4 April/5 April 2020 ★ FT Weekend 9Opinion
3 Fifty years of US economic policy come
home to roost
Decades of bad choices have favoured the
private sector, writesRana ForooharTop reads at FT.com/opinion
3 The new Labour leader must play a
patient game
All the UK opposition can do now is ask the
right questions, writesRobert Shrimsleypandemic, particularly its failure to
deliver desperately-needed ventilators.
But, unlike New York mayor Bill de Bla-
sio, he has refrained from attacking per-
sonally the commander-in-chief in the
midst of a national crisis.
Instead, Mr Cuomo is practising a
form of political ju-jitsu — hitting the
White House at one moment to grab its
attention, and then publicly embracing
Mr Trump the next. Underlying it is a
calculation: New Yorkers and the nation
need the might of the federal govern-
ment as the pandemic bears down.
That truth is likely to become appar-
ent as hospitals begin to breach their
capacity limits and casualties mount. At
this Thursday’s briefing, Mr Cuomo
sounded prepared.
“I take my job very seriously. I don’t
make excuses,” he said. “If I fail, I fail. If
something breaks or doesn’t work —
that’s on me. I see the number of deaths
every day and I take that personally.”[email protected]ble housing and marvels at his ability to
communicate empathy while ruthlessly
delivering policy. “It’s very unusual to
find someone who can package both.”
The Cuomo package, even admirers
acknowledge, also includes a long mem-
ory for slights, an obsessive nature and
occasional brutality. He is widelyblamed for running off Andy Byford, the
Brit who became beloved by New York-
ers for stabilising the city’s decrepit
transit system. Mr Byford, known as the
“Train Daddy”, thrived at his main job
but failed to court Mr Cuomo.
With Mr Trump, the governor has
been cagey. He has blasted the federal
government for its slow response to theago, when Mr Trump was going through
a divorce, he sent a video greeting for Mr
Cuomo’s bachelor party urging him not
to “fool around”.
Mr Cuomo learnt the political trade
from his father, Mario, a beloved three-
term governor whose sentiments about
New Yorkers’ brotherhood and shared
humanity have featured in his eldest
son’s recent briefings.
After a cabinet post under President
Bill Clinton, Mr Cuomo returned to New
York and became its attorney-general
and then governor. Two years ago, even
as Alexandria Ocasio-Cortez’s election
to Congress underscored the growing
appeal of the party’s progressive wing,
Mr Cuomo, a moderate, won a third
term as governor in a landslide.
He has managed to deliver both mar-
riage equality legislation and nuts-and-
bolts infrastructure, including a suspen-
sion bridge named for his father. “He’s
having a moment where he’s kind of
putting it all together,” says a person
who worked with Mr Cuomo on afforda-A
mericans are adopting new
rituals in the coronavirus
era: obsessive handwash-
ing, Zoom video calls and
watching New York gover-
nor Andrew Cuomo’s daily briefing.
From the US epicentre for the pan-
demic, Mr Cuomo delivers a sermon
each day in which he is, by turns, sober,
informative, rousing and unexpectedly
vulnerable as he updates viewers on the
progress of the current war. At times he
is profane, as when he urged soldiers to
go out and “kick coronavirus’s ass!”
In just a few weeks, Mr Cuomo, a 62-
year-old divorced dad known for a dom-
ineering — at times bullying — persona,
has transformed himself into an
unlikely father of the nation as it faces
one of its gravest modern moments.
While President Donald Trump’s
early response to the pandemic was
characterised by denial and baseless
optimism, Mr Cuomo’s performance
has been akin to Franklin D Roosevelt’s
fireside chats during the Depression or
the resolve of New York mayor Rudy
Giuliani as he steadied the US after the
September 11 terror attacks.
“If the White House ran a press con-
ference at the same time as Cuomo,
more people would tune in to Cuomo
right now,” says a political operative
who knows both men. The governor
“hasn’t changed. The moment has.”
Mr Cuomo’s intimate bond with a
frightened public has led many Demo-
crats to nurse the hope that he could
somehow be drafted to replace former
vice-president Joe Biden as the party’s
likely presidential nominee.
A more probable scenario, says Hank
Sheinkopf, a Democratic strategist —
who has worked for and against Mr
Cuomo over the years — is that the gov-
ernor is persuaded to use his popularity
to boost Mr Biden before the November
election. “Assuming we get out of this
alive, the amount of power that Andrew
Cuomo will have will be extraordinary,”
Mr Sheinkopf opines.
This was the week when the extraor-
dinary toll that the pandemic will take
on the US at last came into focus. Even
Mr Trump acknowledged models that
estimate 100,000 to 240,000 US fatali-
ties as he urged Americans to brace for
“a very, very painful two weeks”. Other
predictions exceed 1m.
New York, which has recorded nearly
10 times as many Covid-19 cases as Cali-
fornia, is on a wartime footing. At Mr
Cuomo’s direction, medical tents have
gone up in Central Park. Convention
centres, a horseracing track and other
facilities have been hastily converted
into hospitals. Refrigerated trucks have
been brought in to handle the bodies.
Everybody seems to know someone
who has been infected — even Mr
Cuomo. His younger brother, Chris, the
CNN anchor, disclosed on Tuesday that
he had fallen ill. “We’re talking about
my little brother. This is my best friend,”
the governor despaired during one
briefing. “It’s frightening because
there’s nothing I can do.” (He did send a
guide to bass fishing, a favourite hobby.)
Mr Cuomo hails from the same
Queens borough as the president. YearsPerson in the news| Andrew Cuomo
A governor grabs
national attention
New York politician has
won over Americans withrousing and unexpectedly
vulnerable briefings,writesJoshua Chaffin
In a form of political
ju-jitsu, he hits the WhiteHouse one moment and
embraces Trump the next
T
he coronavirus lockdown is
saving lives but destroying
livelihoods. Is it worth it?
I’ve been accused of ignor-
ing its costs. For an econ-
omist, this is fighting talk. Love us or
hate us, thinking about uncomfortable
trade-offs is what we economists do.
Three points should be obvious. First,
we need an exit strategy from the lock-
downs — a better strategy than Pres-
ident Donald Trump’s, “One day it’s like
a miracle, it will disappear.” Expanding
emergency capacity, discovering better
treatments, testing for infection and
testing for antibodies could all be part of
the solution, along with a vaccine in the
longer term.
Second, the economic costs of any
lockdown need to be compared with the
costs of alternative policies, rather than
the unachievable benchmark of a world
in which the virus had never existed.
Third, the worth of a human life is
not up for discussion. This week I lost
a mentor of unlimited kindness. As I
write these words I hear that a beloved
family member is also reaching the
end of her remarkable journey. Their
lives, like the life of any individual, were
priceless.
Yet no matter how much we want to
turn our gaze away from the question,
it hangs there insistently: is this all
worth it?
We spend money to save lives all the
time — by building fire stations, impos-
ing safety regulations and subsidising
medical research. There is always a
point at which we decide we have spent
enough. We don’t like to think about
that, but better to think than to act
thoughtlessly. So what are we willing to
sacrifice, economically, to save a life?
A 1950 study for the US Air Force
ducked this question, recommending
a suicidal military strategy that valued
pilots’ lives at precisely zero.Other early
attempts valued lives by the loss of earn-
ings that an early death would cause —
effectively making retired people
worthless, and the death of a child costly
only if the child could not be replaced
by a new baby.
The late Thomas Schelling , a
Nobel Prize-winning economist,
mocked these errors as he imagined
the death of a family breadwinner like
himself: “His family will miss him, and
it will miss his earnings. We do not know
which of the two in the end it will miss
most, and if he died recently this is a
disagreeable time to inquire.”
There must be a better way to weigh
the choices that must be weighed.
But how?
Schelling suggested focusing not on
the value of life, but on the value of
averting deaths — of reducing risks.
A life may be priceless, but our actionstell us that a statistical life is not. The
engineer Ronald Howard has proposed
aconvenient unit, the “micromort” — a
one-in-a-million risk of death. Implic-
itly, we constantly weigh up small risks
of death and decide if they are worth it.
Despite inconsistencies and blind spots
in our behaviour, we value reducing
risks to our own lives very highly, but
not infinitely so.
We vote for governments that hold
our lives in similarly high regard. For
example, the US Environmental Protec-
tion Agency values a statistical life
at $10m in today’s money, or $10 per
micromort averted. I have seen lower
numbers, and higher.
I am giving most of my figures as con-
veniently round numbers — there is too
much uncertainty about Covid-19 to be
more precise. But if we presume that 1
per cent of infections are fatal, then it is
a 10,000 micromort condition. Being
infected is 100 times more dangerous
than giving birth, or as perilous as trav-
elling two and a half times around the
world on a motorbike. For an elderly or
vulnerable person, it is much more
risky than that. At the EPA’s $10 per
micromort, it would be worth spending
$100,000 to prevent a single infection
with Covid-19.
You don’t need a complex epidemio-
logical model to predict that if we take
no serious steps to halt the spread of the
virus, more than half the world is likely
to contract it. That suggests 2m US
deaths and 500,000 in Britain — assum-
ing, again, a 1 per cent fatality rate.If an economic lockdown in the US
saves most of these lives, and costs less
than $20tn, then it would seem to be
value for money. (By way of compar-
ison, each 20 per cent loss of gross
domestic product for a quarter repre-
sents a cost of about $1tn.) One could
quibble with every step of this calcu-
lation. Perhaps some of those who die
were so ill that they would have died
of other causes within days. Perhaps
Covid-19 is not quite so dangerous. Yet
it is clear that with so many lives at
stake, we should be willing to pay huge
costs to protect them.
We must remember something else:
the risk of being wrong. We will inevit-
ably make mistakes. The measures we
take to contain coronavirus might do
more damage to people’s livelihoods
than necessary. Or we might allow the
virus too much leeway, needlessly end-
ing lives. In a spreading pandemic, the
second mistake is much harder to repair
than the first.
Fighting this virus demands eco-
nomic sacrifices: not without limit;
and not without end. But if not now,
then when?[email protected]How do we value
a statistical life?
With so many lives at
stake, we should be
willing to pay huge costs to
save them from Covid-Tim
HarfordThe undercover
economistW
hatever it takes” is the
mantra of the moment.
Hammered out to an
audience of Eurosceptic
hedge fund managers at
the height of the 2012 eurozone crisis by
Mario Draghi, then president of the
European Central Bank, the words have
come to stand for the technocratic
determination to meet a crisis with all
necessary force.
It should be no surprise that the
phrase is enjoying a renaissance in 2020.
Faced with the Covid-19 pandemic, we
need brave talk. The irony is that when
Mr Draghi first uttered the assurance it
was less a confident assertion than an
act of defiance. The ECB did not have
the licence to act. Nor did he have the
approval of his own team in Frankfurt.Instead, he gambled that the intensify-
ing pressure of the crisis would forge the
eurozone into a truly integrated fiscal
and financial unit. In such a system, the
ECB could then graduate to being the
sword and shield of the euro.
Eight years on, the coronavirus crisis
is exposing how ambiguous the out-
come of his wager on Europe remains.
“Outright monetary transactions” —
the ECB policy most closely associated
with Mr Draghi’s promise — is a power
festooned with conditionality. It was
crafted to soften the resistance of north-
ern European conservatives, above all
in Germany. To trigger the ECB’s power
to buy sovereign debt under OMT, a
country must first have been granted a
rescue programme from the European
Stability Mechanism. This would need a
unanimous vote from all eurozone
members, which gives Germany a veto.
For the distressed borrower, the con-
ditionality this implies would be humili-
ating. Mr Draghi never had to put OMT
into effect and, even now, no one wants
to invoke the mechanism to support thestressed states in the pandemic. It is
precisely for that reason that nine heads
of government, led by France, Italy,
Spain and Portugal, have proposed
mutualised “coronabonds”. This is a
proposal that has been made repeatedly
since 2010. It has long had the support of
the ECB, which wants a sensible balance
between fiscal and monetary policy. A
common bond would be the foundation
of a fiscal apparatus to match the scale
of the currency union. Faced with a
common crisis such as Covid-19, it is
more warranted than ever.
But the opposition of the northern
states is adamant. As they have shown
in recent weeks, they are determined to
resist the idea even if it causes an open
breach with their European partners.
It is possible that some complex com-
promise can be worked out that will
allow the common rescue fund, the
ESM, to serve as the basis for borrowing.
It is also possible that the European
Commission may gain acceptance for its
proposal of a joint fund to support
unemployment and short-timepayments across the continent. But the
moment for an impressive display of
common resolve has passed. Faced with
the urgency of the crisis, the eurozone
can offer nothing like an adequate pro-
gramme of common public spending.
Instead, crisis-fighting has been left to
a lopsided combination of national fis-
cal policy and bond buying by the ECB.Mr Draghi began quantitative-easing-
style bond-buying in 2015 not as a res-
cue measure for any single country but
as a general support for the eurozone.
To ward off accusations of favouritism,
purchases are regulated according to a
strict quota system. Faced with this pan-
demic, after initial hesitation and some
wrangling within the bank, bond buyinghas been ramped up to a massive scale
and quotas have been loosened.
This is justified by the overriding pri-
ority of maintaining the coherence of
the monetary system and thus the effec-
tiveness of the ECB’s monetary policy. It
may serve as a legal fig leaf, but it does
not convince the economic nationalists
who oppose coronabonds. Their central
obsession is that the bank should not be
used to finance national borrowing,
which is explicitly prohibited by its
founding treaty.
Whenever the ECB has bought bonds
before, as in 2015 and 2019, they have
protested. And their protests are likely
to be all the more fierce now because the
ECB is for the first time buying bonds
while governments are engaged in
gigantic fiscal spending.
For those who embrace European sol-
idarity and view macroeconomic policy
in pragmatic terms, as a means of max-
imising production, employment and
welfare, combining fiscal expansion
with monetary support is the whole
point. The ECB’s interventions areAdam
ToozeDraghi’s famous promise
was uttered againstthe optimistic horizon
of further integration
calming the markets and buying time.
The current makeshift arrangements
are better than nothing. But the risk is
that without a clearly defined fiscal
framework, the most vulnerable states
will not dare to spend enough.
So far Germany’s national stimulus is
far greater than that Italy’s or Spain’s,
even though their medical emergencies
are more urgent. Were they to spend
more, what assurance would they have
that once the crisis passes the burden on
their national balance sheets will not be
made into a crippling constraint for dec-
ades ahead? The straitjacket of austerity
imposed on the eurozone after 2012
taught a harsh lesson.
Mr Draghi made his promise against
the optimistic horizon of European
progress towards closer fiscal and finan-
cial integration. Without that prospect,
“whatever it takes” is at best a recipe for
makeshift. At worst it is a mockery.The writer is the author of ‘Crashed: How a
Decade of Financial Crises Changed the
World’The problem with the eurozone’s ‘whatever it takes’ mantra
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