Mass death is the economic consequence of lockdowns — Breaking the Silence
We are starting to see the reports now, “Coronavirus pandemic will cause famine of biblical proportions.” This article headline lies, because what will cause that is not the pandemic itself, but the lockdowns. Those lockdowns come on the heels of conflict famine and an apocalyptic locust swarm that put 70 million people into starvation if they do not get help. An estimated 265 million people will starve to death without major help.
“Coronavirus threatens to turn aid crises into ‘humanitarian catastrophes’” as restrictions on movement and shipping stop relief supplies. “Pandemic could ‘turn back the clock’ 20 years on malaria deaths, warns WHO”, because of program disruptions. 10 million people here, 700,000 people there, this matters. To put this in perspective, 700,000 people is pretty close to the population of San Francisco.
The director of Humanist Global Charity reported to me directly that in DR Congo, Nigeria, and Uganda, people are starving and desperate for work.
But it’s not just the developing world that is seeing problems. “Farmers Dump Milk, Break Eggs as Coronavirus Restaurant Closings Destroy Demand”. “Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic.” “Lines grow at food banks as some farmers destroy food.” These crops and products are produced every day, but when the supply chain to the demand is destroyed, a new one can’t appear overnight. So food piles up. This also means that the farmers can’t get paid for their crops, and farming is a low-margin business. So we should expect farms to go into bankruptcy, and in our system, that will mean destruction.
This is not “creative destruction” of the technological improvement kind that Schumpeter identified in the 1930's. This is simple destruction. It’s the kind of thing it normally takes a serious war to accomplish.
We are seeing this in energy as well. Oil is piling up like green beans and milk, except there’s no way to destroy it. “The oil market is running out of storage space and production cuts loom,” this article discusses how US oil storage will be filled by May, and global storage will be filled by June. “What’s next for oil after prices go negative? Saudis, other producers expected to do more to curb supply.” This means that the oil producing nations are getting their income shut off. It also means that the entire transport sector, world-wide, is minimal. Automobiles aren’t selling. Trucks are idle, which means trucks won’t sell, so manufacturers of those vehicles and associated parts are shut down. All those suppliers are idled.
But it gets worse. The lockdowns have killed US energy (that isn’t nuclear). Oil price is not going back to a sustainable level for a long time. The USA will not be energy independent again until we build out our nuclear system. That means that all that money we have been paying for fuel that used to recirculate into the USA is going to go to … Saudi Arabia, Russia, Venezuela, etc..
If our economy was an animal, we would say it was extremely sick, that it had fallen down with circulatory failure.
We have to face facts, in the midst of our ivory-tower lockdown idealism. Yes, looking only at the disease, lockdown is the right thing. But how many people do we expect to save here? I understand the epidemiology well. The worst case is about 4.5 million Americans dying. Globally, it’s 100 million people or so. But now we have estimates (which I believe are low) that over a quarter billion people will likely die because of what we are doing. Is this still the right thing? I don’t think so.
For the developing world: India, all of Africa, most of South America and Central America, the right thing to do is just ride it out, and no lockdowns. For the developed world, I think the lockdown is worse than the disease.
