It’s been said that you can’t put a price on a human life.
That, however, is exactly what governments across the world are trying to do, as they seek to develop models predicting the economic impact of COVID-19 based on various courses of action.
Sergio Rebelo, an economist from Northwestern University, has come up with a figure he believes can serve as a “price tag” for the American lives lost to the virus based on the number of predicted deaths and an estimate of the impact on the economy:
$9.5 million per life.
A year-long lockdown?
Contrary to Trump’s desire to get the economy up and running as soon as possible, Rebelo’s models indicate that the longer businesses are closed, the better. His estimates show that a year-long lockdown – giving health professionals time to develop and approve a vaccine – would set the economy back about 22%, or $4.2 trillion.
Lack of preventative action, on the other hand, would shrink the economy by about 7%, but result in an additional 500,000 deaths. Multiply that by $9.5 million, and you see that no confinement would cost the American economy around $6.1 trillion, or $2 trillion more than a year of lockdown.
Numbers aside, other financial experts claim that the economic impact of COVID-19 will be steep – with or without containment measures – as fear takes over and consumption is reduced.
The latest projections by the White House put estimates between 100,000 and 240,000 deaths, even with containment measures.
What has the U.S. done?
It is important to note, however, that, aside from declaring a national emergency, restricting U.S. entry, and invoking the Defense Production Act of 1950, and signing into law an economic relief act (you can see a full list of the White House’s actions surrounding COVID-19 here), the central government has, for the most part, chosen to give states the autonomy to act as they see fit.
(For a list of actions taken by each state, click here.)
The importance of a back-up plan
In these times of uncertainty, a back-up plan becomes increasingly important – and reliance on your national market alone becomes increasingly risky. Expanding your company’s reach is one way to protect yourself against national volatility. At Gedeth, we’re experts in international expansion. Contact us if you’re ready to explore your options.