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Many governors are refusing to lift their COVID-19 shelter-in-place decrees until long lists of conditions are met. They have phrased their recalcitrance in the language of science—not politics. But what about economics?
As California’s Gavin Newsom puts it: "Science, not politics must be the guide…. We can't get ahead of ourselves .... I don't want to make a political decision. That puts people's lives at risk."
As a matter of science, the governors are wrong! They assume they are making a tradeoff of a short-term reduction in employment for a long-term reduction in age-specific mortality. They are actually making a tradeoff of a short-term reduction in COVID-19 deaths for a long-term increase in age-specific mortality for working people and their families. That’s the bigger picture they’re not focusing on and it also has far reaching economic consequences if not considered.
Governor Newsome and Others Have Made This Error in Judgement
The governors have made this error in judgement because they are not taking into account basic facts about COVID-19 and about the mortality risks from mass layoffs and poverty. These are the economic aspects they’re not considering using cost-benefit analysis.
Let us start with the facts about COVID-19. First, it is highly contagious. Second, a very large percentage of those infected are asymptomatic. Third, precisely because it is highly contagious and many cases are asymptomatic, infection will continue to spread until a vaccine becomes available, everyone is tested, or herd immunity is reached.
Without a vaccine and the aforementioned reasons, government actions, such as lockdowns, contact tracing, mandatory social distancing, and the like, will not influence the total number of people who are ultimately infected; they only influence how many people have an active infection at a given point in time. All of these actions “flatten the curve,” but they do not affect the area under the curve.
The Undisputed Facts About the Mortality Effects of Unemployment and Poverty
Let us now add a few basic facts from research in economics about the mortality effects of unemployment and poverty. First, as the research of Daniel Sullivan and Till von Wachter in the Quarterly Journal of Economics shows, mass layoffs during recessions increase both the short-term and long-term age-specific mortality risks of laid-off workers.
For middle-aged male workers, mortality rates in the year after being laid off are 50 percent to 100 percent higher than they would have been otherwise. Second, a large body of research shows that the loss of employment in middle age produces a permanent, long-term reduction in income because of reduced employment prospects. That is, layoffs push families toward poverty. Third, the effect of poverty on age-specific mortality is brutal. In the United States, the poor die 10 to 15 years earlier than the wealthy.
The Mortality Risk From Unemployment and Poverty
What inferences, then, can be drawn from these facts? Governors who persist in state-wide lockdowns are making a huge mistake. They think that they are safeguarding workers and their children from COVID-19; they are actually exposing them to mortality risk from unemployment and poverty.
None of this is to say that governments should ignore the threat posed by COVID-19. It is a highly contagious disease that poses a very serious threat to mostly the elderly that comprise 79% of the deaths.
But there is a middle ground approach to COVID-19 that does not create the lose-lose outcome now on offer from some governors. That approach, currently being applied in Sweden, boils down to protecting the elderly and those with co-morbidities, while allowing everyone else to go back to work and school.
Alternate Programs and Statistics for Consideration
Sweden’s approach should be weighed against the short-sighted options that will be disastrous to state and local economies—with little or no effect on the long-term eradication of COVID-19. An update from the Mercury News and Foreign Affairs are on the links below:
A 4-28-20 report by two California physicians per the link below shows the death rate of 1,227 in California (back then, still significantly lower than previously estimated) at 0.003 percent of infected people, out of an infected population of 4.7 million, dying from COVID-19.
The reason the death rate is so much lower is there is a large segment of the population that has contacted COVID-19 and doesn’t know it because the symptoms are so mild or not noticeable they go un-noticed, un-reported or un-tested and in the past this group was not included in the survey results and of course should be for more meaningful statistics.
A new study from UC Berkeley finds that if the U.S. adopted Japan’s approach to the virus, new infections would drop by over 90 percent. Japan never implemented a nationwide lockdown as many restaurants and businesses remained open, yet they managed to keep its death rate from coronavirus at a mere two percent of that in the United States, adjusted for population. The reason: residents practice serious social distancing in public and always wear a mask, Newsmax World reports per the link below: