The governor of New York again pressed the “pause button” on the state’s economy until May 28. The excuse is that if people go out and about, more individuals are going to die from the virus. That is possibly true in the short run. The shutdown was ostensibly only to “flatten the curve” so hospitals weren’t overwhelmed. Most people were willing to cooperate for the short time promised, but anyone who supposes that a government can pause an economy doesn’t have any idea about how an economy works, nor do they have a sense of what it takes to actually run a business.
The economy has not been shut down completely, though. Health care workers still provide care, at least those connected to the virus treatment and containment. They are considered essential, as are firemen, police, and other such services. The list of essential workers, however, is not based on anything in reality. It is entirely political. Big-box stores, for some reason, are considered essential, while small businesses that provide the same goods and services are forced to watch while their business fades and their expenses and debts pile up.
It is a false dichotomy to say that COVID-19 deaths will increase if we open up and won’t if we don’t open up, and it is also probably false on its face. It is likely that those states that clamped down will ultimately have death rates comparable to those that didn’t. It is probably a matter of timing, but more to the point, even if deaths from the virus are kept down due to the lock down, there are effects from the lock down itself that must be considered. With the extent of unemployment right now, it is quite possible that this country, as well as most countries around the world, will suffer a severe economic downturn. That doesn’t mean just that wealthy people will watch their stock portfolios crumble, especially since some of the biggest investors in the markets are retirement plans for working people. Those hit hardest in a recession or depression are the working class and the poor.
Weeks ago suicide hot lines reported large spikes in distress calls. There is always tremendous suffering, and even death from severe economic upset and chaos. The longer the shut down continues, the more small business people will be forced to shut their doors permanently, the more people will lose their jobs, and the more economic resources will be wasted. Real wealth for most people in society will be destroyed, at least in part.
“Never fear,” say the big-government promoters. “We can spend even though we don’t have any money.” The government has passed bills for trillions of dollars in deficit spending and the Federal Reserve Bank has pledged to inject more trillions into the economy. One Fed governor went so far as to say the money supply is “unlimited,” and they are ready to use it.
We need to understand, however, that the government can’t print real resources. It can’t create food, vehicles, carpentry services, or factories out of thin air. That comes from people working. All it can do is either take money from the economy in the form of taxes or create new money, which simply increases the claims on real resources without creating any real resources. In either case, it doesn’t bring prosperity or wealth. It just redistributes, and to a large degree, in the most regressive way possible.
The virus is going to spread regardless of what the government does. What doesn’t have to spread is economic misery to add to it. Politicians are not pausing the economy, they are destroying wealth and hurting everyone, especially the productive people who pay the bill.