Their complexity is growing as more countries are stricken by covid-19. In the week to April 1st the tally of reported cases doubled: it is now nearing 1m. America has logged well over 200,000 cases and has seen 55% more deaths than China.
On March 30th President Donald Trump warned of “three weeks like we’ve never seen before”. The strain on America’s health system may not peak for some weeks. The presidential task-force has predicted that the pandemic will cost at least 100,000-240,000 American lives.
Just now the effort to fight the virus seems all-consuming. India declared a 21-day lockdown starting on March 24th. Having insisted that it was all but immune to a covid-19 outbreak, Russia has ordered a severe lockdown, with the threat of seven years’ prison for gross violations of the quarantine. Some 250m Americans have been told to stay at home.
Shutting the economy will cause huge economic damage. Models suggest that letting covid-19 burn through the population would do less, but lead to perhaps 1m extra deaths. You can make a full accounting, using the age-adjusted official value of each life saved. This suggests that attempting to mitigate the disease is worth $60,000 to each American household.
How should you think about these trade-offs? The first principle is to be systematic. The $60,000 benefit to American households, as in all cost-of-life calculations, is not real cash but an accounting measure that helps compare very different things such as lives, jobs and contending moral and social values in a complex society. The bigger the crisis, the more important such measurements are.
A second principle is to help those on the losing side of sensible trade-offs. Workers sacked in forced shutdowns deserve extra help; children who no longer get meals at schools need to be given food. Likewise, society must help the young after the pandemic has abated. Although the disease threatens them less severely, most of the burden will fall on them, both today and in the future, as countries pay off their extra borrowing.
A third principle is that countries must adapt. The balance of costs and benefits will change as the pandemic unfolds. Lockdowns buy time, an invaluable commodity. When they are lifted, covid-19 will spread again among people who are still susceptible. But societies can prepare in a way that they never did for the first wave, by equipping health systems with more beds, ventilators and staff. They can study new ways to treat the disease and recruit an army of testing and tracing teams to snuff out new clusters. All that lowers the cost of opening up the economy.
By the summer, economies will have suffered double-digit drops in quarterly gdp. People will have endured months indoors, hurting both social and their mental health. Year-long lockdowns would cost America and the euro zone a third or so of gdp.
Markets would tumble and investments be delayed. The capacity of the economy would wither as innovation stalled and skills decayed. Eventually, even if many people are dying, the cost of distancing could outweigh the benefits. That is a side to the trade-offs that nobody is yet ready to admit.
