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…

My rather lopsided love/hate relationship with Barack Obama…

Some time ago I was talking with a guy I know and the issue of politics came up followed soon thereafter by the mention of Barack Obama. I instantly said “I hate that guy!” Afterward I wondered if that was really an accurate statement… after some introspection I have to admit, it's kinda true.

I know in a world of political correctness I should maybe not say that… but I feel as if I must, if for no other reason that explain why. Although I don’t actually know Barack Obama personally, that is exactly how I feel. On a personal level he might be a great guy. He’s certainly personable, he might be a great guy to have a beer with, he appears to be a good father and he would probably make a great guest on SportsCenter. Nonetheless, the dictionary defines hate thus: “To dislike intensely or passionately; feel extreme aversion for or extreme hostility toward; detest.” That seems about right.

How is it even possible that I might have such a strong feeling towards someone I’ve never met? Charlie Rangel and MSNBC and the rest of the fabulists - about all things conservative and Tea Party related - would suggest it’s because he’s black, obviously. That’s their right, but nothing could be farther from the truth. While I despise Barack Obama, it has nothing to do with his skin color. Frankly I feel exactly the same about Barney Frank and Nancy Pelosi as well… and the last time I checked neither of them was black.

No, I hate Barack Obama because it is his goal is to destroy that thing I hold most dear: the United States. The United States is indeed an imperfect place, but so too is every other place on this planet. It has however created more prosperity and improved the condition of man more than any other nation in human history. And the biggest part of that success was the driven by the free market system – imperfect as it may be – and its companion individual freedoms.

The United States is not just a geographic land mass sitting between two oceans. There are 200 plus other countries around the world that can be defined by lines on a map. None of them is anything like the United States. They may share some traits with us, but America is a different animal altogether. While you may very well hear someone saying they want to move to France or Germany, you don’t hear them saying “I want to become French” or “I want to become German”. They can move to France, they can become a French citizen… but they can’t become “French”. That has never been the case with the United States. For centuries people have dreamed of coming to America and becoming an American. That is because for most of our history the world understood that America was a place where, regardless of where you came from or what you started with, with hard work, they could achieve spectacular success, however they wanted to define it. For outsiders looking in and those born here, the American Dream was something of consequence, something to strive for, something worth sacrificing for. People like Cyrus McCormick, Andrew Carnegie, Levi Strauss and Madam C. J. Walker knew it long ago while people like Sara Blakely, Daymond John, John Schnatter, Cesar Millan and Mark Cuban know it today.

Unfortunately Barack Obama doesn’t understand any of that. While he talks about an American Dream, his American Dream is one where the nanny state of government swaddles the nation, suckles the citizens, gets to decide who wins and who loses in virtually everything, gets to arbitrarily define the rules, and gets to keep its thumb on every scale. At its foundations that is a misunderstanding of what made America more than just a geographic entity in the first place. America is not great because of government, it is great because of its freedom… economic and otherwise. America was not made great by agencies like the ICC or the SEC or the FDA, the IRS, the EPA or even NASA for that matter. No, America was made great by companies like GE and Ford and Carnegie Steel and International Harvester and Standard Oil and Rockwell, and Intel and IBM and Merck and Kelloggs and J.P Morgan and Sears and Delta Airlines and Microsoft and Disney and Turner and millions of other companies started by entrepreneurs and investors who risked much, and sometimes everything to do something worth doing and earn a profit while doing it.

But Barack Obama doesn’t understand that. He fundamentally misunderstands how and why businesses function – and truth be told… so do most liberals. He believes that businesses exist to provide jobs to employees. He believes businesses exist to provide tax revenue to the government. He believes that businesses exist to further his social agenda. He simply doesn’t understand that while businesses may do any or all of those things, in a free market businesses exist to generate profits for entrepreneurs and investors.

It is that disconnect that makes Barack Obama worthy of being hated. Not because he misunderstands the basic element of free market economics, but because he feels it’s his right to use the police power of the United States to wreck the most prosperous and powerful economic ecosystem the world has ever seen. From green energy boondoggles to stultifying regulation to excessive taxes to seemingly boundless spending on social programs, Barack Obama is systematically strangling the goose that has laid the golden eggs for over 200 years.

If you think the word hate is too strong, what else might you call it when you see a man who is leading the charge to push the United States into an economic tailspin from which we might never recover? America becoming an economic basket case the likes of Greece or Detroit would create a worldwide catastrophe, economic and otherwise that would destroy the lives of hundreds of millions of people, both at home and abroad. A man who is working to inflict that level of destruction on a nation is indeed worthy of being hated.

That doesn’t mean that I wish him ill however. On the contrary, I hope he lives another 50 years after he leaves office. If we’re lucky that will be long enough to allow him to observe how his imperious anti capitalist reign caused (hopefully) a reawakening of the American people to the fragility of freedom and prosperity, resulting in a wholesale dismantling of the regulatory leviathan he has championed. Now that would be a great reason to love him.