USA: Lives for Money

US layoffsFinancial aid to many US companies will take longer than expected

PABLO PARDO (WASHINGTON) | Almost all industrialized economies have decided to slowly reopen their economies after the ‘peak’ of coronavirus cases. There are few exceptions. Perhaps the most significant is Great Britain, but that is precisely because that country closed its economy three weeks after other countries (and its prime minister has had coronavirus ). It is clear that the reopening will not mean a return to past times. That is something that no country can afford.

The decision to restart the economic activity will lead to a further increase in deaths, although health authorities around the world hope that it will not lead anywhere near the collapse of health systems, as happened in March and April. But when you say, “lives for money”, you are, relatively speaking, right. Maintaining a daily life that looks even slightly normal will make the death toll rise. It is the price to pay for avoiding an economic depression. And there are already examples of this. Sweden, which is one of the few countries that has not opted for quarantine, is also on its way to being the country with the highest number of deaths relative to its population size, according to estimates from the University of Washington.

One of the countries that it is leading the way out of lockdown is the United States, although, if truth be told, this country has never closed down. Its containment measures have always been much laxer than, for example, the ones in Spain. Moreover, the United States is a very decentralized country. The states are the ones that decide which activities are closed and which are not. In matters such as the opening of shops and hotels – both restaurants and hotels – the competence often lies with the county.

The same is true about how cases are counted. New York has a much stricter system than, for example, California, even though both are Democratic states. The case of Florida is much worse because it is a tourist region where also millions of ‘winter birds’ live – that is, retirees from other states who go there in the coldest months – so the fact that this state doesn’t even count the ‘positives’ of non-residents casts doubt on the total number of cases in a state with almost half the population of Spain. But the state’s governor, Ron De Santis, has bet all his political capital on reopening Florida’s economy – literally, no matter what. In Texas, they’ve chosen not to test. Only 1% of its 29 million people have been tested for the coronavirus.

So the opening of the economy of the United States, like almost everything else in that country, consists of many different openings. And its impact on the economy and health is going to be very different. For example, among the states that have pioneered the relaxation of measures are Texas, Nevada, and South Carolina, where the number of deaths doubles every two weeks. Clearly, their numbers are very low: just 1,600 deaths in a combined population of 37.5 million people. But all the countries that have been through the pandemic know that infections and deaths increase exponentially and, before you know it, they have skyrocketed.

But there are economic factors for these states to try to force the issue and open up. Tourism accounts for 23% of Nevada’s GDP, almost twice as much as in the country we consider to be the country of tourism par excellence: Spain. If Las Vegas is not reactivated, even minimally, the state is in danger of collapsing. In Texas, 9% of GDP depends on the production of oil and natural gas. These are hydrocarbons that, as we have explained on previous occasions, are very expensive to extract. With the ‘price war’ between Saudi Arabia and Russia and the collapse of world demand due to the coronavirus, oil extraction is not profitable. Texas, thus, needs to reopen its economy. Even more so because, as much as Texans don’t like it, the state depends on Mexico, where 40% of its exports go. And Mexico is rapidly closing down as the coronavirus spreads there, helped by a huge informal economy that forces people to keep working and by a president, Andres Manuel Lopez Obrador, who went so far as to recommend that voters should pray to contain the pandemic, because he was not going to close the country.

There is also, of course, the ideological factor. Forty percent of Republicans believe that the US coronavirus death toll of 80,000 according to Johns Hopkins University count is an exaggeration. 63% of Democrats think the opposite. Democrats, moreover, are concentrated in urban areas, which have not only tended to suffer more from the pandemic, but also have many more health services, which has made it possible to carry out a more accurate count of those infected and killed. Republicans, by contrast, mostly live in rural areas. Republican politicians, therefore, have an incentive to open up the economy. Democrats, to keep it closed or at least to open it more gradually.

The differences in the health care system between American cities and the American countryside are spectacular. Life expectancy in urban areas is, on average, six years higher that in rural areas. The number of doctors per 10,000 inhabitants is 60% lower in these regions than in cities. And the trend is getting worse. In the last decade, 7% of rural hospitals in the United States have closed.

And then there’s the economic issue. The lower-income population in the United States does not have a system of state aid as they have in Europe. That is why they want to go back to work. The professional services companies in New York worked at a slower pace, but they did not stop, not even at the worst moments of the epidemic. In fact, consultants or lawyers in the city are surprised by the paralysis they have seen in Europe. In the USA, even if it was through Zoom or other internet networks, operations have continued, although fewer in number. But this is not the case for industries such as oil, hotels, agriculture or the automobile industry. There the paralysis has been total. And the social support network, non-existent.

All this indicates that in the United States the economy is going to start up again, as in Europe, with a cost in lives, as in Europe. The main difference is that the number of deaths is going to be higher. It is possible that, when this phase of the coronavirus pandemic ends, there will be around 150 000 deaths in that country, despite doubts about the accuracy of that figure. Then the number of deaths in the U.S. relative to its population size would be similar to that in Italy or Spain. But the public is willing to accept that. There is also another factor: no one is going to count the deaths in Plano (Texas), like those in Brooklyn, New York, just as the deaths in Soria went relatively unnoticed if compared to those in Madrid. The new normality is going to have a human cost that, at least for the moment, many Americans seem willing to pay.

About the Author

Pablo Pardo
Pablo Pardo is Washington DC correspondent of El Mundo. Journalist especialized in International Economics and Politics.