Coronavirus Next Economic Steps
Our leaders are worried that patients could overwhelm the hospitals and ICUs. They recommended social distancing. As a result, schools, restaurants, sports, and large events have been shutdown.
Okay, a start on halting the spread has been initiated, but we must remember Hippocrates words, “First, do no harm.”
Our society and economic system won’t last with this type of draconian shutdown. The stock market has made that clear.
After two weeks, some relief to the restrictions need to be made. Let me list first which restrictions stay in force.
- If you’re allowed to work-at-home, you should continue that.
- If anyone in your household has coronavirus symptoms, everyone must stay at home. Keep 6 ft or more from sufferer as much as feasible.
- If you are at special risk and over 60, stay at home. Out of contact with others as much as possible. This removes the main source of COVID-19 patients that lead to overwhelming hospital and ICU beds.
- Everyone else needs to go back to work or school, although with new watchfulness against close contact, using a hyperflu-like vigilance.
After another two weeks, another assessment of actions may result in further modifications.
Economic Consequence
If we don’t modify the current restrictions, the entire economy will collapse. Did you hear today Ford is shutting down its auto production in North America? A 15% drop in GDP is being mentioned as possible. It’ll will be larger than that if other large productions are shutdown.
If social distancing continues, our GDP will be smaller even when normality returns. Restrictions in staff density will cause productivity to suffer. Every business will have an additional costs for avoiding future outbreaks and new pandemics.
Until we return to some semblance of regular economic and societal interactions, the US government bailouts are debt masquerading as demand. The only reason the Fed and the government actions have real value is that they are predicated on taxes raised from future production. When there is no real production, the true value of government expenditures evaporates.
Government Actions
The US government must perform may actions to get us through this crisis, yet getting most employees back on the job is an essential step for the rest of their actions to be effective.
Testing and contract tracing are essential to society’s peace of mind that it’s safe to return to work and retail shops.
The federal government has failed on its responsibility. Many states have picked that up, but with easy traveling across state lines, that is not sufficient. All states need a common approach. Which do we wish to be—fifty individual countries or one United States?
We need to get back to work while limiting the spread of virus to the most vulnerable both for their sake and society’s sake.
Image: Economics_Perfect_competition.png. Courtesy User:Bluemoose in English Wikipedia / CC BY-SA (https://creativecommons.org/licenses/by-sa/3.0)
