Coronavirus: Return to sender — economists’ letter is gibberish

Like some books, there are petitions that deserve to be forgotten, not for the sake of their potential readers but to protect the reput­ation of their authors. The open letter by a bevy of economists urging­ Scott Morrison to keep the COVID-19 restrictions in place is a case in point.

In the great class of sequiturs, its opening salvo is a non. It begins by denying that there is any trade-off between the “public health and economic aspects” of the crisis, calling attempts to separate them “a false distinction”. However, it then recognises that “the measures taken to date have come at a cost to economic activity and jobs”, before asserting these are “far outweighed” by the benefits those restrictions have brought.

Plainly, the letter takes a position­ on the very trade-off between­ costs and benefits whose existence its previous sentence had definitively denied.

That muddle may be the excusable result of sloppy drafting; what is inexcusable is the letter’s utter confusion on what the debate is about.

Contrary to its claim, no one ­seriously expects governments to simply allow “unmitigated contagion”. Rather, given the steep fall in cases and fatalities, the suggesti­on is that Australian govern­ments ought to systematic­ally reassess the restrictions, ­carefully considering their costs and benefits going forward.

Inevitably, that reassessment involves trade-offs; indeed, those trade-offs have figured in the decis­ions taken from the moment the crisis began.

There were, for example, health risks involved in allowing construction sites to operate and in ensuring mining exports could continue. But even then it was clear that the risks were far smaller than the costs that would be caused by shutting those activities down.

In exactly the same way, now that both the risks from COVID-19 and the effectiveness of the measures are much better understood and the health system’s capacity to manage outbreaks has been greatly increased, it would make sense to identify and relax restrictions whose benefits no longer exceed their costs.

But far from accepting the need for that reassessment, the letter states that nothing should be done “until the number of infections is very low, our testing capacity is expand­ed well beyond its already comparatively high level, and widespread contact tracing is available”.

Does that mean the signatories believe schools should not be reopened, elective surgery should continue to be postponed and all cafes should remain closed, despite­ the decline in cases and fataliti­es? Presumably so. But it is a mystery how the signatories can confidently hold those views ­without having examined the trade-off between costs and con­sequences whose existence they vehemently dispute.

It is true that the signatories propose a remedy for the hardship of those who have lost their jobs and for the small businesses that face ruin: “strong fiscal measures”, which, translated into plain ­English, means greater public spending. Yet the burden being imposed on future generations is already enormous. And since it cannot be wished away, isn’t it incumben­t on governments to test whether it might be better to start easing ­restrictions instead?

None of these questions is ­simple. On the contrary, they are heart-wrenchingly difficult. But to decide is to choose, and to choose rationally is to compare the costs and the benefits, reconsidering one’s decision as new information arrives.

That is what we teach econo­mics students from the outset, and the tools economists have developed for analysing trade-offs are among the discipline’s finest achievements. In Europe, where the process of removing restrictions is getting under way, those tools are playing a vital role. Here too, rather than being ignored, it is time they were put to good use.