Why Staying Home Saves the Economy
Opening things up too soon is like jumping out of a plane and not pulling the parachute ripcord because you haven’t hit the ground yet.
Opening things up too soon is like jumping out of a plane and not pulling the parachute ripcord because you haven’t hit the ground yet.
“…I’m not on my timeline anymore, none of us are, we are on the virus’s timeline and it decides when we are done.” — Daniel J. Pico, currently recovering from Covid-19, April 14, 2020
The potential for large scale loss of life exists as long as our medical capabilities are or can be overwhelmed. Staying home slows the spread and lets our medical capabilities treat people in sequence instead of all at once. This is lowering the curve, this is a good idea.
“…in the build up to this I was reading how few cases there were in this area and voices minimizing the dangers. Do not believe any of this. I realized how wrong they were when I was only the 2nd person tested in the… area. This disease is out there, and you have no idea how wide spread it is, protect yourself with great distancing practices.” — Joe O’Connor, tested positive on March 23, wrote these words March 26 and passed away from Covid-19 on April 14, 2020
But what about the economics of it? Distancing saves lives, but does it save the economy? Yes. People won’t go out or make big (or even medium) purchases in the face of uncertainty. I know at least one person who was on the cusp of buying a high-end car, and has now delayed that indefinitely while we are without clarity on the current threat.
If economic gains interest you more than anything, then save the economy of 2021–2030 by not opening things up too soon in 2020. Striking the balance between slowing the spread, and slowing the economy is a nearly impossible task. But one certainty is clear: speedy short term solutions are the worst option. The more people who are lost, and the more people there are who know someone who is lost, the more grim everything looks. The more grim everything looks, the less people will invest or spend money. The less people invest and spend, the worse the economy gets. This is true for corporations and people alike.
If millions of unemployed seems bad, how bad would many tens upon tens of millions of unemployed be? If mass graves in New York seem bad, how bad will mass graves in every city in the country be? In every small town? Such uncertainties cannot make the stock market rise. They will make it fall. Rising death counts mean lowering valuations.
The dollar stays healthy as the people who make dollars through their work stay healthy. Your personal wealth increases with the health of the people who support it, make it and grow it. The wealth of nations is inexorably tied to the health of those nation’s people.
Rushing to short term re-openings can cripple the economy in ways that are unsolvable. Once industries are gone, it can take decades to build them from scratch. Death kills industries as well as people. The way forward, economically, is to slow the spread to limit the harm. By extension, this limits the hardship, fear and uncertainty that can and will collapse the country and world’s economy if we rush. Sacrificing older people for the financial gains of the second half of 2020 also sacrifices the financial gains beyond that; it is the surest way for everyone to suffer economically for 2021 and beyond. The hardship of months to a year can be expressly endured to prevent the greater hardship of years or decades. The medicine for the economy is to do what ever needs to be done during 2020 to save what can be done during the 2020s.
And during this time, perhaps we can build a more resilient economy, one more able to bear disruptions and compensate for turmoil. Maybe we can have more people able to have savings to weather troubles, be they pandemics or other causes. We can re-examine our supply chains: both their brittleness in the face of shifts in demand and their inflexibility to make resources more meaningfully usable in the space of days and weeks instead of weeks and months.
We should patch the holes in the social safety net through which tens of millions of people are now falling with no sign of the flow slowing. If you want to have viable workers, consumers and investors, then make mechanisms that catch everyone who may fall. This allows for economic growth in addition to lowering human suffering. We have done it before, 90 years ago, and we should do it again if we want to set the stage for prosperity in this century as those measures did in the last.
