Scott Grannis on the shutdown of the US economy: ‘the most expensive self-inflicted injury in the history of mankind’

Via Mark Perry.

"In a chart-rich post on his Calafia Pundit blog (“The crisis is over, but at terrible cost“) Scott Grannis provides some great insights about the shutdown of the US economy, which he predicts will prove to be “the most expensive self-inflicted injury in the history of mankind (bold added)”:

To date, the most consequential result of this novel coronavirus has come from the hand of government, thanks to multiple decrees from governors, mayors, and public health officials mandating the closure of a broad swath of the US economy. Arguably, the cost of shutting down the economy in terms of jobs, living standards, and money has been far greater than the cost of virus-induced deaths, which have turned out to be orders of magnitude less than initially predicted, even by models which factored in severe social distancing. As I like to put it, “The shutdown of the US economy will prove to be the most expensive self-inflicted injury in the history of mankind.™”
Earlier this year. headlines were screaming that millions would die and hospitals would be overflowing with desperately ill patients. Early estimates (mid-February) pegged the fatality rate at 2-4% (20 times more lethal than the common flu!). More recently, better-informed analysts, including Dr. Fauci, have estimated the lethality rate to be 0.2%, only double that of the common flu. Several other estimates of lethality can be found here, many of which say it is far lower than most have thought, but do read the entirety of this linked page as it will amaze you. Some speculate that covid-19’s lethality could be much less than the flu, based on the (still unproven) theory that it began to spread rapidly through areas such as the California economy beginning in October of last year, and has thus left millions with protective antibodies. One curious fact about this virus is that the majority of people infected never even realize they have it, while for the unlucky few (mainly the elderly and those already besieged by another grave illness) it is quite deadly. We are now learning that only 0.9% of US deaths from coronavirus correspond to people who were younger than 65 and had no pre-existing conditions!
…..
Regardless, and unfortunately, the millions-of-dead nightmare scenario was enough to persuade public officials to take the most drastic course of action ever contemplated, with the result that at least 17 million American workers have lost their jobs in just a few weeks and economic activity has plunged so drastically that the world is awash in unwanted petroleum. To make matters worse, our federal government had no choice but to offer extraordinary unemployment benefits to tens of millions of workers who could no longer work, and many hundreds of billions in loans to otherwise suddenly-insolvent businesses. Estimates of what is deceptively called fiscal “stimulus” start at $2 trillion and the final tab could easily reach $4 trillion. The problem with all this, of course, is that it is not stimulus, it’s just an attempt to compensate people who lose their jobs and businesses who were forced to shut down.

If we had known at the outset that the virus would end up being far less lethal than it was predicted to be, and instead only somewhat more lethal than the ordinary flu, would we have agreed to surrender our liberties and allow the government to order tens of millions to stop working? I seriously doubt it, and that leads to the inevitable conclusion: this shutdown was a terrible and tragic mistake.

And here’s a very interesting perspective from Scott on the US labor market that hasn’t been widely reported, or reported at all:

The chart above compares private sector jobs (blue) with public sector jobs (red). Wow: almost overnight we have wiped out all the net job gains of the past 14 years, and the losses aren’t over yet. Private sector jobs have dropped more than 13% to date. Here’s a thought: to my knowledge not a single public sector employee has lost his or her job. Some or many may have been sent home, but have any been forced to endure a visit to the unemployment office? Would politicians have been so quick to decree a shutdown if that meant that 13% of public sector employees were fired along with 13% of private employees? Doesn’t fairness demand that the public sector share in the pain of the shutdown? There is potential for great anger here.

And here’s part of Scott’s conclusion:

Whether we experience a near-term recovery, and whether it’s V-shaped or U-shaped or strong or weak will depend on how soon and how rapidly the economy is allowed to re-open. If it were up to me, I’d start the re-opening tomorrow. Unfortunately, I don’t think the current political climate would support that, and it’s doubly disappointing to hear so many people talking about a May 15th re-opening. The worst has passed, but it’s going to be an agonizing wait for good news, which means continued volatility.

MP: Scott’s whole post is worth reading, he’s got lots of charts and great insightful and thoughtful analysis and commentary that you won’t read anyplace else."