Posted on 03/30/2020 8:46:05 AM PDT by Kaslin
It is vitally important, literally life and death, that the proper costs and benefits are weighed with the decision on how much and how long to shut down economic activity through the pandemic.
As the coronavirus pandemic continues across the world, leaders and policymakers have scrambled to respond to the growing health crisis. In the United States, multiple state governors have issued statements urging their citizens to follow social distancing guidelines.
Other governors have taken more extreme measures, issuing orders to effectively lock down entire state economies. The current goal of these responses has been to slow the spread of the virus in the hope of reducing the strain on the health-care system. Discussion over the proper precautions is a necessity in such a time.
There have been forecasted estimates of virus-related death totals for the United States from as high as 10 million, to 2.2 million, to more conservative estimates of 5,000. The models used to estimate the potential death rates are not without criticism and repeated adjustment. Sampling bias may be a significant problem. These data errors are an important problem to resolve as policymakers use these models to inform their responses.
The difference between social distancing and complete economic shutdowns is too dramatic not to be taken seriously. It is imperative that more testing be conducted to provide better access to data, as well as the health benefits that come with knowing who does and does not have the virus. However, as important as it is to get the cost of not shutting down right, it is also important that policymakers properly weigh the cost of the economic shutdowns themselves.
Getting the cost right is not simply a matter of valuing “profits over people,” as the social media memes may suggest. Rather, even in times of crisis, the ability to operate in a functioning economy is important for the people within it.
The economy is the people, and the people are the economy. The ability to continue to function in a market system does matter to individuals within the system, particularly when the ability of business to remain open and continue to employ them is in question.
We have already started to see some of these human effects as the unemployment has quickly rocketed beyond even the early initial projections. A rise in unemployment is correlated with a number of negative socio-economic effects. For some, these effects can be quite deadly, particularly when the changes are rapid, as is currently the case.
The economic predictions for the shutdowns may be as varied as those for the virus itself. The Federal Reserve’s James Bullard has noted that unemployment may rise to as much as 30%. Treasury Secretary Steven Mnuchin has estimated a possible unemployment rate of 20%.
Bullard’s number is higher than the unemployment seen in the United States during the Great Depression (25%), and both estimates are significantly higher than the unemployment during the Great Recession (11%). Even if we take the more conservative estimate of 20% unemployment, that is a 16.5% rise in unemployment from its recent historic lows of 3.5% unemployment.
Although it is difficult to estimate how long this downturn may linger, that is a severe shock to the economic system. It is possible that people return to work and economic activity returns in strength in short order after the shutdowns are lifted.
Even then, the costs of shutting down will have been quite large. However, it is also possible that some businesses who had to pause activity for a month or more may not be able to return at all. The recession could be longer than some economists are projecting. If the economy does linger in its downturn, the human costs to the shutdown will inevitably begin to increase.
A 2017 National Bureau of Economic Research paper finds a 3.6% increase in the opioid death rate per 100,000 people for a 1% rise in unemployment. There were 14.6 opioid death rates per 100,000 in the United States in 2018. If we use the more conservative estimate of a 20% unemployment rate without a quick return to lower levels, then there would be an estimated 59.4% rise in deaths per 100,000, leading to an increase of 8.7 deaths for a total of 23.3 for opioids.
With a current U.S. population of 331 million, there are 3,310 groups of 100,000, meaning there is potential for an additional 28,797 deaths from opioids annually. Consider that for 2018, the Centers for Disease Control reports that there were 67,367 deaths from all-drug deaths, with 46,802 of those coming from opioid use. The 46,802 deaths were considered an opioid crisis. A possible 75,599 should not be dismissed quickly.
The negative effects will not be felt just through opioid use either. The numerical increase in deaths provided above is only for opioid users, but the all-drug death number will rise as well. In a 2018 study, Bruguera, et al, found that of the 180 drug users they surveyed about use during the Great Recession, 58.3% reported an increase in use while only 25.6% reported decreasing use, resulting in greater all-drug use for the period.
Similarly, Mulia, et al, (2014) connects a rise in alcoholism to economic loss during the Great Recession. The CDC estimates that 2,200 people die in the United States just from alcohol poisoning annually, not to mention the additional alcohol-related deaths that occur. In 2017 alone, there were also 22,246 deaths resulting from alcoholic liver disease. As the jobless rate increases and the economic losses continue to mount, these numbers are likely to rise.
The deaths related to economic downturns go beyond those from chemical dependency, also. The mental toll is not inconsequential. For example, Blakely, et al, (2003) find that being unemployed may also increase the risk of suicide two to threefold. Milner, et al. (2014) similarly finds that unemployment is associated with a higher relative risk of suicide, with prior mental health issues being a key factor in that association. While a study by Kerr, et al, (2018) did not find that unemployment is directly linked to suicides, it did find a significant link between poverty, suicide, and alcoholism.
When breaking the population into age groups, Lin and Chen (2018) do find that unemployment does have a direct impact on older portions of the population, the portion of the population many of the current shutdowns are most meant to protect. Whether it is the direct unemployment effect or the potential poverty produced from the economic shutdown that leads to greater suicides, an increase from the 48,344 suicides and 1,400,000 suicide attempts in the United States in 2018 should give decision-makers pause during their response to this pandemic.
Increased harm to oneself is not the only harm caused by economic downturns. There is also the threat of rising crime in general. Ajimotokin, et al, (2015) estimate that a 1 percent change in unemployment will increase the property crime rate by 71.1 per 100,000 people and the violent crime rate by 31.9 per 100,000 people.
With our estimated 16.5% rise in unemployment, we could see a significant increase in both property and violent crimes. The violent crime also may add to the death toll in this period. Kposowa and Johnson (2016) find that unemployed workers are more than 50% more likely to become homicide victims than those who are employed. They also find people not in the labor force are 1.3 times more likely to be victims than those who are employed. As workers become discouraged due to an inability to find jobs during a recession, their lives as well as their livelihoods are called into question.
The future during such a pandemic is largely uncertain, and misinformation is rampant in the current panic. Policymakers face tough decisions as they navigate the issues of data collection, virus transmission, and economic ramifications of doing too little or too much. It is vitally important, literally life and death, that the proper costs and benefits are weighed with the decision on how much and how long to shut down economic activity through the pandemic.
This article originally appeared from the American Institutes for Economic Research and is reprinted with permission, with slight alterations to implement AP style plus an editor-chosen title and subheds, as is the industry norm.
Sad ain’t it?! I’d rather die going back to work and trust God not what the mediaVOMITS hair on fire say!! I’ll say it again the mediapukes are enjoying every bit of their hair on fire pandemic re amok..just this morning a reporter for our local news outlet was reporting of a “MIGHT” food shortage..do you know what that does to our mental psych?! PANIC!! Will this botch be held accountable by the station..absolutely NOT!! This is a media virus and the president has been HAD!! President NEEDS to go tour hospitals where the china virus folk are..he can wear a PPE or a hazmat suit!! HE NEEDS TO GET HIS BUTT OUT THERE AND SEE FOR HIMSELF!! FAKENEWS CBS reporter use an Italian hospital clip reporting that the hospitals in New York were being overwhelmed with China virus patients! What does that tell you? I’m sorry but if Trump doesn’t get on gear and get people back to work like the middle of this week it’s going to be very difficult for him come 2020! I am telling you people are furious about the April 20 deadline! So what happens after April 20? extend it to May 20? And so on and so on!! China the globalist and the swamp are at this moment celebrating the demise of our economy and president!
We ain’t seen nothing yet like what will happen if the stock market and corporate financial systems totally collapse. We don’t have much in the way of family farming anymore. It’s all big corporate business now. Farming, processing, packaging, transportation, distribution, retailing, etc, is all conducted and carried out by big corporations that require big corporate finance.
Being out of toilet paper is bad, but what happens when there is no food on the shelves in your local supermarket?
Set our people free to work and produce!
There are multiple ways that the intentional destruction of the economy will cause many more deaths from the virus. An increase in suicide, domestic violence, homelessness, and eventually malnutrition and a lack of prescription drug coverage for people who are permanently laid off. For ever action there is a reaction. I think President Trump understands the risks, but he has no support for his position within the gutless GOP. If he tries to reopen the economy without broad based support, McTurtle and the others will hang him out to dry. We just have to hope the virus will subside before the economy is permanently damaged.
What BS.
This is correct. The government does not have infinite resources. It takes money from those who earn it and gives it to those who don’t. When no one is working, there is no money, and you get inflation and poverty.
” April 20 deadline”
_________________________
From what I read April 30th MAY be just the start. He mentioned June 1st as well.
I like your posts !
yes, An increase of suicides due to each 1% increase in unemployment is estimated to be a low of 4,000 to 40,000. With a projected unemployment rate of 30% , the annual deaths from suicide may be as high as 120,000 to 1,200,000 and may exceed that of deaths from COVID-19.
President Trump yesterday also mentioned the potential for death from stress and anxiety, very true for those with other conditions, especially the heart, blood pressure, stroke, etc.
Depression —> suicide
Desperation —> self-medication, drugs, alcohol
Stress/Anxiety —> heart, stroke
Some of us have been saying for awhile now that the economic calamity from a locked down economy will dwarf the damage this virus could cause on it’s best day. It could literally take 10+ years to recover from this economically, assuming socialism isn’t fully implemented in the interim.
You see, here is how it works.
Dr. Fauci the All Knowing relies on projections based on assumptions and models and they are sacrosanct. They are to be believed and cast in gold.
Predictions of the collateral damage based on assumptions, etc? Not so much. That is mere speculation and conjecture and alarmism and being dramatic.
Funny how that works.
All true. What’s more, people have to grow our food, create our electricity, provide clean water, law enforcement. There’s a whole bunch of folks that we cannot allow to “just stay at home”. We have an “essential core” that at minimum has to function. IMHO what will happen is when the trend is clearly downward, other “less essential” services will be added back in. With a whole lot of monitoring. Restraints and bars may have to have “regulators” for a while that supervise appropriate precautions. (No spitting on police burgers.) just mu guesses.
Similar situation here, eye specialist closed up and left town due to the virus, leaving me delayed for months getting insurance issues cleared up.
In California the democrats have closed the outdoors.
They closed the beach...and parks...!
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