The Federal Reserve Board of Health

Political debate on social media is even more of a morass today than it usually is.

The pro-Trump side is downplaying the Trump Administration's slow response to the crisis and the President’s public statements by pumping up his appropriately enacted Chinese travel ban.

Said “side”, then continues on by pointing out Mr. Obama’s response to the swine flu event (which was also slow and costly in terms of lives), and the fact that Democrats responded to Trump’s travel ban with accusations of racism, indicating that they would not have put a travel ban in place at all.

The anti-Trump side pumps up Mr. Trump’s negative statements on the level of threat from the COVID19, the lack of testing and availability of test kits, and the detrimental effect on the stock market.

Personally, all this political finger pointing misses two key points. I’ll deal with one of them here (the other being the culpability of the Chinese Government in all this), that being…. why is the government’s public health agency under control of any one Administration in the first place?

So, with that in mind, lets talk about the Fed.

In 1907, there was a banking crisis. Banking crises were not all that uncommon back in those days, as various attempts at stock manipulation, market cornering, and other nefarious strategies were legal and unregulated. In the 1907 miscues, suffice to say that the banking non-system we had at the time was at risk of failure, along with the stock market itself. Those interested in this event can get up to speed here:

In this case, it was necessary to re-liquefy the banking system in order to save both it and the stock market. Since the government didn’t have the legal authority to intervene, critics of Wall Street will be shocked (perhaps disappointed) to learn that the Good Guys here were the Wall Street investment bankers.

J.P. Morgan (yes THAT J.P. Morgan) put up a ton of his own fortune, and convinced other Wall Street rich investment bankers to do likewise, in order to re-liquefy the banking system and fend off a looming stock market collapse. Basically, they did what Ben Bernanke and Hank Paulson did in 2008 — they swore blood oaths to the retail banks that they would not let them go under.

J.P. Morgan

So, yes, the people who today would have been “billionaires” saved the economy, out of their own pockets, personally losing….a boatload of money in the process.

The 1907 Crisis was quickly followed by a second crisis where the Wall Street bankers had to intervene, and take more personal losses. This led to one of those odd moments in time where Wall Street was willing to give up financial control to the government in return for the government covering bailouts rather than they.

So, during the next (Wilson) administration, Wall Street supported the creation of a Central Bank that would manage the money supply and other aspects of the economy. Thus, the Fed was created, noting that the economic interests of the nation were too important (and too bipartisan) to be left totally unmanaged. And, without centralized management to insure trust in the banking system, bank-related panics, which were not unusual prior to this time, would continue.

The result was the Federal Reserve Act of 1913. The Fed was given a mandate to manage the monetary system, and was created to be largely autonomous, because economic stability is an objective that transcends politics.

The same, I’d argue, applies to public health. This calls for an independent agency, similar in structure to the Fed, which is not under political or budgetary control by a political branch of government; but is instead data-driven by facts and health needs on the ground.

It’s early to do a post-mortem on the entire COVID19 crisis. But at the very least, we can see certain fault lines beginning to form, caused by having public health resources under control of partisan administrations.

  1. Response to a public health crisis should not be colored by politics. Recommendations and responses should be handled by an independent agency in conjunction with the Secretary of Health and Human Services.
  2. Determination and declaration of travel bans, quarantines, and public recommendations should be made independently and outside of politics.
  3. The stockpiling of necessary medical equipment should not be subject to politically controlled budgets.
  4. Regarding the manufacture of medical equipment and pharmaceuticals — — an independent agency should exist to raise the red flag if we become too dependent on foreign entities for these necessities.

Those are just off the top of my head, based on problems which we have already seen arise in the last 30 days. I’m sure others will arise in the next 30 days, and in postmortems afterwards. Just keep in mind that however you see how response (or lack thereof) to COVID19 at this point in time, we need to all realize that as long as we leave politicians in charge of the budgets and responses to health crises like a pandemic, we leave ourselves vulnerable to mismanagement the next time such a crisis arises.

Put another way — the next time such a crisis arises, hoping that the elected President at that time is an altruistic angel is not a good strategy.

I suggest another path.

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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