Why Opening the Economy Now Won’t Help Much…and Might Hurt a Lot

I cannot believe that I wrote that headline. I’m trying real hard to come up with a disclaimer and then take my seat on the conservative bandwagon.  Then I would make a compelling argument for opening up the economy sooner rather than later. Let’s get back to business. What this shutdown is doing to the nation is worse than Covid-19. If we stay away much longer, there won’t be anything to come back for. Besides there are lots of places like here in Texas where people haven’t experienced anything close to what the folks in New York, or New Orleans for that matter, have gone through and are still going through. Let’s roll the dice, the odds are in our favor.

However, as good as that sounds, I find myself saying that we should tap the brakes. And it really comes down to two major reasons. First, when people start going back out again, even with social distancing and caution, this virus is going to fire back up. A lot of people will get sick and more than a few will die. Those who want to re- open now will say that, until we get a vaccine, more sickness and death will result whenever we go back out. So let’s get on with it. Fair enough, I get that argument and have made it myself. But at this point, another month or two on lock-down might just slow the virus spread even more. We might also be in a better place with testing. We may even get lucky and have some effective treatments for those who do get sick. And, we are learning more about this virus every day.

But here’s the major reason to wait… opening things up isn’t going to make much difference to the overall economy. I understand that for certain businesses, they want to open up now or else they may never be able to open again.  However, most companies are not going to suddenly ramp back up to business as usual. Those who have down-sized are not going to immediately bring everyone back to work. The demand for goods and services isn’t going to magically return. OK, we go out and get a haircut, eat at a restaurant, get together with a few friends for a cookout. We burn a bit more gas and in some places maybe people can even go back to the gym.  But few of us are going to make major purchases or act as though our lives are back to normal. Too many people have taken a big financial hit and they aren’t all that confident about the immediate future either. Not to mention, the on-going fear of the virus. Do I really want to expose my family, especially the older ones, to this virus?

Open things up too soon and you are going to get limited economic benefit for what might well be a terrible costs in terms of illness and death. To be sure, I remain a pragmatist. If I thought we could hit the reset button and turn this economy back on to what it was before Covid-19, I’d be inclined to accept the risks of more sickness and death in the near term. The payoff might well be worth it. But in my gut, I know this economy isn’t coming back quickly and another month or two spent getting ahead of the virus is worth the additional sacrifice.  

(Wow, that was hard to write…I better go watch some Fox News or something before I turn blue.)