Analysis

How the COVID Lobby Wrecked the Economy (…And the Stockmarket… And Crypto)

People will let the economy burn if they think it won’t affect them.

It’s not just COVID but society’s response to COVID, that is wrecking the economy.

Of course, nobody is saying that. What is being said is that we are having “disruptions to the supply chain.”

Here’s a picture of George Orwell for you

When are we going to get back to normal? We don’t know yet.

And that’s a problem. Lots of people think wrecking – sorry “disrupting the supply chain” is still necessary and justified, even after two years of COVID.

Maybe that’s true. COVID has made everybody’s lives miserable when not ending it outright.

But should we continue with the war on COVID? That’s where it gets complicated.

COVID hasn’t affected everybody the same way, both health-wise and in terms of economic well-being.

Here is a list:

  1. People over the age of 55, retired.
  2. People under the age of 25, not working.
  3. People under the age of 25, working.
  4. Blue-collar people over the age of 25, working.
  5. White-collar people over the age of 25, working.
  6. Government employees.

People over the age of 55 have been at great risk of serious illness from COVID including death (unlike the Spanish Flu of 1919 which disproportionately affected younger people).

But, as most 55 and over are retired, they have not been materially damaged by COVID for the most part, as the stock market recovered with copious fiscal stimulus and pensions were not affected.

Another group that was not adversely materially were people under the age of 25, not working, who were cut government stimulus checks. For many, the cheques cut by the government were more (after-tax), than what they made working 40 hours a week.

And under-25 did not experience anywhere near the same level of illness as the over-55 group.

It could be argued for this group, that the COVID pandemic overall was a net benefit. But of course, those government cheques are now getting stopped and they need to find jobs.

For people under the age of 25, working, with little or no money in the stock market (or in crypto), it’s been a miserable time, economically. Working conditions have deteriorated, especially in the health industry and employment has been erratic, especially in the service industry

For blue-collar people over the age of 25, it’s been miserable as well. No government handouts for the most part, Grandma and Grandad at risk of serious illness or dying, kids staying home from school, and massive stress at home and at work.

In terms of finances, they have not benefited at all or even lost ground.

For white-collar people over the age of 25, it hasn’t been that bad. Government payouts have kept them employed, even indirect government payments to their place of employment, or due to Fed stimulus that has boosted asset prices like stocks and real estate.

Working from home has been a boon, especially with the kids at home. You can also save a few bucks by not having to travel to and from work each day.

An honest answer from most of them would probably be, lose the COVID and keep the working-from-home thing going, and please keep the price of my home going up so I feel richer.

Finally, government workers. For those working in sectors directly affected by COVID, like healthcare and the transportation industry, it’s been hell. But if you haven’t been in the line of fine, it’s been not bad at all.

A government job with guaranteed pension and work-from-home? It’s too late for me to sign up, but you can be sure I’m telling my teenage kids to keep that career option in mind.

Different groups are all affected by COVID in different ways, both in terms of health and personal finances.

So there’s no mystery at all why society’s response to COVID has been chaotic and contradictory.

Here’s just one example:

In the province of Canada, where I live (British Columbia), we are no longer actively testing for COVID in the general population nor asking people to isolate if they have been in contact with someone who has had Omicron.

These policies are in place even though we know that Omicron is highly contagious and if you live with somebody who has Omicron, you are going to get it, almost guaranteed.

So we don’t check to see if anybody has Omicron anymore unless they are elderly and obviously sick.

But hey, if you go to a restaurant or a hockey game, you have to show your vaccination passport.

There are many critical sectors that have lost skilled, hard-to-replace workers because of the mandatory vaccination policies, causing more and more “disruptions to the supply chain.”

I’m not arguing for an end to vaccine passports. I’m also not arguing to boost testing for COVID.

(By the way, for the record, I am double-vaxx’ed with a booster last week).

There are two points I’m trying to make.

Point one is that there is no free lunch, in the long run.

Point two, is that for the last two years, there has been a lot of free lunches handed out.

Financially speaking, retired people have done okay (with booming stocks markets), under 25s have done okay (government handout), white-collar people (work from home) and government workers (same).

These interests have been economically incentivized to keep the COVID restrictions in place, even if there is no need for those particular restrictions.

And government stimulus measures have protected those groups from any economic fallout from those economy-wrecking restrictions.

Again, don’t think I am making an argument about ending or continuing those COVID restrictions. Nobody cares about my opinion on that matter.

But at least agree with me that ongoing COVID restrictions are regulations are screwing up the economy.

Signs that the party is ending are popping up everywhere. Crypto is crashing (but that’s easy to ignore for most of the population) and the stock market is starting to tank (but Jim Cramer is still telling people to keep the faith).

I still see stories that say the Fed is going to blink and not raise interest rates and continue to pump trillions of dollars of stimulus into the market because otherwise,the alternative is too painful to contemplate.

But that misses the point. The problem is not that the milking cows don’t have enough hay to eat or water to drink.

The problem is that we keep kicking the cows in the butt, all in the name of containing COVID. That’s why we are getting less milk every day.

The workers who get up at the crack of dawn to milk the cows have been saying for months that the cows are putting out less milk each week.

And the answer from Farmer Dan, sitting in his office? Give ‘em more hay and kick them in the butt even harder.

This is not a long-term economic strategy that is going to provide material prosperity to society at large.

But large parts of society have been incentivized to ignore the warning signals.

But as for me, I think I will sit on my pile of cash just a little bit longer and see how February unfolds

DJ

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