good long read
his result might be hard to grasp at a time when millions of Americans are currently filing for unemployment amid the coronavirus pandemic. How can it be that shutdown tactics like school closures and restrictions on business hours could actually benefit the economy?
The reason is that pandemic economics are different from ordinary economics. In ordinary times, business shutdowns and other restrictions are bad for the economy, as they limit economic activity. But it’s important to remember that in a pandemic, the disease itself is extremely disruptive to the economy. Households do not want to spend money or go to work if it involves a major health risk, and businesses do not want to invest because economic conditions are so uncertain. The alternative to these public-health restrictions is not a normal functioning economy, but rather a widespread, debilitating outbreak of disease that causes major economic disruption in the short and medium term. As a result, measures to fight the pandemic can actually benefit the economy in the medium term, as they target the root of what is ailing the economy—the pandemic itself.
https://www.politico.com/news/magazine/2020/04/02/coronavirus-economy-reopen-deaths-balance-analysis-159248#4
Since it's such a major health risk and people don't want to go to work, why are the government decrees necessary? Why did Kansas City have 200 businesses they had to deal with when they issued their shutdown order? I know lots of people that are currently out of work that would be back there in a second if the shutdowns ended tomorrow. There's not a great fear of a health risk in younger people.
Sure there is an economic cost to a pandemic. For this coronavirus, though, the cost of a shutdown is much greater than the cost of not shutting down. There's a big difference between a virus that generally equally affects people of all ages (including prime working-age people) and one that far and away disproportionately affects those 65 and older. In the case of the swine flu of 1918, it is quite plausible that shutting down the economy was better in the long run, given the number of people that were affected at all ages.
I really like how Will Wilkinson tries to tug at the heartstrings at the end of his section.
In the end, measures of economic performance alone—whether GDP or the Dow Jones—don’t always track the things we cherish most. My wife’s mother, and my children’s one living grandmother, is a respiratory therapist in Connecticut. We’re worried sick about her, because we all love her, and she desperately loves my children. Money is great, but it isn’t everything. It would be a cosmic tragedy if we were forced to trade love against prosperity. But we aren’t. Failing to protect the people we love won’t leave more money in our pockets. It will leave them even emptier, and with holes in our lives that we can never fill.
If it's such a cosmic tragedy, why is everyone so comfortable trading the lives of 30,000 - 60,000 people every year by not shutting the economy down during flu season? Surely we could save more lives if we shut everything down from October-April every year. Given that there is no value we can place on saving people, there's no question we'll start shutting everything down for 7 months a year. Doing so would leave our pockets so much fuller that we would never need to fill them.
