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OP-ED: No solutions, only trade-offs

  • Published at 08:15 pm July 18th, 2020
lockdown
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We have to learn to co-exist with Covid-19

We've bad news about Covid-19 -- it appears to act like many other viral infections. More specifically, that immunity to it, once having had it, lasts only a few months. 

This is, sadly, a repeat of the great lesson of economics, that there are no solutions, only trade-offs. Here, we cannot let the disease rip through the population and then regard it as solved. We're going to have to come to terms with it co-existing with us. 

This is a rather bleak message for us all but there we are, no one has ever said that this world is to be perfect. All we can do here is the best we can, given the options available to us.

The big trade off here is an economic one too. Yes, obviously, driven by the medical truths about what we face and what can be done about that. But it's always, always a trade-off. The most obvious of which is the closing down of the economy in order to prevent and limit the spread of the disease. 

If we faced something that was inevitably fatal to anyone and everyone, then we would indeed close down everything to avoid the spread. If it was something mildly tiresome like the common cold then we'd not close anything at all. Given the disease, our likely option is something in between.

The original idea of the closedown was that medical services would not be able to cope if we all caught it at the same time. Fewer lives would be lost because there would be the equipment, the doctors, the supplies to treat that portion of us that needed the medical intervention. 

But once some to many of us had had it, there would be the herd immunity that would protect us from a repeat of the experience. This new fact, that immunity only lasts a few months, changes that calculation.

Closing down the economy doesn't deal with the problem. So, we need to rethink that decision. For we should not think of the lockdown as being just about “money” or the rich or the capitalists. The economy is what we all gain our living from, and by living, we don't mean simple money. 

It's only if other people go out and produce things that there is anything that we can consume. We'll get hungry if the farmers don't farm for example, and we can repeat that point across all and any method of producing anything. 

Doing this, taking a hit to those living standards, is one justification. We still need to be careful as some of us live too close to the survival line to be able to do it for long. But we can share about it and live with it for a short period of time. But that decision depends upon it being just the one time -- that once the disease has passed through, then we won't get an epidemic again. 

As soon as we find out that we can have another epidemic, as above, then the costs of the lockdown remain the same but the benefit largely goes away. That is, our reaction -- the costs we're willing to bear -- to a one time lockdown is different and should be from a series of them, one every few months. We would continue to carry those very heavy economic costs while not actually gaining the benefit we hoped for.

As we've seen, the lockdown in other places has affected Bangladesh substantially -- the clothing retailers cancelling contracts and thereby throwing hundreds of thousands, at least, out of work. This is just, writ large, the same problem the closedown of the economy has in every sector. 

People stop being able to make their living and that has costs. In the end, it will cause deaths too, it being obvious enough that if we keep the economy closed for long enough, then the number of deaths will be higher than those avoided by doing so.  

Economics is called the “dismal science” and the roots of the phrase are to do with slavery and how free labour is more profitable. But the naming of it as such is appropriate here too. We never do have a solution to a problem, we're just faced with a series of trade-offs. 

And if the coronavirus immunity lasts only a few months, then the optimal trade-off is different from if we did reach true herd immunity. We're going to have to do less economic closedowns to avoid infections and deaths simply because repeating the closedowns will cause more deaths than the disease itself.

Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.

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