As I write this today, Ireland has the 12th highest number of Covid-19 related deaths at 223 per million. We are over a month in lockdown, which has inevitably led to a downturn in economic activity and dragged what was a strong economy into a recessionary one. The virus has been allowed to ravage nursing homes and mental health facilities as the elderly in care facilities account for nearly half of all deaths so far. The growth level for the virus has dropped and the number of new deaths is heading consistently towards the twenties per day as opposed to the forties per day and new infection numbers are also dropping, so there is a light at the end of the tunnel.
But can it be argued that the lock down has helped or will it have done more harm then good ? In Sweden, the government there implemented social distancing and crowd restrictions but did not lock down the economy. Pubs and restaurants are open, albeit with distancing guidelines in place. People are going to public parks, going to work etc. Sweden currently have 225 deaths per million, slightly higher then us, but with none of the pain of a strict lock down and an economy that will be a lot healthier then ours when this ends most likely. Veteran epidemiologist Professor Johan Giescke who advises the Swedish government believes that countries who have imposed a strict lock down are just delaying the inevitable and that the virus will still overtime infect and lead to deaths regardless of what a government tries to do. Professor Isaac Ben-Israel from Tel Aviv University has formulated a theory that the virus has a seventy day life cycle and once it transmits to a location that no matter what action is taken, the virus will go through this inevitable life cycle.
All of this only highlights the futility of starting a strict lock down and also of continuing it. People need to get back to work, the economy must re-open. In a careful manner, yes of course, with continued social isolation and some movement restrictions yes also. But it needs to happen sooner rather then later. As I said earlier, we had a healthy economy and there was nothing wrong with the economy. This is an unusual circumstance created by government action in response to the pandemic. The fact that one million workers are currently either in receipt of Covid-19 related payments or their employers are availing of the Wage Subsidy scheme does not mean that those people will never work again or their spending power is gone. The government, do not deserve too much credit, however their decision to protect wages or to increase payments in order to keep money in people's and companies pockets was vital. They needed to do this and likely to continue for a month after the lock down restrictions ease, afterall they are the reason so many are out of work in the first place. The industries most affected are of course going to be hospitality and tourism and connected contractors. However who is to say that with social isolation restrictions being imposed they could not re-open ?.
US Senator Rand Paul said during the week, speaking against the massive multi trillion dollar stimulus bill being passed, that the problem the US economy has, is that there is no commerce taking place. He is one hundred percent correct !, the core issue with our economy right now is that there is limited commerce taking place. We already have experts demanding that there be lots of stimulus. Keynesian's have never encountered an economic issue that doesn't require state intervention or their cousins the Monetarist's and their "money printers must go brrr' memes have never seen a situation where managing money supply is not the cure. But what good is injecting stimulus into an economy that is switched off ?. There is none. The solution is to switch on the economic machine, get businesses doing what they do best, ie producing and creating goods and services and therefore wealth. The states main role here is to keep out of the way. Don't pump cheap loans into the economy and create economic bubbles but instead allow businesses to protect their cash reserves and workers to keep their money. Taxing the Covid-19 payments for starters is a bad idea, give SME's a break on their VAT and PRSI bills, demand that local authorities stop charging rates (they are currently demanding rates on empty premises). The government can do much right now by doing very little. The bottom line with all of this in my opinion is that the economy must be open and trading to an increased extent by June 1st and be fully mobile and operating by July 1st in order to avoid a long recession. This will avoid a long recession and instead see a short, deep recession that will bounce back by Q4.