SARS-CoV-2

There are many costs resulting from the economic shutdown to prevent lives being lost to covid-19. It is essential that we balance the cost of preventing the spread of the illness with the cost of the economic shutdown.  Are the lives on only one side worth saving?

Vaughn Cordle, CFA, Founder of Ionosphere Capital LLC, has analyzed the costs of multiple approaches to managing the risks.

Mortality Rates

Understanding the mortality figures for deaths caused by covid-19 is critical to the evaluation.  The following is the basis for the analysis by Ionosphere:

Covid deaths are exaggerated because of how they are reported and many are reported as covid deaths without being tested. Moreover, there is a financial incentive to exaggerate the numbers. Even the CDC has a much lower covid death count when properly coded and estimated–37,308 as of May 1.  This number is much lower than the 60,300 estimated by IMHE researchers on April 20.  Number of deaths reported by the CDC are the total number of deaths received and coded as of the date of analysis and do not represent all deaths that occurred in that period. [emphasis added] (source)

Related Deaths

The number of deaths resulting from the economic shutdown will likely increase by adding drug-overdose deaths and suicides caused primarily by unemployment.  I would add the impact of social distancing and isolation from family and companions to unemployment.

Assuming a phased-in recovery beginning in mid-May, the analysis estimates “33,743 drug overdoses and 7,324 suicides, which sum to 41,067 layoff-related deaths.”  If the plan is followed, the lives lost because of the shutdown could exceed lives lost to the illness by 68%.  A lockdown that lasts throughout May or longer would increase the estimated deaths proportionately.  Cordle concludes, “The point where layoff-related deaths exceed covid-19 lives saved is when we need to consider whether going on will be costlier than going back.” (source)

(chart source)

Economic Impact

Ionosphere estimates an “average household burden of $33,442 and $27,848 per employed due to the $4.3trn cost to save covid-19-related lives.” The analysis estimates that the public debt of $4.3 trillion from deficit spending and public debt caused by the current economic shutdown “will result in higher taxes, reduced social spending, lower job growth, GDP and living standards.” 

Most people, who are rightfully concerned about illness and death from covid-19, are not, however, considering the deaths and cost burden that are caused by the economic shutdown. 

Worldwide Starvation from Economic Shutdown

Many countries in the world are already facing starvation and famine.

• Coronavirus pandemic ‘will cause famine of biblical proportions’
• Some Countries Face an Awful Question: Death by Coronavirus or by Hunger?
• In Zimbabwe, ‘you win coronavirus or you win starvation’
• Pandemic could mean 260 million people worldwide ‘marching toward starvation’
• ‘We may have to ration’: US food banks face shortages as demand surges
• (Update 7/12/20) WATCH: The Gates Foundation and the Subversion of Public Health Policy in India, “In India, tens of millions are in danger of acute hunger and starvation.”

This Ionosphere chart illustrates the cost of delaying the lockdown.

(chart source)

Vaughn Cordle has additional data charts that illustrate the economic costs of the shutdown.

More analysis is needed as we learn more about the actual circumstances; however, I believe that we need to consider the cost of the economic shutdown to all people in the world not just to those most susceptible to the virus.  We should continue to encourage, not force, those who are most vulnerable to stay home, but healthy people should be allowed to continue their employment, education, and other everyday tasks as necessary without government intervention.  The sooner we end the shutdown, the less the damage to the world economy.

Disclaimer:  I am not an expert on economics, epidemics, or viruses.  I am a health researcher who is concerned about the impact on the people of the world from an extended shutdown.

Sources for Additional Information:

• Pandemic 2020: Layoff-related deaths exceed covid-19 deaths by 41% by Vaugn Cordle
• The price of reducing needless deaths versus the price of COVID-19 lives saved: The grim calculus. by Vaughn Cordle
• The Cost of COVID-19: A Rough Estimate of the 2020 US GDP Impact
• The Economic Costs of a Government Shutdown
• How Shutting Down The Economy Much Longer Could Kill Tens Of Thousands Of Americans
• Shutdown Spotlights Economic Cost of Saving Lives
• The Economic Cost of the Shutdown
• The Cost of Coronavirus Shutdown Orders

About Vaughn Cordle, CFA, founder of Ionosphere, provides investment research and analytic support for investors in the airline and related industries. (source)

Update August 26, 2020: 17 Facts That Prove The U.S. Economy Is A Complete And Total Disaster Zone At This Point by MIchael Snyder.  This article paints a dark picture of our economic situation.  Fact #1 “According to the San Francisco Chamber of Commerce, more than half of all the storefronts in the entire city of San Francisco are no longer in business.”

Update October 16, 2020: We Just Witnessed the Greatest Transfer of Wealth In History Thanks to COVID – The Great Reset is Next by Health Impact News. “Billionaire wealth has hit a record of 10.2 trillion dollars during 2020. This video is about the greatest transfer of wealth in history, how the rich got richer while the poor got poorer as the demolition of small business took place.”  The article says that ” the American middle class is disappearing.”

Update December 23, 2020: Net Worth Of U.S. Billionaires Has Soared By $1 Trillion— To Total Of $4 Trillion—Since Pandemic Began by by American’s for Tax Fairness.  Comment on this article by Children’s Health Defense: “Never before has America seen such an accumulation of wealth in so few hands. As tens of millions of Americans suffer from the health and economic ravages of this pandemic, a few hundred billionaires add to their massive fortunes.”

SARS-CoV-2 photo credit: CDC