Masks & Social Distancing: The Real Economic Opportunity Cost
Even a casual review of recent data should be enough to convince most Americans that things are getting progressively worse across a large swath of our country in terms of the pandemic. Cases, positive test rates, and hospitalizations are all soaring across the southern US—from coast to coast. Businesses are beginning to shutter their doors again. If we fail to embrace simple mitigation techniques, we risk a return to more draconian measures and economic damage on a massive scale. It’s time for an honest, open, and serious conversation about opportunity cost.
Simply put, the current dilemma we face revolves around masks and social distancing: to wear or not to wear; to practice or not to practice. It is a collision between personal freedom and economic survival.
It’s a binary choice—a predicament with but two mutually-exclusive options, each with an inherent and unavoidable opportunity cost.
Opportunity cost represents the benefit, profit, or value of something that must be given up acquiring or achieve something else.
Typically, opportunity cost is discussed in the context of financial matters—for example, purchasing decisions. In fact, I write about it from an investing perspective in my article Why Investors Should Focus More on Opportunity & Crossover Costs. It is a real eye-opener and I encourage you to read it, as it will provide some additional insights that both compliment and expand on the scope of this article.
However, opportunity cost applies to all spheres of life—anywhere a decision between competing options must be made. In this case, the opportunity cost pertains to a pandemic crisis and our response to it.
Early on in this viral crisis, a great number of Americans voiced their opinion that we needed to end the “lockdowns” and re-open the economy. However, we (along with the experts) explicitly warned that this would ultimately require society to manifest certain behaviors—namely, wearing masks when around others and practicing social distancing.
These actions are the only tools (short of more draconian measures) currently available to us to mitigate the viral threat—or at least dampen its impact to a manageable level.
This is why I label it—at least for now—as a binary option. We have no vaccine—let alone an effective one. In fact, its dubious that we will have one anytime soon. Our toolbox is very limited at present. Our choice is to use the tools we have at our disposal… or ignore the looming threat and put away the toolbox.
Unfortunately, many of those who so passionately pushed for a quick economic reopening are now—with equal zeal and fervor—refusing to exhibit the necessary level of personal discipline to sustain it. They feel that wearing a mask represents an unacceptable surrender of their personal freedoms and liberty.
While I do not agree or disagree with either variable in isolation (to re-open or not re-open, and to wear a mask or not wear a mask), I do contend that they are not independent variables; rather, they are inexorably linked.
This is where understanding opportunity costs comes into play.
While we are all free to have our own opinions—we are not free to have our own facts.
In this case, nature serves as the final arbiter of both facts and cost. Nature doesn’t care about your (or my) opinion, desires, or freedoms.
If we want to continue to rebuild our economy and move toward a return to “normalcy” (whatever that looks like), then there is a price to be paid. Call it the price of admission or the price to play the game. In this case, that price is wearing a mask and practicing social distancing.
Thus, we must evaluate and chose an opportunity cost: we can either (a) focus on our economy (benefit) and sacrifice a little of our personal “freedom” (cost) or (b) focus on our personal freedom (benefit) and sacrifice our economy (cost).
This is the choice and the corresponding opportunity costs that nature is presenting us with. It doesn’t matter whether we like it or not. It is what it is. There is no free lunch. We can’t have our cake and eat it too. Nature doesn’t work that way.
Opportunity cost boils down to determining which option provides us with the greatest overall value (a cost-benefit determination). It is an either-or scenario. We must sacrifice one benefit to acquire the other—it is about allocating a limited resource (whether physical or intellectual).
As such, we must now collectively decide as a nation which option provides us with the greatest value: the economy with a mask or perfect freedom with a greatly diminished economy.
Make no mistake. We will select one. We will receive one benefit. We will sacrifice the other benefit (the opportunity cost).
In making our decision, we must all be honest with ourselves and understand the true cost should we decide to opt for freedom. Namely, we risk a complete collapse of our economic system, which will likely extend to a complete collapse of our society. We’re not talking about the opportunity cost of buying a combo at McDonald’s or buying a lottery ticket… the stakes (cost) is much, much higher in this case.
We can seek to ignore, discard, or minimize that cost. However, again, nature doesn’t care, and nature—not us—determines the price of admission (the true cost of either option).
We are—as our readers and viewers know—unabashedly big proponents of personal freedom and liberty. However, each choice (and corresponding opportunity cost) must be examined and weighed independently.
We must be careful not to fall into a slippery-slope logical fallacy (i.e., if we bend on this one issue, we will ultimately be forced to sacrifice all our freedoms and liberties). We must also avoid overweighting or exaggerating low-probability outcomes (e.g., inflating unsubstantiated conspiracy theories or creating illusionary larger-than-life boogeymen).
It is easy to recite generic axioms, such as “sacrificing a little freedom for temporary security.” However, sometimes, doing just that is logical and rational. We do it all the time in life. It always comes down to value and opportunity cost.
In this case, we believe that the cost inherent in a willing (rather than coerced) sacrifice of a small amount of personal freedom (the equivalent of buckling your seatbelt when you get in a car) is astronomically smaller than the cost of derailing our recovery—or even collapsing it.
Furthermore, like buckling up in our car, we do not believe that it will necessarily and inevitably lead to us being forced to surrender additional freedoms and liberties (at least not in a direct cause-and-effect chain).
Soldiers and law enforcement wear body armor for a reason—it’s the smart thing to do!
That’s our opinion for what it’s worth.
However, as preppers, we are comfortable with—and very well prepared for—either choice.
The question is: Are you?
Are you really prepared for a lost American decade or even a potential economic collapse (and permanent loss of our beloved “normalcy”)… and willing to risk that outcome for the freedom of not wearing a mask or practicing simple social distancing?
The opportunity cost could be severe—if not catastrophic. Is that cost really worth the minimal trade off in this case?
Don’t be fooled. We will sacrifice something—there will be a cost. There is always a cost—one that includes both primary (visible) and secondary (hidden) costs.
The question before us all is: Which option provides the greatest overall value?
As a society, we must answer that question… and we need to answer it quickly or the decision will be made for us—by nature or by the forceful hand of government.
A final caveat…
Please note, we have limited this discussion to the sphere of economics. We have done this for two reasons: (1) we believe the facts regarding the potential economic impacts are less contestable and (2) this seems to be the focus of most who are favoring a no-mask approach.
However, the true opportunity cost is not limited to economic variables alone. Rather, it inevitably includes issues of health and welfare. There will be a health cost (both physical and financial) to be paid by our society as well—a cost that falls more into the realm of secondary (less visible) consequences. We encourage you to consider this opportunity cost as well, and appropriately factor it in when making your own personal decision.