Well, apparently, neither is what we have done. But at least in the scenario mentioned above, we don't find ourselves slipping into totalitarianism.
Perhaps there is no way, in a liberal society, to have a silver bullet? It turns out principles matter in such situations.
What they are proposing is how our nation is supposed to work. Everybody is responsible for assessing the risks for their self. If everybody does this then it is an effective way to handle an outbreak.