Elon Musk dropped an economic truth bomb on Joe Roganโs podcast a couple of months ago.
โIf you donโt make stuff, thereโs no stuff.โ
Obvious? Youโd think so. But, as Musk pointed out, our economic policies throughout the COVID-19 pandemic have ignored that simple truth.
The prevailing assumption is that the government can press โpauseโ on the economy throughout the pandemic, throwing millions out of work, and then simply tide everyone over with relief checks.
โThis notion,โ said Musk, โthat you can just sort of send checks out to everybody and things will be fine is not true.โ
โTheyโve become detached from reality,โ he added. โYou canโt just legislate money and solve these things.โ
Muskโs point is indisputable. Government checks are only valuable to the extent that there is enough actual โstuffโ (goods and services) available for those dollars to buy. The more you lock down production, the more our stock of โstuffโ will shrink, and the more our living standards will worsen. No amount of zeros added to those government checks can change that.
When โstuffโ dwindles, printing government checks cannot magically reverse that impoverishment. It can only do two things: Shift who gets impoverished by redistributing wealth (that is, access to the remaining โstuffโ), and Delay the drop in living standards by enabling higher consumer spending.
Higher consumer spending means burning through our remaining โstuffโ faster instead of investing it in production. This means even less โstuffโ down the road.
Itโs like if you lost your job and cheer yourself up by splurging on an expensive new TV. Government checks merely make us feel less poor by inducing us to further impoverish ourselves in reality. It postpones the pain today by condemning us to much greater pain tomorrow.
America has a lot of โstuffโ to shift around and burn through, so we can delay the pain of impoverishment for quite a while. The same cannot be said for poor countries, however. People there have so little โstuffโ that they feel the pain of production lockdowns immediately.
โIf you donโt make the food,โ Musk warned months ago, โif you donโt process the food, you donโt transport the food… thereโs no stuff.โ
And now, for hundreds of millions of people around the world, the stark truth of that statement is manifesting as empty stomachs and ruined lives.
According to a new report from World Vision, a global humanitarian organization, as many as 110 million children in Asia alone are facing hunger, and 85 million households across Asia have little or no food stocks as a result of the economic impact of COVID-19 and the lockdowns.
The report also found that as many as eight million children in Asia are being exposed to begging, child labor, and child marriage since parents are unable to buy food in the wake of the coronavirus pandemic.
โOur rapid assessments in countries across Latin America, Sub-Saharan Africa, and Asia show that itโs clear we are on the cusp of a catastrophe for children,โ said Norbert Hsu, World Visionโs partnership leader for global impact. โWithout urgent action we risk an increase in extreme poverty and hunger not seen for decades.โ
World Visionโs numbers are no outlier. Similar figures were recently reported by the World Bank.
Hsu doesnโt explain precisely what โurgent actionโ should be taken. It wouldnโt be surprising if it involved massive amounts of foreign aid, the usual remedy prescribed by such organizations.
But international โreliefโ is not a real solution for them, any more than domestic โreliefโ is for us. As Musk said, โYou canโt just legislate money and solve these things.โ
To meet these massive problems without making them worse, we need to come to grips with economic reality: especially the concept of scarcity, and how it pertains to production and money.
Only then will we fully understand just what we are setting ourselves up for by locking down the economy indefinitely to combat the pandemic. Only then will we be able to make truly informed judgments about the trade-offs involved.
The crisis facing the global poor is a heart-rending tragedy. It is also an ominous warning, the proverbial canary in a coal mine.
If we keep burning through our โstuffโ faster than weโre replacing it, we will eventually descend into an economic crisis that dwarfs what we have been through so far, and our fraying social fabric may not be able to handle it.
Like gravity, scarcity can be denied, but it cannot be defied.
โIf you donโt make stuff, thereโs no stuff.โ

Dan Sanchez
Dan Sanchez is the Director of Content at the Foundation for Economic Education (FEE) and the editor of FEE.org.
This article was originally published on FEE.org. Read the original article.