First estimate of the cost of the Wuhan panic shutdown


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The estimated lose to the U.S. economy due to the shutdown over the Wuhan panic is now estimated at $32 trillion, more than the entire annual gross national product for the country.

That number is of course preliminary, but for a first guess I think it is probably low, especially because it does not include the following:

  • Lost opportunity cost for businesses
  • Lost opportunity cost for individuals who had to delay dreams, plans, etc.
  • The loss of freedom (priceless)
  • The cost of not educating millions of students and falling further behind in academic standards

It also assumes we get back to work relatively soon. Should the shut down extend through May, I think the Great Depression will appear like a lark in comparison.

Note that the overall social cost of this panic and shutdown cannot be measured, as it is also establishing new social distancing customs that are probably overwrought and counter-productive for a healthy society.

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11 comments

  • Cotour

    The cost of having a truly free society (As it is) where the world is attracted like a moth to a flame.

    https://abcnews.go.com/Politics/disaster-motion-34-million-travelers-poured-us-coronavirus/story?id=69933625

    This is a paradoxical result of freedom, no?

  • Edward

    From the article: “I did everything we could do … This is about saving lives. If everything we do saves just one life, I’ll be happy.” (Governor Cuomo)
    and:
    If we’re going to be honest, at some point we will need to do a serious ‘cost benefit analysis’ of the economic and societal cost of literally shutting down huge swaths of our society and confining people to their homes.

    We can already do a little analysis, based upon what we already know about our society. If we take the average income of $50,000 and multiply by a 40 year work life, we find that each person earns around $1 million, which sounds like a reasonable measure of a person’s productivity and worth. If we take our $21 trillion GDP and divide by the 320 million population, we get an annual productivity of around $65,000 per person, multiplied by a 45 year work life we get a contribution of around $3 million, or multiplied by a 75 year lifetime (whole population, whole life), we get a contribution of around $5 million.

    The article’s $32 trillion comes to around $100,000 per American, or to $16 million for each of the once-projected 2 million lives that we could have lost, or $160 million for each of the currently projected 200,000 lives that might be lost or saved.

    Obamacare values a life at $26,000 times the expected remaining life expectancy, so an older person is worth around $100 thousand-ish, and a newborn is worth around $2 million (and we allow abortion?).

    So is Cuomo right, that one life is worth the loss of a month of a whole state’s worth of productivity and livelihood of all the others in that state? If a state of 12 million people (not New York) had to lose one month’s worth of productivity and liberty, would that loss of a million man-years, or 13,000 man-lives, be worth saving that one life? Really?

    As for that loss of liberty question, from the article: “We have faced effective Martial Law (nicely called ‘stay home’ orders, like we are pets… ‘stay’) and the suspension of basic human rights.

    Like pets, we are now the possessions of our government, rather than the owners of it. Who was it that said “we are all socialists, now”? Jon Meecham used it in a 2009 Newsweek magazine cover headline talking about Obama’s stimulus that is dwarfed by our current one.

    it is interesting to note that Trump said only a year or two ago that the U.S. would never become socialist, yet only a couple of weeks ago he said that it would be acceptable for the government to take equity positions in companies that took government loans due to this crisis. Trump thinks that this crisis is a reason to nationalize many, most, or all companies in the U.S. At the very least, these loans require that government have a large say in how these companies run themselves. Good bye liberty, hello fascism.

    By the way, what kind of loan requires an equity position?

  • Max

    Never let a crisis go to waste… They’ve been waiting for the right moment to crash the system and use a natural disaster as a excuse.
    World War II, war against communism in south east Asia, the Cold War, oil embargo, The collapse of the iron curtain countries and the rise of global warming. Faults flag wars like the Persian Gulf and Afghanistan. Y2K, NY “world trade center” marking the rise of terrorism. Home land security act passed, (suspiciously like “defense of the father land” in hitler’s Germany) climate change 2.0 telling us we are all doomed if we don’t act now, even if the action is worse than the problem. (Like our current situation)
    Travel restrictions at airports with federal officers violating intimate places as a condition, preparing us for…
    https://berniesanders.com/issues/green-new-deal/

    This is an example of the government “coming to save you” with programs like this;
    “Save American families money with investments in weatherization”???

    What has this virus lockdown produced?
    The drastic reduction in energy, check.
    The elimination/reduction in jet travel, Check.
    Billions/trillions of dollars for feel good programs, check.
    The closing of all banks preventing a run on the money that they do not have, check.
    Soviet style metering of commodities and services, rationing of food, water, toilet paper. Check.
    Rationing of healthcare, eliminating elective surgeries, check.
    Actively monitoring peoples movements with their GPS cell phones looking for violators of the “stay at home order”, check.
    Using public cameras, drones, cell phone cameras using “Pokémon go” style face recognition, looking for unauthorized/unmasked people in public for “instant rewards” on your cell phone account, Check.
    Shutting down politically incorrect businesses and services for the fear of contagion, Check.

    The list of the conversion of our country to the green new deal goes on and on, coming from a direction that blind sighted us. An attack that covers every aspect of our civilization that leaves no person untouched. Complete control, that at first is voluntary, but it’s very quickly being converted to mandatory with fines. We know from history where it goes from there.
    It’s uncanny how the government shut down during the continuing resolution during Obama, resulted in all federal workers not working but being paid, federal institutions/parks shut down. (Nearly as bad during trumps budget crisis) Now the budget crisis has been expanded to include the entire country/world with the necessary employees still working, unnecessary workers being paid for not working, the rest or being singled out as useless eaters.
    Everyone line up for your mandatory blood test for required antibodies… Forced medication/tissue typing for the good of all!

    Big brother knows what’s good for you, even if you don’t. Resistance is futile.

  • Cotour

    Max:

    Bernie Sanders and AOC have their “New green deal” and the coincidental total destruction of the American economy and employment numbers by default. (?)

    And it all happens to happen in the election year that president Trump, who represents the most existential threat to the Leftist Democrat leadership Globalist and un American agenda.

    If find that very, very conveniently coincidental.

    And to reiterate, in the end I also believe that if this is agenda or opportunity leveraged into an existing agenda that it will once again fail and Trump will remain to finish what must be finished, the destruction of the un American, Leftist / Globalist Democrat leadership of the Democrat party and Sorosian Globalists in general.

    If not that, then what?

  • wayne

    “Fish Tank Cleaner Lady Exposed…”
    Louder with Crowder
    April 3, 2020
    https://youtu.be/LLGQLKNBS-o
    7:47

  • Max

    Cotour;
    “If not that, then what?”

    You ever tried to turn a stampeding Buffalo herd? With out a gun? That’s probably what Trump feels like right now, the events of the world are to massive with too much momentum for one person to change based on willpower and personality. Even though he has the support the majority of the nation.
    Democrats and the media hate him and will take every opportunity to hurt him, even if they lose their own job. (Cut off their nose dispite their face, whatever that means)
    The most influential members of the Republican party (Bush, McCain, Romney) are the leaders of the “Trump haters for life club”. With the CIA/FBI deep state attempting black mail, soft and hard coup d’état and fictional scenarios all designed to remove Trump from office. I’m amazed he has lasted this long knowing what they have planned could be ruined if he didn’t play along. Will he pull a rabbit out of his hat? We won’t have to wait long to find out.
    Draining the swamp and fighting the swamp creatures would be easier if the millions of mosquitoes wasn’t draining the life out of him.
    Using Glenn Beck’s analogy, (sort of) we suddenly have a hole in the plane (USA) and are losing air. The oxygen masks only work in first class so the pilot (Government) had to turn off the engine to drop to a lower altitude to save the passengers that are not too old, sickly and frail. The plane is re-pressurizing. Now a choice needs to be made. Do we turn on the engines and pull up before it’s too late? Or do we pull out our parachutes telling ourselves that we can build a better plane next time, knowing someone sabotaged the perfectly sound plane that we already had…
    Sure the promises sounds great having a new plane that’s electric with solar panels for wings but there isn’t enough parachutes for everyone… The people in first class next to the doors have taken extra because they know the parachutes were made in China and they may not work.
    You can’t make an omelette without breaking some eggs, everything will be fine if we could just get enough “hope”… and change! That’s starting to sound a lot like two legs baaad, four legs gooood.

  • Jason Hillyer

    My first thought when I read the $32 Trillion figure… “That’s all?” I agree, I think it is a vast underestimation.

  • wayne

    The Tom Woods Show
    Ep. 1620 “The Economics of the Shutdown”
    March 26, 2020
    https://youtu.be/W8jzjsGaZxM
    33:34

  • Dick Eagleson

    Bob,

    It’s hard to see why, as you already question the obviously very iffy estimates of total potential deaths from Covid-19, you don’t do likewise for equally “out there” numbers anent the potential economic damage. U.S. GDP in 2019 was a bit shy of $21 trillion. To get a number of $32 trillion for total economic damage due to Covid-19, the U.S. would have to have a GDP of zero for roughly 18 months. This $32 trillion number needs at least one zero lopped off.

  • Dick Eagleson: Valid point. I admit that when it comes to economic numbers such as this, my depth of knowledge is somewhat limited, making me an easy target for bad math.

    This is why however I appreciate my readers and their comments.

    However, we both would agree that the harm to the U.S. economy caused by these shutdowns is dreadful, and with each passing day getting more catastrophic. Moreover, the link I provided did admit that their total was more than the U.S. GDP, which to them was merely an indicator that the economy was being pushed over a very bad cliff.

  • Edward

    Dick Eagleson,
    You wrote: To get a number of $32 trillion for total economic damage due to Covid-19, the U.S. would have to have a GDP of zero for roughly 18 months.”

    Unless you include monetary losses such as the drop in the value of investments, which the retired, most-at-risk population is concerned about, because that is future economic activity that they may be unable to participate in. Add in the cost of the most recent recovery/stimulus, which is a cost that we will eventually have to repay, most likely by taxing future money that will be unavailable for economic activity. Lost wages to fired or furloughed employees translates into future economic activity that will never occur. Money borrowed by government is money that becomes unavailable for business expansion, housing construction, and other economic activity. The economic cost is far greater than the loss of current productivity.

    The article did not say that it was total economic damage but that it was an estimate of the cost of the shutdown. The article gave a dollar figure, but it also acknowledged that there are societal, governance, and personal costs that are difficult to give a dollar value.

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