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Sunday, May 3, 2020 Leer en Español

Reopen Society Now

Every day on lockdown we further destroy our economy, our sanity, and our liberty.

Image credit: Scott Warman on Unsplash

A fundamental flaw of government is its inability to properly analyze tradeoffs. The narrative of the COVID-19 lockdown is that it is a tradeoff between saving lives and the economy. This is erroneous. The reality is a conflict between emotion against common sense, economics, and science.

Lockdown logic began with flattening the curve. The argument was that COVID-19 spread much more easily than other viruses, that the lengthy incubation period exacerbated the spread, and that it is vastly deadlier than the common flu. Thus, we had to close schools and the economy, and lockdown society in order to spread out the number of inevitable cases, and not overwhelm vital healthcare.

That the lockdown persists counters the initial flatten the curve logic. Persistent chatter of months upon months of lockdown cannot be reconciled with a flattening of the curve. Lockdown logic has transformed into simple emotion, coupled with a government inebriated on an unprecedented power grab. It demonstrates the worst of the universal government tradeoff that permeates virtually every one of its decisions: The preference for short term seen benefits against long term unseen costs. Any tragic loss of life, or potential loss, attributed to COVID-19 is evidence to those in power that the lockdown must persist. This is emotional, short sighted, and typical of government.

The cost of the lockdown is, unfortunately, not all that unseen. Millions upon millions have lost their jobs. Businesses have shuttered. Freedom itself is under siege. The federal government has borrowed another $2 trillion on our behalf, to haphazardly spray on the populace at its whim. And untold trillions more are to come. As Milton Friedman famously extolled, “we are all Keynesians now.” While flipping the switch and instantly reinvigorating the economy is likely impossible, it was a government mandated off switch for the economy and daily life that caused this.

Politicians have since framed their lockdown as money vs lives. This is emblematically simplistic, and more importantly, it is wrong. Arguments could be made, and have been made, ad nauseum regarding how many deaths should be attributed to COVID-19, and how many more would be lost sans lockdown. And similarly, how to translate years of quality life to some dollar amount. But this leads down the wrong road. It is not a matter of X dollars for Y lives. In framing it that way, politicians tug on emotional heartstrings. Rather, it is X lives or Y lives or Z years. As in, economic devastation translates to a real-world toll on life, life expectancy, and quality of life.

More importantly, though, the scientific evidence is mounting that it is not even how many lives would be lost in either scenario, or quality of life. Rather, it is that the entire premise of a lockdown was the wrong approach to battling the virus. Thus, even if one entertained the faulty notion that it was X dollars per Y lives, the number of lives was way off.

As recently as a few weeks prior to many of the nationwide lockdowns, the CDC released a report questioning the benefits of shutting schools for an extended period. Other studies presented a similar thought pattern. Partly this related to herd immunity—the concept that the larger percentage of a given population that has had a certain virus, and thus developed an immunity to it, the lower the spread of that virus will be. Given the novelty of COVID-19, many key factors were unknown as the lockdown loomed.

Primarily, it was the headline number: the mortality rate. This is merely the number of people dying from COVID-19 divided by the number of people infected with it. While a simple calculation, it is based on a proper understanding of the numerator and the denominator. What we have learned since is that both numbers have not been fully understood, and have often been based on conjecture. The numerator has been questioned from the beginning.

A large percentage of deaths attributed to COVID-19 are also attributed to some other co-morbidity. What has differentiated COVID-19 from other diseases is the lopsided impact on the elderly and those with pre-existing conditions. Those who have died from COVID-19 are highly likely to have also, or instead, died from at least one other cause.

More recently, the denominator has been called into question. Because COVID-19 disproportionately impact certain demographics, discerning who actually was infected becomes precarious. Part of what makes COVID-19 more spreadable is also what makes it more difficult to calculate the denominator: many contract the virus but yet are asymptomatic. That is, many in our population have COVID-19, or have had it, and never display any symptoms, or display minor symptoms. This has been demonstrated in scientific studies of various populations, where the number infected would cause the denominator to skyrocket, and thus the COVID-19 morbidity rate plummet.

If we can extrapolate a vastly lower morbidity rate, the lockdown vs reopen tradeoff requires quite a different analysis. Given that such a large number of people have contracted COVID-19 and demonstrated no symptoms it is quite possible that the entire lockdown approach is logically inconsistent and is scientifically counterintuitive. It would make the Sweden model, of locking down only those who are most at risk and keeping the remainder of society open, the most obvious path.

Every day on lockdown we further destroy our economy, our sanity, and our liberty. And it is not a trade off between money and lives, or constitutional rights and emergency measures. Even those would be difficult for the government to evaluate, and would engender a reasonable debate. No. Today we are faced with a trade off that pits emotion against rationality. There is no longer a robust scientific case to be made for continuing the lockdown, only an emotional appeal. The science, the economy, and liberty itself all clamor for us to #reopennow.

  • Dave Sukoff is an advisor to the investment management community and previously co-founded and ran a $500mm fixed income relative value fund. He is also the co-founder of a software company and inventor on multiple patents. Dave graduated from MIT, where he majored in finance and economics.