Liability (n): being responsible for something, especially regarding law and finances
Satire Alert! Some content may offend readers if you do not have sense of humor and decency.
A few weeks ago, President Trump, in the panic of states’ governors closing many public businesses, declared that “the cure should not be worse than the disease”. He was referring to the economic cost of containing the Covid19 pandemic versus the economic cost of slowing and containing the spread of the illness. The thought was that through the usual physical contact that we have when we go to stores, restaurants, theaters, bowling alleys, hair salons, etc., we were giving the virus a means of jumping from person to person. Ironically, in our virtual world, where screens should distance us from just about everything and everyone, we still have a lot of touching going on.
The federal government has put out guidelines for re-opening the USA economy. Governors are looking at how to implement these in different parts of their states and regions of the country. This week, I have heard news reports about various computer modeling of what those costs might be: the cost of not opening businesses versus the potential rebound cost of the illness spreading again.
Most of these discussions have come off as lies-and-damn-statistics, or an insurance actuary’s midnight computer analysis. The gist was something like, “the economic value, or cost per life…”. The numbers seemed to escalate as the news cycle spun the yarn from 10 million per life to 3 trillion for the USA economy, etc.
I decided that tuning into Big Band music and remising about the good old days of WWII, when a threat of Hitler taking over Europe was tangible, seemed more pleasant that considering whether the average USA worker would actually generate 10 million worth of value to the economy (somehow this does not quite work with my paychecks added up over 30+ plus years of working, but I never did well with raw numbers).
But, my understanding of basic budgeting, one must consider not only one’s assists and potential assets (e.g. that theoretical 10 million value over a lifetime), but also one’s liabilities (e.g. the cost of living and dying in this case). Is it not obvious that those computer models need to factor in not only the cost of keeping people alive; not just how much the economy is loosing by having 1/6th of the work force seeing unemployment benefits at this time?
At the risk of sounding like Rush Limbaugh, I think that we must ask not only who is at risk of getting Covid19, but what group of those folks are likely to survive, though put out for a while, and who is likely to die. Sorry to sound morbid. But, those most likely to die are also those least likely to be contributing to the economy (or affected by businesses being shut down temporarily).
The most vulnerable groups are those living in institutional settings, such as nursing homes, assisted living facilities, prisons, homeless shelters, and cruise ships. These share in common, folks who are later in life, in poorer general health, living in close quarters with limited ability to physically distance themselves, dependent on other people to care to their basic needs, and not employed. As to poorer health, they are more likely to have obesity, cardio-vascular issues, diabetes, and marginal nutrition, all of which appear to be health risk factors for mortality if they contract Covid19.
Thus, for the actuaries, they need to acknowledge that the most vulnerable, are the those contributing the least to the economy (unless they are tourists on cruise vacations who are stimulating the economy). Folks in nursing homes, prisons, and homeless shelters are not big consumers in our economy… except for health care expenses.
Thus, we must consider the cost of these folks staying alive: diabetic care, obesity care, cardio-vascular procedures, orthopedic procedures, dialysis, etc. This does not include the cost of institutional settings, most of which is paid for by taxes (e.g. federal government Medicare, state government Medicaid and prisons, local governments homeless shelters).
Another liability to factor in is the retirement payments that go on indefinitely, namely Social Security and pension plans. These are different from assets such as 401k or 403b plans, investments, and one’s home. Eventually, those can run out. But, Social Security and pension plans keep paying former employees and spouses until they (the people) run out.
Maybe Rush has a hidden message when he rants that “those people would have died anyway”. He sees that letting old and sick folk die, whether from Covid19 or some other cause, is a good way to reduce our financial liability of keeping them alive. Senate Leader Mitch McConnell seemed to have the same sentiment when he proclaimed that states should be allowed go bankrupt because they were on financial cliffs before Covid19 because overly generous pension plans for state employees. Oh, wait, Rush and Mitch are old guys, and have not looked in good health for years. Maybe… oh, just wishful thinking… but then are not most of the presidential candidates old too? More liability to society in 2020!
But, back to the analysis of liability. We do have lot of Gorillas (Guerrillas?), Elephants, and Donkeys in the room here: federal and state pension programs. Isn’t Early Retirement a great liability that we have wanted to ignore for years (except those who want to shut down the US Postal Service, claiming that their pension programs are way too generous)? Career military officers routinely retire in their mid-40’s to early 50’s when they age-out of potential for going up in rank (how many generals and admirals do the armed forces needs?). Federal and state bureaucrats retire in their mid-50’s, after 30 year careers when they cannot go up any more grades. Some businesses offer early retirement incentives for long-term employees in their early-60’s, to reduce their workforce expenses (they can hire 2 to 3 new-grads for the cost of 1 senior middle-management staff). And, all those 40, 50, 60 year olds have life expectancies of 40, 30, 20 years, at our expense (most have told me that they earned their retirements because they chose to take lower paying jobs in exchange for worry-free retirement benefits, including health care packages until Medicare takes over).
There you have it. The group most likely to die are probably not going to be 10 million dollar investments in our economy, but 10 million dollar liabilities. If I were channelling Rush Limbaugh, I’d say, “Let them die and reduce the surplus population”. Wait that Charles Dickens in “A Christmas Carol” via Ebenezer Scroog.
But, I am not. Thus, I would say that Covid19 has merely pointed out the obvious: the cost of allowing people to live. And to live, we need more than groceries, house cleaning, and neat lawns. We need people in our lives. We need care and compassion. We need entertainment. We need hair cuts (I’m not sure about tattoos, but that is a person preference). We need society.
The assets and liabilities of having society is just that. At what cost do we care for each other. What is the cost of loving one’s neighbor? If you missed Easter this year, go read The Acts of the Apostles to find a possible answer. Our assets are of little use unless we give them away.
I wrote the above piece back in April, but considered to crass to post at the time. However, the state economies are opening with anticipated/denied increases in Covid19 cases and hospitalizations. The Republicans, lead by our president, want to claim that everything is going great, there really are no increases or second surges in cases… it’s just Mexicans coming across the boarder infecting Southern states with Covid19.., or more testing being done.., or.
And, now the President wants to hold mass rallies starting this weekend in Oklahoma. Up to 20,000 fans of the president could pack into a stadium, with our without masks — which are bunkus show of weakness, you know — yell and shout (and don’t forget to sign that watery of liability of the GOP should you get Covid19, which is ridiculous because it does not exist) generating billions of Covid19 droplets and aerosol the stadium
But, lets run the actuary numbers:
20,000 x .03 = 3% predicted infection rate, 600 new Covid19 cases per rally
600 x .01 = 1% predicted death rate, 6 deaths per rally
600 x 10 = number of people each of those infected will likely infect in the general community through contacts at work, the store, church, etc., 6,000
6,000 x .10 = 60 deaths in the community for those infected at rallies.
6 + 60 = 66 deaths contact traced to those who attended rallies.
There’s my computer model. 6,600 new Covid19 cases per rally and 66 deaths.
How many potential voters does the president intend to kill off before November? And, you think I’m morbid?