Economic Armageddon: How Many Lives is $10 Trillion Worth?

I heard or read somewhere this week someone ask what would someone think if they had fallen asleep in December 2019 and awoke today to discover that the United States and the world had willingly shut down almost its entire economic engine and “encouraged” or demanded that their citizens stay in their houses except for buying groceries or going to the hospital.  No gatherings of 500 or 200 or 50 or 10 people were allowed.  Apple had closed all of its stores outside of China, movie theaters were vacant, Disney World was closed and air travel had fallen off a cliff. The stock markets had collapsed by 1/3, Catholic churches around the world were cancelling masses during Lent, the Olympics, the NBA, NCAA, MLB, Nascar and the PGA all cancelled or postponed their seasons.  All in less than a month, in some cases just a couple of weeks.

This Rip Van Winkle would likely have expressed disbelief and posited that other than an alien invasion or world war, only a contagion could have brought this about. 

Winkle:  “How many millions or billions of people had it killed?  25% of the world’s population, 1.5 billion people?”

You:  “No, less”.

Winkle:  “Surely it must have been 10% of the world’s population, 700 million people? “

You:  “Um… no. Less.”

Winkle:  “OK, 2%, 140 million people?  Half a percent – 35 million people.  Seriously, it has to be at least that bad to bring the world to such a standstill.  No Summer Olympics!  No Masters!  No Spring Break!”

You:  “Umm, not quite… the actual number is about 10,000, almost all of whom are in their 70’s and 80’s with underlying health issues…”

Tilting his head and squinting his eyes, Winkle starts looking around for a camera as he’s sure he’s on some modern Candid Camera reboot or is being pranked by those Russian radio shock jocks who conned Prince Harry into disparaging his own family.

When you finally convince him that he is not being pranked and that the world has indeed kneecapped its economy for a less than 10,000 deaths… less than ½ the number of people killed worldwide in car accidents every single week, Winkle thinks the world has gone crazy, recognizing that it has probably lopped off $5 trillion off of its economy, and perhaps a lot more. 

Now of course, the goal of all of that activity – or lack thereof as the case might be – is to keep that number of deaths down.  But the question is, if the world hadn’t imposed such draconian measures on itself, how bad would it get?

Estimates of course vary widely, from tens or hundreds of thousands to 50 million, a little below the total number of people who die worldwide annually from all sources.  Here in the United States the ranges are wide too, from a conservative number akin to what the flu inflicts annually, 70,000 to two million.   

Whatever ends up being the case, one has to wonder, what are the real world consequences of such measures.  Sure, there will be the trillions of dollars that governments around the world print in order to try and keep their economies from collapsing.  But what about all the businesses that fail, both big and small.  The jobs that will never return and the corresponding uptick in alcoholism and suicide induced in those who live on the financial edges of life.  Shipments or deliveries of computers or vitamins or kneebraces that arrive two months late.  The weddings that were postponed and never take place or the relationships that fracture as a result of sudden, ‘round the clock’ close proximity.  The 2-3 months of education that kids around the world didn’t get.  The movies people never see, the dates never gone on, the restaurant meals never served.  Not to mention the mental anguish that 7 billion experienced simultaneously. 

This is indeed a crass way of looking at something, but if one assumes that there is a correlation between economic activity and life & the quality of life, one has to ask, how much damage to both has this shutdown caused?  If we could, before Winkle fell off to sleep, we might ask the question a slightly different way… How many lives is it necessary to save in order for the governments of the world to find it prudent to throw the planet’s entire economy into chaos and essentially destroy between five or ten trillion dollars of economic activity and cause markets to decline by similar amounts? 

At 50 million lives saved – again, approximately the number of people who die around the world annually from all causes – the destruction of $10 trillion in economic activity and value equates to $200,000 per life saved, or approximately 20 times the average “value” of every person as measured by the dividing the world’s $88 trillion GDP by 7.7 billion people.  At 1 million lives saved the cost jumps to $5 million per life and at 250,000 lives saved the cost per saved life is $20 million. 

No doubt if you or someone in your family is one of the lives saved, that $20 million price tag is well worth it, as is the $200,000 tag.  The question is however, today, when the worldwide death toll from this virus sits at less than 10,000, is it prudent for the governments of the world to send the planet’s economy off a cliff and into freefall to arrest a virus that in even the worst case scenarios is projected to kill less than 1% of the people who actually contract it?

We all probably have our own opinion on such things, but our opinions don’t count in “emergencies”.  Governments are sometimes like lemmings, particularly in a world driven by a floundering traditional media that seeks out or creates chaos or anxiety or sensationalism as it struggles to remain relevant.  Only time will tell whether March 2020 is more akin to the launch of the Manhattan Project or the passage of Smoot Hawley.  History will, as it always does, have the last say…

A Donald Trump presidency will be the death of the Republican party. Good riddance!

It looks like Donald Trump may run the table towards Cleveland, or close to it. Although it may end up being a two man race after the SEC Primary – John Kasich doesn’t count and Ben Carson is irrelevant – it may end up being too late to matter.  So why would Donald Trump be the end of the Republican party? Because other than building a fence – which is important – it’s likely that not much will change…and things might even get a bit worse.

Trump is attracting the attention of millions of Americans from across the spectrum. Somehow he attracted the votes of tens of thousands of evangelicals in South Carolina while at the same time drawing attention from minorities and millennials and self professed “conservatives”. His numbers are actually increasing, having won 45% of the vote in Nevada, almost a 50% jump from South Carolina less than a week before.  As I said last week, Trump 2016 is like Obama 2008 in that he is, for his fans, an empty vessel into which they can pour their dreams. That’s great for him on the campaign trail, but it might not be such a good thing for the country when he’s in the White House.

All of the people who are flocking to Trump are doing so for what they read into his “Make America Great Again” slogan. (Rush again on Monday disingenuously claimed the slogan is somehow more substantive than “Hope and Change”… He’s wrong, it's not.) Trumpkins are understandably frustrated with a government that doesn’t work. They are frustrated with a government that is involved in too many things. They are frustrated with a government that seems unresponsive to their needs and demands.  They want a government that protects their individual freedoms.  Those are all real concerns… but the problem is, Donald Trump will not likely change much of that, and to the degree that he does, he may well do so unconstitutionally.

And that’s the rub, and that’s why the Republican party will be doomed by a successful Trump run for the White House. The Republican Party is on the ropes in the first place because its candidates run on conservative ideas and then run away from them once in office. Whether it’s vows to stop Obamacare or promises to cut spending, GOP voters vote for one thing and via the magic of Washington, they get something else. Most GOP voters are simply sick of it. That explains the Trump phenomena and the strength of Ted Cruz.

So how exactly does a Donald Trump presidency doom the GOP? Simple. Because a significant faction of the GOP voter base is ready to walk already – myself included - because the party has lost its way and become liberalism light, but because Ted Cruz is in the race many of us are at least hopeful that it’s possible to end up with an actual limited government conservative nominee and president. Another significant portion of the voters are looking for something different than the status quo… hence Trump. Together those groups make up half if not more of the party, and a Trump in the White House will not only not be conservative, he’ll likely not change much at all.

Change doesn’t come easy, particularly when you’re fighting a leviathan. And Washington is nothing if not a leviathan. It’s entrenched in almost every aspect of American life. It’s dysfunctional and provides money and services to millions of America's who have become fat and happy suckling on the nanny state teat. And don't forget the millions of well paid bureaucrats and supplicants doing the same.

Bobby Kennedy learned as Attorney General, that changing anything in Washington is almost impossible, and the leviathan of government is exponentially larger today than it was then. Even Ronald Reagan, who famously wanted to kill the Departments of Energy and Education, was stonewalled. And Washington is more entrenched now than it was then.

In order to change Washington one has to have a visceral hate for big government, because it won’t go away without a fight. There are too many people, on both ends of the government industrial complex who have vested interests in maintaining it as it is. Add to that the fact that Trump is a big government crony capitalist and you can see where this is going, or not, as the case might be. Sure, he’ll build a wall and rename Obamacare, but will he rein in the NLRB or the EPA or HUD?  Don’t count on it. Will he eliminate the Dept of Education or the CFPB or agriculture subsidies? Not likely. And perhaps most importantly, will he put a constitutionalist on the Supreme Court to replace Scalia? No chance.

And that’s why a Donald Trump presidency will be the death of the GOP. Nothing will change.  Washington will likely function very much the way it does now… only the people running it will have Rs by their names rather than Ds. Once Republican voters have their guy in the White House and nothing changes, the factions of the party that seek something other than go-along-to-get-along big government, crony capitalism, and the nanny state will have no choice but to form a third party.  Maybe it will be a conglomeration of Tea Party groups. Maybe it will be a amalgamation with the Libertarian Party. Maybe they go for the fence and create an entirely new party focused on limited government, free enterprise and individual freedom. Whatever it turns out to be, it’s happening because the Republican party no longer stands for anything but itself. In Donald Trump it has its man. Good riddance to it.