Paul Romer, winner of the 2018 Nobel Prize for economics, says there’s only one way to make people safe to go back to work en masse: widespread and comprehensive testing.
In an interview on Yahoo Finance’s “On The Move,” Romer, an economics professor at New York University, explained that if we break down the macro issue of what would make us feel safe — absent a vaccine — the solution is much simpler.
According to Romer, we should be asking ourselves, “what is it going to take for me to feel safe going to a seminar with my colleagues at NYU or going to get my teeth cleaned by the dentist?”
To the Nobel laureate, the answer is obvious. It’s going to take assurance that you’re not around people who have the coronavirus.
“The only thing that’s going to give me confidence that [those are] safe things to do is if the people I’m around have recently been tested for the virus and have negative tests,” he said. “And they won’t want to see me in those settings unless I have been tested recently and I have a negative test result as well.”
This, he said, is the key for returning to the activities that our economy depends upon.
It’s expensive, but it might be a bargain
Romer has a plan for this type of testing, with cost estimates.
“If we spent $100 billion a year on testing and could pay about $10 per test, that would be enough to test everybody in the United States once every 14 days,” he said.
That is a lot of money, but Romer pointed out that it’s “very small” compared to the “trillions that we’re losing under these current depressed conditions,” which he estimated at $500 billion per month. Unfortunately, the scale of the money required means that only the federal government could pay for a program like this, especially given the strain states are now under with dramatic revenue shortfalls projected. However, Romer said that the money could flow through states to provide the testing.
Romer said members of Congress and the Trump administration have “inquired” about these ideas, but didn’t mention anything specific about increasing funding from the current budget of $25 billion in testing that Congress allocated.
The way tests would be administered would be different for different segments of the population. Romer pointed out that hospital workers had higher rates of coronavirus than the general population, so most people who work in the healthcare industry should be tested every day. After a while, this could be scaled back to once every week or two if the prevalence is low.
‘Still bullish on cities’
Despite living in the epicenter of the pandemic, Romer also said he’s still “bullish on cities.”
“Young people find New York so attractive, they’re willing to put up with extraordinary inconveniences,” Romer said. “They’ll live in an apartment that doesn’t have a washing machine.”
Romer sees having to get regular coronavirus tests as a similar kind of urban nuisance, like an awful subway system, woodchuck-sized rats, or the smell of hot garbage in the summer.
Cities may not change too much in Romer’s estimation, but some things will, like the role of the government. After this experience, more people will see the value in a more competent government filled with skilled people and enough money that can respond to a crisis.
“We may want to invest in just raising the level of the competence and skill in our government,” he said, citing Singapore’s $1 million salaries for certain civil servants and higher-quality outcomes.
“If we paid for the critical positions: biomedicine, cyber security, about these many different threats that we face, we could get the most talented people in the United States to work in these government positions,” he said. “I think that would be an investment worth making.”
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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