Kevin Duffy on Covid-19 and managing risk

We all have to live in a world of risks with limited resources to guard against them. Crawling under a rock is not an option and to do so would risk certain death.

We all have to manage risk and deal with trade-offs. Are you willing to get on an airplane and take a 1 in 11 million chance of dying? A lot of people have pets even though 1 out of 8 million will die of a dog bite this year. One in 8,000 Americans die in car crashes every year.

What are the risks of dying from Covid-19? By the evidence so far, if you're under 40, practically nil. In Italy, the worst affected, the death rate is 1 in 30,000. Perhaps that goes higher. In China it appears the worst is over and people are slowly returning to their normal lives (1 in 440,000 died). In the U.S., 94 people have died so far. That will certainly go up.

Nobody knows for certain what the death toll in this country will be. I just got a call from a physician friend who, after being on the CDC website, thought 40-70% of the population could be infected and the death rate could be 3.8%. At 50%, that would mean 6 million U.S. deaths, or 1 in 50!

If Italy is 1 in 30,000 and China is 1 in 440,000 and South Korea is 1 in 640,000, how is 1 in 50 in the U.S. even remotely possible? This is why some people take the predictions of complex phenomena - hurricanes, pandemics and the global economy - by "experts" with a healthy grain of salt.

Over-preparing for a remote event can be just as dangerous as under-preparing for a more certain event. Of course, take precautions, but the draconian measures being taken (especially by the authorities shutting down businesses) are causing certain pain against an uncertain risk. That is leaving many people with fewer resources to deal with life's contingencies.

Some people live in a fantasy world where they think resources are unlimited. These are typically the same people who exaggerate the risks of the coronavirus. They think the federal government will magically come to the rescue of every business establishment destroyed by state and local government closures.

That money will come from somewhere. Boomers, are you prepared to have your social security checks reduced? Welfare recipients, are you prepared to get less? Military employees, are you prepared to get laid off? Savers, are you prepared to have your savings inflated away?

The era of Santa Claus economics is coming to an end.

~ Kevin Duffy, Facebook post, March 17, 2020