Nations Face Hobson’s Choice Over Coronavirus

The cost of eradication may outweigh the economic damage of stopping it

Focus on the extermination of Covid-19 through draconian travel bans, etc, without regard to cost to the global community is dangerous. It will not work and will devastate employment and welfare, most of all among developing nations with few resources but young populations at less at risk from the virus.

The topic seems to be taboo. It should not be. At every point, governments, societies need to weigh the cost of saving a life. They need to establish the marginal cost of preventing one death. They need, for example, to try to measure the present discounted value of life earnings of an individual – clearly, that of a 35-year-old is several times greater than that of an 80-year-old.

Obviously, the above values vary dramatically according to the overall per capita wealth and incomes of nations. The marginal cost of reducing death in, for example, France is much greater than in the Philippines.

But each nation is so focused on prevention at any cost that the resultant damage to economies and societies is ignored. No balance sheet is offered or discussed. And where are institutions like the World Bank at a time when it is clear that developing countries will probably suffer the most, seeing collapses in prices and foreign demand while not in a position to combat the virus as effectively as the rich?

These questions may be cruel but by not publicly asking them, the nations of the world risk a global depression on a scale not seen since the 1930s. The more countries ban movement between each other, the more they impose restrictions on internal as well as external travel, the more they forbid gatherings or insist on closure of shops, bars and restaurants, the greater the danger of economies and societies suffering setbacks far greater than tiny shifts in life expectancy that the virus may bring.

Wrongly focused reaction can also have a very negative impact on people suffering from other conditions, with all but emergency operations postponed and hospital beds reserved for an assumed influx of Covid-19 patients, resources shifted from bigger health issues which kill far more people, especially the poor.

What may seem appropriate policy in one country becomes disastrous if followed by a large number of countries simultaneously. Governments can pump money into banks, they can prevent vulnerable big businesses such as airlines from collapsing, they can hand out cash to people at large. But if it can’t be spent other than on immediate survival, it will have a limited impact on a collapsing overall demand which in turn will lead to ever high unemployment and hence the demand for further survival cash handouts.

At a time when the virus is already established in most developed countries, mutual travel bans achieve very little, but their social cost is very high. They also lead to mutual insults and pots calling kettles black. It is evidence of a breakdown of trust between nations even within the European Union’s Schengen region – though it has now replaced internal barriers with external ones. Border controls and other blanket bans make for good headlines and seem an easy way out for governments which have lagged far behind in implementing intense test-and-trace efforts which have got countries such as Korea on top of the problem without resort to extreme measures.

Inadequate data has also been a panic factor. Italy has reported a very high – 8 percent – death rate. But it now transpires that the average age of the deceased was 79.5 with almost all of them already suffering from high blood pressure, diabetes or heart disease. The average age of those infected was 63. Italy has mostly only tested those with very clear symptoms. Korea did much more intensive testing and its death rate is just 1 percent. Clearly, Italy’s apparent infection rate cannot reflect the population at large where the average age is 45.

It is now likely that even if the virus panic only lasts a few more weeks, it will have done some irreparable damage to international cooperation, not least between China and the US as well as to the livelihoods of billions.

The policies of the rich world will do double damage to many in the developing world. The demand for their products is falling faster than the ones they import. Fewer garments sold, lower prices for copper, coffee or whatever. Meanwhile, capital goods import prices stay the same. Developing countries also have a larger proportion of informal sector workers who are especially vulnerable to loss of daily earnings and also far fewer office workers able to work from home.

In addition, the majority of developing countries do not have the financial, technical or human resources to conduct large-scale testing or tracing, let alone provide hospital treatment for more than a very few cases. It is clear already that several countries in Southeast Asia have reported few cases mainly because they have tested so few, if any.

No less a supposed authority than Aung San Suu Kyi has declared Myanmar has no cases.

This situation is being repeated in India and will be in the not-too-distant future in Africa. No amount of handwringing in the richer world can get away from this reality. The bureaucrats of the WHO urge “aggressive measures” on South and Southeast Asia. But given their capacity – political, financial, technical and human – this can only mean lockdown decrees which cannot be thoroughly policed and merely cut off the country from the outside and may cause domestic mayhem. For examples of outright idiocy, see Malaysia’s ban on workers crossing the causeway to Singapore, or time curfews as though the virus had operating hours.

Politics is in command much of the time, whether with China blaming the US or declaring sudden victor over the virus or Trump posturing in ever-changing directions.

The panic over Covid-19 deaths must also be put in perspective against deaths from other infectious diseases which particularly occur in the developing world but attract comparatively little attention. Tuberculosis and HIV both cause more than a million deaths a year, malaria about 400,000. Most of these are in the developing world and mostly among the young and middle-aged rather than the over-60 average for Covid-19 fatalities. India and Indonesia have particularly high rates of tuberculosis. In that context, Covid-19, scourge of the over-60s, may seem of secondary importance despite the international noise and local panics for masks, etc.

Even in developed, health-conscious countries, some diseases barely come to the attention of tourists and other travelers. Though it received much early Covid-19 attention, Singapore has had no deaths. Yet in 2019, despite high treatment quality, it had 20 deaths from dengue fever. Dengue killed about 1,300 people in the Philippines in 2019, half of them children and Brazil had more than 600 deaths. These were of all ages, not concentrated among the over 65s. For sure, dengue-like malaria is not spread directly between humans and is region-specific, unlike Covid-19, as far as is known so far.