By: Mark Glennon*
We got a nice email from a professor at the University of Chicago’s Booth School of Business complimenting us on a recent article and pointing us to a paper he has in draft that makes the same point but with academic rigor. The email is from Prof. Joseph Pagliari and it was about our article, “Huge Flaw in Federal Guidelines Feeds Wrongheaded Thinking on ‘Opening Up’”
This is particularly timely because Greg Hinz at Crain’s just published a new article illustrating beautifully what so many don’t understand about this crisis and about economics in general. Hinz says we just want to “throw grandma under the bus” and let survival of the fittest rule. A teaching moment is at hand.
Our article that Pagliari liked had two points. First, poverty, recessions and depressions kill, too, and those deaths must be weighed against the deaths directly from the virus, along with all the other costs. Second, the balancing has to change each day as we plunge deeper into an exceptionally severe economic hole that will be difficult to dig out of. The “gating factors” for opening up, in other words, should not be fixed and static.
Prof. Pagliari put that in the chart below. Now, don’t panic if you don’t like charts and economics. The concept here is actually very simple.
The red line is the all-in direct cost of the virus, including lost lives. Moving further to the right means keeping stay-at-home rules in place longer, which brings that cost down. The longer we keep the rules in place the more lives we save. So far so good.
The green lines, however, show the all-in indirect costs of keeping stay-at-home rules in place. That’s not just the trillions of dollars government is paying out but the other lives lost over the long run due to a crippled economy. Those costs soar as the rules stay in place longer.
That description is my simplified version. Read Pagliari’s whole paper to do full justice to his work.
The point, however, should be clear: We are dealing with two killer curves, not one. Reasonable people may differ on what to do with stay-at-home rules, but we at least have to think about this rationally and balance the deaths, costs and risks on both sides, and the calculation changes every day. At Wirepoints we happen to think the rules should be redirected to laser focus on protecting the high risk groups where the vast majority of deaths are occurring.
Note that the red line, which includes deaths directly from the virus, eventually flattens out. But the green lines, which include deaths and other costs of a wrecked economy, just goes up and up as more time passes.
We will be writing more about Hinz’s mischaracterization of us. We sure as heck don’t believe in some sick version of social Darwinism Hinz used as a straw man. To the contrary, it’s those with Hinz’s view of the world who are throwing an unknown number of victims under the bus.
*Mark Glennon is founder of Wirepoints.