Late Friday, President Donald Trump exclaimed “We have to open our country again.” On Monday, he followed up by suggesting a decision “will be made shortly.” Trump’s right: We need to open our country again, and soon. With trillions of dollars in lost economic output and the government’s own fatality estimates for the COVID-19 virus plunging, continuing the shutdown makes no sense.
We’ve heard the arguments and questions, of course. What if the virus comes roaring back? Won’t Americans lose their coronavirus discipline, and stop social distancing?
We won’t impugn those who ask such questions, since we assume they mostly are sincere. However, when certain members of the Democratic Party suggest keeping the economy closed for as long as 18 months, an absurd proposition, we also realize that the closure for some has become a bludgeon for attacking Trump, and little else.
And make no mistake, it’s going to be costly.
So far, plans are for $4 trillion or more in spending on “stimulus.” That means adding even more to our current $24 trillion in federal debt, IOUs that will be passed on to future generations to pay.
First off, Americans are not children, and the government is not our parents. It is our servant. When it no longer is doing what we ask it to do, it must step back. That’s the essence of our constitutional, republican (small “r”) form of government.
As for the virus roaring back, all the numbers are suspect. But the U.S. has a far lower COVID-19 death rate per million population than virtually all the other major industrial nations.
The speculation by “expert” epidemiologists has been all over the place, with estimates of as many as 2.5 million dead to just tens of thousands. Our own government’s projections have steadily declined in recent weeks from a guess of more than 90,000 dead from this pandemic in March, to now just over 60,000.
That’s a lot of people, 60,000. But put that in perspective, as Arthur Petersen does over at RealClearMarkets:
“In the 2018-2019 flu season in the U.S, there were approximately 35 million cases of influenza, 16 million medical visits and 55,672 deaths from flu and pneumonia. When this happened, we did not close our livelihood, the economy, or put 10 million people (and rising) out of work. In fact, these numbers were not frightening or even news.”
Moreover, the fatality rate, once predicted at 2.5% to 3.4% (the latter being the World Health Organization’s estimate), now appears to be 0.4%, according to two recent studies. That’s a bit worse than the flu, but not a catastrophic level by any means.
If current trends hold, the coronavirus will be about as bad as a typical flu season. While each death by COVID-19 is sad, do we really need to keep the economy closed?
The damage to the economy if it stays shut will be enormous. So far, the shutdown of the world’s most powerful economy has idled at least 17 million people, while costing us trillions of dollars in lost future output.
The normally reliable Mercatus Center at George Mason University estimates “that the real GDP growth rate will decline 5% for each month of partial economic shutdown. Therefore, the economic cost of the first two months spent fighting the pandemic will be $2.14 trillion (10%), which is surprisingly close to the static fiscal cost of the CARES Act.”
Meanwhile, investment bank JPMorgan Chase estimates a record 40% annualized drop in real GDP for the second quarter, a crash of roughly $2 trillion, with unemployment eventually topping 20%.
The good news is the bank sees hefty rises of 23% in the third quarter and 13% in the fourth quarter, assuming the economy reopens for business.
Meanwhile, hoping that there will be some magical transfiguration to make the economy thrive if it remains closed is a far-left fantasy. A new University of Chicago study found that only 34% of all jobs can be done from home in their entirety.
So no, we won’t all be sitting in our sweat pants or pajamas typing on a keyboard from home.
Small businesses are desperate, meanwhile, to reopen.
A new National Bureau of Economic Research study of 5,800 small businesses shows just how hard hit they are: Some 43% of small businesses are closed, and have laid off 40% of their workers since January.
Worse, they won’t be able to hold on, since “the median (small) business has more than $10,000 in monthly expenses and less than one month of cash on hand.”
As for those on the left who want a lengthy shutdown, and those in finance and government who see it as inevitable, such as Minneapolis Fed President Neel Kashkari, sorry. Eighteen months, or even one more month, is too long. It will damage the economy, create poverty, and actually increase deaths from suicide, drug use, malnutrition and other diseases of poverty and despair. A long shutdown is a cure that’s worse than the disease.
Meanwhile, if the economy remains closed, the federal government, states and cities will suffer massive losses in tax revenue, making them unable to keep their promises to citizens. The stakes are enormously high for all.
The time to reopen the nation’s economy is now. Governors are already forming groups to plan for reopening. And Trump will soon outline his plans.
As it now is, Goldman Sachs estimates that states accounting for roughly 86% of U.S. GDP are still in lockdown. So let’s move, and fast. It’s time to put America back to work and end our brutal national nightmare.
Once the economy is again unleashed, we have great confidence that activity will snap back quickly and companies will recall their idled workers to meet rebounding demand.
The governors and Trump have it in their power to get things going again. So do it. Remove the shackles. Let’s open again for business and restore health to both our people and the economy.
— Written by Terry Jones