Don’t Forget About the Other Crisis: The Economic and Health Fallout of Forced Shutdown

By: Andrew Beeler

It is the job of policymakers to make challenging decisions while weighing the costs and benefits of action and inaction.  The one-size-fits-all policies being forced upon Michigan by Governor Whitmer are failing to account for the catastrophic economic and health impacts that the government-mandated shut down has caused.

The health impacts of unemployment are well documented; however, because these impacts are more diffuse and difficult to correlate directly to unemployment, it is politically more palatable to show a preference towards deaths caused by COVID-19.  For this reason, it is easy to understand why the Governor has neglected the effect that the economy has on human health and well-being.  A 2017 study conducted by the National Bureau of Economic Research found that for each percentage point increase in unemployment, there was a 3.8% increase in drug overdoses.  For Michigan, that could mean a 75% increase in death caused by drug overdose.  According to 2016 reported drug overdoses in Michigan, this could mean over 8,000 deaths—more than twice the number of COVID deaths to date.  Further health effects include the inability for routine medical check-ups to occur.  Routine check-ups are often the first step in detecting or preventing medical conditions from becoming more severe.  The delay of routine surgeries and operations will result in a higher risk among patients. 

The economic impacts of the government-mandated shut down are obvious and dramatic as well.  By forcing restaurants to shutter, demand for high quantities of dairy products like milk and cheese decreases dramatically.  This drop in demand with an unchanged supply causes a subsequent drop in prices.  The Wall Street Journal reported last week that the fair-market price for milk would drop $1 below the break-even price for dairy farmers.  In other words, for every gallon of milk sold, farmers would lose one dollar.  Meanwhile, farmers have surplus dairy for which there is no demand resulting in the dumping of their hard-earned product.  Photographs of farmers being forced to dump their milk surpluses have become ubiquitous.  Without the high quantity demanded by commercial restaurants, dairy farmers will not be able to sustain operation for much longer.  

Elsewhere in the agricultural community, corn farmers are facing dire straits as well.  The decreased market demand in ethanol – due to both the government-mandated shutdown and the nefarious actions of foreign adversaries pumping surplus crude oil into our marketplaces – has caused a dramatic reduction in the price farmers can receive for their corn used for ethanol production.  Following a disappointing 2019 harvest caused by unseasonably high rainfall, farmers are facing another year of lower profit than expected from their crop yield.  The thin profit margins on which they are already operating means that a second year of barely covering costs could result in farms being sold or shutting down altogether.  To add insult to injury, the decreased ethanol production means no ethanol by-products to be used for cattle feed resulting in higher prices for cattlemen to feed their herds.  

As with most public policy-related questions, there may be no perfect answer; however, it has become clear that the answer is not complete lock-down which only recognizes the threat of COVID-19; rather, we must balance the health risks of shut-down with those of opening the economy.  Shut-downs were never supposed to “kill” the COVID threat.  They were meant to allow us the time necessary to prepare our healthcare system and the private sector for a second wave – to flatten the curve.  We have achieved a flattened curve to the maximum extent possible.  We can no longer ignore the immense negative side effects of shuttering the economy.  Now, Michigan is ready.