Laffer Curve of Pandemic Lockdowns

Here's an interesting example of the Laffer curve in real life:

What's so outrageous about all this is that the new businesses and activities that Whitmer is targeting can all be safely conducted while adhering to strict social distancing rules. But Whitmer's theory apparently is that anything beyond absolutely essential conduct jeopardizes frontline workers. This is the precautionary principle on steroids. It considers even an infinitesimal increase in secondary risk as unacceptable, a mindset that could justify stopping virtually any activity anytime.

That's why this order has disrupted the political equilibrium in support of her efforts. To date, hardly any legal challenges have been filed against any stay-at-home orders. But Whitmer's new order has already prompted four Michigan residents, including the guy who can't see his girlfriend, and Contender's, the landscaping company, to sue her for violating their right to free association and perpetrating an uncompensated regulatory taking. More lawsuits might well be underway.

A Facebook group called Michiganders Against Excessive Quarantining—whose very name suggests that it isn't opposed to reasonable quarantining—gained steam with over 282,000 members. Four Michigan sheriffs have declared that they won't enforce parts of Whitmer's executive order that they view as unconstitutional.

It's an example of the Laffer curve because it's a situation where stricter quarantine measures have clearly led to laxer compliance (just like how in some circumstances, higher tax rates lead to lower tax revenue). I'm generally in favor of stay at home orders and think they're painfully necessary, but when they're imposed in such a plain arbitrary and capricious manner such as Michigan, I don't really blame people for pushing back.

The first time I came across this kind of unorthodox application of the Laffer curve was in my college economics textbook. It used examples to illustrate the idea beyond the narrow confines of tax policy. One of the examples (some were hypothetical, some were based on real instances) which has stuck with me was a scenario where a mountain has 10 climbing deaths a year. The park service decides to address the number of fatalities by diverting more resources into search and rescue (more rangers, a helicopter, cell tower installation, etc.). This search and rescue service worked so well in fact, that the mountain drew even more visitors. Even though the fatality rate is lower, the increased number of visitors resulted in 100 deaths per year instead of 10.

The idea that people will respond to incentives in potentially unpredictable ways should be kept in mind in many areas, not just tax policy. In the scenario of lockdown disobedience, it shouldn't be a given that the proper way to address lack of compliance with a stay-home order is to make the order more strict. The opposite tact may be best.