by Gary Alexander
November 3, 2020
Maybe it was just a cosmic joke. In the second week of March, the moon was full, the clocks changed, and Friday fell on the 13th. The Federal Reserve called an emergency meeting on the Ides of March (NCAA’s non-Selection Sunday). They cut interest rates to zero, but that caused a 3,000-point Dow crash Monday.
Call it March Madness. We shut down the nation in the first-ever forced recession. We fell into a coma.
Will we wake up this month? Election week began with a full moon, a time change, and the end of the worst market week since March. What’s more, our votes may be in flux until Friday the 13th next week.
No matter who wins the election tonight (or later), if we want to thrive again, we must avoid candidate Biden’s threatened Dark Winter of economic lockdown in hopes of starving Covid-19 by inaction. We must listen to the voices of more than a few doctors who only look at the case load of Covid tests. A true leader looks at a vast array of causes and effects – the economy, our psychology, and our total health.
The final 2020 GDP won’t be known until late January (initial estimate) or late March (more accurately), but first estimates for third-quarter GDP came out last week with a record-breaking 33% annual growth rate in the U.S., according to the BEA, vs. just 12.7% for Europe – almost a 3-to-1 growth differential.
There is growing evidence that lockdowns don’t cure Covid, but they certainly kill economies. The other G-7 countries stayed locked down longer than the U.S. and they also used contract tracing and had mask mandates, and the worst of the G-7 economies (UK and Italy) had similar Covid death rates and are now entering strong new waves of Covid infections and deaths. Lockdowns did not help them. Sweden, by contrast, which never locked down, had no resurgence and has lower death rates than Italy or the U.K.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Economist Don Luskin measured U.S. state economies by severity of lockdowns, and it turns out that states with the most severe lockdowns correlated with a greater spread of the virus. “States with longer, stricter lockdowns also had larger Covid outbreaks. The five places with the harshest lockdowns—the District of Columbia, New York, Michigan, New Jersey, and Massachusetts—had the heaviest caseloads.” (Don Luskin, “The failed experiment of Covid Lockdowns,” Wall Street Journal, September 1, 2020)
The alternative to lockdowns is to let those at low risk (those in good health under 65 – including children and those of working age) go to school and work, while we of older age and those with health risks stay under self-regulated quarantine, mostly separate from society – working from home or retiring. Maybe we grandparents will need to skip one Thanksgiving and Christmas (except for Zoom or Skype and gifts via mail), but it’s a small sacrifice compared to front-line workers and those working daily with safeguards.
The Great Barrington Declaration spells this out. It is written by three epidemiologists who also serve as medical professors at Harvard, Oxford, and Stanford. It is co-signed by 45 other medical professionals and endorsed by over 44,000 other medical professionals. I can’t vouch for all of it, especially the “herd immunity” concept, but this is the core of their rational, common-sense scientific division of risk profile:
The Great Barrington Declaration: “Keeping students out of school is a grave injustice. Keeping these measures in place until a vaccine is available will cause irreparable damage, with the underprivileged disproportionately harmed. Fortunately, our understanding of the virus is growing. We know that vulnerability to death from COVID-19 is more than a thousand-fold higher in the old and infirm than the young. Indeed, for children, COVID-19 is less dangerous than many other harms, including influenza.”
Experts Should be “On TAP, not on TOP”
In one of my early (1971) assignments for a major magazine, I was charged with writing an article on the crisis in the cities – a financial crisis which led to riots and fires, bombings, and tensions like we’ve seen again this summer. In the process of my research, I attended a mayor’s conference held in Indianapolis in May 1971 hosted by the young (39-year-old) mayor and future Indiana Senator, Richard Lugar.
The conference was dominated by scholars with various solutions, but in one panel, Democratic Senator (and former Presidential candidate) Hubert Humphrey cut through a lot of theoretical knots in one short sentence, “When it comes to practical solutions, academic experts should be on TAP, not on TOP.” *
I think of that diagnosis often when I hear Dr. Fauci or other medical experts talk about not opening up the economy until 2022. They have their microscopes and their models, but they seem totally ignorant about human psychology and economics. There are far more dangers in this world than a single virus that kills less than 0.1% of its victims under the age of 60. There is poverty, suicide, domestic violence, drug abuse, alcoholism, avoiding treatment for other diseases, depression, obesity, diabetes, bankruptcy, eviction, divorce, looting, rioting, and more. A true leader looks at a lot more than Covid testing alone.
I’m no medical expert, but I’m a lifelong student of panic reactions in markets and life, and 2020 may go down in history as a case study in panic overreactions that may puzzle many generations to come.
* This quote has a hoary heritage, going back over a century, according to Quote Investigator. It first occurred in a Dublin, Ireland periodical called “The Irish Homestead” in 1910, when editor George William Russell wrote:
“Our theory, which we have often put forward, is that experts ought to be on tap and not on top. We have had during our career a long and intimate knowledge of experts, most interesting men in their own specialty, to which they have devoted themselves with great industry and zeal. But outside this special knowledge they are generally as foolish and as ignorant as any person one could pick up in the street, with no broad knowledge of society or the general principles of legislation.”
Dr. Fauci and other researchers have great experience in one area but, to a historical economist like me, they seem “as foolish and as ignorant as any person one could pick up in the street” in a wide array of other vital areas of life. We need real leaders to listen to all points of view and then make wise decisions for the good of all of us.