Economics: The Economy Would Get Even Worse Without Lockdowns

(Drivebycuriosity) - There is a wave of protests against the severe COVID-19 lockdowns, often aggressively. People respond to imploding economies and extremely jumping jobless numbers. Some influencers claim that the lockdowns are unnecessary and do harm the economies without reason. Really?

It seems that many care more about being able to watch football or to get a haircut than about the number of severely sick and the deaths. But I don´t write here about the moral implications and will focus on the economics. I am convinced, supported by the facts, that the economy would be much worse without the lockdowns.

First, there is - and was - no real quarantine and no complete shutdown in the US. Yes, I miss my gym, going to my favorite pub and the heavy metal concerts and festivals which I have tickets for where all canceled or postponed. But the supply chains, which deliver our daily food and other necessities, are still functioning. The farmers are working and the transporting sector, there is electricity, gas and Internet. I still can shop for food at many places and in Manhattan where I live are many restaurants - and even some pubs - open for take-out & home-delivery. The streets in my neighborhoods - Lower East Side, East Village & Soho - have still plenty of strollers and joggers.

I am aware that more than 30 million Americans lost their jobs temporarily. But they receive unemployment  payments and - like most Americans - checks from the IRS. Government and Federal Reserve have been pumping about $6 trillions into the economy to mitigate the carnage done by the crisis. And a lot of office jobs - and some education & entertainment - can be done from home thanks to the Internet.

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The lockdowns - even though they were just partial - reduced the transmission of the virus significantly because they limited personal contacts - making it more difficult for the virus to jump from person to person. As a result the lockdowns - so incomplete they are - squeezed the growth rates and flattened the curves of new cases, hospitalized and death people significantly. Before the lockdowns the number of new cases in Europe & the US grew daily around 30% and more and the number of infected doubled roughly every 3 days. Without lockdowns the US - and the rest of the world - would have multiple times sick & dead people. That might not interest those who are so fortunate to be immune to the virus. But even these people would get hit - by a much weaker economy,

Even with incomplete lockdowns some parts of the economies which had permissions to continue got closed - at least temporarily. In the US, Brazil & Spain several meat processing and packaging plants closed after employees have tested positive for the virus (cnn). General Electric shut down temporarily a wind power factory after 110 workers tested positive for the virus ( seekingalpha). A Walmart super center in Colorado got closed after coronavirus deaths (cnn). Workers from Amazon, Instacart, Whole Foods, Walmart, Target  and FedEx had a walk out on work on May 1 due to health and safety concerns amid the pandemic ( seekingalpha). In Germany all the car companies shut down for weeks - in part because of logistic chain problems, in part out of concern for worker health, and in part because orders collapsed (marginalrevolution). Amazon France shut down because a court ordered strict constrains combined with drastic fines which made orderly business impossible after worker protests about security.

How would workers and unions respond if the numbers of sick & dead people would have continued snowballing as they did in March? How many employees would be on sick leave? How man shops and factories would get closed because there were not enough workers available? Even if businesses stayed open they would be confronted with a shrinking demand caused by scared customers. OpenTable bookings had declined 70% before US restaurants were closed ( twitter ). Sweden does not have lockdowns and movie theaters stay open. But box office dropped 98% by March 20, due to fans staying away from movie theaters, chains shutting down voluntarily, and studios delaying new releases ( marginalrevolution).

The supply chains are already stressed today. Many grocery store shelves are empty because of ongoing supply problems, fresh bought food is already spoiled and some groceries in my Manhattan neighborhood are closed without government action. Would I be able to buy food and to get electricity  when too many factories, shops and utilities are closed because owners and employees are panicking or a sick? If governments wouldn`t have closed the economy (partially), workers and customers would have done it.