Many issues that become ‘hot topics’ in public debates are really non-questions despite the heat they raise. All sorts of experts advance views, television current affairs programs trawl over them with various of these experts making careers for themselves, politicians take up hours of their time and our time discussing them, yet, when you really break the issue down – there is nothing much to see. The seemingly very erudite debates, discussions, opinions are all based on false starting premises, which are assumed and rarely discussed. This sort of charade is all the legacy of living in the fictional world created by my profession, which has distorted public discourse so badly that we now have people saying old people should be allowed to die terrible deaths from COVID so the young people can have jobs. These are old people who worked all their lives to help build our nations, who fought in World Wars to defend our freedom from daunting enemies, old people who cared for us personally, and old people who mostly, probably, have the joy of life before them each day they open their eyes, just like any of us. The problem is that the whole construction is based on a false premise: being that there has to be widespread economic damage if we choose to protect the health of our peoples. That premise is based on the failure to understand that the currency-issuing government can attenuate any economic losses if it chooses to adopt appropriate economic policy interventions. The fact that real GDP and employment has fallen significantly this year is testament to a failure to use fiscal capacity. We should be better informed before we get into elaborate but flawed debates that essentially come down to turning one population cohort against another.
Here is a case in point.
There has been a lot of noise in recent months about the decision by our State and Territory governments to impose lockdowns and close the internal borders within Australia.
The most attacks have been made against Victoria, which is the only jurisdiction that has endured a second-wave, as a result of breaches of quarantine breaking out into wider outbreaks.
Fortunately, that wave is now under control and only 11 new cases were recorded yesterday.
It won’t be long now before our internal borders open again after 6 months of closure (with some exemptions).
It has been a very painful exercise in terms of the way the restrictions have impacted on our lives. My own life has been substantially altered and I haven’t been to my Melbourne office since early June.
The business community, as always, have been vocal in their criticism, claiming that the state/territory governments should be opening up like the rest of the world to allow them to make profits.
The federal government, supporting the business community, has been claiming likewise, but knows that under our Constitution they cannot command the states/territories to reduce the restrictions and open the borders. These powers are assigned to the sub-federal governments as a quirk of our creation.
Interestingly, but not unsurprisingly, the critics offer no solutions to the reality that Europe and the UK are now seeing – that if you open up and allow freer movement of people, without adequate testing and follow-up capacity, then a second-wave follows quickly which is worse than the first.
And the death rates start spiralling again.
They just want profits!
The more sophisticated critics hide behind sophistry and false premises to push the argument that lockdowns are worse than spirally death rates.
There was an article in the media over the weekend (September 19, 2020) –
– Melbourne Uni chief says Victoria must address difficult ethical questions – along these lines.
The Vice-Chancellor of the University of Melbourne is the highest paid University head in Victoria (receiving $1.499 million per year against the average full-time earnings in Australia of $82,436)
You can read about the way the bosses of Australian universities have feathered their own nests in this article (among others) – Overpaid university bosses cry poor as their foreign-student riches evaporate (April 18, 2020).
It is one of the ways in which neoliberalism has undermined the fabric of our higher education sector.
But that is not the point of this blog post.
The Melbourne University VC (who is a microbiologist) claimed that:
The question everyone is skirting around here is what is the appetite in any country for disease and mortality associated with this virus …
Every answer to that question is valid in one way or another. If you were to say we have no appetite whatsoever for any deaths from this virus, that is a perfectly reasonable position to take, but you have to take that position knowing the consequences …
If that decision stops people dying now from the virus, what are the economic consequences of that for people and how will that play out in terms of future mortality?
I discussed these issues in this blog post – Academic freedom requires evidence and knowledge – not a desire for headlines (July 28, 2020).
The VC fell into the ‘economists’ lair by claiming that governments “must consider the role of quality-adjusted life year (QALY), a unit of measurement used by economists to predict and assess the impact of health policies. In simple terms, it assumes that a life near its end, whether because of disease or advanced age, is empirically different to a healthy life closer to its beginning.”
He expressed it in this way:
It boils down to a basic but very hard moral philosophy: What is the value of a 90-year-old’s life versus the value of the continuing livelihood and happiness of a 25-year-old?
The article talks about the Australian response – “broad suspension of commercial, educational and social activity to reduce the spread of the virus” as being in “contrast to the approach being taken by European nations such as France, the UK, the Netherlands and Austria, where governments are resisting a return to lockdown despite facing substantially higher COVID case loads, and deaths, than we are.”
The Melbourne University VC was quoted as saying the European nations have:
… got used to this virus being around and people dying from it.
Apparently, we are all going to die and protecting life has “consequences”.
He claimed it was an “an absolute tragedy that young people’s lives are being disrupted”, which is the line the critics are taking.
It is the line that those who oppose fiscal intervention use also – the debt burdens on our grandkids ruse.
But the whole discussion is based on a false premise that the VC of the University of Melbourne also fails to deal with.
There is the presumption that the choice is between lower Covid death rates and higher economic damage – and the Australian governments have not made a valid case for choosing the former over the latter.
Apparently, the European nations, by resisting further lockdowns, are allowing their citizens to enjoy better economic outcomes as they adjust (become inured) to the result (much) higher death rates.
Well, before we deal with the false premise that underlies all these discussions, we can have a look at some evidence.
The conclusion is that the evidence base doesn’t support any of these arguments.
Lockdown and GDP performance
The University of Oxford has published a very interesting dataset – Coronavirus Government Response Tracker – which, among other indicators provides “stringency and policy indices”, that combine a number of “government response” indicators (17) to come up with a summary measure of tightness of lockdown.
The OECD provides quarterly GDP figures – HERE.
And Our World In Data – provides extensive datasets on coronavirus incidence – Coronavirus Pandemic (COVID-19) – which are updated daily.
The following graph shows the relationship between lockdown stringency (index points – higher tighter lockdown) and the quarter-two 2020 real GDP contraction (in per cent).
The red diamond is the average observation for these OECD observations.
The dotted line is the simple linear trend.
The conclusion is that there doesn’t seem to be any clear relationship between the two series.
Countries like Australia had a similar economic contraction to Sweden, for example, with significantly tighter lockdowns.
Death rates and GDP performance
And what of the relationship between lost GDP and Covid death rates?
The analysis provided by Our World In Data – No sign of a health-economy trade-off, quite the opposite – provides an evidence base to answer the question:
Have the countries experiencing the largest economic decline performed better in protecting the nation’s health, as we would expect if there was a trade-off?
They explore the relationship between GDP loss and confirmed COVID-19 deaths per million people and find that:
… countries which suffered the most severe economic downturns – like Peru, Spain and the UK – are generally among the countries with the highest COVID-19 death rate.
And the reverse is also true: countries where the economic impact has been modest – like Taiwan, South Korea, and Lithuania – have also managed to keep the death rate low.
There are many examples, also of quite varied death rates yet similar economic contractions.
The conclusion, based on the evidence to date, is that there is no visible “trade-off between protecting people’s health and protecting the economy”.
It is possible, they conclude, that “countries controlling the outbreak effectively may have adopted the best economic strategy too.”
In terms of the OECD data set that the first graph (above) was produced, the next graph shows the relationship between real GDP losses in the second-quarter and the death rates per million to date from Covid.
In this restricted set of nations, there is more likely to be a negative (inverse) relationship than no relationship (as indicated by the dotted, negative) trend line.
That line suggests that the deeper the recession the higher the death rate.
I always caution against drawing too much from cross plots like this.
Fortunately, the datasets provided above allow us to do more complicated statistical work, which I am doing at present and will report back if I find anything interesting.
There have been a number of studies to date which have investigated these type of issues.
country-specific Susceptible-Exposed-Infected-Recovered (SEIR) models
Many find, overwhelmingly that the lockdowns saved millions of lives and this depended on timing of the restrictions and the severity of them – “earlier lockdowns would have increased social welfare tremendously” (Source).
Undoubtedly, more evidence will be forthcoming as the datasets improve and the time series extends.
Who will die?
When I was a graduate student, a particularly odious senior academic in the department used to sit in the tea room of mornings waxing lyrical about how all jobs should be open to continuous competition, so that workers should not enjoy any protections from legislation from summary dismissal.
I remember I said to him one morning that given his publication record (virtually zero), his lack of competitive grant success (a key indicator of research capacity), his lack of PhD graduations (another key indicator) and his somewhat dubious teaching record, then I thought if his job was open to competition (rather than being protected by university tenure arrangements enforced by law) that he would be on the unemployment queue immediately.
He huffed and started raving on about experience and respect.
In the same vein, I wonder, as a mental experiment, that if we had a public ballot for those who would have to die, whether these critics would have the same view.
We would not!
The false premise
Finally, the sort of ‘moral’ or ‘ethical’ debate that the Vice Chancellor was proposing and is emerging as a regular discussion topic in the press, is clearly based on the false premise that there is a trade-off that cannot be altered by government policy.
Imagine how we would construct this discussion if everyone understood clearly that national governments could make up any income losses resulting from lockdowns and prohibited behaviour under the health plans.
Would we then be proposing deep ethical discussions about whether the younger members of the population should be allowed to kill off their parents because their on-going lives a damage the children’s futures?
I doubt it.
It is the same sort of syllogistic error that enters discussions about how to deal with mass unemployment or poverty or climate change challenges and all the rest of the issues that get placed within a logic framework constrained by a mistaken belief that the national government cannot afford to purchase anything that is for sale in its own currency and must therefore impose taxation or debt burdens on people that have long-term negative consequences.
We are continually being confronted with the syllogism that:
Premise 1: Lockdowns undermine the capacity of younger people to produce and earn income.
Premise 2: Lockdowns protect the lives of older citizens.
Conclusion: Therefore older people are being kept alive at the expense of younger peoples’ future prosperity.
The argument as it stands is logically sound but inherently incorrect.
Because Premise 1 is flawed and cannot be taken as an eternal verity that always holds.
The correct first premise is that: Lockdowns undermine the capacity of younger people to produce and earn income, if the currency-issuing government does not use its fiscal capacity to minimise employment and income loss.
So before we get into the deep ethical discussion about whose lives are more ‘valuable’ in our societies, which has been demonstrated to be highly divisive and even promoting aggressive, anti-social behaviour (see Being called ‘bitch’ in the street? Lockdown fatigue is no excuse for this), we need to understand that the premise such arguments are based on may not be valid.
If there are two people isolated on a desert island with just enough water to keep one of them alive until the rescue ship arrives and one is old and the other young, then there is a valid ethical discussion to have about which one gets the water.
But that highly stylised (and unrealistic mostly) argument does not apply in the real world, where there is no shortage of live-preserving goods and services and currency-issuing governments that can purchase them and distribute them according to need.
The whole trade-off argument between prosperity and saving lives is thus just a reflection of a deep ignorance of the capacities of the currency-issuing governments in our nations.
The extent to which economic losses occur as we save lives through the lockdown are just a reflection of how effective the policy intervention has been.
Those governments that have penny-pinched, such as the Australian government, will see deeper losses arising from the lockdown.
Those losses were avoidable and nothing to do with prioritising the lives of the frail and the aged over the future prosperity of the youth.
Indeed, neoliberalism, which biases fiscal policy towards austerity has already done a good job of undermining the prosperity of our children by cutting education and training, allowing go-nowhere gig jobs to proliferate, and not addressing the climate emergency.
The empirics show that the idea that those who had less stringent lockdowns have done better in economic terms is flawed.
Moreover, all the debates that are emerging about valuing one cohort’s lives over another are just reflecting an ignorance about what the national governments are capable of.
This is not the first time this ignorance has distorted the public debate and undermined a progressive response to a crisis.
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.