One problem with the "demand suppressed by the pandemic" story is that no prior pandemics created even close to this degree of suppressed demand, and none of the economic papers yet published have been able to identify so total an effect.

That is to say, while epidemics DO suppress demand.... they have never before, and have not in other countries, led to so massive a spike in unemployment.

Acting like this is just an inevitability, rather than a specific feature of US policy, is weird, since other hard-hit countries did not have the unemployment rate spike we had.

Here's the US vs. Euro area unemployment, and US vs. European countries for which excess mortality data is available for deaths.

This unemployment data is just through April for the Euro area and May for the US, so it reflects periods for which the virus was TONS WORSE in Europe than in the US. And yet the US economic shock was WAY bigger!

Now, the unemployment rate series clearly show that the US is just spikier to begin with. But that doesn't undermine the argument that the U.S. policy environment may have created a worse shock, since that policy environment is not a new thing.

I'm not saying that we should end generous UI.

But I'm absolutely saying that the idea that the economy cannot recover at a higher level of death seems to mistake that many economies do in fact operate at higher levels of death!

What we need to do is the same thing we've needed to do for months and which the few people have bothered to do. States could have done it and chose not to:

Isolate contacts. Mandate masks.

There's no fiscal capacity argument against masks it's purely a question of having a spine or not. "But I'll lose my next election!" yeah maybe get over it and do the right thing you spineless whelps.

Contact isolation does have a cost associated with it. It's definitely harder. But societies with way lower fiscal capacity than US states have managed to pull it off, so I'm pretty skeptical that the money just isn't there.

The problem is that the money is there but it's dedicated for other things. It needs to be rededicated. "But Lyman that's difficult because there are X, Y, and Z rules." So? Break those rules. When the courts strike you down, dare them to join Team COVID.

Travel restrictions help too. Yes, they get legally struck down. But there are ways around that. Just tell the state police to stop every 5th car for some facially legal reason and thus cause such a massive traffic jam you've effectively sealed the border!

The only places in America to have consistently kept R values very low are Alaska, the island territories, Hawaii, and a few isolated areas in the northern plains. That's not a coincidence. Cutting off travel WORKS.

But instead ya know what we're gonna do?

We're gonna keep paying people not to work for months creating years-long labor scarring while we wait for a maybe-effective vaccine instead.

I'm sure that's a way better solution. We're totally all better off letting a transient shock turn into a years-long recession. That's definitely what we should do, rather than just raiding some restricted funds to pay for quarantine sites for a few months.