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.
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.
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.
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)
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.
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?
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.