Will the first nationwide emergency brake in Germany vanquish the pandemic?

Some thoughts on federalism

It sounds a bit weird: Last weekend, more than a year after the pandemic outbreak in Germany, the first nationwide Covid-19 measures became effective, including night curfews and school closures (depending on the number of infections in an area). 

Before, most restrictions were regulated by the 16 German states (Bundesländer). There were periodical digital meetings with the minister presidents of the federal states together with chancellor Angela Merkel. Sometimes they came to agreements, sometimes not. Besides, the (different) rules of the federal provinces often fall short of expectations - at least of Merkel's expectations. 

That's why Ms Merkel pressed to amend the law and to pull control to the national level.

As a result, the German parliament passed an emergency brake (called "Bundes-Notbremse"). It prescribes uniform national restrictions and is designed to end a tug of war between the federal government and Germany's states.

What had been missing in the debate from my view is a basic question: Is the national level appropriate for this purpose? Is federal law superior in terms of combating the pandemic the best?

You might think this question isn't that important. But I am a great advocate of functioning federalism. To put it the other way around: I am convinced that many state-related problems have their roots in tackling issues on the wrong political level. 

To explain, I have to introduce an economic term, the so-called negative externality. Negative externalities occur when the consumption or production of a certain good causes a harmful effect to a third party, whereby "consumption or production of a good" is to be understood in a broad sense. Examples

  • Loud music. If you play loud music at night, your neighbour may not be able to sleep.

  • Pollution. If you produce chemicals and cause pollution as a side effect, local fishers will not catch fish. The loss of their income would be a negative externality.

  • Congestion. If you drive a car, it creates air pollution and contributes to congestion. These are both external costs imposed on other people who live in the city. (I took these examples from economicshelp.org.)

A pandemic is also causing negative externalities in different ways (more about that here). The one important in this context derives from real social interactions. 

From an individual point of view, social interaction in a pandemic can have two negative outcomes. First, a person gets infected; second, a person infects another person. The latter outcome is a negative externality, an unintended consequence on "third parties". Often people respond to the first negative effect but neglect the second one. 

That leads to

  • masks that prevent spreading the virus are worn rarely; 

  • hand disinfection often used after having met people instead of (also) before;

  • people stay at home when they are scared of contracting the virus (not when they fear infecting others). 

Because of these two faces of social interactions (endangering themselves and others), the government is required to limit social interactions. 

Economically spoken that amount of mobility should be reduced by restrictions or incentives driven by not considering the threat of infecting third parties.   

Sole individual decisions may lead to disaster. It limits mobility but too little. Self-interested behaviour reduces mobility just to the extent of one's own risk. Consequently, mobility drops sharply not until the pandemic spirals out of control and horror scenarios are broadcasted on digital devices. 

Individual actions to keep infection numbers under control are too little and too late. 

In economics, you would call this a market failure. Market failures are often a call for governments (even they are not the only cure). That takes us back to the initial question: Is the national level the appropriate one to curb the pandemic effectively by reducing mobility, or would local or provincial levels (Bundesländer) be more suitable?

It seems that the highest level is most suitable (with more democratic legitimacy, the European level could be conceivable, too). Because the above described negative effects not only occur between individuals but also between groups.

At the level of German districts (Kreisebene), a reasonable politician will reduce mobility to the extent that the pandemic in his community is under control, hospitals not overcrowded. He will not consider the effects on neighbouring districts (of course, the virus doesn't fear borders). Even though there will be some positive impacts on other districts, the measures may not be sufficient. If every district is looking after itself, the cross-border aspects of the pandemic will not be taken into account.

What is even more important: The restrictions in one district reduces the efforts in other districts. As a result, every district argues for sharp restriction in all the other districts but not in their own area. If all think that way, the overall limits will be too lax. 

What is valid on the district level provides the same logic on the level of the 16 German states. 

Therefore the national level is best for implementing limited mobility. In addition, it is unsurprising that Angela Merkel (national level) is advocating for stricter restrictions than politicians on lower levels. The national emergency brake provides greater clarity for the German public and prevents weak measures caused by negative externalities. At least in theory.