An Economic Trolly Problem
Originally published May 18, 2020
I was recently rewatching the movie “The Big Short” about the 2008 financial crisis. At one point, Brad Pitt’s character Ben Rickert says, “Every one percent unemployment goes up, 40,000 people die.” I did a bit of digging around to fact check that statement, and it turns out that it holds water. It’s based on a number of studies by Dr. Harvey Brenner of Johns Hopkins University back in the mid-1970s.
This got me thinking about the state of our economy. In the past three months, our unemployment rate has gone from 3.5% in February to 14.7% in April. This implies that as of April, the overall increase of 11.2% means 448,000 deaths would be caused by this economic change, while the total unemployment numbers keep rising.
So what causes these deaths? It can be a wide variety of things, heart attacks, suicide, untreated health problems, substance abuse, etc… They may be ancillary effects of a society where our measured worth and access to healthcare are derived from our participation in the labor force.
While I’ve seen images of unmasked gun-toting protestors at state capitols rallying against what they view as oppression by the government issuing stay-at-home orders, I have not seen any advocacy about removing stay-at-home orders as a way to increase jobs, in order to save lives in aggregate. Clearly, there are risks involved with the spread of COVID-19, and mitigating those risks is of paramount importance. Misconstruing our civil duty to flatten the curve, with oppression, however, is taking us down the wrong path.
The imperial college study last month claimed that if no actions were taken, that 2.2 million people in the US could die from COVID-19. So ultimately, this is a trolly problem for public health. Open the economy and increase deaths from infection, or keep it closed and increase deaths from unemployment effects. I believe that our priority should be on public health before shareholder equity, although it would be best if we could achieve both.
According to my greatly simplified back-of-the-napkin calculations, (2.2m / 40,000 = 55) unemployment would need to increase by 55 percentage points, (or a total of 55 + 3.5 Feb rate = 58.5% total U3 unemployment) in order to have it make more sense to fully open the economy rather than work to flatten the curve.
Ultimately, I believe that the correct choice is to create a guaranteed basic minimum wage and create a universal healthcare program. National health is clearly a matter of national security, and on that front, there is a lot of room to improve.