So, Trump and others, including New York Governor Cuomo and Thomas Friedman (possibly the most overrated public intellectual alive today), are musing about restarting the economy to “save” it.
The Lieutenant Governor of Texas put this more clearly, if inaccurately:
“No one reached out to me and said, ‘as a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?’” Patrick said. “And if that’s the exchange, I’m all in.”
First, people younger than 60 or so do die from the Coronavirus, especially if they have any health problems. Viral load also matters: The more of the virus you have the more likely you are to die, and this can kill people even in their twenties. The morbidity charts we have are based on China, where after some initial fumbling, they went hard into isolation.
If you send people back to work too soon in the US you will kill millions, and they will not all be old, not that Americans are necessarily willing to kill their parents and grandparents.
Second, as I noted yesterday, this misunderstands the economy.
The economy is the people in the economy, not the numbers in ledgers. It is people who make and consume every single service and product. Capital goods and real-estate are not killed by the coronavirus.
If you want to protect the economy what you do is protect the people. If the people are still there at the end of the pandemic you can have the economy back, if they aren’t, to that extent, you lose the parts of the economy which relied upon them as consumers and producers.
The ledger numbers are easy to manage. You simply freeze all normal payments: mortgages, loans, rent, interest, etc., until the end of the crisis. Give a UBI to people sufficient for them to pay non-payment expenses. The Federal Reserve or other central banks can keep other markets going as necessary, and a few targeted bailouts can be offered.
I want to talk a bit more about what is actually happening to the economy, and what it is going to mean in the future, but I’ll leave that for a later article, perhaps tomorrow.
For now: People, land, and capital goods (what we use to produce goods and services) ARE the economy. The coronavirus will not kill capital goods or land (mortages, leases, rent) unless we decide to let the ledgers run when we don’t have to. It will, however, kill people if we send them back to work in a misguided attempt to “save” an economy which will actually be killed by people dying.
This sort of category confusion is constant: Money is a fiction. We made it up. It’s a convenient fantasy used to keep track of the economic “game.” We can change how we use money any time we want to, in any way we want, for as long as we want. (Yeah, there are some consequences to the changes, but the fundamental precept remains true.)
Right now we should be halting a large chunk of the money game, then giving people the money they need so they can isolate and not get dead.
Money exists only to serve the needs and promote the welfare of humans. We already die for it far more than necessary, but sacrificing ourselves to a pandemic to “preserve” it is insanity. Money is a fiction, humans are real. Save the humans.
(I know this is in part a repeat of yesterday’s post and I apologize, but as this “save the economy by killing millions” idea gets traction I felt the fact it’s stupid and does the exact of opposite needs re-emphasis.)
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Ten Bears
My response to Lt Gov Dan Patrick of Texas: you first bub.
anon
I’m a healthy person under 40 and I am offended by these statements. No one gets to decide when my time is up for the sake of something as stupid as saving the stock market. Most women on my mother’s side of the family live to their 90s, so no, I would not give up an additional 20 years of life for the economy even if I were in my 70s right now.
This virus should scare everyone young and old. A young man who appeared healthy recently died of COVID-19 in my area, so who knows if the strain of the virus where I live is more lethal than somewhere else in the world. More stories of young people dying and being severely incapacitated are now emerging. None of us know enough about COVID-19 to understand the long term affects this virus can have on our health, the lungs in particular.
These politicians, celebrities, and talking heads would never give up their luxurious lives for their country. None of them are sending their children to fight in endless wars or giving up their COVID-19 test to one of their fans or constituents. Rand Paul is a prime example of a selfish hypocrite who got a test while average Americans with more severe symptoms have been refused treatment. They want us to risk our lives and health so that they don’t lose millions of dollars in stock.
Whether we stay indoors for another three months or return to work in early April, this economy is toast, only the latter option ensures that millions of people will die.
nihil obstet
No one gives a rat’s rear end about the economy. The rich want to grab everything, and their lackeys are converting their greed into propaganda talking points. My favorite is the Boeing CEO first demanding a bailout of some $60 billion, and then squelching any thought of giving up stock to the government in return: “I don’t have a need for an equity stake,” Calhoun said in a Fox Business interview. “If they forced it, we’d just look at all the other options, and we have got plenty.” Boeing’s stock price then went up. That’s the “economy” that they say we have to rescue — claim they need massive amounts of government money, but angry about it not being free loot.
Meanwhile, most people needing to escape deprivation are simply used as levers to open the Fed’s coffers for the rich.
Willy
Another solution is for the wealthy to manufacture and consume everything on behalf of the rest of us so we 99% can hunker down and get better. When this is all over the rest of us will be super well rested and rearin’ to manufacture and consume more than ever before!
I haven’t worked out the details of stockpiling all that stuff or crazy huge garage sales though. As a Doctor of Economics I get called a screwball crackpot all the time but the little people simply don’t understand. All that time spent writing all those books down the drain.
If anything good can come from all this I’m hoping some of it will be a better common wisdom about how economies actually work.
Hugh
Apparently, this “let them die” meme was started or re-started by Brit Steve Hilton of Fox News. He’s 50 so age and wealth wise I’m guessing he feels immune. Trump picked it up and it has been trumpeted by the aforementioned Dan Patrick. Also by his Trump’s chief economic advisor “Cocaine” Larry Kudlow and by Lloyd Blankfein, chairman of Goldman Sachs. He was chairman and CEO of Goldman back in 2008 and Goldman was a major recipient of the Wall Street bailout. In fact, Goldman and Blankfein had the unusual distinction of needing to be and getting bailed out twice in 8 days. First, on Sunday the 13th as part of the AIG deal. Then after Lehman went splat on Monday the next day, it was bailed out again the following Sunday, the 21st, when the Fed declared Goldman a bank and able to access and profit from all its facilities and services (which it still does). This should surprise no one actually, seeing as the guy Blankfein was dealing with was Treasury Secretary Hank Paulson, his immediate predecessor as head of Goldman. Shorter Blankfein: I got my bailout. I’m getting it again. The rest of you, Go die!
These are the kind of people pushing this version of “Let’s kill/let die _____ (fill in the blank): hacks, carnies, schemers, and predators.
different clue
@Ian Welsh,
Should we consider the possibility that “killing millions” of non Upper Class people is the secret real stealth goal of “back to work” too soon? The goal that dare not say its name?
Could this be an attempt at Jackpot Design Engineering and “never let a good plague go to waste”?
Cuomo reveals his inner self to those who did not already know what Cuomo really is and really always was . . . . by making this Trumpian suggestion. ( Trump himself may be ignorant and stupid enough to think ” back to work” is meant to “save the economy”. But Cuomo is a smart man. I would advise considering the possibility that Cuomo knows exactly that “back to work ” in the midst of the pandemic is meant to secretly advance the unstated stealth goal of Jackpot Design Engineering.)
NR
Trump says he wants to reopen the country by Easter, to which a Fox News host says it would be “a wonderful American resurrection.”
The cult of Trump (and it is a cult) is a merging of white supremacy, nationalism, worship of money, and religion.
Hugh
Easter is on April 12 this year. Today is the 24th. So Trump is talking about opening up the country in 19 days. Yeah, that’ll work.
Stirling S Newberry
This was a one day rally, these things will be walked back.
Stirling S Newberry
Stephen Roach is calling it “highly dubious.”
Greg T
These guys don’t care about the economy per se. They care about their place atop the food chain. They would rather millions of people die contracting the virus than risk restructuring production and distribution they can no longer control. It represents an unwinding of this top heavy system they created over the past forty years. That’s their concern.
Stirling S Newberry
Some points:
1. Millions of people is off the table. But low hundreds of thousand is. Trust me, low hundreds is bad enough.
2. What is going to cause pain is letting people die who otherwise would live.
3. Trump is not going to make serious decisions anymore. But he could making a screen.
scruff
I don’t see any ledger numbers being managed. I see mortgages, rents, fees and interest all continuing like “normal”. Evictions are halted – at least in my state and at least for public housing (it’s debatable whether it applies to privately owned complexes like the one I live in) – but this isn’t terribly surprising because evicting people does not entrench the power structure that has been built. Pushing people further into “debt” does further entrench the power structure.
We can’t be far away from the guillotine when we come out of this, right? I see no evidence that there is any actual compassion or virtue directing government action at this time. Everything being said and done is only happening to quell fear and anger, and at the same time tighter bonds are being put in place to make sure life will be even harder for those who survive.
Ian Welsh
The fatality rate has gone as high as 9% (in Italy). If you let most of the population get it, even with a much lower death rate and granting rates are lower than they appear because of testing issues, you’re looking at more than hundreds of thousands of deaths. Letting isoloation off too soon will cause another spike and increase viral loads in healthy young people who would otherwise be unlikely to be at risk.
Mark Pontin
Stirling N. wrote: ‘Millions of people is off the table.’
We will see. But I wouldn’t be so sure.
Watching the daily global stats and glancing through various studies, I’m afraid somewhere between 1 and 1.4 million dead in the U.S. is well within the bounds of plausibility.
We will know more by the end of June.
Mark Pontin
Okay, I see Ian got there ahead of me.
In other news: the U.S.A. has been attacked by aliens. Washington’s first response is to lower interest rates, soon followed by lowering taxes on rich people and corporations.
Because, of course, there’s no problem in history that approach has failed to solve, is there?
Mallam
Low hundreds is a certainty. If we took measures of Italy we could probably end up with 100-200k, but we still haven’t, and even the places that are it’s kind of a half assed effort. 500k seems assured, wouldn’t be surprised at a million.
Atlanta is already hitting ICU capacity. It’s not even April, and peak isn’t until April-May (June if we are lucky).
Mark Pontin
As for why we have Dunning-Kruger sociopathic incompetents in charge now, while neoliberalism is of course particularly pernicious, bigger trends are at work. See forex —
‘Why Elections Don’t Bring Progress: Buttigieg, Biden and the Iron Law of Oligarchy’
https://www.politicalorphans.com/why-elections-dont-bring-progress-buttigieg-biden-and-the-iron-law-of-oligarchy/
https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
See also: Mancur Olsen and his ‘distributional coalitions.’
Putting it another way: some of us are just about old enough to remember when types like Eisenhower and Harold Macmillan ran things, or at least are old enough to recall when folk-memories of such leaders as the real-world norm– far from non-problematic, but basically competent — still prevailed.
Such figures were competent because they had risen during a period when there’d been such a shit-storm for several decades — with the bloodbath of WWI in their youths, then the Great Depression, and then the further bloodbath of WWII — that the incompetents and carpetbaggers had been swept away. In the normal process of societies without calamities, it’s likely that incompetence and corruption become increasingly the norm.
And so we arrive at today.
Mark Pontin
‘Spanish soldiers fighting coronavirus find nursing homes full of ‘dead and abandoned’ elderly’
https://thehill.com/policy/international/489223-spanish-soldiers-fighting-coronavirus-find-nursing-homes-full-of-dead
Don’t be surprised by similar scenarios in the U.S.
Zachary Smith
I saw the link to this story somewhere – Politico isn’t a site I have bookmarked.
https://www.politico.com/news/magazine/2020/03/24/if-trump-really-wants-to-reopen-the-economy-he-should-lead-the-way-146527
Z
AOC’s fighting back and making a great case against the Mnuchin $5T corporate sweepstakes:
https://twitter.com/allinwithchris/status/1242610033931751427
Z
StewartM
Basically, Ian, is that Trump and people like Steve Hilton, think that the financial sector and Wall Street IS the economy. I am reminded of Ayn Rand, who sang the praises of capitalism and its ‘producer’ class although none of her circle had every produced anything but prose. (A critique I read by an engineer of Atlas Shrugged once quipped, “I can tell you, that’s no way to run a railroad”). These people are willing to let millions die (and yes, it would be millions if you simply tried to go back to normal, especially when the health care system got swamped and you started losing people you would otherwise save if you had the resources) because they actually thing the ledger sheet is more ‘real’ than the actual nuts-and-bolts work done of producing food, goods and services.
But even in regards to their stated goals–they’re idiots. The best way to ease the economic discomfort is to clamp down hard now and secure everyone with income and living space, be it by direct payments to people themselves or by maintaining nominal employment, even if the employees are sitting at home, by having the government backstop wages. Wait and you’ll just increase the mess. People like Steve Hilton apparently forgot that there was indeed a *depression* that hit concurrently with the 1919 influenza pandemic, in which the US stock market lost half its value.
StewartM
Z,
I saw AOC on TV too. But you do realize what said Corporate Sweepstakes is all about, don’t you? It’s not just about Trump’s businesses; it’s his private war chest to be used to bribe Fortune 500 companies under duress to ‘if you want any free moola, pay yer dues to Drumpf’s re-election war chest’).
Ivory Bill Woodpecker
Slightly off topic, but it does involve COVID-19: 😈
https://i.imgur.com/cP2fEsW.jpg
Benjamin
@Mark Pontin
Control + f “Sanders” on that article, literally no results. Looking at the comments, I see people apparently deluding themselves that Buttigieg was ever a potentially worthwhile candidate.
Poking around the site a bit further, of course they didn’t talk about Sanders. They’re all-in for the Russiagate conspiracy theory (opening with talk of the ‘Kremlin troll farm’ indictment. You know, the one that just got thrown out of US Federal court because it was such complete and utter bullshit. Oops.). Bernie is Kremlin agent number 2, donchaknow.
What an impressive den of utter stupidity you’ve linked us to.
As for the basic concept itself, Michels was a literal fascist (as in he looked at Mussolini and thought “yeah, this seems like a good idea” and went to Italy to join the party). So, in other words, a complete and total thundering dumbass.
Astrid
The solutions to economic problems are easy and well understood. The psychopaths at the top of government just prefer raiding public treasury for their masters instead. They\’ll do it again at the next crisis and the next one.
Iraq II showed us what they were. 2008 showed us what they were. Obama administration showed us what they were. The current primary cycle showed us what they were. It\’s people who made the right call on those occasions who paid with their careers, their reputation, their freedom, and sometimes with their lives. Those who made decisions to hurt people and lie are doing just great. If voting can change things, they have electronic voting machines to make sure changes don\’t happen. And if the natives finally start getting restless, the a state of emergency can be declared and give more opportunities for looting. That can continue until some idiot scrimps on bonus payments to their legions.
It doesn\’t matter much in the long run, which won\’t be very long now. Climate change and resource depletion will catch up to them. Those are difficult or impossible to solve problems, whose only solution may well be a mass culling of the populace by whatever means and greatly reduced living standards for the living.
I don\’t even think there\’s going to be the bitter satisfaction of knowing those who did evil will suffer for it in the end. Most of them are very old, and will die soon enough, probably peacefully in their beds. A few will be knocked off by COVID-19, but not enough to matter and they\’ll be given the best opportunities to survive while the masses fend for themselves.
There\’s no solution to this. But if you have a choice, at least don\’t bring children into this hell world.
Stirling S Newberry
Mark Pontin you paste articles which get facts wrong and wonder why you are ignored? Let us start with elections the caused change: 1912, 1932. 1960. That just in the US.
Look in the mirror: there is Dunning-Kruger looking back at you.
Ché Pasa
There’s a good deal of resistance to the notion put forward by some of the more soulless politicians, financiers and— sadly— medicos that the old and susceptible should be isolated and provided with a “compassionate” exit from their mortal coil in order to preserve, protect and defend The Economy. And that resistance will only grow as the virus continues its march. How long both will last is the question.
This doctor, David Katz of Yale, who put forward the argument to let the useless eaters die (compassionately of course) in the New York Times the other day made explicit what his idea is about in an appearance on PBS NewsHour yesterday: Money, specifically his father’s money which he had worked his whole life to accumulate so he could pass it on to his spawn, unencumbered and undiminished by society or events. This doctor, so called, is quite the piece of work. I suppose that all this hoo-hah over shutting down so much of the economic activity of the country to protect against the virus diminishes the value of his father’s portfolio and that’s just wrong. Better to put the old and infected and the unlikely to recover in isolation and let the young and healthy and immune run free, no?
If the ruling class decides to pursue this plan, with the current leadership in charge, it will literally destroy the country. That may be their intent, I don’t know. It will not revive an economy that has essentially no viability without massive injections of liquidity and cash from every source imaginable. In other words perpetual looting until there is nothing left.
This crisis is a perfect opportunity to change course, and some Americans and societies around the world are going to take a new and let’s hope better path. But here, I expect a fight, and an ugly one at best.
The English-speaking world — US, UK, Aus, NZ, Can — has a real problem when it comes to notions of The Economy and Society. The rulers of US, UK, and Australia are freaks, not simply neoLibs. For them, as the Baroness Thatcher so astutely observed, there is no society. Only individuals scrabbling for their own advantage. And they and their accumulations are the economy, and that’s what must be preserved and defended at all costs.
Not only are your mother and grandfather expendable, so are you and all your kind.
Z
Here’s a theory that sounds nuts but makes sense in some ways: Israel created the virus and deployed it.
You got to say, they’re doing pretty well dealing with it. Only three Israelis dead so far. And Israel is also claiming to be close to creating a vaccine for it. Hmm, sure made progress on that quickly. You haven’t heard of a lot of Jews over here getting it either, if you come to think of it. What if Israel created a virus that the genomes of the purest Jews were immune to?
It’s not outlandish to believe that Israel would try to develop such a virus. It would be much more outlandish to believe that they wouldn’t. What if they were successful then?
And if they were real sly, and they are, they’d plant it in Wuhan first, that way it would be suspected that it came forth from the live markets.
From there it quickly caught fire in Iran, their biggest enemy, where they would have certainly seeded it. And in Italy, it may have caught accidentally. They don’t have many Jews in their population to slow its spread through their population.
A lot was going on around that time, remember. Back in December, when it started taking hold Bernie Sanders was looking like the favorite to win the democratic nomination. If he was on his way to winning it now, the DNC would have shut down all the elections for sure using the virus as an excuse, and force it go to the convention where they’d certainly box him out.
Netanyahu, despite losing the vote, has quickly deigned himself a dictator in Israel, using the pandemic as an excuse for his power grab. Mnuchin is now close to taking advantage of it to get trillions of U.S. dollars in his hands to support the corporate economy.
In a separate matter Blackrock was also hired by the Fed to support the markets and the Fed is giving trillions to them as well.
Mnuchin and Schumer did most of the negotiating on the bill. Some Jewish dude named Fink is the head of Blackrock.
Schumer, Mnuchin, and Fink. Sounds like a Jewish law firm doesn’t it? Just like The Committee to Save the World: Rubin, Greenspan, and Summers.
For only two percent of the U.S. population, they sure always end up in control of our financial markets and the Fed’s free money somehow.
It seems like everything is working out for the best for the Jewish mafia right now, if you look closely at it. The virus has been to their benefit. They seemed the most prepared for it. Have gained the most from it and haven’t lost much.
The biggest danger that Sanders posed to them was that if he got his hands on the Fed. Then the power structure had the chance to change. Also remember that around the time the virus broke out Wall Street was on life support from the Fed for reasons that have never ever been explained. It wouldn’t be too hard to imagine that if Sanders got his hands on the Fed, or the power to appoint his own Fed chair, and if they didn’t dirty dance with Wall Street that whole filthy f*ing market would have crashed. It was deep on Fed support. And if it did crash, much of their power structure, much of their power over us would have been crushed with it. And all that corruption and crime, and all those Wall Street criminals, would have been revealed and instead of being our rulers, they’d be our prisoners.
Z
Z
To get free of the boot of capital we have to abolish the Fed.
Z