Coronavirus response caused a ‘much bigger economic shock’ than necessary: Niall Ferguson

Max Zahn with Andy Serwer
·4 mins read

As all U.S. states begin to reopen, the country seeks to undo an economic calamity that caused more than 40 million people to file for unemployment over the past 10 weeks. The downturn coincided with stay-at-home orders that urged the vast majority of Americans to remain at home and required many businesses to shutter.

In a newly released interview, taped on May 14, historian and author Niall Ferguson condemns those restrictions as stringent measures that crippled the economy far more than necessary to ensure public safety.

“We've inflicted on ourselves a very much bigger economic shock than I believe the public health emergency warranted,” says Ferguson, a senior fellow at the conservative-leaning Hoover Institution, based at Stanford University.

He defended social distancing precautions but sharply criticized restrictions of individual movement or business operation.

“We need to draw a distinction between social distancing and lockdowns,” he says. “Social distancing is part of a targeted and rational response to a contagious disease.”

“Locking [people] in the economy is a much more blunt instrument, because you're basically saying to everybody, stop right there and stay at home,” he says. “Regardless of your age, regardless of the role you play, regardless of how many contacts you have in a typical day.”

“So that's a very, very crude way of dealing with this problem, and it's also extremely costly,” he adds.

In mid-April, 316 million people in at least 42 states were being urged to stay home by local or state orders, the New York Times reported. Now, as U.S. coronavirus cases are following a downward trajectory, all states have begun to loosen their restrictions.

Tension over how to reopen the U.S. economy amid the coronavirus outbreak has embroiled the nation in recent weeks, as President Donald Trump has differed publicly with the nation’s top infectious-disease expert, Dr. Anthony S. Fauci, over how to weigh public health risks against economic pain.

Niall Ferguson, a senior fellow at the Hoover Institution at Stanford University, appears on "Influencers with Andy Serwer."
Niall Ferguson, a senior fellow at the Hoover Institution at Stanford University, appears on "Influencers with Andy Serwer."

The Trump administration released a set of conditions for coronavirus containment last month that it recommends states meet before they reopen, including a 14-day downward trajectory in new cases or positive test rates. So far, only three states have met all of the White House conditions for reopening: Illinois, New York, and New Jersey, according to ProPublica.

Ferguson made the remarks in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

Since 2016, Ferguson has worked as a senior fellow at the Hoover Institution. He served as a professor of history at Harvard University for 12 years prior, and has published 15 books, most recently “The Square and the Tower.”

He emphasized the importance of testing and contact tracing as means for containing the virus, noting that epidemiologists “have said for years that the key in any pandemic is early detection and early response.”

“It wasn't a hidden truth,” Ferguson adds. “The way to cope in 2020 with a new coronavirus was with very rapid rolling out of testing and contact tracing.”

Over a crucial monthlong period — from late January to early March — the federal government failed to institute widespread testing for the disease, The New York Times reported in late-March. Bureaucratic obstacles, technical shortcomings, and a dearth of leadership caused the delay, according to the article, which drew on conversations with over 50 public health officials, administration officials, and others.

As of Friday morning, the U.S. had more than 1.7 million coronavirus cases and over 101,500 deaths, according to Johns Hopkins University.

Meanwhile, the economic consequences of the U.S response could get even worse, Ferguson predicted.

“It's perfectly plausible, in my view, that the unemployment rate in the United States could reach 26% at peak,” he says. “That is higher than in the very depths of the Great Depression.”

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