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Monday, March 30, 2020

Iacta alea est

I know that the Virus Which YouTube Will Not Let You Name Without Demonitizing You has been written about extensively on this blog, but I’ve largely stayed out of it.  This is in part because I largely feel no fear or concern about whether or not I will get the virus myself.  I don’t fear death in general, so dying from the “scary” virus is little different from dying any other way.  I wish I could say that it was more my strong faith in Christ and His plan that made me not fear death, but it’s primarily because I don’t have any strong attachments to anything in this life so don’t have anything to really lose.

Because I don’t have any strong fear of death, it’s put me in an interesting position to evaluate the panicked response to the virus as a whole, and that dispassion has led me to conclude that on the whole our reaction to the virus is almost certainly going to be far worse for us than the virus ever could have been.  Of course, by saying this, I have to immediately say, “I’m not claiming COVID-19 isn’t a big deal, or that the regular flu is worse than COVID-19”—although seriously people need to actually look up how bad the regular flu is; it’s no picnic and is a massive problem that ought to be dealt with.  Our culture has a knee-jerk reaction, however, in that if you point out A is more dangerous than B, then the vast majority of people irrationally hear that as a claim that B is not dangerous at all.

But let me first illustrate the concept via an analogy.  If I said, “While a knife wound to an extremity may indeed be fatal depending on where it is located and the disposition of the person who has the injury, depriving a person of food and water for an extended period of time is far more dangerous because without proper nutrition and fluid the healthiest individuals will become sick and die” it should be easy to see that this is not an argument that knife wounds are trivial and do not require medical assistance.  It is, however, pointing out that if you wish to treat knife wounds, you probably should do so in a manner that does not induce deprivation of food and water for extended periods of time. 

To spell it out, the analogy is that COVID-19 is equivalent to the knife wound and our world-wide response in shutting down the entire global economy is equivalent to depriving everyone of food and water for an extended period of time.  The first question might be whether or not this analogy is representative.  I think most would agree that that COVID-19 would best be represented by some kind of acute trauma—something that is intense and immediate, but not expected to be long term.  Even in our experience with recurring pandemics, they come in waves.  It’s not a continual threat at full pressure.  Ebola has outbreaks that kill lots of people then sputter and die out.  Influenza does the same thing.  Historically, the Bubonic Plague acted in an identical manner—peaking out over the course of a few years and then only having smaller, more localized outbreaks afterward.  We don’t have the experience of very dangerous diseases serving a constant yearly threat, even if some (like Influenza again) have had several outbreaks through the centuries.

So that may fit the analogy nicely, but what of linking our economic shutdown to deprivation of food and water?  In one sense, this is actually far more literal than it is an analogy, because we are dealing with poverty.  I daresay the vast majority of the readership of this blog has never stepped foot outside of a First World country, or if so it was only for a week to a month on a mission trip, so it may be difficult for us to actually understand exactly how bad poverty truly is.  If you make around $32,000 per year, you’re in the top 1% of the world.  Indeed, the poverty line for the United States currently sits at an income of less than or equal to $12,490 per year.  That means on a Global Scale, everyone above the poverty line in the US is in the top 13% of income earnings for the world.

The upshot of these figures is that when I say, “Poverty kills” I have been met with skepticism from the largely American audience.  Yes, when your poverty line still is better than 87% of the what the world earns, it’s not going to be “that bad” when you look at your numbers.  But you don’t have to go far to see how bad it really is.  Visit any third world country without money and try to get sufficient food.  Try to get sufficient medical care.  Try to get sufficient anything.

At this point you might be thinking, “Yeah, poverty is bad.  But how can the economic shutdown that we’ve put into place cause poverty?  Wouldn’t us not shutting everything down mean more people would die, and obviously dead people can’t help out the economy any.”

True, deaths to COVID-19 would have an impact on our economy too, which we are theoretically sparing us from due to our current response.  However, if we go that route, the first thing I would need to point out is that this virus is primarily fatal for the older population—a set of individuals who have largely already left the workforce due to retirement.  Not to sound crass, but if the vast majority of fatalities from COVID-19 were from this set of individuals, it would have a fairly low impact on the economy since they are not going to be producers, only consumers.  This impact is actually how it goes with most viruses—they predominately attack the elderly and the very young, both of which are not part of the working class.  Stating these facts does not mean I’m advocating for us to do a cutthroat policy of sacrificing grandma since she can’t help out the economy much anyway.  But we could, instead, focus our social distancing and quarantining on the elderly and young instead of the entire workforce.  Because shutting the economy down by quarantining the entire workforce is objectively bad and will necessarily lead to an increase in poverty for all, whereas quarantining the young and old would have a targeted effect (albeit there will of course still be some individuals in between those extremes who will pass away too).

Of course, it’s also incumbent upon me to demonstrate how shuttering the entire working class will necessarily lead to increased poverty.  To illustrate that, let’s start by just examining the facts of where we are right now.  Large swaths of the Earth—not just the US, the entire globe—have shut down all “non-essential” businesses.  What does that mean?  It means anyone who is employed in a “non-essential” position is now no longer doing work.  Businesses cannot afford to pay employees who are not doing work.  The result is that millions of people worldwide have already been laid off, and those not specifically fired are not getting a paycheck.  Those few companies that can weather the storm thus far do not have infinite reserves, so those who have managed to dodge the termination/no paycheck bullet so far have less and less of a chance to continue to dodge it the longer this goes on.  The upshot of all this is that unemployment has already risen catastrophically in every country, including the US, who has closed all their “non-essential” businesses.

Nor are these workers easily able to find new jobs, because only “essential” jobs remain (which, for whatever reason, includes cannabis shops in Colorado).  If your only skills have been in “non-essential” areas, you will most likely not be able to find a new job in an “essential” field because there are more qualified workers—and a surplus of them to boot—to take any openings already there.

But how long will these “essential” businesses remain open?  To answer that question, we need to look no further than one such “essential” aspect right now: shelter.  Everyone needs a place to live.  Many (most?) American do not actually own their own shelter.  Their landlord owns it and they pay an agreed upon rate to have the right to stay there.  If your “non-essential” job is terminated, how can you pay for the “essential” need of shelter?  You cannot.

That alone is sufficient to cause problems for the landlord.  He cannot collect rent from people who literally have no money to pay rent, and thus in order for him to make money he can only rent to people who work in an “essential” job.  Except that the government has already stepped in.  The county I live in (in Colorado) has already had the court say that they will not process any eviction notices while we are in a state of emergency.  In other words, rent is coming due for millions of people who cannot pay it, and the landlord cannot evict anyone who cannot pay it.

What this means is that the “essential” business of renting out shelter has now become one in which landlords cannot legally make any money.  And yes it’s easy to see on humanitarian grounds that we cannot evict and make homeless millions of people.  Yet at the same time, we have just devalued the entire rent market to such an extent that anyone currently holding land that they would have rented out to others will no longer do so, because it’s the same thing as giving it away and getting nothing in return.  This will necessarily cause all real estate to tumble into chaos as the implications set in.

But it won’t end there.  If it’s logical and humanitarian for us to declare that shelter is so essential that we cannot process evictions during this time, essentially making rent free, how is it any less logical or less humanitarian to decree that all food must be free for whoever needs it too?  Those who cannot pay rent clearly cannot pay for food either.  And therefore, the “essential” job of running a supermarket will soon fall under this same cloud: you cannot deprive those who have no money of their food, so you must give it to them for free.  The medical establishments will fall under the same problems: how can you deny medication to those who clearly need it, solely because they have no money, solely because the government shut down their job as being “non-essential”?

And what are you left with at this point?  All “non-essential” jobs are shuttered already.  All “essential” goods are going to be forced to be given away for free.  Those who worked “non-essential” jobs cannot work, and those who are working “essential” jobs cannot make money for what they work.  If you’re a supermarket, you’re not going to pay to restock your shelves when you have to give away your product, so either farms will be forced to give food to stores for free, or the stores will shut down completely.  Farmers will not grow their crops if they cannot get anything in return for doing so, so they will shut down as well.

At this point, money is completely worthless.  Again, you can’t use it to buy any “non-essentials”—those stores aren’t even open!—and you don’t need to use it to buy “essentials” because it would be inhumane to deprive those without money of those goods.  More economic “stimulus” packages will be pointless because money is now pointless.  And there are many historical precedents of what happens when money becomes worthless.  Just look up the pictures of German toddlers playing with millions and millions of Marks post World War I, when a wheelbarrow load of cash couldn’t buy a loaf of bread.

If a farmer cannot get compensated for his food, if a landlord cannot get compensated for use of his property, if a doctor cannot be compensated for his skill, if a pharmacist cannot be compensated for his medications—only a fool continues to work in any field then.  The end result is necessary: those who have, hoard; those who don’t, starve.

Again, this is not a hypothetical situation.  This has happened multiple times in history.  When the economy collapses, people die.  Just as depriving someone of food and water necessarily results in illness, depriving a nation of an economy results in people dying.  It’s not an immediate and acute process, like a knife wound, but it is arguably worse because it will hurt everyone, not just those most susceptible to the acute problem.

Again, I’m not saying COVID-19 isn’t an enormous problem.  It may very well be one of the worst diseases our planet has ever faced (although thus far evidence does not bear that out).  But one thing is certain throughout all history: economic collapse is a horrific thing that necessarily leads to more suffering and death.  Our governments have collectively decided to shut down our world’s economy, which they know necessarily will result in an increase in deaths due to poverty, because COVID-19…might…cause more deaths than the shutdown will.  Never mind that there were ways in which we could have protected the most at-risk population from COVID-19 without shuttering the economy for as long as it must now be shuttered.

Because, see, at the end of the day, there’s going to be a list of fatalities with “COVID-19” listed as the cause of death, but there will never be a list of people with “global shutdown of economy” listed as their cause of death.  Instead, it will say things like “complications from diabetes”, because they couldn’t afford insulin after they lost their job; or “exposure”, because they died in the blizzard while living on the streets; or “murder” because their neighbor was so desperate for the food they had that they were shot in the back.  A few statisticians will notice “Hey, when the poverty rate goes up, the death and crime rates go up too” but politicians will still say, “All those poor people could have made better decisions and they wouldn’t be suffering now.  And furthermore, we kept the numbers who died from COVID-19 far lower than expected due to our actions.  Vote for me again!”

At this point, complaining about it doesn't really matter, I suppose.  Iacta alea est. The die has been cast.  Now we just get to wait and see what the consequences will be.

9 comments:

  1. You know things are serious when we start using Latin!

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  2. Well said, Peter!

    By the way, I've mentioned how bad influenza can be in my posts (e.g. here).

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    1. Correct, Hawk. You have mentioned that in your posts. My laments about how certain aspects have been presented, covered, and/or ignored weren't applicable toward anyone here. I think T-blog overall has done an excellent job both in not over-hyping nor blowing off the concerns surrounding the data.

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    2. Thanks, Peter! I think the "excellent job" now must include your fine post. :)

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  3. "The die has been cast. Now we just get to wait and see what the consequences will be."

    I'd been wishing that more people had made this point. Too many pundits seem to be staking out positions simply as part of their practice of punditry: working their audiences. But, which pundits will get their reputations enhanced, and which won't, when Covid-19 is over, is of trivial importance. We'll do better to find ways to practically serve the people around us than spend too much time expounding on our personal theory of what we'd have done if we were in charge.

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  4. I am also in Colorado. I would think rents afterwards would skyrocket in order for the landlords to get something.
    But yes,I am in general agreement.

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  5. There is quite a bit of economic ignorance of the general public, pundits and government at all levels. For instance they talk of the hospitals being overloaded and running out of supplies. You CANNOT have a strict shelter in place and then intellectually whine about supply shortages. It takes quite a lot of "NONESSENTIAL" jobs to get rubber gloves, paper products, food, masks, tyvek suits, scrubs, drugs and every other product required for a hospital, clinic or doctors office to operate. You need raw materials (metal, polymer, pulp, fabric.... etc) to be harvested, mined, refined, produced and transported to the factories. Once at the factories you need again all kinds of materials, parts, electricity, water, chemicals, repair parts, etc... You need all the support to get the tasks accomplished food, oil, car and truck repair maintenance, clothing, shoes etc.... After the products are produced they need to be transported and warehoused. So for a single large hospital to operate it requires 100's of thousands workers outside the hospital to keep the hospital supplied. So the governments through their non-martial law but essentially martial law "shelter in place" orders is actually excaberating the shortages. Bastiat goes over this in detail in his writings from the 18th century.

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  6. Incidentally, this is the first of many such shutdowns:

    https://www.youtube.com/watch?v=uE0YTsZitiA

    For those who cannot watch, it's the announcement of the closure of Western Omelette because "payroll continues to exceed the income." They hope to return when the crisis is over.

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