Ryan McMaken – February 21, 2022
One of the many sketchy tactics employed by advocates of covid lockdowns was to insist that we had to choose between two bad options: the first option was to damage the economy with lockdowns. But in that case, we’d be saving countless lives. The second option was to not impose lockdowns. But the experts insisted in that case, the economic devastation would be far worse because most people would be too sick to work at all.
One example of this sort of thinking can be found in this article in The Guardian by economist Jonathan Portes. Portes contended in late March of 2020 that if mandatory lockdowns were lifted, the spread of disease would be so bad that
pretty soon many firms would simply stop functioning, as workers became sick, or had to stay at home to look after family members.
Similarly, researchers insisted in the Harvard Business Review:
This may seem strange, but the economy will be even worse if it is restarted prematurely, which, in turn, means that a pre-specified or national date for reopening the economy should be avoided.
Portes goes on to claim that normal economic activity would never return to normal “until the spread of the diseases has been contained.”
This was back in the days when advocates of lockdowns and similar measures continued to indulge the fantasy of “zero covid” in which it was imagined that the spread of covid could be eliminated altogether. That proved to be quite wrong.
But equally wrong has been the idea that covid mandates—however damaging to the economy they might be in the immediate future—save the economy from even worse damage.
To gain a better look at just how wrong this has been, let’s look at US states in terms of GDP growth from the end of 2019 to the third quarter of 2021.
That is, we’re looking at what happened with each state’s economy from the last quarter unaffected by covid (the 4th Q 2019) to the most recent quarter available for GDP numbers.
We find that the states with the most robust GDP growth during this period are Nebraska, South Dakota, Montana, Iowa, and Idaho.
The states with the worst growth over this time period are Connecticut, Oklahoma, Alaska, Louisiana, and Hawaii. Hawaii was the only state with outright negative growth.
It is notable that among the states with the most GDP growth over this time we find Iowa, South Dakota, and Nebraska—three states that were heavily criticized by advocates of lockdowns and mask mandates for being too laissez faire in terms of covid policy. Indeed, among the top-ten biggest growth states, only one state is notable for locking down and locking down early: Washington.
Moreover, the state with the worst economic performance over this time, Hawaii, has been among the states with the most draconian lockdown policies. Connecticut, also found in the top five, was also notable for its strict lockdowns. Looking slightly beyond the bottom five, we also find Delaware, New York, and Rhode Island, all of which were known for implementing punitive lockdown measures.
Moreover, it is often forgotten that Louisiana—among the worst economic performers in this time period—employed relatively harsh lockdown policies on a level similar to those of Maryland and Colorado.
There are exceptions, of course. Oklahoma and Alaska—both with fairly laissez-faire covid policies—are among the worst performers during this period. But among the bottom 25 economic performers, at least 15 states are notable for locking down early and long. These include states like New Mexico, Illinois, Michigan, and Massachusetts. On the other hand, 17 of the top 25 economic performers for the period were states with weak, late, or non-existent lockdowns.
But just how harsh were the lockdown policies in each of these states? As a shortcut to measure mandate stringency, we could use WalletHub’s stringency index from April of last year. (The weighting of the index can be seen here.)
Displayed as a scatterplot, we can see at least a partial relationship between the degree of stringency and economic growth. As stringency becomes greater, economic growth goes down.
Source: Bureauc of Economic Analysis, Wallethub Stringency Index.1
Of course, one can also see here there is a fair degree of variance, and regression analysis shows that only about one-fifth (R-squared is 0.19) of the relationship is explained by stringency alone. Rejecting lockdowns is not necessarily a recipe for economic success. Nevertheless, this relationship certainly does nothing to help 2020’s narrative that jurisdictions without strict lockdowns will endure terrible economic devastation. There’s no evidence to suggest that at all. In fact, it’s fairly clear that, whatever the reasons might be, those states that refused to adopt strict covid mandates enjoyed much better economic growth.
Originally published at Mises.org. Ryan McMaken is a senior editor at the Mises Institute. He has BA degrees in economics and political science, and an MA in political science from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
Image source: Getty
- The BEA measure is gross domestic product by state, all industry total. For the sake of clarity I have reversed the Wallethub index (subtracted each given value from 100) so that higher numbers indicate a higher degree of stringency. See the original.[↩]
These data are meaningless in isolation. One would have to have, at a minimum, comparative GDP numbers for each state representing “pre-covid” conditions in order to unmask any potential effects of lockdowns. Under “normal” conditions, there are any number of factors that cause variations in GDP growth between states. Although differences in lockdown rules may have contributed to changes in economic activity, the data presented herein do not support such a conclusion. As only one example, I would guess that GDP growth actually increased in some states simply through migration of labour and business from lockdown to nearby non-lockdown jurisdictions. A great deal more analysis would be required to sort all this out.
“These data are meaningless in isolation. One would have to have, at a minimum, comparative GDP numbers for each state representing “pre-covid” conditions in order to unmask any potential effects of lockdowns.” …….. This information WAS provided. The first chart provides GDP data from the 4th quarter of 2019, which represents pre-covid conditions.
“Although differences in lockdown rules may have contributed to changes in economic activity, the data presented herein do not support such a conclusion.” …….. Read the final paragraph of the article. The author is simply saying that the data does NOT support the GOVERNMENT’s 2020’s narrative that jurisdictions without strict lockdowns will endure terrible economic devastation.”
Lee argues “This information WAS provided. The first chart provides GDP data from the 4th quarter of 2019, which represents pre-covid conditions.”…………The chart Lee references is for GDP growth from 4th quarter 2019 to 3rd quarter 2021, which does not, by any stretch of the imagination, represent pre-covid conditions. As it is highly unlikely that all states had the same or even similar pre-covid GDP growth rates, the effect that differences in lockdown rules may have had on economic growth cannot be known without first establishing baseline (pre-covid) GDP rates for each state.
Sorry, I should have been more precise. I will try again. The first chart shows GDP growth from “pre-covid conditions” (Q4 2019) to Q3 2021. Pre-covid GDP growth rates prior to Q4 2019 are not relevant to this article.
The author does not claim to know what effect the differences in lockdown rules had on economic growth. In fact, in the final paragraph, he writes “Rejecting lockdowns is not necessarily a recipe for economic success.” The author is simply saying that the data does NOT support the government’s 2020’s narrative that jurisdictions without strict lockdowns will endure “terrible economic devastation” (see the last paragraph of the article).