With costs already an order of magnitude greater than China’s, are advanced western countries, and particularly the UK, about to double down on their earlier cognitive errors in understanding coronavirus? The way the policy argument is currently being framed as a trade-off between saving lives and saving the economy is not only wrong, but also risks catastrophe if it wins the day.
The political and business leaders who are arguing for easing lockdown as quickly as we can, are weeks behind the curve. There is still much wishful thinking about getting away with a V-shaped recession and about saving segments of the economy that are already doomed. To take an illustrative example, the small minority of gung-ho individuals prepared to frequent pubs or restaurants before the virus is behind us will not save anything!
We need to recognise that we are already in by far the biggest recession in the experience of virtually everyone living. If we get upcoming decisions wrong, we will put ourselves on the cusp of a depression as deep and long-lasting as the 1930s — and potentially worse. We need to realise, as an increasing number of economists including Martin Wolf (April 23) now do, that there is no trade off between health and economic outcomes. The outcomes are complementary. This means that we will minimise economic damage by only easing restrictions when we know that our testing regime can cope and when we can trace every last contact to stamp out any new outbreaks or spikes.
The fool’s errand of “saving the economy” by prematurely reopening it would merely increase the likelihood of a major second wave this coming winter. Apart from the extra lives needlessly lost, an economic disaster for this generation would then inevitably morph into an epoch-ending catastrophe.