As anyone who has ever spent more than five minutes considering it
knows, economics is an extremely complicated matter. It's been called the
dismal science. Maybe the most simple rule of the economy is that any
transaction that leaves both participants happy is a positive thing and
enriches the overall economy.
Some hold out that we should now open the economy fully to stanch
the financial bleeding. Yes, they say, some will die, but mostly the old and
ill anyway.
The loss to society of illness and premature death has been
studied and written about in great detail. I'll give you just a couple of
links, later, so you can ponder this question.
But, first -- even if all the deaths were those receiving social
security -- do you think those recipients stuff the money in their sofa
cushions? No. As a retiree, I can tell you that the money gets spent on
housing, utilities, food, clothing, transportation, medical care, and
recreation (to include gifts for children and grandchildren). Every dollar they
spend is good for the economy. All the vacation travel canceled due to
COVID-19? Much of it by seniors. Ask any airline executive what that's worth to
the economy.
But the elderly and sick won't be all of those taken. When a person
in mid-life (20 to 45) is taken, there are somewhere between 1/2 and 2 million
dollars of value lost, forever, to the economy. They won't fill a job. They
won't raise a family. They won't spend their earnings. They won't pay taxes.
They won't invent the next big thing. Imagine if the cancer that took Steve
Jobs life had done that when he was in his 20s, or if Alexander Fleming had died
young.
But, wait, there's more! Even if this illness killed nobody, even
if the illness didn't close a single business, there is a horrendous cost from
the illness. I've read that COVID-19 runs 8 to 16 days from onset to death or
recovery. What does that illness cost? My most recent 3-day hospital stay for
surgery cost nearly $150,000.00; so $50K a day. Maybe that's high. Maybe the
average is more like $20K a day--and that does not include the loss to the
economy from that person being off the job. Every dollar spent on health care
that could be prevented is a dollar that isn't spent in restaurants, stores,
bars, and entertainment venues.
In the 1918 flu epidemic, 20% of Americans were stricken. Let's be
conservative and work with only 1/4th of that as possibly needing hospital care
-- if only 5% of our populace of 300,000,000 is stricken by COVID-19, that's fifteen
million people. If their average hospital stay is half the sixteen days, 8 days
at $20K a day, that's 2.4x10^12 dollars--$2.4 TRILLION. Pure, direct cost to
the economy, not including the loss of their productivity. The total, true cost
is much higher and beyond the scope of this discussion to calculate. If 2% of
the fifteen million ill will die, that's 300,000 deaths -- news flash, we are
already over 100,000 world-wide -- how long till just the U.S. reaches that.
So if by closing and quarantining we can reduce the illness by
only half, that's a savings of at least $1.2 Trillion just from the avoidance
of the illness.
It has been said that those who will not learn from history are
doomed to repeat it. OK, look at history: Again, in 1918, the jurisdictions
that quarantined early, stayed long, and enforced it suffered MUCH, MUCH less
than the jurisdictions that did a poor job of quarantining. They had lower
mortality, lower morbidity, less overall impact to their economies and
recovered MUCH, MUCH faster and fully. Minneapolis tightened early and long:
388 deaths per 100,000 people. Pittsburgh didn't: 1,244 deaths per 100,000
people. And the financial recovery was strikingly different. Minneapolis
tightened early and long: Growth in employment in 1919 over double the rate
Pittsburgh saw in 1919.
Pittsburgh: 1,244 dead per 100,000. That same rate would mean 3,732,000
deaths in the U.S.; nearly 25,000 deaths in just the San Antonio, TX area.
25,000 fewer to work, spend and live in one city. About half of COVID-19 deaths
have been people younger than 65. What would the loss of 12,500 full-time
employed do, long-term, to the economy of San Antonio? And the human cost – are
we ready to allow this kind of carnage without doing all within our power to
fight it? I believe we have a moral imperative to do all we can to prevent
illness and death. This is our real-life ethical dilemma of the trolley problem
(see: https://en.wikipedia.org/wiki/Trolley_problem)
The illness, the cost of care, the deaths, the lost productivity
has the potential to impact the economy in a much more negative fashion than
the quarantine. And for much longer -- literally, forever.
There is something called the parable of the broken window,
introduced by Bastiat in 1850, that considers the impact of negative events on
the economy. A broken window in a storefront, good or bad? Good for the
glazier, bad for the storekeeper. No, in the long run, it is bad for everyone
because it causes resources to be expended just to maintain the status quo --
there is no advancement when the window is repaired -- things are simply returned
to their earlier status.
For further reading:
