Lockdown or Economy, a false choice

Have you heard people say that lockdowns are destroying economies? The argument is that we should open up, let the virus run its course, and build herd immunity (now that it seems only old people die, and that only a tiny percentage of overall cases result in death). Yet the assumptions seem to be that there is an either-or choice. The reality is much different. 

(Twitter: 27/12/2020 – the very voice and face of evil)

Locking down has enormous consequences for economic activity and mental health; this is true. This is balanced by a reduction in the mortality based on a lower or slower spread of the virus. A slower spread of the virus should ensure that the medical system, hopefully, can cater for the load that sick people place on the system. There are only so many hospital beds, and only so many medical professionals. Overload that system, and people will not receive required care, fatalities will rise, and the pool of available healthcare professionals will shrink as they are removed, hopefully temporarily, as they become sick and burned-out. There is also an element of trying to keep the sick-load down until effective interventions are available, and vaccines are available in volume. 

Remove lockdowns (or more accurately, do not impose lockdowns), and the benefits of fewer people becoming ill, dying, and overloading the medical system, will disappear. Now factor in the social impact of a visibly collapsing health system, mounting deaths and infection lurking around every corner and in every shop. There would be no need for a lockdown to stop people from flying. Bars could remain open, generating income for bar owners and employees. Shops and offices could stay open, and the economic activity would reduce unemployment and economic loss. Small investors leveraged to build businesses and futures would have these protected by an economic system that would continue apace, continuing employment and continuing the turnover required to service business (and personal) loans and build assets.

That is the argument. And it is dead wrong.

Mass illness and death have a way of seeping into the soul of a society, and fear is a dampener on economic activity. Trauma begets behaviours (and is caused by behaviours). So, tourism would come to a sudden stop. Likewise, while shops may remain open, economic activity in the shops would have come to a virtual halt. Yet wages would continue to be due, and as revenue collapsed and staff were fired, it would not be long before the markets themselves would begin to ‘price in’ the future impact of collapsing economic activity.

In the US, with a for-profit healthcare system linked to individual employment, the double threat of losing a job while at the same time being forced to work in environments that were clearly advantageous to the spread of the virus could not have anything other than a negative impact on workers' productivity. Worse than worker productivity, worker health will suffer through institutional failure to implement health-saving policies. The only policies that will matter will be wealth-saving policies. We’ve already seen the impact.

Earlier this month in Douglas County, one person who was sick went to work, and later tested positive for the coronavirus.

Within two weeks, that one action led to two subsequent outbreaks. The first killed at least seven people, nearly 20% of the county’s total COVID fatalities since the pandemic began. The second forced more than 300 people into quarantine.

Working from home would become a desirable option for workers (if they can), regardless of the ‘lockdown’ situation.

And the higher death rate among the elderly would drag workers away from the office for funerals and grieving, further impacting the social fabric. The higher death rate would also cause a national grieving significantly greater than the current numbing effect of the virus.

The question of “save lives or save the economy” is a false question. If society did not set out to save as many lives as possible, there would have been no economy. It would have stopped.  

Throughout the pandemic, modelling has included expected cases and mortality based on various levels of a lockdown or other social distancing measures. By early April deaths were climbing quickly, and projections looked pretty scary. The CDC’s site included its historical projections. Below is the 13 April 2020 projections of potential cumulative deaths in the US through July 2020, based on various levels of restrictions.

With the minimum “contact reduction” of 20%, deaths would have reached a range of between 130,000 to a horrifying 350,000. That range itself is horrifying, and reflects the dearth of information available at that time for modelling. It is scary to note that total US deaths passed 125,000 in June, not far off an extrapolation of the 40% contact reduction line above. 300,000 cumulative deaths in the US was reached in December, and current projections are for more than 420,000 deaths by inauguration day on 20 January 2021. 

Imagine 200,000 deaths by May 2020. Who would leave the house? Who would even consider going to work? Would there be an economy?

So while the modelling of total deaths took place, there was not an associated modelling of the potential impact on economic activity based on those deaths.  The comparison should have included not just vague statements about the health system being overloaded, but should have quantified the potential impact of health and economic activity.

The trauma of people being forced to continue to work in offices, factories and shops would be significant. The London Underground provides an example. Even under ‘normal circumstances’ the Tubes are packed, and people are surly and uncommunicative. There are unwritten behavioural rules, such as you don’t talk to others (or if you do, it is either boisterous groups, or quiet individual conversations) and do not make eye contact with strangers. Now imagine that in a pandemic in which everyone is expected to go to work, and the Tube is still crowded, but now there are people with fevers and coughs as well. 

In non-pandemic times, others are tolerated because an unwritten code says ‘we are all in this together’, as long as being together will not kill us. In normal times the unwell person on the train is requested to get off at the next stop and stay on the platform until they feel better or ask for assistance from station staff. 

In a pandemic, station staff are suddenly required to act as front-line medical responders. The infection will spread to them quickly, and the numbers of staff unavailable due to illness will rise. As the London Underground workforce is well unionised and protective, strike action should be expected and would effectively shut down the Underground. So as the pandemic spreads (in a no-lockdown situation) the number of train services will fall, cramming more people into fewer trains, increasing infection rates. 

At some stage, people will simply refuse to take the Tube.

That needs to be figured into the economics of the pandemic, and the ‘stay open’ arguments. Does NYC continue to function if New Yorkers refuse to take the Metro? Does the Metro still function is staff are out on strike or there are too few staff due to sickness?

Then consider the psychological effect of an infection rate climbing quickly, yet with a demonstrably deaf governmental and business community. If we (well, I) have been shocked by the level of conspiracy thinking that has happened with lockdowns, imaging the level of conspiracy thinking that would take place in an “everything should continue as normal” scenario.

I would imagine that business would be even more reviled, and all faith in government to protect people, or even to have the people’s interests in mind would evaporate. Covid-19 would be seen as a tool by which the government was ridding itself of the elderly to avoid pensions and healthcare obligations to the elderly, returning the economy to longer-term demographic stability. Kill off the old, and Social Security costs will fall, and taxes won’t need to rise, allowing more tax cuts for the rich.

And about the ‘rich’. Clearly, THEY are taking this seriously, and are able to distance and protect themselves and their families while the workers who create their wealth must continue to work, be exposed, get sick, and lose everything to the illness. The current anger (yes, there really is anger) at the wealth accumulation by higher earners and the extravagant increases in wealth at the very top through the pandemic will have repercussions. A ‘wealth tax’ cannot be ruled out.

Now imagine a ‘no-lockdown’ scenario, with mounting deaths, raging illness and (in the US in particular) the stripping of families of what meagre assets they have, impoverishment of the newly unemployed (after all, if there is no lockdown there should be little need for a stimulus package). Remember that even those who are benefiting from stimulus are seeing assets diminished and poverty approaching. Renters are falling behind with no associated equity assets to rely upon to provide financial depth. Homeowners are finding mortgage payments difficult or impossible to make. Banks will allow loans to extend only so long.

This is happening with stimulus and with lockdowns. Without lockdowns, the higher infection rates and higher death rates due to crippled health systems will exacerbate the economic problems.

Anti-lockdown advocates also make the spurious claims that ‘more people will die from suicide than will be saved by a lockdown’. This is complete bollocks. The suicide rate will be the same or higher, as large numbers of people are pushed into extreme poverty through economic collapse (which will happen simply because too many sick and dying people will mean too little shopping and too little working). In addition, those that suffer from depression due to the visible increase in illness all around them will have no services available to assist them, as those services will also be impacted by increased employee illness and absenteeism. Volunteers will become fewer as they deal with issues of their own at home and in their families.

Long-Covid

Missing from the discussion has been the economic impact of "Long-Covid" on more general health, and the psychology of returning to work in an "open economy". Long-Covid refers to those patients who continue, sometimes months later, to have Covid-19 related symptoms and in some cases, significant disabilities. 

A core element of a thriving economy is the confidence that the structures are in place to ensure that long-term aspirations will be achievable by "playing the game" of work hard, gain rewards, live a comfortable life. Curtail the probability of a quick recovery and a "back to normal", and expect an even slower recovery. That is the simple psychological impact that will hinder a full return to normality.

Then there is the associated economic impact of a potentially large cadre of individuals who will be unable to fully return to their pre-pandemic jobs and lives. They will "contribute" less to the economy, while likewise increasing the cost of the economy. Societies are expensive to run, and taking care of the weak and the sick to a standard that provides opportunity and enables a quality of life is part of that cost. It is the insurance policy that we all de facto pay for.

Long-Covid will result in untold individual and family suffering, and will be a drain on the economy that is so loved by those with assets. 

While the skyrocketing sickness and death rates in an "open economy" will effectively close that economy regardless of the wishes of politicians and oligarchs. Long-Covid will make create further drains slowing further the recovery of that much-worshipped economy.

Summary

“Open the economy, Now!” Lockdowns cause more harm than benefit. This is true, but only if there is no pandemic. When society is being ravaged by a highly contagious illness, the impact is far beyond the economic. And ignoring the pandemic in the pursuit of continued profit will backfire. More will die, and business will still fail, and prospects for a speedy recovery will wither.