Why do we need to "get the economy moving again"? Sorry I have no background in economics but as a computer programmer, I specialise in building models out of simple math and logic, so I hope we can speak the same language without having to get into too much economic jargon.

Consider the following scenario:

Kate is a hairdresser and Alice owns a restaurant. Every month Kate goes to Alice's restaurant and spends \$50 on a meal, and Alice spends \$50 getting her hair cut at Kate's. This generates $100 of GDP. Now say there is a global pandemic which makes it dangerous to meet each other, Kate decides it's safer to cook her own dinner and Alice cuts her own hair. They are both in exactly the same financial position as they were before but no GDP has been generated. After a while the government announces that we all need to do our bit to "get the economy moving again" (which I interpret to mean "generate GDP") even if it means putting ourselves in danger.

I understand that the government wants economic activity because that's how they collect tax revenues, and I also understand that some people do jobs that are essential for the functioning of society. I also understand that going to work conveys other psychological benefits than simply earning money, but let's assume for the moment that there are at least some people people who would rather just stay at home and where there is reduced natural demand for their services.

It seems to me that all the money that hasn't been spent in restaurants and hairdressers during the COVID-19 pandemic hasn't gone anywhere, it's still sitting in the bank accounts of the people who would otherwise have spent it. 

If we could find another way of redistributing that wealth from the people who's jobs are essential (and are therefore still getting paid but aren't going to restaurants) to people who's jobs are not essential (and therefore don't need to work during the pandemic), is there any harm with putting the economy on hold for an indefinite period until people decide they want to go back to work again?



Edit 8 June

Thanks for all the great responses, this has really helped my understanding but I don't think anyone has hit the nail on the head so I've added this note to try and clarify what I was after. I’ve tried not to move the goalposts to the extent that previous replies look stupid (I haven’t edited anything above this line).

Firstly just to clarify my original question, I wasn’t questioning the benefit of economic growth over stagnation under non-covid circumstances; I was questioning whether covid + economic stagnation might be better than covid + enforced economic activity.

Also one thing I maybe didn’t make clear enough is that I wasn’t talking about an enforced lockdown in cases where people would rather go to work; I was arguing that people who wanted to consume or produce less shouldn’t be obligated to consume and produce more, just to fuel the engines of capitalism.

The effect of covid has been to push the cost of goods upwards (because of the risk of contracting covid while producing them) and the benefit of consumption downwards (because of the risk of contracting covid whilst consuming). This will put some markets into a state of oversupply, even without an enforced lockdown.

So let’s say my widget supplier says “I’m no longer willing to supply that widget for \$50; I’d rather lose my job and get paid \$30 on welfare” and I say “I’m not willing to pay \$50 anymore; I’d rather live without it, even if it means I have to pay \$35 more in taxes”.

In this scenario we’re both happier than we would have been had we traded, and the government gets $5 to administer the welfare. The only people who aren't happy are those that have a vested interest in ever-increasing GDP, who in turn are often those in powerful positions and might try to use their influence to "get the economy moving again" to the detriment of the average citizen.
Trade creates value.


Previously, Kate preferred spending \$50 on food at Alice's restaurant (rather than cook her own food). And Alice preferred spending \$50 getting her hair cut at Kate's (rather than cut her own hair). That Kate must now cook her own food and Alice cut her own hair means that value has fallen (where value is broadly defined as the degree to which individuals' desires are satisfied).

(Note though that the fall in value in the above example is probably not very large. In most other examples and cases, the fall in value will be much larger—consider for example the children who no longer go to school and are now supposed to be learning at home.) 


Money is not the source of value.


You write:


  It seems to me that all the money that hasn't been spent in restaurants and hairdressers during the COVID-19 pandemic hasn't gone anywhere, it's still sitting in the bank accounts of the people who would otherwise have spent it. 


This expresses a common misconception among non-economists. Money is not the source of value.†

Value is the satisfaction of people's desires—and such value arises through production and consumption. If everyone is sitting at home and not producing anything, then no desires are satisfied, no value is produced, and all the money sitting in banks is worthless.

†The mercantilists of the 17th and 18th centuries likewise believed that gold and silver were the sources of value and that one's country should try to accumulate as much gold and silver as possible. Adam Smith pointed out that this was mistaken--value comes from production and consumption, not precious metals, pieces of paper, or numbers in a bank account.