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unome -> RE: Covid 19 and those infected (8/7/2020 1:26:49 PM)
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quote:
ORIGINAL: David F.
I don't understand the concept of a quarantine 'shutting down the economy' or 'the solution being worse than the problem'. It seems to me that the supply of food, water, energy, people, and natural resources is a constant. The only thing that changes in a quarantine is how, where, and at what rate money changes hands. Money is a man-made concept that theoretically should be able to be suspended for a short period of time for the health and safety of the people. Capitalism and a capitalist health care system doesn't seem to be able to handle a pandemic like this. It could be suspended for a short period of time until we have this thing licked.
Not be be mean, but you could have just stopped at "I don't understand". The economy is something so complex and vast that you could have a PHD in Finance or Macroeconomics and still only know so much.
Right off the bat, the supply of almost everything is NOT a constant. Farmers will grow more of this food or that food if the prices are right. Marginal land will be planted if the prices are high and lay fallow or used for cattle feed if prices are lower. We saw just this year that pig farmers actually killed baby pigs because the prices were too low to raise them and make money doing so.
If there is a greater demand for water, prices rise and more expensive ways of getting water, like desalinization, become economically viable.
Same with energy. Cost of energy goes up and solar panels become more viable. Building a new nuclear plant, or oil field or wind farm becomes more viable.
People will want more money if the demand goes up for labor and also if costs go up.
Health care is trickier because if the only way to save yourself or your loved one, you want to pay any price. Government certainly has to be involved in a more substantial way in health care because supply and demand are not going to work as well since supply can be controlled by patents and demand is almost completely price inelastic for life-saving drugs and services. Inelastic meaning that you would pay almost any price, but you also would not buy more if they were cheap because you only need one heart surgery if that is all you need. You are not having another one because of a BOGO sale!
The damage that shutting down the economy does is huge, but every business is different. The easy ones to see is how quarantine harms anyone in the travel or tourism industries. Also, the restaurant and bar business. Events, concerts, etc. This affects the commercial real estate market, the ability for people to pay rent, the ability of landlords to pay mortgages.
You can shut all of this down, and we virtually did, but huge amount of people are employed in these industries. And they take the money they make in profits and wages and spend it in other areas of the economy.
Let's say you shut down 10% of the economy. What will happen? A recession. A huge one. Why? Because you cannot make the economy 10% smaller and not have a smaller pie for everyone to get a piece of.
And the effects are worse than just a lost 10%. So many businesses have fixed costs that cannot be changed so losing 10% of revenue could be the difference of making a decent amount of money or losing a large amount of money. When businesses start losing money that was not planned for, they only have a few options. They can dip into reserves if they have them, but after that they have to reduce expenses. They cannot pay less in rent or mortgage because they could be evicted and they cannot charge more for their products because competition will not let them. So they may have to let some employees go. And this just compounds the overall economic problem.
You just cannot suspend all of these realities because they have bad results during government shutdowns. And, when the government tries to intervene, it normally goes horribly wrong.
The first shutdowns were somewhat necessary to stop the surge and to figure out the full extent of the problem and how to treat it. We are way past the point where that makes any sense in a larger sense. But, there are clearly some areas that are, and should be, still shuttered. Bars and nightclubs. Full stadiums. But even these activities should be seen as a trade off where we are purposefully hurting our economy and people in those industries because the solution is better than the problem created.
But, at some point, in most learned people's opinion, there gets to be a point where the the solution of forced shutdowns is worse than the problem. This is easier to see in economic ventures, but harder to measure in educational ones. Hoiseth sniffs that lives are more important than times tables and this false choice is correct, but pointless. The point is how much damage are we created to our population and country if we teach large percentages of our population less over, say, a whole year, what happens over the long term?
But, there is not a short-term economic effect of not teaching children much for a year. The damage will happen in the future. I guess that is the point with all education, isn't it? In the short-term it is an expense with no immediate return and the benefits are all future based.
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