By Ellen Wald

We are now a year into the “15 days to slow the spread” and the lockdowns that crushed the United States and the world. The economy still has not fully recovered even in jurisdictions where government restrictions are already limited or gone. Global economic activity is still depressed, domestic air travel is down by at least 20,000 flights per day, and unemployment is higher than it was before the virus was discovered. Now we face discussions of a “vaccine passport,” with proponents pushing it as a ticket to returning to normal life. Yet, from a purely economic perspective, a vaccine passport is a bad idea.

Most of the debate around a vaccine passport is focused on the potential health benefits or the moral and ethical considerations. This is not a health column, so we will not address that question. The moral and ethical dilemma is compelling and raises very serious concerns, but it is not even necessary to address that either, because, from an economic perspective, a vaccine passport would be a big mistake. If a vaccine passport is intended to reopen the economy, it cannot even meet its intended purpose. It will only delay the world economy’s full recovery, preventing us from fully returning to normal.

If a full economic recovery is desired societies would end all restrictions and open up completely—and they would do it now. (Again, this column is not addressing the varying arguments for and against lockdowns and restrictions and the unprecedented attempt to use them to halt the spread of a virus). Many people are scared and will continue to be scared, but most people will return to relatively normal behavior eventually after restrictions are lifted.

They will return to their old lives, because they need to. Some people are eager t to return to their old behavior, and will do so as soon as the government stops telling them what they can and cannot do. Others need to return to make a living. Look at all the people in retail who have never stopped working even at the height of the panic, and you see that most people will do what their bosses demand. Others will overcome the fear of interacting normally in the world for the sake of their own sanity and the sanity of their family members. Others will be pushed out of the complacency of staying home when they see their friends and neighbors going about their lives as before. Peer pressure is a powerful force. Yes, some businesses will be slow to open fully immediately for fear of a backlash from customers, but they too will be compelled to resume normal activities as soon as they see competitors return. Businesses will not sacrifice profits unnecessarily.

A vaccine passport, or any other health identification, would act as an additional barrier between people and commerce. In New York, Governor Cuomo proposed what is essentially a vaccine passport for sporting and entertainment events. Putting the legality of this idea aside, if implemented it will actually prevent people from returning to normal economic life, extend the time it takes to return to normal and possibly prevent normal life from ever resuming. It would prevent some people from buying tickets to a Knicks or Yankees game. It would be an extra burden on those who want to see a Broadway show. It would make extra costs for the Buffalo Sabres to screen fans. This makes economic activity more inefficient.

As struggling businesses try to recover—and entertainment and travel are struggling the most—they do not need even a small segment of their potential market eliminated. A vaccine passport will do just that. Moreover, the need to show proof of vaccination—even if you have had the shot—may be just enough to discourage you from finally going back to that sporting event or going on that trip. And why should the play or the sporting event or the airline or the resort pay for this health screening when they have already suffered so much over the last year?

Finally, a vaccine passport perpetuates consumers fears and makes them all the less likely to get out and spend money. In many ways, a vaccine passport will be like a mask, a reminder all the time that you are not supposed to return to normal. If so, economic life can’t return to normal either.

Vaccine passports will stifle international travel the same way onerous visa requirements stifle travel. Until late 2019, Saudi Arabia required a sponsored visa for most foreigners. Visitors needed a letter of sponsorship, which meant that tourism and casual business exploration were mostly unavailable. That hurt the Saudi economy and pushed business and tourism to nearby Dubai, which did not have such onerous visa requirements. Now, to help grow the Saudi economy, the king eventually changed this policy.

Similarly, if the European Union requires a vaccine passport, it will find a portion of the world population that just doesn’t go, or doesn’t have a vaccine sufficient for the EU. Some people—current trends indicate that 40% of frontline workers offered the vaccine have refused it and polls indicate 25% of Americans say they will refuse the vaccine—will refuse the vaccine. Others will refuse to show they have gotten it. For many, the vaccine passport will just be a hassle. Years ago, a friend of mine planned a vacation to India with his son, but he did not know a visa was required. When he arrived at the U.S. airport, he was turned away by the airline. It ruined his vacation. We all know we need passports, but will everyone realize he or she needs an updated vaccine passport with the most updated booster shots as well?

If a vaccine passport is implemented for basic goods and services, like at restaurants and stores, we will see the creation of black markets. There will be illicit commerce for those who do not have a passport. It will also lead to an illicit market for fake passports. Such a vaccine passport would also create second-class citizens, and divided societies are not prosperous. Black markets are inefficient, and adding inefficiencies to the economy will make a return to the pre-pandemic economy impossible.

If government wants to open the economy, all they have to do is remove all restrictions and let society heal itself. A vaccine passport is no exit at all.

Ellen R. Wald, Ph.D. is a widely cited analyst of the global energy industry. She is the president of Transversal Consulting which provides guidance on energy and geopolitics. Dr. Wald is the author of Saudi, Inc., detailing the history and relevance of the Saudi oil industry and Aramco.

A non-resident senior fellow at the Atlantic Council’s Global Energy Center, Dr. Wald earned a Ph.D. in energy history from Boston University and a Bachelor’s degree with honors from Princeton University. Her past academic appointments include positions at Boston University, the University of Cambridge, The American Heritage Center at the University of Wyoming and the University of Georgia.

She frequently provides analysis for print, television and radio news. Her weekly roundup of timely energy market expectations can be found on Thursday mornings at Investing.com and you can follow her on twitter @EnergzdEconomy