Where policymakers have choice is in the scope and speed of reopening and pursuing social distancing. The best available guidance is to do it in phases defined on the basis of the state of the virus spread and the preparedness of the health system. They must be open to course correction based on real time data and evidence
The lives versus livelihood debate precipitated by the Covid-19 suppression measures is fallacious. It implies choice between lives and livelihood. One wishes there were such a choice either in theory or, more importantly, in practice.
What are the real choices on the health and economic fronts? Business as usual in the design and conduct of health and economic policies is not an option policymakers have any more.
Covid-19 has killed over 370,000, infected nearly 6 million people, and still counting, all over the globe. It has a reproductivity rate between 2 and 3. That 2.5 million have recovered and 98 percent of active cases are in mild condition is no comfort. There is an invisible highly contagious virus in 213 countries and territories. Lives are in danger and lifestyles need to adjust to save them.
Does anyone disagree? No, except pointing out that livelihoods are in danger, too.
Countries have responded with lockdowns (LD) and social distancing (SD) to combat the virus until they find a cure or better prevention. These have caused economic disruption endangering livelihoods.
Understanding the epidemiology of Covid-19 is science in the making as knowledge on the economic impact of the disease as well as measures for its containment. What happens to the economy depends not only on the morbidity and mortality faced by the people, but also on the specific measures that countries take.
No matter how strenuously countries have tried to flatten the virus spread curve, it keeps steepening in many, particularly when they let their guard down. There continues to be a spectre of a second or third wave coming up in winter. However, there is robust evidence that timely lockdowns and social distancing interventions can delay and flatten the epidemic curve. It can give communities vital time to strengthen healthcare systems and nudge behaviour change.
Measured as the reduced number of overall cases and health effects it is reasonable to assume, from the theoretical shapes of the virus spread curves with and without intervention, that the benefits from LDs and SDs rise and then fall with the intensity of LD and SD. Speedier vaccine development brings forward the benefits of LDs and SDs by delaying cases until vaccines are available. Policy support and investment to increase the health system capacity make strict forms of LDs and SDs worth their while.
These benefits are quantifiable using epidemiological models. As long as the virus is around, these benefits fade with removal of LD and SD.
So, we largely understand the benefits of LD and SD. If the cost curves could similarly be known, finding the optimal LDs and SDs over time and space will be a matter of writing a computer program addressing some technical issues on the uniqueness and existence of such solutions.
Do we understand the costs nearly as well as we understand the benefits?
Economic contraction caused by Covid-19 could push millions into poverty, according to most authoritative analyses. The World Food Program cautions that an already dire worldwide hunger crisis will be exacerbated, pushing millions of additional people to the brink of starvation by the end of the year. Life was already hard for the billions of poor in both rich and poor nations. Virus has suddenly increased the hardness in unpredictable ways.
All economies have been hit hard. Just look at the rise in unemployment rates all over the world in last three months, not to speak of poverty and malnutrition on which real time data is unavailable.
One may quibble with the numbers, but can anyone discard the probabilities of enduring recession and starvation if LDs and strict forms of SDs prolong? No.
Can anyone discard the probability of the same outcomes if they are removed without putting in place a fully prepared health system? The answer again is, no.
Analysts cannot be sure how the probability of a global economic depression will be affected by unlocking the economy. Nobel Laureate Paul Krugman argues that indiscriminate reopening, when countries are not ready, could turn the Covid-19 "slump into a depression" by spiralling the virus out of control. This will force people to retreat into their homes, back where they started in economic terms, and "in worse shape than ever in epidemiological terms".
It is fallacious to assume that the observed and projected obliteration of growth and jobs is a collateral damage from LD and SD, not the pandemic itself.
The issue is on which side of the hinge will the relaxation of LD and SD make the economy turn – recovery or deeper recession? An equally important issue is who bears the costs, and does that depend on which way the economy turns?
The hinge depends on "raising the line" – increasing the capacity of the health system by expanding and repurposing equipment, staff strengthening; testing, tracing, isolating and treating; providing telemedicine, home care and health education; and maintaining non-Covid-19 care. This can make or break the path of economic recovery.
Absent such a health capacity, not only do we not know what is going to happen, we have a very limited ability to even describe the things that might happen.
The costs, irrespective of the hinge, bite those more severely who have no choice but to seek income. When the economy is in partial coma, a large majority in the informal economy cannot afford to stay home. They come out, get whatever they can, and cut expenditures on essentials to live a degraded life. They come out not because they value their lives any less, but because the alternative is as bad. For them it is not a question of valuing life, it is more a behaviour forced by running out of choices.
When the economy is revived by lifting restrictions on mobility, under increasing virus spread conditions, they probably will see some restoration of lost income at higher contraction risk. Again, they will take that for the simple reason that income is higher while the higher contraction risk is not from their own behaviour but that of others who could afford to stay home but are not.
If these poor and vulnerable cannot survive the income shock under LD and SD, however imperfectly enforced, can they survive the corona infection shock when LDs and SDs are relaxed across the board, including in hotspots?
Thus, the costs of LDs and SDs and their incidence across difference groups depend on the policy response in building health system capacity and making social protection embrace the vulnerable.
The narrative for downsizing restrictions assumes maintaining LD (and some forms of SDs) comes with prohibitive costs. They predict social disorder if LDs and SDs are not relaxed even when the public health system is vastly underprepared. Easing mobility restrictions is an economic and political imperative.
Economists are more reticent. Their narrative assumes curbing the virus is a sine qua non for the economy to rebound. They predict premature reopening, including when infection cases are not exponentially rising, will result in a resurgence of the pandemic with greater virulence. Markets dislike viruses of any kind not to speak of one that can make them sick before they even realise. Hence the market response to premature lifting could be muted even in low income countries as disease spreads. Taming this insidiously contagious virus all the world over is not only an end in itself, but a prerequisite for saving livelihoods.
Walking a tightrope under uncertainties about the biology, chemistry and physics of the virus, the policymakers must also worry about public trust in their strategy.
Decision-makers in most governments are facing interest group and populist pressure for reopening. Yet, if the reopening goes too far too fast, and the virus rebounds, will the same people take responsibility and the general public still trust the authorities?
The policymakers can surely achieve credibility, reduce uncertainties and build confidence by ramping up the capacity of the health system. These efforts will never catch up if the virus spread curve is not flattened. The latter cannot be done without appropriate combinations of LDs and SDs. These in turn dry out income sources for the vast numbers of poor and the vulnerable. Social support systems are needed to address these livelihood risks. There is hardly any choice in any of these except on the operational details.
Where policymakers have choice is in the scope and speed of reopening, pursuing SDs and supporting the poor and the vulnerable. The best available guidance is to do it in phases defined on the basis of the state of the virus spread, the preparedness of the health system and the impact on vulnerabilities. They must also nudge behaviour change to embed new SD norms and be open to course correction based on real time data and evidence.
This is one lesson from New Zealand, Germany, Iceland, South Korea, Japan, Taiwan, China and Vietnam that others can fearlessly apply in their own contexts, no matter how different they are. Nations on paths other than this are putting both lives and livelihoods at incalculable risks. Faith in herd immunity to Covid-19 is equivalent to leaving it to the stars, that is, unconditional surrender to the virus.