The Economic Consequences of Opening the Economy Too Soon

[Emily Lake]

And the second WoT:

2) Trade off between full lock-down and reopening the economy.

This is a prickly question. There's not really a right answer here. We're not going to have a vaccine for COVID-19 for several months, and likely we wouldn't be able to get it administered to the whole US population for about 18 months. That's not even considering the rest of the global population. This is going to last for a long time.

If we keep the economy closed for that long, the economic impact is monumental. Think famine and pestilence end of days monumental. This isn't even a matter of economic systems - this is a matter of highly interconnected and interdependent supply chains for a large part of the planet, many of which run on "just in time" processes. As smaller businesses fold, that has ramifications to all other parts of the global economy. We can't just stop, not for that long.

Keeping essential businesses open is just that - essential. But that also continues to put essential workers at risk of infection and of transmission to other people. We're not going to see "zero new cases" for a long time, regardless of what claims China makes. This is a highly contagious virus, with an illness that lasts for multiple weeks and has a 20% chance of hospitalization. We're going to continue to see essential businesses affected by COVID outbreaks. We're going to continue to see food processing plants shut down when their employees get infected.

Additionally, there are tolls to quarantine beyond merely the financial aspect. There's food insecurity, loss of homes, eviction, depression, anxiety etc. We're already seeing the rate of prescriptions of anti-anxiety and anti-depression medicines increasing. And we're already seeing an increase in people filing for unemployment, and we're seeing people losing medical insurance through their employers. Poverty is highly correlated with many illnesses including obesity, diabetes, heart disease, depression, suicide, and alcohol and drug abuse. I can only imagine that isolation plus poverty will be even worse.

Of course, the government could step in and find a way to support all those people. At present, however, the US government simply does not have the resources to do so. They can increase the deficit, borrow against the future, or print more money, but each of those is also likely to increase inflation. And if it increases too much, then we're at widespread poverty, food insecurity, and anxiety for everyone.

Either option has risks. Neither option is attractive. No matter which way you cut it, lots of people are going to suffer because of this pandemic. Trying to "return to normal" is going to cause a spike in COVID cases, many more deaths (including secondary deaths due to a lack of access to non-COVID necessary care), and massive economic strains on our health care system and everything related to it... and all of the collateral fallout from that. Keeping it on lockdown is going to cause poverty, illness, and a host of other causes of death.

The question really boils down to which (or what combination) you think is the lesser evil. There is no good option.

 

[Emily Lake]

For testing to work it has to be really really massive. Like everyone gets a test every 3 days or whatever the average time between infection and being contagious. And it has to be fairly instant and accurate.
Only then we can get a real picture. In reality we have imbeciles as governors of Georgia who thinks temperature measurement is a way to go and open the the essential industry of nail salon polishing.

Estimates range from 7 to 14 days of presymptomatic shedding of active viruses.

 

[Emily Lake]

The real reason behind the stay at home orders has been to flatten the curve, to prevent the hospitals from running out of supplies, ventilators, and beds. However, it's not going to stop the disease. I hate to say it, but we are all going to get it. Even when we come up with a vaccine, you won't be 100% protected. This nasty bug is really a souped up flu. It changes and evolves. The best thing that you can do is to boost up your immune system: exercise, sleep well, eat well, veggies, fruit, protein, exercise, don't stress, don't smoke, don't drink to extreme, and exercise! Overweight people are being ravaged by covid.

Nitpicky, I know, but this is NOT a "souped up flu". Flu is specifically influenza virus, which has a host of very different effects. This is a coronavirus. Coronaviruses don't mutate and evolve at nearly the same pace that influenza does... but it's also more robust and lasts longer outside the human body. And so far as I'm aware (which may not be complete as I'm not an immunologist), exposure to influenza provides lasting immunity to that strain and several similar strains for the majority of influenza strains. On the other hand, there are several coronavirus strains for which exposure confers only very short-term immunity. Most coronavirus illnesses are very mild - a large portion of "chest colds*" are coronavirus. This one is not mild, and we don't yet know whether exposure confers immunity or not, although I understand that early indications are promising.


*A large portion of "head colds" are rhinovirus, the other major virus species in the collective of common colds. There are some others as well, but these two make up the large bulk of cold viruses.

 

[Politesse]

No one on the left is arguing that people should be allowed to starve to death on account of lack of income. This kind of situation is exactly why the government ought to exist, and taxes levied. Preserving lives in the face of a natural disaster is just as noble and necessary a use of our communal power and resources as fighting some stupid-ass war would be, or building giant walls or whatever the fuck you people prefer to drop trillions on. If you think it should be down to just individuals (not government) to support each other, I think you are misguided and naive but think you should put your money where your mouth is and send the man in the photo some dosh rather than arguing for policies that are just as apt to result in his death. Consider sending him your Trump check in fact, since I assume you are valiantly refusing to accept it.

I'm not sure who you're talking to here.

I don't think anyone on the right is arguing that people should be allowed to starve to death either. They just don't have the same approach for how to solve it.

Yes, this is why the government exists, and yes, this should be a good case for using our communal resources. Unfortunately, our communal resources are currently insufficient to the need. Even with massive government intervention, we're looking at some pretty significant economic disruption. I don't think that disruption is limited to the US, I'm relatively certain it's going to be world-wide.

Yes, but lifting all the shelter-in-place orders isn't going to help anything either. If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years? Our system is incredibly inefficient, but can be made more efficient with a bit of forethought. What the political Right is suggesting is not a real solution, it's just adding mass death to the already inevitable problem of the resulting economic downturn, heightening the problem without providing any real counter-measures.

 

[Politesse]

Where did this idiotic notion that the coronavirus is like an influenza virus even originate? They are nothing alike, aside from both being viruses (which is like saying that humans are just like sea sponges since we are both animals). They don't have the same life cycle, they don't attack the same systems, they don't share presentation, treatment, or long term impact.

Is it just because the media talked about "flu-like symptoms" back in the early days before its symptoms were well-understood yet, and people have just been running away with the metaphor since then?

 

[blastula]

Admittedly, I made it little more than half way through Stansberry’s opinion piece so if there was something beyond the, “free markets right, government wrong” argument, I missed it.
Did he mention the reason for listening to the government’s shutdown orders is because the government is listening to the medical professionals? Beyond that, I’ll be damned if I take advice about my health from a man who’s life’s work has been the accumulation of wealth.

Off topic, but I quit reading after this part,

A court in Arkansas sent three teenage boys to prison in 1994 for murders they couldn’t have possibly committed, mostly because the jury firmly believed they were devil worshippers and thought they’d used black magic to pull off the crime

Despite the propaganda docs out there, the West Memphis 3 are guilty. Same with Making a Murderer and Serial.

 

[Derec]

No parks, no walking outside of your yard.

Whom is people walking outside in their respective yards endangering?

 

[Derec]

I disagree. The correct approach is a gradual reopening, particularly now as we move into the warmer weather. It may not be appropriate for large cities such as New York or places where the medical services are struggling but in a lot of places the lockdown has served its purpose, i.e. to prevent the medical services being overwhelmed. People will need to be mindful of social distance, basic hygiene and keep grandma at arms length.

Gradual opening, yes, but not yet. Things are way too hot now regarding new and active infections. Probably early June I would say is when we can start reopening.

 

[blastula]

Nitpicky, I know, but this is NOT a "souped up flu". Flu is specifically influenza virus, which has a host of very different effects. This is a coronavirus. Coronaviruses don't mutate and evolve at nearly the same pace that influenza does... but it's also more robust and lasts longer outside the human body.

Both are enveloped viruses and so neither lasts long outside the body.

 

[Derec]

It doesn't matter what I (or anyone) wants. The only question is what is necessary to avoid massive numbers of deaths.

What matters is what is doable. A long-term shutdown is not.

The real question is about the damage from COVID vs. damage from the shutdown, both economic and psychological. The longer a shutdown goes on, the bigger the former will get. People are already getting restless, after only about a month. Can you imagine things after 3 or 6 months of this?
Right now the damage from COVID still dominates. That's why governors like Kemp are wrong. But as new infections decrease, we will be able to gradually reopen.

What we want isn't in any way noticed or cared about by the virus.

Your mistake is to assume that the virus is the only reality that matters.

The pandemic started with a single case. Then it grew exponentially. So either you need to eliminate every single case; or lock down everything to stop it from spreading exponentially; Or accept vast numbers of deaths.

Define "vast numbers". The main objective should be to prevent the health system from getting overwhelmed like what happened in Italy.

It would be great if there was another option. But there's not. sometimes what we want just isn't possible.

Exactly. Keeping the economy shut down for 6 months or a year just isn't possible.

Open everything up in the "tail end of the bell curve", and you get a second wave. Unless you have changed the whole game by developing and distributing a vaccine, or a cure. Or unless you have a sufficiently excellent test to ensure that every single case is identified and quarantined.

I do not think we should open everything up immediately. Rather open gradually, test, observe and adjust.

Reality doesn't give a crap what you want.

Ditto.

 

[J842P]

Of course, the government could step in and find a way to support all those people. At present, however, the US government simply does not have the resources to do so. They can increase the deficit, borrow against the future, or print more money, but each of those is also likely to increase inflation. And if it increases too much, then we're at widespread poverty, food insecurity, and anxiety for everyone.

Do you have any evidence for the claim that the US Government does not have the resource to do this without drastically increasing inflation?

Like, an example of a similar situation where such inflation has occurred given similar circumstances.

Be specific.

 

[blastula]

For those who apparently can't comprehend any argument not expressed in the form of a cartoon:

View attachment 27220

Cartoonists that unnecessarily label everything are the real plague.

 

[Emily Lake]

If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years?

I don't think it can do that either.

Also, it's not just minimum wage here. For example, a close friend of mine just got laid off from her $55K/yr project manager job because the company she works for can't do business during the pandemic. Another friend of mine is using up his own savings trying to keep his plumbing business afloat and pay his employees, and that' going to run out this month. Then he'll be bankrupt and his business will fail and all of his employees will be laid off. None of them make minimum wage... but commercial plumbing installation isn't occurring right now.

 

[Emily Lake]

Where did this idiotic notion that the coronavirus is like an influenza virus even originate? They are nothing alike, aside from both being viruses (which is like saying that humans are just like sea sponges since we are both animals). They don't have the same life cycle, they don't attack the same systems, they don't share presentation, treatment, or long term impact.

Is it just because the media talked about "flu-like symptoms" back in the early days before its symptoms were well-understood yet, and people have just been running away with the metaphor since then?

That, plus the fact that a whole lot of people call almost any illness a flu. Lots of people refer to the common cold as a flu, even though it's got virtually nothing in common with actual influenza.

 

[Emily Lake]

Nitpicky, I know, but this is NOT a "souped up flu". Flu is specifically influenza virus, which has a host of very different effects. This is a coronavirus. Coronaviruses don't mutate and evolve at nearly the same pace that influenza does... but it's also more robust and lasts longer outside the human body.

Both are enveloped viruses and so neither lasts long outside the body.

Depends on how you define long I guess. Research is not conclusive at this point, but there's a fair bit of suggestion that COVID-19 has a surprisingly long "shelf life".

Also, my recollection is that most influenza survives like an hour outside the human body, whereas most coronaviruses last many hours outside the human body. My recollection may be wrong But I'm under the impression that coronas last like 6 times as long as influenzas. I mean, neither is weeks or months, but that's still a pretty big difference when you're talking about contact transmission.

 

[Emily Lake]

Of course, the government could step in and find a way to support all those people. At present, however, the US government simply does not have the resources to do so. They can increase the deficit, borrow against the future, or print more money, but each of those is also likely to increase inflation. And if it increases too much, then we're at widespread poverty, food insecurity, and anxiety for everyone.

Do you have any evidence for the claim that the US Government does not have the resource to do this without drastically increasing inflation?

Like, an example of a similar situation where such inflation has occurred given similar circumstances.

Be specific.

I think you're setting up an unattainable goal there. I don't believe there are similar circumstances to look at anywhere, so it's kind of moot.

They've already dumped a few trillion dollars into the economy and seen it evaporate in days. If we just keep adding debt to an already large pile of US debt, by handing out money that doesn't currently exist... my understanding is that inflation is a pretty normal effect. Maybe ask Laughing Dog for more details?

Of course, if you'd rather believe they have the financial resources necessary to do so easily at hand, go for it.

 

[repoman]

We are getting information through and perspectives about the economic (financial and real goods) effect of this from tech companies that are not as effected as other sectors of the economy. In fact they have never had as many eyeballs as now.

There is a difference between saying let's get back to work despite the death toll and and get back to work because this is a hoax.

The former should never be struck down by a social media firm but the latter probably should.

 

[southernhybrid]

Well, let me give my two cents since the rest of you have.

Of course, we can't keep the country closed down until a vaccine is developed. It would be amazing if one is developed in less than 18 months, as it usually take years to develop a vaccine for a new virus. We don't know yet exactly how this virus mutates. It could mutate itself out of existence or it could mutate so that every season a new vaccine is needed. Or it could be like polio or measles. The virus doesn't change much and one vaccine works for the disease. Polio vaccine was developed in the 1950s, and it's still works against polio.

If businesses are opened too soon, there will almost definitely be a large resurgence of the virus, which will cause a lot more economic problems than if we wait a few more weeks or another month or two. That's the opinion of medical experts who I trust far more than politicians.

If businesses are opened slowly but social distancing is maintained, like keeping diners at least 6 or more feet apart, while wait staff wears masks and gloves, we might get away with opening things fairly soon. But, it will be the consumer who really decides if it's time for the economy to open back up on a large scale. I will not be eating out or returning to my hair salon for months. I will continue to go to the grocery store at 7AM, when there are hardly any people there. I won't be inviting friends over for dinner for the foreseeable future. I know a lot of people who will be doing the same thing. If consumers believe it's too early to open things back up, then opening businesses won't do a thing to improve the economy. This virus has probably changed a lot of the things that we usually do. I have a feeling that people won't travel by air as much or go to the movies or concerts as often. Many if not most of us will have a bit of crowd phobia for a long time to come.

I strongly believe that regardless of when things open back up, there will be a serious economic pullback for some time to come. I think it's unrealistic to expect a V shaped recovery. We were already past due for another recession and this has triggered the start of it.

It's true that exercise, healthy eating, maintaining a healthy weight are all ways of helping maintain a healthy immune system. Cytokine storms aren't fully understood and from what I'e read, having a healthy immune system doesn't cause them. We don't know why some people's immune systems over react and begin to attack the body's own organs while also fighting the infection. If anyone has a good scientific link that explains who is most at risk for a cytokine storm, please share it. I find it a very interesting topic.

I don't believe that all of us will get the virus. Those who continue to take precautions are at low risk for becoming infected. While it's true that this virus can live on various surfaces for hours or days, there is so far, no good evidence that the virus is spread that way. It's good to take precautions but the only way that we know for sure how the virus is spread is by contact with other infected people. So, the safest thing we can do is to continue with the social distancing.

If you're a health care worker who cares for infected people, you are at the highest risk, because you are constantly exposed to a large viral load while at work. With proper PPE, the virus can be prevented, but there hasn't been enough effective PPE for all health care workers. If we open all businesses before we are past the peak, our health care system won't be able to handle it. That is true of all countries, not just the US.

But, the truth is that there is a lot more to be learned about this infection. There are certain risk factors for complications, including diabetes, hypertension, heart disease, being over 65, and it's now been noted that obesity is one of the biggest risk factors. Considering the rate of obesity, this is a serious concern. Plus most middle aged and older obese folks suffer from at least one underlying condition. I'm not fat shaming. Obesity is a serious disease that we don't completely understand. It can be influenced by genetics as well as the culture that has influenced people to over eat. So, I hope all of my friends who are very obese will take extra precautions when it comes to protecting themselves from this virus.

Stay safe, y'all. I try not to wish this on my worst enemy. I'd rather be poor and healthy than dead. I hope that instead of bailing out corporations, our government will be willing to spend more money on the people who need the most help, until we can safely go back to normal. Imo, we will never go back to what was once considered normal. Maybe that's not such a bad thing.

 

[bilby]

It doesn't matter what I (or anyone) wants. The only question is what is necessary to avoid massive numbers of deaths.

For consideration: deaths caused by what?

It seems as if you're focusing on the deaths directly caused by COVID-19, and not really giving much consideration to the potential deaths caused by secondary effects of an economic shutdown. I posted a couple of WoTs in a different thread, that probably belong here, so I'm going to copy them over.

There's no reason for an economic shutdown (that continues to allow food production, processing, and transportation, and other essential services) to kill anyone. It's perfectly possible to feed all the people, at the expense of the government, indefinitely. Even if they don't work.

Governments don't require taxes in order to spend money; Taxes are merely a way to prevent runaway inflation. As a depression is massively deflationary, taxes to offset the cost of keeping people alive despite their unemployment can be deferred until after the crisis.

The only reason for unemployment to cause death is callous disregard for their situation. So the USA may well be in deep trouble, but the developed world should be just fine.

 

[repoman]

So vaccine hope needs to be taken off the table as a reason to wait. Then reassess.

There are a few other reasons to wait and some reasons to not wait to get back to work.

But to have what may be vaporware as a reason to wait it would really suck.