We Can’t Keep the Economy Closed Forever

June 11, 2020 5:15 pm

By Henry Olsen

Cases and hospitalizations for the novel coronavirus are on the rise in many states, leading some to question whether the nation is reopening too quickly or haphazardly. They’re wrong.

The novel coronavirus created a global panic in February and March for three simple reasons: It was spreading rapidly, we knew little about it and there was no vaccine or known effective pharmaceutical treatment. Had governments around the world not acted, millions more people in the United States would have contracted the disease. An unknown number of Americans – surely in the hundreds of thousands, and perhaps as many as a million – would have died. Preventing that horrific toll and the social damage it would have caused was well worth the economic cost the lockdowns caused.

We now know much more about covid-19 and its frightening cost to people’s livelihoods. The coronavirus appears to be less fatal than originally thought, with the risk of death highly correlated with factors of age and prior health. The cost was also much higher than many had thought. Although the true number of unemployed people is a matter of debate, the data show that as many as 27.5 percent of Americans lost their job or had their hours scaled back as a result of the shutdowns. That’s more than 30 million Americans, at a minimum, who were hit hard economically.

We simply cannot sustain that level of economic catastrophe much longer. The massive, multitrillion-dollar aid packages that Congress passed enabled most families to avoid economic ruin. Government data show that personal income actually rose by 10.5 percent last month, mainly because the combination of the up to $1,200 per adult stimulus checks and enhanced unemployment eligibility and support levels more than made up for lost wages. But that was financed by a record amount of borrowed money. The federal government cannot continue to borrow or simply print money out of thin air indefinitely.

Nor can people recover their economic well-being without a significant relaxing of the lockdowns and social distancing rules. Our modern service economy generates employment only when people can share experiences with one another – traveling, dining out, enjoying concerts or shows, getting a pedicure or a massage. But all require close contact with others to make the experience enjoyable and profitable. Lockdowns, tight capacity controls and six-foot social distancing measures make many of these activities impossible, and thus throw those who provide them out of work.

This month’s labor market report makes this crystal clear. While all sectors of the economy were affected by the shutdowns, those that inherently involve close personal interactions were devastated. These data show that the country lost about 18 million jobs between March and May. More than 6 million of these were in leisure and hospitality, a nearly 40 percent decline in employment for the sector. Almost 2 million more were lost in retail trade, with furniture, electronics, clothing and sporting-goods stores losing a third or more of their employees. More than 40 percent of our total jobs losses were from just these two sectors where personal interaction is unavoidable.

Other similar sectors were also hit hard. More than 2 million jobs were lost in education and health services, as doctors’ offices and day-care centers closed. Roughly 1 million jobs were sacrificed in state and local governments’ education sectors as schools and universities closed. One million or more jobs were lost in other sectors where people meet people in close quarters such as air and local transit transportation and personal and laundry services. All told, a minimum of two-thirds of America’s lost jobs are in industries whose business is to have people interact with people.

These purely economic figures also do not account for the lockdowns’ mental health effects. Research has found a dramatic increase in symptoms of depression and anxiety since the lockdowns started. Human happiness is the measure of the quality of life, so much so that its pursuit was enshrined in our Declaration of Independence as one of humanity’s three basic natural rights. Now that hangs in the balance.

These facts mean rises in the coronavirus infection and hospitalization rates have to be put into context. We must minimize the potential loss of life, but public health measures must also be weighed against the cost of millions of ruined lives. Keeping the economy closed and the lockdowns tight would be fatal to America itself. To do this would be the public health equivalent of the famous quote from a dispatch during the Vietnam War: “It was necessary to destroy the village in order to save it.”

{Matzav.com}