Author Topic: Health vs. the Economy  (Read 98 times)

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Offline Jason Wallwork

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Health vs. the Economy
« on: August 19, 2020, 04:11:28 pm »
There was some discussion early on about whether a lockdown was really necessary because of the effect it would have on the economy.

We can look at the example of what happened in the US which was slow to mandate lockdowns and opened many states too early. The COVID-19 numbers spiralled out of control with 170,000 dead so far which is greater than the total civilian deaths in WW1 and WW2 and one-half the total number of all deaths in those wars. The US, even when adjusted for population, has 4x the number of cases and double the number of deaths as Canada. And that even with lockdowns. Imagine if a country didn't impose any restrictions.

For that, we can look at this article from the NYtimes about Sweden which didn't impose any lockdowns and kept schools open. It resulted in 2/3 the number of cases as Canada and ~6K deaths, which doesn't sound so bad when compared to Canada's 9K deaths, until you realize that Sweden has 1/4 of Canada's population. And this:

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Per million people, Sweden has suffered 40 percent more deaths than the United States, 12 times more than Norway, seven times more than Finland and six times more than Denmark.

But surely their economy did better than other nearby countries and the US, right?

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Sweden’s central bank expects its economy to contract by 4.5 percent this year, a revision from a previously expected gain of 1.3 percent. The unemployment rate jumped to 9 percent in May from 7.1 percent in March. “The overall damage to the economy means the recovery will be protracted, with unemployment remaining elevated,” Oxford Economics concluded in a recent research note.

This is more or less how damage caused by the pandemic has played out in Denmark, where the central bank expects that the economy will shrink 4.1 percent this year, and where joblessness has edged up to 5.6 percent in May from 4.1 percent in March.

For comparison to the US, its economy the Federal Reserve predicts -4.2% actually ahead of Sweden despite having lockdowns.

Admittedly, the Bank of Canada forecasts a decrease in GDP of 7.8% with most provinces imposing strick lockdowns. But the point here is that Sweden, despite having no lockdowns and depending on Swedes to be cautious ended up having their economy worsen by almost as much as nearby countries with a human cost much greater than even the US. The theory is that even with no lockdown, other than schools, Swedes stayed home causing an economic downturn almost as bad as other countries who did.
"With all its sham, drudgery, and broken dreams, it is still a beautiful world." - Max Ehrmann, Desiderata

Offline fox

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Re: Health vs. the Economy
« Reply #1 on: August 19, 2020, 04:44:02 pm »
The problem with all of these comparisons is that each country is an n of 1. There are so many variables, both known and unknown that seem to affect infection rates, mortality rates and economies. Having said that, I think there is no good evidence that business as usual in Covid times is good even as an economic strategy.
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Offline buster

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Re: Health vs. the Economy
« Reply #2 on: August 19, 2020, 07:12:48 pm »
I like your analysis Jason.  And also agree with fox that " there is no good evidence that business as usual in Covid times is good even as an economic strategy." The opening of schools is going to be interesting. Talked today to a grade 1&2 teacher and she is considering quitting, taking a leave of absence or just getting out of dealing with lots of little ones running around, however she can manage it.
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Offline Jason Wallwork

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Re: Health vs. the Economy
« Reply #3 on: August 19, 2020, 10:10:10 pm »
The problem with all of these comparisons is that each country is an n of 1. There are so many variables, both known and unknown that seem to affect infection rates, mortality rates and economies.

True, but you can't discount it, either. And I disagree that it's an n of 1. Yes, an individual country but we compare things all the time that had known and unknown variables affecting them and we don't say we have an n=1 in those studies. Countries have more variables but can also be compared and other variables measured for effect. Also, I'm not sure how those other variables would have changed in the the last six months from pre-pandemic to the present situation, certainly not by that much of a difference to say other variables are responsible for more than a small part of the decrease in GDP.
"With all its sham, drudgery, and broken dreams, it is still a beautiful world." - Max Ehrmann, Desiderata

Offline Jason Wallwork

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Re: Health vs. the Economy
« Reply #4 on: August 19, 2020, 10:15:42 pm »
I like your analysis Jason.  And also agree with fox that " there is no good evidence that business as usual in Covid times is good even as an economic strategy." The opening of schools is going to be interesting. Talked today to a grade 1&2 teacher and she is considering quitting, taking a leave of absence or just getting out of dealing with lots of little ones running around, however she can manage it.

I can't really blame her although that will also mean if more teachers are like her, the teachers left will be left with larger classes and a greater chance of infection. I would hope that, assuming the hospitals have enough N95 respirators, that the teachers would get those along with the students instead of non-medical or surgical masks. But I really wish the younger grades would follow the high school model of having days they go to school and days they don't and study at home. But that puts a lot of stress on parents having to find childcare or having to stay home and the government can't afford to keep paying people to stay home.

Teachers are essential workers and are generally paid well here except when they're just starting out. Other essential workers like those in retail make much less and have been putting themselves in harm's way from the beginning. I think it's a bit of snobbery to think that your health is more important than that of those workers. I can understand them worrying about carrying it home to family although their kids are more likely to get it from school.
"With all its sham, drudgery, and broken dreams, it is still a beautiful world." - Max Ehrmann, Desiderata

Offline Jason Wallwork

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Re: Health vs. the Economy
« Reply #5 on: August 20, 2020, 01:35:56 am »
Here's an opinion piece in the Guardian by someone who certainly does take other variables into account when considering the trade-off between the economy and public health. He's Jonathan Portes, professor of economics and public policy at King’s College London and a former senior civil servant. The article is from March 25 but it just as salient now as it was then. It's entitled, "Don't believe the myth that we must sacrifice lives to save the economy." It's talking about the situation in the UK concerning lockdowns accept that they finally realized how wrong that approach was and started enacting more lockdown measures.

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But perhaps more importantly, the idea that the way to minimise the economic damage is to remove the restrictions before they’ve done their job – definitively suppressing the spread of the virus – is a terrible one.

Does anyone believe that, whatever the government said, we could get back to “normal”, or something close to it, any time soon? If we were all allowed to return to work, many or most of us would, quite rationally, choose not to, for fear of catching the virus. And if, as the scientists predict, the result of loosening the restrictions was an acceleration in infections, then pretty soon many firms would simply stop functioning, as workers became sick, or had to stay at home to look after family members.

More broadly, restoring the economy to normal requires, above all, confidence. Amid continuing uncertainty both about their own finances and the wider economy, households won’t spend and businesses won’t invest. And that simply isn’t going to happen until the spread of the diseases has been contained.

So there is no tradeoff here. Health and economic considerations point in exactly the same direction in the short term. Do whatever it takes – and whatever it costs – and do it now, in the interests both of our health and our collective wealth

The US has done exactly what is mentioned above, removing restrictions before the virus was definitively suppressed and look at the tragic results. Their economy still tanked and because of upward trends in many states, a second series of lockdowns are taking place. One of those variables that does make the US different is that the suspicion of government and of science there. Freedom is more important than life so they don't want to lose their haircuts, their beach parties, Disneyworld, or have to wear masks even when shopping. They honestly think the constitution gives them the right to shop. "Give me liberty or give me death" could be the US motto. I'm happy giving up some minor liberty to save my life and others because liberty isn't of much use if you're dead.

My conclusion from all this is that, yes, you can't stay locked down forever. Governments can't afford it and while COVID might be beaten, the mental health toll will be excessive. But you also can't carry on like things are normal and keep the economy fully operating. You'll have a substantially higher number of deaths. Sweden was 40% over the US in deaths per million and many times the deaths as its neighbouring countries. And for what? A slightly less hit to GDP. It's not worth it by any measure.
« Last Edit: September 13, 2020, 09:36:49 pm by Jason Wallwork »
"With all its sham, drudgery, and broken dreams, it is still a beautiful world." - Max Ehrmann, Desiderata

Offline fox

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Re: Health vs. the Economy
« Reply #6 on: August 20, 2020, 10:42:53 am »
There was an article in the Sunday Star where they interviewed health experts about whether they would send their kids back to school. I found it interesting, and somewhat surprising, that Isaac Bogotch, the U of T expert they always use on CBC to answer Covid-19 questions, will be doing so and didn't seem to think that the risk for his family was high. However, he said that his answer was context-dependent, i.e. he would under his personal circumstances but that may not be the best thing for everyone. He seems pretty conservative with his Covid-19 answers on TV, so his reply made me think that the government's plans are not as risky as I thought they were initially. A number of the other scientists and doctors asked also answered in the affirmative, though many don't live in Ontario.
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Offline Jason Wallwork

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Re: Health vs. the Economy
« Reply #7 on: August 20, 2020, 05:09:19 pm »
I read that article, too. I don't think the risk level is high but I think it could be made lower but it would require the government to spend more on resources than they are. They're also expecting boards to follow certain guidelines that are not compatible with each other given their numbers. This Star article talks about how The larger boards aren't intending to following the more difficult ones such as in-school instruction being 50%. When asked why:

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Tony Pontes, who heads the Council of Ontario Directors of Education, said large boards had to factor in a number of conditions, including limiting teens’ direct and indirect contacts to 100, shrinking class sizes to 15 to allow for physical distancing — which would require probably doubling the teaching staff, and that educators cover three of four courses in a semestered system — combined with a lack of extra space.

“You put all of those restrictions together and it’s virtually impossible” to get students into school classrooms half the time, he said. “The government has done a terrific job of managing COVID — but the number one priority of kids returning to school has to be safety, and we think everyone has to be realistic that we cannot replicate a regular school (year).”

And note that the health experts were asking about sending their children to school, not about the teachers who are seeing far more students than the students themselves will be interacting with. So the risk is elevated for them, especially in high school where they have multiple classes a day. Elementary teachers will have the same classroom all day (mostly) but their class sizes will be larger.
"With all its sham, drudgery, and broken dreams, it is still a beautiful world." - Max Ehrmann, Desiderata