One of the primary reasons I started writing about coronavirus and the mitigation measures being implemented is because of what I see as the complete imbalance in the weighing of the harms caused by coronavirus disease and the harms caused by the unprecedented shutdown of the economy. This is compounded by the fact that in supposedly the world’s premiere democracy, those decisions are being made by one person in each state, with no involvement by the far more representative legislatures.
And just so there can be no doubt in people’s minds about the scale of the economic devastation and harm we are masochistically imposing upon ourselves, let me give you a few links and examples. Here are some charts showing the dramatic decline of small business. (Small business effects) Just some highlights, or rather, lowlights. For the week ending March 27, weekly revenue was down 57% for restaurants and 47% for bars from the same time last year. That is money these businesses have to have to pay employees, pay rent and utilities, buy supplies and so on. Hotels have experienced an 83% revenue drop. And movie theaters took the prize with a 91% revenue decline. All of those businesses together employ over ten million Americans. Grocery stores are an obvious exception to the revenue declines and gun stores are doing fine. Think people are a little anxious about the possibility of social chaos if this continues.
When the federal guidelines were extended to the end of April, a number of larger businesses announced major layoffs this week, as even they can’t endure such a mammoth revenue decline. Economists are anticipating even more unemployment benefit claim filings this week than last. (Large employer layoffs) Shutting down large segments of the economy meant big revenue drops for almost every company, and those revenue drops mean even more layoffs. Businesses are fearful, so they stop spending on workers and expansion and new equipment. Consumers who lose jobs obviously aren’t spending much. Those who still have them will not spend on anything other than necessities. It is complete disaster, spiraling downhill faster and faster. And predictions of a quick upturn when restrictions are lifted are fanciful, see this New York Times article. (NYT article) We are doing so much damage so fast that the road to recovery will take a long time, if it ever occurs. Imagine running off a cliff, you manage to live but break many bones, damage organs and are unconscious for a long time. Are you just going to bounce back up to the top of the cliff?
And the non-economic harms that accompany job loss are even more heart-wrenching. Suicide, worsening health and deaths, alcohol and drug abuse, domestic and child abuse, divorces, homeslessness–all are already trending dramatically upward. The state and federal governments will endure a double hit–their tax and other revenues are plummeting and the demands for help are soaring.
This week is when economic problems that seemed bad turn catastrophic– job losses are accelerating. On April 1, millions of people didn’t pay their rent, didn’t pay their mortgages, didn’t pay credit bills, didn’t pay car loans, didn’t make other payments. All those payments are revenue or income for someone else, who then in turn can’t pay their bills. Banks won’t have funds from which to make loans as defaults deplete their balance sheets. It is no exaggeration to call this a complete catastrophe.
People who are so worried about loss of lives to the virus need to look at the other side of the scale. How many jobs gone is too many to delay, not prevent, just delay, the loss of those lives due to coronavirus–5 million? we are already there; 10 million? we are already there; 20 million? we will be there soon. Is it okay if half the population becomes unemployed to theoretically save a few lives. How many suicides are okay–500? 1000? 5000? 20,000? How many drug and alcohol deaths? How many cases of child abuse? How many cases of domestic abuse? Are those people’s lives worth so much less than the lives of those who might die from coronavirus illness? The extreme mitigation measures are not costless, they are phenomenally costly.
We need to reverse course now. Open the economy back up, while maintaining mitigation measures that have a low economic cost, like better hygiene, care in being in group settings, quarantines for the infected and above all, strict isolation and protection for the elderly and other vulnerable groups. We simply cannot sustain this level of pain.