0
$\begingroup$

Most signs show that lockdown could easily stretch through the summer. A freeze in consumer spending would cause multiple industries to fail causing a ripple effect.

To be specific, if lockdown lasts through the summer, and a second virus wave occurs in the fall as expected, then lockdowns will continue further into the year. The timeframe for a vaccine is 12-18 months earliest. Then, the vaccine must be manufactured and distributed. Since the virus is so widespread that it is now assumed that it will reach a global critical mass, this essentially guarantees the collapse of the restaurant, airline, tourism, and hotel industries as they cannot sustain prolonged losses in a capitalistic structure. If they fail, their suppliers fail, and so on. History has shown that large systems are prone to failure time and time again, esp. when accountability is obfuscated (e.g. the Titanic, the World Wars/Holocaust, and now this). In the past Egypt fell, and then Rome fell. What is to say our current systems won’t fail, even if as a slowly sinking ship?

EDIT: This question was closed, before I received enough good, thoughtful answers. As of tonight (April 4th) Bernie Sanders held a virtual address on the situation. He's looking at the unemployment projections that were posted by the St. Louis Fed's models and has spoken with a number of economists. Finally a voice of reason in this media circus. He has confirmed that a potential collapse is possible as another 47 million Americans may become jobless - this is unprecedented and would be absolutely devastating to American civilization.

$\endgroup$
9
  • 3
    $\begingroup$ Welcome to the site. I suggest that your question would be better worded as "Is there a risk of a total economic collapse ...?". That's clearly, at least to a large degree, an economic question. But "Why does it seem like no one is concerned ...?" seems to invite answers in terms of psychology or sociology, so appears off-topic for this site. $\endgroup$ – Adam Bailey Apr 4 '20 at 10:07
  • 1
    $\begingroup$ Asking whether a civilisation could collapse because of this pandemic seems beyond the scope of economics. People have offered simplistic economic reason why Rome (etc.) collapsed, but from what I have seen, historians are not impressed with those theories. I think the question needs to be tightened to a purely technical economic one: e.g., will GDP fall by x%? $\endgroup$ – Brian Romanchuk Apr 4 '20 at 12:40
  • 1
    $\begingroup$ economics.stackexchange.com/questions/34607/… $\endgroup$ – Fizz Apr 4 '20 at 16:28
  • 4
    $\begingroup$ The objective is to avoid opinion-based Q/A here. There are tons of venues for opinions on economics. $\endgroup$ – Brian Romanchuk Apr 4 '20 at 21:27
  • 4
    $\begingroup$ @user27239: When is an economic collapse "total"? Was the US in 2008-09 a "total" economic collapse? US in 1929-33? (Germany in May 1945? Feb 1945? Dec 1944? Sep 1944? Etc. Was there a precise moment or even approximate month or year during WW2 in which Germany's economy fell into "total" collapse?) $\endgroup$ – Kenny LJ Apr 5 '20 at 2:49
2
$\begingroup$

As a disclaimer, this is not an answer, rather a long-form explanation of the difficulties of answering.

The first leg is uncertainty about the danger of the epidemic. Economists are not medical experts. For example, one could imagine that there is an amazing breakthrough where a common medicine saves patients. The economic effects of that scenario are very different than the scenarios presented by governments. More realistically, we do not know how strong activity restrictions have to be to control the epidemic.

The next leg of uncertainty is the government response. Governments have the capacity to bail out entities (firms, households) that get in trouble. We do not know what they will do.

Even if we knew all that, there is uncertainty about the best model that takes all this in. It is very unusual for governments to restrict economic activity in such a broad-based manner, and so there are no standard models. (There is a flood of research.)

Finally, “conventional” economics does not really spend much time looking into societal collapse scenarios. There are areas of academia that do this, and there is presumably studies in economic history. Experts in those subject areas are not normally visiting this website.

$\endgroup$
2
  • $\begingroup$ Thank you for this explanation. This is precisely why I'm looking to this StackExchange for some useful information or knowledge. When I said in my original question that large systems fail due to obfuscated accountability, I mean that I'm struggling to find a voice that takes a macroeconomic view, factoring in medical, economic, and historical evidence to give some guidance. Political discourse seems to be confusing the public into thinking "this will go away" but striking evidence shows a long slow slope to recovery and a possible second wave in the fall. A big picture analysis seems scarce. $\endgroup$ – user27239 Apr 4 '20 at 21:49
  • 1
    $\begingroup$ There’s tons of long form commentary available (I produce it myself). The question is whether the person writing knows what they are talking about. This website tries to stick to technical economics questions, that could be answered in a standard textbook or research literature, so that there is a “right” or “wrong” answer. My answer above is probably too loose, but I doubt that anyone could make too substantive complaints. Rather than just close the question, at least you get an explanation. You could try to take parts of it, and ask very narrow questions, where you might get an answer. $\endgroup$ – Brian Romanchuk Apr 4 '20 at 23:03

Not the answer you're looking for? Browse other questions tagged or ask your own question.