The American economy is very much between a rock and a hard place at the moment. Should the country begin to reopen the economy to alleviate some of the unprecedented strain being put on the economy, or is it too dangerous?
Let’s take a look at both sides of the issue.
COVID-19's Economic Toll
Unemployment is currently around 20%, and it continues to rise. Many economists predict it will grow higher than the historical 25% it reached during the Great Depression.
So far, 33 million Americans have lost their jobs. Hundreds of thousands of small businesses have been forced to close, probably for good. 20% of American children are now living in families who struggle to provide regular meals. According to a Pew poll, over half of the population under 30 years old have lost their jobs.
Things are very bad. And they’re only going to continue at this rate if people don’t start stimulating the economy again. That means working full-time, spending money, traveling, etcetera.
What if We Reopen the Economy?
Reopening the economy would not erase coronavirus’s economic impact, but it might have a significant effect. Many pro-reopening economists predict that millions of jobs could be saved if the reopening happens in the near future.
And that is not to mention the general health, happiness, and morale of the American people, which many theorize will skyrocket when people are allowed to get out of the house and back to work.
On the other hand, some economists predict that reopening the economy anytime soon will lead to disaster. They argue that sending the workforce back to their offices will, in effect, be a death order for many, especially since many of them are older and more susceptible.
Most returning workers would not even have access to protective equipment. Those are all being used by healthcare workers, who are facing a shortage as is. Sending a bunch of middle to older aged people back to their crowded workplaces may not be the best idea.
Also, point out the naysayers, reopening American businesses wouldn’t exactly bring about a return to the economic norm. Commerce relies heavily on the transactions done overseas, and very few other countries are up and running again at this point.
Some of them say American consumers are not ready to start going out and stimulating the economy, either. They may be willing to go to work to collect a paycheck, but they won’t be comfortable going to a bar with colleagues after work because there is still a significant risk of contracting COVID-19.
China reopened the economy last month. It’s a giant economy that has already been reopened for a significant amount of time, which makes it a perfect model to examine.
With its factories and offices back online, Chinese production surged. Retail sales did not, however. Both domestically and internationally, no one was buying the things China was producing. That left them with a massive surplus of products with no one to consume them.
Chinese economists are expecting another economic downturn because of this surplus, called a “W-shaped recession.”
As Keith Bradsher of The New York Times explains, “in such a pattern, the economy nose-dives when most businesses close during lockdowns and then seems to recover when factories and stores reopen. But with many consumers still scared of infection and leery of spending money, the economy then dips a second time before embarking on a more sustainable recovery.”
Maybe that’s a painful but necessary process every country needs to go through.
The thing is, China waited until new coronavirus cases were all but eliminated to reopen its economy. That is far from being the case in the US.
Is it Worth the Risk?
So is it worth the risk? The decision is about weighing the pros — all of the jobs that could be regained — against the cons — all the lives that could be lost. We should also look at the choice through the lens of what we have seen from China already.
The general position of the American GOP seems to be that yes, it is worth the risk.
When asked if additional deaths could be in the cards after the economy reopens, President Trump said, “hopefully, that won’t be the case … but it could very well be the case… We have to be warriors. We can’t keep our country closed down for years.”
Dan Patrick, Texas’s republican lieutenant governor, told FOX News that “There are more important things than living… I don’t want to die, nobody wants to die, but man, we got to take some risks and get back in the game and get this country back up and running”.
They may have a point, but it may also be valid that the US could just wait a month or two, even though it would cost millions of jobs, in order to save countless lives.
Our opinion is that the economy does indeed need to reopen sooner rather than later, but not until:
- Safety equipment is widely available to those who need it.
- A quick and reliable testing method is available, something on the horizon in many states.
Even at that point, workers should be allowed to work from home if they choose to until new cases drop to zero.
This is just our opinion, and it remains to be seen what actual measures will be imposed when the government reopen the economy.
What are your ideas? Should the government reopen the economy? Please leave them in the comments section below.
FOR AN IMPARTISAN LOOK AT REOPENING THE AMERICAN ECONOMY, CHECK OUT THIS INTERVIEW BETWEEN DAVE RAMSEY AND ECONOMIST ARTHUR LAFFER.