Monday, May 25, 2020

Why Didn't the 1958 &1918 Pandemics Destroy the Economy? Hint: It's the Lockdowns (The Means Will Not Justify The Ends)

Scapegoating a virus is all the rage. You see/read/hear it all over the place.
Deaths in long term care homes?- Scapegoat the virus- Ignore the systemic negligence
Crashing the economy? - Scapegoat the virus- Ignore the role of government and banks
 Reality is altogether different then scapegoating. It is the lockdowns that have destroyed vast swathes of the global economy and thrown millions and millions into despair.  

It was not the virus, because we deal with viruses every single second of every single minute of every single day of our lives- That's reality

What we don't deal with, have never dealt with until now is LOCKDOWNS

 So we're on the same page- Scapegoat: something or someone blamed for the wrongdoings, mistakes, or faults of others, especially for reasons of expediency.  Expediency: convenient and practical despite being wrong, inappropriate or immoral) 

Excerpting from a lengthy piece:Mises Institute
Media pundits and politicians are now in the habit of claiming it was the pandemic itself that has caused unemployment to skyrocket and economic growth to plummet. The claim is that sick and dying workers, fearful consumers, and disrupted supply chains would cause economic chaos. Some have even claimed that economic shutdowns actually help the economy, because it is claimed allowing the spread of the disease will itself destroy employment and economic growth.1
Leaving aside the fact there's no evidence lockdowns actually work, we can nonetheless look to past pandemics—where coercive government interventions were at most sporadic—we should see immense economic damage.  Specifically, we can look to the the pandemic of 1957-58, which was more deadly than the COVID-19 pandemic has been so far. We can also look to the 1918-19 pandemic. Yet, we will see that neither produced economic damage on a scale we now see as a result of the government mandated lockdowns. This thoroughly undermines the claims that the lockdowns are only a minor factor in economic destruction, and that the virus itself is the real culprit.

Economic Reactions in 1957–58, and in 1918–19

The CDC estimates that as of May 18 this year approximately ninety thousand Americans have died of COVID-19. Adjusted for population size, that comes out to a mortality rate of 272 per million.
This is (so far) less than half the mortality rate for the 1957–58 flu pandemic. In that pandemic, it is estimated that as many as 116,000 Americans died. Yet, the US population was much smaller then, totaling only 175 million. Adjusted for population size, mortality as a result of the "Asian flu" pandemic of 1957–58 was more than 660 per million.
That's the equivalent of 220,000 deaths in the United States today.
Yet, Americans in 1957 did not respond by shutting down commerce, forcing people into "lockdown," or driving unemployment up to Depression-era levels.  (Obviously there has been another decisive factor in taking these actions- I'd look to the massive bailouts) In fact, reports show that Americans took little action beyond the usual measures involved in trying to slow the spread of disease: hand washing, staying home when ill, etc.
Although the virus does appear to have been a factor in the 1958 recession, the economic effects were miniscule compared to what the US now faces from the reaction to the COVID-19 virus. This suggests that most of the economic damage now being experienced by workers and households in the US is more a product of the policy reaction to the virus than to the virus itself.
Overall, the economy declined by approximately 2 percent during both the first and second quarter of 1958, but this could not all be attributed to the effects of the virus. Unemployment at the time also surged, peaking at 7.5 percent during July 1958. Economic growth was positive again, however, by the fourth quarter of 1958 and had soared to over 9 percent growth in 1959. Unemployment had fallen to 5 percent by June of 1959.
But the overall economic impact of the virus itself was hardly disastrous. Henderson, et al conclude:
Despite the large numbers of cases, the 1957 outbreak did not appear to have a significant impact on the U.S. economy. For example, a Congressional Budget Office estimate found that a pandemic the scale of which occurred in 1957 would reduce real GDP by approximately 1% ‘‘but probably would not cause a recession and might not be distinguishable from the normal variation in economic activity.’’
The 1918–19 pandemic, which caused an astounding ten times as many deaths per million as the 1957–58 pandemic, also failed to produce economic disaster. Although the US entered the 1918–19 pandemic in poor economic shape thanks to the Great War, according to economists Efraim Benmelech and Carola Frydman,
The Spanish flu left almost no discernible mark on the aggregate US economy….According to some estimates, real gross national product actually grew in 1919, albeit by a modest 1% (Romer 1988). In new work, Velde (2020) shows that most indicators of aggregate economic activity suffered modestly, and those that did decline more significantly right after the influenza outbreak, like industrial output, recovered within months.

The Reaction in 2020

Needless to say, the economy today appears to be in far worse shape in the wake of the 2020 pandemic than in the days following the 1957–58 outbreak, or even in 1919.
As of April 2020, the unemployment rate has ballooned to 14.4 percent, the highest rate recorded since the Great Depression. The Atlanta Federal Reserve, meanwhile, forecasts a drop in GDP of more than 40 percent. More mild estimates suggest drops of 8 to 15 percent. If the milder predictions prove true, then the current downtown is "only" the worst since the Great Depression. If the Atlanta Fed is right, then we're in an unprecedented economic disaster.
The World Bank's estimates of even a "severe" pandemic, which predicted a GDP drop of around 5 percent, don't even come close to the estimates for the 2020 collapse. And why should they? The World Bank report didn't anticipate the global economic shutdown imposed on billions of human beings by the world's regimes. Thus, the bank's estimates assumed that economic losses would be limited to absenteeism, disrupted trade and travel, and declining demand due directly to disease or fear of disease.
So why the enormous difference in economic effects? The answer almost certainly lies in the fact that governments in 2020—unlike in any other period in American history—engaged in widespread business closures, "stay-at-home" orders, and other state-mandated and state-enforced actions that led to widespread layoffs and plummeting economic output.
Defenders of government-coerced "lockdowns" have insisted that fear of the virus would have destroyed the economy even without lockdowns, but there is no historical precedent for this claim, and no current evidence to support it. Although some survey data has been proffered to suggest that more than 60 percent of Americans say they plan to comply with stay-at-home orders, this merely tells us how people make plans when threatened with fines, police harassment, and other coercive measures.
In reality, the experience of the 1957–58 pandemic—or even the 1918–19 pandemic—gives us no reason to believe that joblessness should be increasing at unprecedented rates and that GDP would collapse by catastrophic levels. In a modern industrialized economy, that sort of economic damage is only achievable through government intervention, such as socialist coups, wars, and forced economic shutdowns in the name of combating disease.
The cost in terms of human life will be significant. One study contends that the current economic downturn could lead to seventy-five thousand "deaths of despair." This is not shocking, however, since the fatal effects of unemployment and economic decline have been known for decades.
Deaths of Despair.  Suicides. Overdoses. Deaths from surgeries and medical procedures not being done.  It's already occurring. The advocates of home  invasion/snatch and grabs who think it's okay to traumatize children should rethink their insane suppositions. But, they won't.
Defenders of lockdowns will likely continue to claim that "we have no choice" but to continue lockdowns for long periods of time. At the very least, many claim that the lockdowns until now have been "worth it." Yet the efficacy of lockdowns remains an open question, and has hardly been proven. Meanwhile, the world faces the worst economic disaster experienced in centuries. It didn't have to be this way.
  • 1. a. b. For example, Politico this week quotes an economist who says  the disease itself is the cause of the economic downturn. “The economic story really isn’t about lockdowns, and we’re going to make mistakes by pursuing that narrative. It really is about the disease."
No, it really is about the lockdowns- that failed to protect the elderly and the vulnerable and  while pushing many people to their limits. There were other options. 

2 comments:

  1. A good way of getting back at the pandemic pundits when they say "Your life is more important tan the economny!" would be "How am I going to afford food, water and medicine, not to mention hospital stays, if I have no money?" It should be plainly obvious that more people will die from other untreated conditions, starvation/dehydration, violence and rash decisions inspired by declining psychoemotional health than from a virus related to the cold and the influenzas, which is riskiest to the elderly and already infirm. Especially regarding the Indian Subcontinent and Subsaharan Africa, the Essential Pandemic Promoters have blood on their hands.

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  2. " It should be plainly obvious that more people will die from other untreated conditions, starvation/dehydration, violence and rash decisions inspired by declining psychoemotional health....."

    It should be and yet it's not!

    Only the independently wealthy don't worry about the economy- at least they don't worry like the rest of us do- Since we only have pay cheques to rely on and not trust funds and masses of investments

    ReplyDelete

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