Will corona recession really kill more people than corona virus? Not unless we're stupid and cruel

The question: will corona recession kill more people than corona virus? The answer: not if we take some easy preventative economic medicine.

First, let’s do away with the abstractions of economics for a second. People don’t die when their bank balance hits zero. It’s not some sort of video game life counter. It’s not an economic downturn or unemployment per se that kills people. It’s starvation, exposure, sickness, and suicide that actually kill people. These “four horsemen” just happen to correlate with economic downturns.

The good news: all of these are thoroughly preventable causes of death, even in an economic downturn. Here’s the recommended course of treatment.

The Plan

Avoid Starvation.

To prevent starvation, you make sure two things happen: that we make enough food, and that we make sure we distribute it to people who need it. Even in the corona recession, this is not particularly difficult.

  • Food production. Firstly, we’ve been running food surpluses for decades now. In fact, so much so that the government has been holding up food prices by buying up massive “strategic reserves” of food. Reserved for what? Reserved for a situation like this. So we probably don’t even need to grow any more corn or wheat this year to avoid starvation. However, we don’t even need to stop food production! Only about 7.3 million people in the country are farmers, hunters, fisherpeople, food processors, or grocery workers out of 331 million people in the country. We can avoid any hitch in the food supply by having about 2% of workers keep working and it won’t make a dent in social distancing.

  • Food distribution. This one is easy. Cut everyone in the country a check for $2,000 a month. People can use that to buy food and pay rent. How do I know we can do that? The cost for this universal basic income (UBI) program would be about $660 billion dollars a month, and we are gearing up to spend $30 trillion this month on Wall Street bailouts.

Avoid exposure.

We can prevent people from being houseless during this crisis. There are six empty homes for each houseless person. We can prevent a spike in new houselessness by freezing mortgage and rent payments.

We should pass a law that says this: for the next year, mortgage balances are frozen— no payments are due, no interest will accrue, and no principle will be paid down. Then, in a year, we all pick up where we left off. The only cost of this is the interest that the banks would have been earning otherwise. We could pay off all mortgage interest for about $155 billion dollars a month (way cheaper than those Wall Street bailouts!) or just say “you are welcome for saving you from a foreclosure crisis!” And since landlords won’t be paying mortgages, they don’t need to collect rent, so we freeze that too.

Or again, we could just cut everyone a month check to cover their payments.

Avoid sickness.

The most important thing we can do to reduce sickness is keep workers at home if their works is not needed to keep us alive through the crisis! If social distancing is lifted, models predict that 2 million people will die. The options are simple: (1) keep people at home, and there are 90% fewer deaths OR (2) send everyone to work, and two million die.

While we’re all here: Medicare for All is cheaper than private insurance. If we’re looking for savings, we could save $200 billion per month while making sure that everyone has care! And that’s a $200 billion based for a normal month, not per corona month (the savings from M4A increase the more care is demanded)

Avoid suicide.

Why do you think suicide rates increase in economic downturns? It’s because people are hungry, sick, homeless and/or anxious about becoming hungry, sick, or homeless. Solve the others and solve the anxiety about them and you solve the spike in suicide rates. Throw in Medicare for All with access to mental healthcare and lower the rate even further.

Feasibility

But can we afford it? The UBI would cost $660 billion a month. A mortgage interest freeze costs $155 billion a month, assuming we don’t just make banks carry it. Medicare for All saves at least $200 billion a month, probably more in corona times. So our corona recession preventative treatment costs about $600 billion a month. For comparison, the Federal Reserve is about to embark on $30 trillion in bank bailouts in one month.

On the other side, there’s the cost of not preventing the wildfire spread of corona virus. 2.2 million dead according to the latest models. In a normal moral calculus, that should be enough. But let’s say you are an economist, and you want to know about the dollar impact, because economists are sociopaths. Normal flu costs about $2.6 million for each person it kills due to lost productivity and medical cost. So if you just linearly scale that to 2.2 million people, it’s around $5.7 trillion dollars of impact, which is about 30% of GDP. But flu kills far fewer people than corona does, and epidemics have network effects. A better data point is probably the 1918 flu epidemic. Economic data from 1918 is dodgy, but the areas in the United States which were hit by that year’s flu reported 40 - 70% drops in aggregate demand. That’s $8.4 to $14.8 trillion in economic cost. AND TWO POINT TWO MILLION DEATHS. There. Can I go throw up now?

Conclusion

Strong social distancing plus strong social safety net saves billions per month and 2 million lives. There’s been a lot of talk of “balance” lately. I propose this: halt non-essential work, and provide a safety net to keep everyone fed, housed, and well. That’s the balance we need.

Sources

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Why the Corona Recession Is Different Than the Great Recession

The Great Recession began as a plague of capital. The Collateralized Debt Obligations and Mortgage Backed Securities got sick first. The real economy got sick later once people couldn’t afford to stay in their homes but couldn’t afford to sell them either.

Throughout the Great Recession, the working class in general, and service workers in particular, kept everything running— as they always do. Economists call the Service sector “acyclic” which means it is comparatively resistant to the boom and bust cycles of capitalism. People didn’t stop buying haircuts or eating at restaurants during the Great Recession. You still need haircuts, food, and medical care, even if there is havoc in the fictive economy of the stock markets. The Service sector is our life preserver.

The corona recession is a consequence of an actual material plague. People are getting sick first, then the economy is getting sick because people can’t show up for work. The Service sector kept us afloat last time, but we need to shut it down for material epidemiological reasons. We are about to be adrift without our life preserver.

Working people make everything: meals, haircuts, medicine and medical care, culture, housing— everything. For all the emphasis we put on the ups and downs of financial assets, stocks alone have never made anything. We say that capital investment makes the economy move, but it only does so because it commands labor. Without labor, stocks and bonds are inert. A stock has never made you a meal or cared for you when you were sick, and neither has a CEO (putting aside publicity appearances here or there).

This makes the corona recession materially different from the last one. If we don’t protect working people through this crisis, we will incur a tremendous human cost. And if the economy is your concern, know that it will never recover unless the working class comes out of this crisis in a strong position. If working people get sick and starve, there will be less food and less medical care as a result. Then more people will get sick and starve. An economic contagion to match the viral contagion.

So what should we do? The tactics we used last time won’t work this time. It’s debatable whether they worked last time. The government used targeted stimulus to keep the financial, automotive, and real estate industries operating. We can’t keep the services sector open. So we need to apply our stimulus directly to working people.

In the short term, we need to get direct cash payments into the hands of every working person in the country. We need that money to stay fed and healthy, which society needs in order to recover when the crisis passes. And long term, we need to make sure working class people share in the prosperity that we create. The risk of this crisis would be far lessened if the working class wasn’t in such poor shape to begin with. The working class needs an ownership stake in the economy, savings, and a robust safety net to make it through times like these.

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One Piece of Work-From-Home Advice That No One Will Give You

Since COVID-19 is a serious concern, a lot of companies are asking their employees to work remotely right now. Many of these people have never worked remotely before. Let me tell you, it is different. I’ve been working from home for about ten years now so let me give you some advice. This time around, I’ll skip over the parts about having a desk set aside for your work, making sure to set time boundaries on your work, &c, &c because that’s been pretty thoroughly covered elsewhere. I’m going to tell you the part that I haven’t seen anyone else say aloud.

You aren’t going to feel productive. And it isn’t because you are distracted. In fact, it might be because you have fewer distractions!

Allow me to explain. If you are used to working in an office, you are probably accustomed to office chit-chat and doing little laps around the office all day. You talk to the person at the front desk, then to your friend two cubicles down. You get some coffee before you “dive in.” Your manager stops by to see how softball went. Someone stops by to say that it is Sylvia’s birthday and there is cake in the break room. The guy from facilities needs to stand on your desk to fix that air vent. While he’s at it you can’t work anyway, so you chat about the Saints. And then you go get that cake, and a coffee refill. You sit down to work, but you stand up again one minute later after you print out that report. You walk to the printer, but your manager catches you on the way and wants to know what you think about the new format for the weekly business unit review. It’s getting close to lunch time. &c, &c.

When you work from home your day is different. You are probably trying extra hard to be diligent. You make coffee before your designated start time, because you don’t want to be away from your computer if your manager “pings” you. There is no one to chat with on your commute down the hall to your post in the spare bedroom. You might not even have a printer, but if you do, you can reach it from your chair. Your manager doesn’t swing by your desk or catch you in the corridor. If they need to talk, they’ll schedule a meeting. You eat lunch on a schedule and keep snacks on your desk.

The result of this is a lot less “fluff” in your day. Because you are moving less and talking less, you feel like you are less productive. The truth is, you’ve probably been getting all your work done in the three productive hours you actually have every day. I’m not saying this is a bad thing! A lot of people have this revelation after some time working from home and they feel intense guilt about it. I’m telling you it is natural! Medieval peasants worked about half as much as we do now!. Hunter-gatherers work about half as much as typical office workers! I think we’re honestly not built for eight hours of constantly coding or fiddling with reports in a day. We’ve been fooling ourselves.

I think we all need negative space in our days. We need time to rest and think. It’s gauche to admit that in our puritan work culture. We need to be constantly in motion and be seen being constantly in motion. So the average office is a dryer full of ping-pong balls all bouncing off of each other, going round and round, but not making much forward progress. In fact, we’re all probably melting a little.

When it is time to work, work hard. Then, embrace the negative space. Rest and think and plan and read. And find time for chit-chat and cake and coffee. Trust yourself and find your rhythm.

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