by Ryan McMaken, Mises Institute:
The pressure is already mounting for state and local governments to move again toward coerced stay at home orders and mandatory business closures.
The constant drumbeat of headlines designed to convince people to adopt new draconian government controls is more of less exactly the same as what it was back in March. Arizona “lost control of the epidemic” one headline proclaims, while another insists “ICU beds full.” A government bureaucrat in Texas says the situation is “apocalyptic” and Bloomberg dutifully features the word in its headline. The governor of California is threatening another stay-at-home order. The Texas governor has re-imposed some restrictions. Florida has “paused” its scaling back of lockdown edicts.
Americans should expect more of this as the year proceeds. Once we arrive at September, hospitalizations due to the usual winter diseases like flu will begin to mount. At that point, the daily headlines about “full” or nearly-full hospitals will be a daily or even hourly occurrence.
There is no doubt politicians and government “experts” like Anthony Fauci will briefly emerge from their luxury homes and gated communities to demand that middle class and working class Americans be once again forced to abandon their jobs, take pay cuts, and sit at home. (The politicians decreeing lockdowns, of course, will keep collecting their six-figure salaries.)
But there’s a problem with the politicos’ plans. They assume Americans will comply with the stay-at-home orders to the same degree they did back in March and April. This may not be a very prudent assumption. This will be due to at least two reasons. First, more Americans now doubt the official narrative on the disease. Second, Americans are now in a worse economic position compared to the time of the first lockdown.Both of these factors will contribute to more resistance to lockdowns.
In other words, a second lockdown will be more difficult — both economically and politically — than the first. Economic pain will mount as political doubts grow.
The Economic Threat
A second round of lockdowns also poses a very large economic risk to families.
Advocates of coercive lockdowns have long tried to portray opponents of lockdowns as just “people who want a haircut.” The reality is a lot more grim than that, however, and the threat to the economic well-being of many families is going to make a second round of lockdowns far worse than the first.
[RELATED: “Unemployment Kills: The Longer Lockdowns Last, the Worse It Will Get” by Ryan McMaken]
Many Americans voluntarily complied the first time around because they were starting from a relatively good economic position. The politicians kept assuring them it was all just for “two weeks” or maybe even a month. After all, when the lockdowns began, the economy was at very high levels of employment. The US was in the waning days of the boom phase of a boom-bust cycle. But it was nonetheless still in the boom phase. Since the spring lockdowns began, 40 million Americans have become unemployed. Twenty million of them are still unemployed, and more than 1.3 million Americans became newly unemployed over the past week. Tax revenue has also plummeted reflecting the downward spiral in Americans’ income.
The bankruptcies are now mounting. In recent weeks, just some of the companies that have declared bankruptcy are J.Crew, Gold’s Gym, Neiman Marcus, Hertz, GNC, and Chuck E. Cheese. Thousands of retail locations for these companies will be closed. Their staffs will be laid off.
The idea that everyone can just “work from home,” of course, has always been a fantasy of the well-off. The work-from-home myth is especially damaging for lower-income workers and for blacks and Hispanics. Moreover, if school closures remain, many parents who rely on government schools as a type of “free” day care will find themselves without schools as a resource.
So far, all of this has been cushioned by outlandish fiscal and monetary “stimulus” designed to bailout bankrupted industries, small businesses and households. Households have received stimulus checks as incomes dried up or were reduced.
The federal budget is likely to top ten trillion this year (well more than double last-year’s budget) as a result of literally trillions of new dollars being created out of thin air to finance the stimulus checks and bailouts.
If lockdowns are imposed again, expect even more “stimulus,” bringing the federal budget to 12 trillion, or maybe 14 trillion. There will be no end in sight.
But apparently-endless money printing can’t continue indefinitely. At some point the upward pressure on interest rates, and concerns over the value of the dollar, become so great that even Congress and the Fed fear another round of stimulus. If that comes this year, household finances will immediately collapse. More businesses will go under. Jobs will dry up. 30 percent of Americans already missed their house payments in June. Expect that to get a lot worse if lockdown mandates are tightened again.
And as economic turmoil becomes worse expect more of what resulted during the lockdowns of March and April: more child abuse, more suicide, more drug overdoses. Expect more death from non-COVID causes as “elective” medical care is banned by executive order.
The New Lockdowns Will Be Longer
Also complicating the situation is the fact that if lockdowns are tightened now, the duration of the lockdowns will likely last well beyond the month or two of lockdowns initially promised. Hospitalizations for a wide variety of diseases (not just COVID-19) will only get worse as the northern hemisphere approaches flu season three months from now. At that point, the end of the 2020-21 flu season will still be a long way away.