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Goldman Sachs: National mask mandate needed to restart US economy

Government mandates to wear a mask in public have become a uniquely hot-button issue in the U.S., which finds itself in the throes of a coronavirus crisis that appears to be drifting out of control by the day.  The debate pits scientific consensus against libertarian philosophy.  The public welfare against individual freedom.  Reasoned thought against inflamed tribal passion.

“Your liberty to swing your fist ends where my nose begins”.  – former Supreme Court Chief Justice Oliver Wendell Holmes, Jr. (addressing pragmatic limitations on liberty.)

Impact on Economic Activity

Goldman Sachs – whose focus is always on business, the economy and making money – weighed in on the debate in a new study released last week.  Goldman observes that “New US coronavirus cases have risen sharply in recent weeks, leading investors to worry that renewed lockdowns will again depress economic activity.”

Jan Hatzius, chief economist at Goldman, says that “a national face-mask mandate would partially substitute for renewed lockdowns that could otherwise subtract more than a trillion dollars from gross domestic product and cripple the US economy.”

Goldman’s new study compares data from 125 countries and scores of US counties with and without face mask mandates.  The researchers concluded that a government order to wear face masks in public “could cut the virus’s infection rate by nearly 60 percent, and reduce fatalities by nearly half.”

Public Confidence

“We find that face masks are associated with significantly better coronavirus outcomes,” they wrote, and this “seems to reflect a largely causal impact of masks rather than correlation with other factors (such as reduced mobility or avoidance of large gatherings).”

Beyond the medical evidence, mandatory face mask usage would also increase public confidence and feelings of personal safety, further increasing the likelihood that individuals and families feel comfortable returning to work, school and other activities.  

Avoiding Lockdowns

Looking at the U.S., the researchers found “face mask usage is highest in the Northeast, where the virus situation has improved dramatically in recent months, and generally lower in the South, where the numbers have deteriorated”.

“For example, only about 40 percent of respondents in Arizona say that they ‘always’ wear face masks in public, compared with nearly 80 percent in Massachusetts.”

“If a face mask mandate meaningfully lowers coronavirus infections, it could be valuable not only from a public health perspective but also from an economic perspective because it could substitute for renewed lockdowns that would otherwise hit GDP,” the researchers wrote.

Their data showed that countries that fail to reach widespread masking usage see both infections and deaths increased.

It Ain’t Over Til It’s Over

The Goldman report comes as Florida, Texas, California and Arizona – the states that have accounted for much of the recent rise in U.S. cases – imposed new restrictions and rolled back their reopening plans.

There are now 10.9 million confirmed cases of COVID-19 world-wide and at least 521,000 people have died, according to data aggregated by Johns Hopkins University. The U.S. continues to lead the world, with a case tally of 2.8 million and death toll of 131,000.  The US has only 4% of the world’s population but more than 25% of virus-related deaths.  

On Monday, Tedros Adhanom Ghebreyesus, the head of the World Health Organization, said that the pandemic is “not even close to being over.”

Still, mask wearing in the U.S. has been lax and not uniform. Hugo’s Tacos, a Los Angeles Mexican restaurant, temporarily closed its doors, claiming that its workers were being bullied for enforcing mask-wearing protocols in their restaurants.

LA, particularly, has seen an explosion of COVID-19 cases, with about 100,000 cases and more than 3,300 deaths.

Tribalism and the Culture War

While science and the rest of the world are largely in agreement, the medical guidance in the US has become embroiled in a culture war.  The US president’s view on mask usage is seen undercutting efforts by public-health officials to encourage the use of facial coverings and other personal protective equipment, or PPE, to halt the resurgence of the infection.

Impact on the Stock Market and Economic Recovery

Concerns about a resurgence of the disease also has created turbulence in the equity markets after the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite Index all surged from the late-March lows on the back of hope that America had gotten a handle of the outbreak, which bullish investors surmised could help to stoke a so-called V-shaped, or sharp, economic recovery.

Goldman warns that failure to issue a timely national mandate on mask wearing will jeopardize the US recovery and potentially lead us into a lasting recession or depression if the virus is not contained.  Community spread has already reached levels that exceed our ability to test, contact trace and isolate.  

A national mask mandate is our only viable solution to quickly returning to economic prosperity.  Public resistance is akin to “cutting off the nose to spite the face”.  Resistance based on anger, mistrust or tribalism will only reduce public confidence, risk further damage to our economy and slow our efforts to restore our nation’s health.



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