SHUTDOWN MISTAKE
By Karl Arnold Belser
29 May  2020

AN EPIPHANY

The US Center for Disease Control (CDC) has recently published the true facts about the Coronavirus as shown in the following two charts. These show that the US policy of a total shutdown was a mistake.

Keath by age internal   Keath by age flu
Probability that one will die of a cause like Coronavirus if one gets it

These charts should be read as showing the probability of dying as a function of age given that a person got the disease. They show that the risk for most of the working population (under age 50) is small and in fact no different than the flu or internal ailments.

I note that the death rate for drowning is greater than that of Coronavirus for younger people. I think society would go crazy if everyone was forbidden to go to the beach or a swimming pool. This is how stupid the shut down is. The unfortunate thing is that the news is not reporting this fact that young people are at minimum risk of dying from Corona virus. It is continuing to say how awful it is that older people are dying without pointing out that most of the people that are dying are older.  

Older people are not a significant part of the work force and they can be protected if they know they are in danger. This tact is exactly what the country of Sweden has done with great success and they did not have to RUIN their economy. Sweden is expecting a 6% drop in GDP with low unemployment whereas the US is expecting a 30% drop in GDP with high unemployment.

This situation is what I pointed out in my post ANAPHYLAXIS
. The US immune system (the government) has caused this economic tragedy. I wonder what a recovery might look like or even if recovery is possible.

SNAPSHOT OF THE WORLD TODAY

There have been about 100,000 Coronavirus deaths in the US to date and the government is remaining dictatorial in shutting the economy down. They claim that they are saving people's lives but in the end, overall no lives will be saved, Flattening the curve just delays death. It does not prevent death unless the hospitals are overwhelmed. And at this point few hospitals have had to do triage, that is choosing who will live and die. However, there are going to be a lot of deaths until herd immunity is reached by vaccine or recovery.

There are now some 40 million people on unemployment. Many of these people have small businesses that will never reopen. Further companies will be motivated to use automation to reduce the exposure to people who might get sick. This is the business death rate and it is high. The full extent of the business loss will not be known until the insolvency issues, that is debt default, have been resolved. The government has given many businesses free money that does not have to be repaid in order to mitigate this loss.

Many states see the light and they are opening their economies. Since there is in truth little risk for younger people there will not be a bad outcome with these reopenings. These states are gradually moving in the direction that Sweden took.

One part of the epiphany is that the Swedish model is correct. Rather than government dictates, the people should be warned about the risks due to old age. Then the responsibility lies with individuals. For example I am 80 and I now know that I will have a 30% chance of dying if I get Coronavirus. Hence I am going to continue to shelter in place.

I live in Santa Clara County California which has had draconian stay at home and business closure mandates even though out of over one million people there have only been 2600 illnesses with 139 deaths as of this writing. I note that I still can not get my haircut.

WHAT ABOUT RECOVERY ?

The good news is that the economy can reopen quickly with little bad long term consequences based on the CDC data above. People that are old or that have pre-existing conditions should stay sheltered and away from many social situations. The rest of the population can just resume business as normal.

Because of the lock down people will feel obligated to keep a social distance and maybe wear a mask. Social distancing will make many people avoid crowds. This will affect the travel, sports, theater, hospitality and transportation industries. This situation will be a impediment to a fast recovery..

The fed injection of trillions of dollars into the US economy has increased liquidity to compensate for low velocity of money. The stock market has recovered some. I suspect however that people will use a lot of the money they get to pay down debt and save for a possible second wave of shut down. Hence demand for goods is going to be low.. Manufacturers will react to the lack of demand by cutting production and making more people unemployed.  So I think that the economic down turn has quite a ways to run. In fact there may be no real recovery for many people at all.

There is opportunity in having high unemployment. The government might decide to continue the economic war with china by bringing home as much manufacturing as possible to the United States.. Like the WPA (Works Progress Administration) projects in the 1930s, the US will want to get people back to work and they can achieve there economic objective  of competing with China. I am just speculating here. But given President Trumps attitude toward China this type of scenario might happen.

I note that because of quantitative easing during the last 10 years a lot of zombie (nonviable) business continued to exist. The garden has been weeded. One might view this a creative destruction (Joseph Schumpeter). New business might flourish  in the current environment. However I also note that government regulations have made it difficult to form new businesses.. So in addition to modern day WPA the nation needs to relax its regulations, like the minimum wage.

THE BRIGHT SIDE

I am truly enjoying staying at home. My gardener has returned and my property looks great.

Usually I don't see children on the street even though there are many. Now many kids have gotten bicycles and are using them. This is just another item that reminds me of my childhood. I played the piano, worked in my father's wood shop making guns and boxes and the like, and rode my bike everywhere I wanted to. I am now having an excellent home-cooked meal every night and play board games with my partner Jackie. In addition the weather is great with little pollution and little traffic. It feels like the 1950s to me,
      
Last updated May 29, 2020
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