How many lawsuits can you afford to lose?

Before I get any farther, please understand this: pretty much everything in this post can start an argument. Should start arguments, from the philosophical to the technical.

Be warned. What I'm after is here is about putting numbers to the human lives lost to Covid-19. Risk assessment and economic cost have to be reckoned with. Philosophers, I feel you. The utilitarian arguments here are not about worth; rather, just about the nuts and bolts of pocketbook impact.

Economists, please forgive me. I search for order of magnitude numbers. By all means, correct my assumptions. Refine and argue and better this work.

Ok. Here are my basic assumptions. I will use the actuarial value of a human life from the current U.S. number of 10 million dollars. I will use as actuarial life expectancy three score and ten, i.e. 70 years. I'll keep it simple and simply divide the one by the other.

Which gives us a value of life of 143,000 dollars per year.

Further, I will use an average age of 35 at time of death, giving an expected loss of 5 million dollars for each death in actuarial terms. Yes, this is crude. We know that age will be skewed due the risk factors for Covid-19, as known at this time. But the modifications here due this skew are likely to impact the total risk assessment in only minor ways.

I'll point out, though, that any given lawsuit will contain different types of recompense, both for expected income and for recompense for boneheaded decisions. Most companies and systems will react poorly initially, so think of the 5 million dollars not as simply recompense for lost income, but also as the loss due to emotional harm to the survivors. In which case, the 5 million number is an estimate of the total dollar risk factor for losing a lawsuit, including that a jury/judge will find that gross negligence played a part in that loss of life.

So, 5 million dollars per loss of life is an order of magnitude estimate for the dollar risk per life lost to Covid-19.

And thus the question that titles this essay: as a business owner, how many 5 million dollar lawsuits can you afford to lose if you proceed with your plans? Does your current net income projection factor this risk into account?

Does your insurance company's? And remember this, your insurance company might cover one lawsuit. Might.

And even if they do that much, they'll drop you like a hot-ass rock the minute they can.

Further: the government isn't going to pay your liabilities. It ain't on offer.

At the macro level, 5 million dollars per life, 5 billion dollars per thousand lives. That 5 billion dollars per thousand lives means that approximately 0.1 percent of total U.S. federal gross tax revenues is lost every day at the current rates.

That would be about 10 percent of the total current U.S. federal yearly tax revenue lost, to date.

In my state, for every 1000 lives lost, we've seen then a loss of approximately 2 percent of the total yearly tax revenue. Or, for the total number of reported deaths to date, about 5 percent of the state yearly tax revenue.

There's a key difference between the government's loss, and an individual business or institution's loss. The government, generally, won't be forced to write a check paying out for these losses.

Instead, the government will just lose the tax revenue. Little by little, over time. And, more importantly (hi philosophers!), the sum total of those lives that should have been well lived.

One more thing here. If you read carefully, note that "open up and get back to life as we knew it" translates to "we want you as a private individual to accept the risk here, rather than the government".

The risk, and most importantly, the liability. So plan your business stance accordingly.

Ok, we've covered business and government. What about each of us as individuals?

Will your family survive without your income? Or, better: Will your family **succeed** without your income? Will your children and grandchildren, or your cats and charities, be left just scraping by if you die?

There aren't too many of us who can answer that question as well as we would hope. I don't know about you, but I'm not sitting on the pile it would take to make sure my family wouldn't have a hell of a row to hoe without me here.

What's your risk, what's your risk tolerance? I hope that these numbers might help you answer the former, and help you think in detail about the latter and how to respond to it.