The Human Cost of Economic Shutdowns
Article from For Liberty by Norm Leahy.
With a handful of states opting to slowly lift the restrictions placed on businesses, the question about when others will follow suit is getting more attention – as is the notion that prolonged economic shutdowns can create lasting harm.
A San Francisco Federal Reserve study looked at pandemics going back to the Black Death in the 14th century to see how it took before nations got back to “normal.”
The authors concluded these massively disruptive health events can affect economies for up to 40 years, mainly by reducing rates of return and investment.
But what about the effects on individuals? Reason Foundation senior fellow Geoffrey Lawrence argues that long-term disruptions can inflict substantial harm on individual health and well-being across the globe:
A global collapse in economic production to 1995 levels could expose untold millions of people to conditions of extreme poverty once again. Individuals around the world could suffer the twin dangers of rising prices that result from reduced global production and falling incomes as unemployment skyrockets. Suddenly, millions of people who were out of poverty, or people who have never been impoverished, will no longer be able to afford or even find basic items they were previously able to purchase.
While federal, state, and local governments are aggressively pumping money and resources into the economy to prevent these worst-case scenarios, even the mighty American economy cannot endure a months-long shutdown.
The sooner we can safely get the wheels of commerce turning once again, the better.