By: Mark Glennon*
Poverty kills. Recessions kill. Depressions kill tens of millions.
You’d hope everybody knows that, but public opinion polls indicate they don’t. Many politicians bank on that ignorance, and it was particularly baffling that the Trump Administration, which surely knows better, would publish guidelines that effectively dismiss the reality.
The White House and the Centers for Disease Control and Prevention last week released those guidelines for getting American back to work in stages, subject to states meeting defined gating criteria.
Regardless of whether one thinks those gating criteria are too strict or too loose, a fatal flaw should be obvious: They are static.
That is, they require that the same preconditions be met for reopening irrespective of whether they are applied today, a month or a year from now.
That’s simply irrational. With each day the economy sinks deeper into an extraordinarily dangerous and unprecedented abyss, perhaps even a depression. Decisions about when and how to open up must balance that against the direct health threat of COVID-19, and that balance changes every hour.
Much of the of the public is likewise irrational and apparently sees no need for balance – especially in left-of-center states like Illinois. An April Rasmussen poll found that fully 50% of voters who identify themselves as liberal say the lockdowns can continue “as long as government officials say is necessary,” as well as another 35% of moderates:
That’s madness. We will starve in cold and darkness long before we die from this coronavirus if shutdowns continued indefinitely.
Governor JB Pritzker’s preconditions for reopening seem to accept the potential for indefinite shutdowns because a treatment — a drug therapeutic — is one of his preconditions; it’s one of his “3 Ts” along with tracing and testing. But we have no idea when an effective treatment will be available. However, he has indicated he is open to modifying stay-at-home rules.
What many don’t seem to understand is that aside from destroying quality of life, a bad economy kills people. It’s not just near term deaths from suicide, substance abuse, domestic abuse and the like, which are nicely estimated here. Crippled economies, in the long run, also have less to invest in healthcare, highway safety, research, public safety and the like that save inestimable numbers of lives.
Depressions can cause civil unrest, riots and even war. The Great Depression spawned fascism, leading to World War II. Eighty million dead.
Nor do many voters seem to understand that the economy will not function at all if so much of it is closed. The economy is like an ecosystem in which killing parts kills the whole. It’s a complex machine that, when large chunks get lopped off, can collapse into a pile of rubble.
Make no mistake that the economic risks of the current shutdown are nothing short of terrifying. Among what experts are saying:
• The Federal Reserve Bank of St. Louis found that about 40% of the American workforce is in jobs “that are at high risk of layoff.” Under a worst-case scenario, that would result in 47 million unemployed and a staggering 32.1% unemployment rate – higher than the Great Depression.
• “This is more like 1929 and the 1930s, which hit the whole world,” said Kenneth S. Rogoff, a professor of economics at Harvard University.
• “Never in the history of the IMF have we witnessed the world economy come to a standstill,” said the managing director of the International Monetary Fund.
• Coronavirus has delivered “unprecedented shocks to economies and labor markets. … It is the worst global crisis since the Second World War,” the International Labor Organization said.
• U.S. government spending in response is now comparable to what was spent on World War II, according to the Wall Street Journal.
And never in history have central banks unleashed anything comparable to the flood of fiat currency now being created. No expert truly knows how that will work out.
None of this is to say how and when we should open up again. Social distancing will continue, as it should, regardless of what the government does. Personally, I honor the social distancing guidelines. Those of you in high risk groups should be particularly careful to comply.
It’s just that we need to set policy rationally, with balance. We need to listen more closely when Dr. Anthony Fauci, Director of the National Institutes of Health, repeatedly cautions that his advice is limited to medical aspects of the crisis, and that he does not attempt to balance those against economic concerns.
We do not face a binary choice between “lives and livelihood,” as many have put it, including Illinois Governor JB Pritzker. And if one recognizes that the choice is not binary, but instead a matter of balancing, it should be obvious that economic consequences of remaining shut down grow every hour.
*Mark Glennon is founder of Wirepoints.