Corona-panic is everywhere, the question is if shutting everything down and quaranting is the solution?
The Covid-19 virus has been ubiquitous lately. Most news stories seem to involve it, and people talk of it constantly. Global stock markets have tumbled, schools and businesses have closed, and borders have been shut. In this week’s post I want to discuss how dangerous the virus is, and my view of what policy responses are appropriate and why I believe shut downs are poor policies. Last week I wrote about possible worst case scenarios, you can find that post here, and to summarise two those I brought up were a crisis of faith in government and economic crisis in Italy which could potentially cause economic consequences for the wider European or Euro area. These concerns are still valid, and I fear that those might be the results regardless of the intensity of the public health crisis from Covid-19 when states take drastic actions designed to seem forceful rather than attempting to make the best long term decisions.
During conversations with colleagues and friends I’ve noticed how some place great value on the optics of government policy, and have a laser focus on the major issue of the day which has of course been the Covid-19 virus. The manifests in the belief that drastic government action is the only way to combat public health crises, and that all “normal” or day to day political issue should be put on hold until the pandemic has died down. While I disagree, I do understand why people feel that way. I think ‘dramatic’ is the appropriate word to describe the virus outbreak, coming from nowhere and in just a few short months claiming lives in countries all across the globe and making government impose harsh temporary rules to slow the spread. That being said though, shut downs might do far more harm than good in most places.
Shutting down schools and quarantining cities can, if done before the virus takes hold, slow down the spread of a disease considerably. But it can also create problems for businesses and get people fired. It seem awfully cynical to talk of the economy when there are people dying from a disease, and perhaps I’m just a cynic, but I firmly believe that life can and should go on during the epidemic. If stopping the spread of the virus takes priority over everything else then shutting everything down and quarantining everyone might be the best policy but that will cause lay-offs and businesses failing. It’s easy to see how Covid-19 is bad, and it produces very human tragedies with clear causes and effects. That’s not the case with a recession but it does still produce human suffering through less clear cut mechanisms and policy makers need to make choices based on facts and the probability of outcomes rather than emotions. I’m not usually a proponent of utilitarian ethics but in this case given the low mortality rate, and the fact that most people will be fine if they catch the disease I believe the costs to society will be greater should we decide to shut society down until the virus outbreak is over.
There seem to be quite a few who aren’t interested in policy outcomes though. Some seem more concerned with the optics than the policy outcomes, which is why shutting down schools and borders are cheered as it’s seen as tangible ways the government is doing something to combat the virus. With the caveat that I’m not trained in medicine, my layman’s understanding is that getting people to wash their hands more often with hand sanitizers would do more to slow the spread of the virus than any shut down. Ultimately designing good policy is very difficult, and in many cases bad policy will be seen by regular people as good policy.
I don’t blame any policy makers for the choices they made, and despite my apprehension towards shut downs I want to commend the Chinese response to the virus. To muddle our discussion of public policy further, it’s important to remember that good policy doesn’t always lead to good outcomes and vice versa. The Chinese handling of the Covid-19 virus will likely cause a great deal of economic pain both in China and abroad but when the outbreak started no one knew how dangerous the virus really was, so punitive measures to stop the spread was, in my opinion, the optimal policy response as it would have saved a lot of lives had the virus turned out to be more deadly. But given that the rest of the world had far more information about the disease when they had to make their policies I think they should opt for other ways of slowing the spread of Covid-19. After all, the consequences have consequences.
What do you think? Am I a cynic for being worried about the economy during a public health crisis? Is signalling more important than results in a health crisis? I'd love to hear your thoughts! If you want to read more of what I've written you can read more here. Please share this post with a friend or coworker and come back next week for a new post!
Written by Karl Johansson
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