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Cost and Benefit When Human Life Is a Stake

April 3, 2020

How long can we keep people away from work before their lives are ruined?

In my immediately prior post, I talked about the value of extending one human life one year. I said it is a large but finite value. This isn’t controversial among economists. It is controversial among others including medical ethicists and society at large. “If [fill in the blank] saves but one child’s life … “ is often invoked, as though the value of extending one human life one year is infinite. Obamacare made health care uninsurable for many people of modest means by eliminating caps on coverage. In today’s panicked state of society, any suggestion that we should reopen the economy is described as a willingness to trade the life of grandma for a few dollars.
 
Most people, at some level, know that some people must go to work. Being several weeks into the present panic, we would be seeing people starving to death if not for farmers and ranchers, truck drivers and grocery store clerks. When Jesus said “Man does not live by bread alone,” he affirmed that bread is essential. Nobody disputes that bread is essential. Anybody who claims that reopening the economy causes grandma to die is already killing grandma, because the economy isn’t completely shut down. The claim, however, is stupid. We can both have an economy partly- or fully-open and protect grandma.
 
In a well-functioning economy, the choice of some to eat does not cause anybody to die. This is fundamentally because the supply of food isn’t fixed such that more for one person means less for another. In general, if you have money, this is because you or somebody on your behalf has created value. Money represents that value.
 
Money, nowadays, is a mere abstraction. We sometimes call it “a medium of exchange;” but, it is more than that. It also serves as a budget. It ensures that each of us can only take value out of society equal to what we or others on our behalf put into society. Borrowing and lending, gift-giving, theft, taxation and inflation may make the connection between producing and consuming value flexible at the individual level, but the connection is not flexible at the social level. For anybody to consume, somebody has to produce.
 
While it is not disputed that part of the economy has to remain open, some people seem to think that man can live by bread alone. That church, ball games, artistic performances, birthday parties, vacations, schooling, weddings and funerals, haircuts, tooth fillings and new shoes can be postponed for months or even years. If 15 days to slow the spread and now a total of 45 days is good, why not 365? After all, we’re saving grandma.
 
The purpose of slowing the spread was indeed to protect the most vulnerable among us, and even each one of us, while the disease remained largely unknown and we weren’t geared up to deal with it. Slowing the spread enabled us to build-up the infrastructure needed to deal with the disease, including developing tests, therapeutics and vaccines. Otherwise, our health care facilities would have been overwhelmed. But, at some point, the further benefit from mass self-isolation becomes small. At that point, the proper strategy to protect grandma is for the most vulnerable to self-isolate and for the rest of us to follow the appropriate guidance when in public.
Article Tags
Economy Health Care
Author
Clifford F. Thies is the Eldon R. Lindsay Professor of Economics and Finance at Shenandoah University. He received his Ph.D. in economics from Boston College.
cthies@su.edu

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