These ‘strong measures’ are going to send us broke
Can an infinite price be placed on a single life? Would these economists be willing to see the global economy sacrificed at the altar of a single COVID-19 victim, knowing that millions could die from collapsed businesses, suicide and a depleted health system in the resulting economic conflagration? Why not urge permanent house arrest and lockdown of the entire economy to save the thousands of victims of the regular flu and death on the road?
Do they present a skerrick of evidence to show that the policies adopted in Sweden, South Korea, Taiwan, Japan and other areas to keep their economies relatively open are not a potentially more cost-effective way of preserving human life, now and in the longer term, compared with lockdown and barricading?
It has been known for more than 100 years that social distancing and handwashing are the primary means of fighting pandemics. Why give primacy to potential COVID deaths over all other forms of death, including from flus, cancer, road accidents, strokes and heart attacks, by recommending some form of permanent lockdown?
All Australians will be exposed to the virus at some stage, many without knowledge or harm, unless we are willing to keep our borders closed indefinitely or subject to quarantining and severe border testing. Indefinite or prolonged closure, which those economists mentioned above do not rule out, will gravely weaken the university sector of which they are an important part, as well as Australia’s tourism industry and others that involve trading partners.
Some vulnerable people may escape earlier exposure rather than delayed exposure, but the consequences for the potentially thousands of ill people unable to gain access to hospitals because beds are preserved for virus victims who have never shown up, and the lives of millions who could remain unemployed and potentially face destitution, are ignored.
These academic economists should be capable of representing the views of millions facing destitution, not just privileged bureaucrats and those, such as themselves, still fully employed while working from home. Other economists, including Gigi Foster and Jonathan Pincus, have risked ire by taking the opposite stance.
So far, and most fortunately, most academic economists, including those urging continued lockdown, have escaped mass sackings, but for how long? Once on the dole queue, we might see a different attitude.
The notion that “strong fiscal measures”, meaning more subsidies, can offset the extraordinary costs of shutting down a sizeable portion of the economy for an extended period is vacuous. These merely shift the burden from the stood-down to the taxpayer and deprive us of other things the public demands, such as a better educational system, better roads, higher old-age pensions and the like. It is not costless to future generations to extend our foreign national debt to more than $1 trillion. Interest costs must be met, and our youth will be required to repay a debt almost incomprehensible in magnitude while providing pensions to the elderly.
The number of pandemics Australia has survived, including the 1918-19 Spanish flu that killed 15,000 and was far worse, are legion. This is the first time in our history that lockdown has been added to social distancing and handwashing. Why this one? Media scares based on early and grossly exaggerated morbidity modelling must surely take some of the blame.
It is true that opening the economy now implies added risk of some deaths in addition to the relatively small number that, sadly, have already succumbed. Co-morbidity is also an issue with many reported deaths from people suffering from COVID-19 but subject also to other conditions.
Being forced to open up the economy after some period of international travel bans and restrictions with much of the university sector and tourism in disarray will also bring unwelcome deaths when we will be less able to cope because of the loss of a portion of our wealth and economic wellbeing, with thousands of businesses altered for the worse and lives unnecessarily shattered.
I cannot see these millions voting for the government in two years if the economy remains cloistered for much longer.
Who will form and lead the new anti-COVID party if the vast support for our Prime Minister turns to anger? Scott Morrison is too smart to allow this to happen. As more economists emerge from the shadows to help him return the economy to health, all Australians will be exposed to the power and majesty of the economic way of thinking.
Peter Swan is a professor of finance at the University of NSW.
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