Is this really the best we can do? Switching back and forth, open then shut? The more it happens, the harder it will be for people and businesses to have any certainty about the future. Living in fear of the next shutdown just depresses people as well as economies. And consider this. Doherty makes the point that the world is in the very early stage of this pandemic.
How so? Doherty, a Nobel laureate in immunology, reckons that the number of declared cases worldwide, now at 11.8 million, is a drastic understatement. The real number is perhaps 5 to 10 times as many, he estimates.
If you accept that the extreme assumption of 10 times as many is correct, “that means about 100 million people have been infected, and that’s less than 2 per cent of the global population”. Meaning? “Meaning that 98 per cent of the human population is still vulnerable – it’s got an infinite way to run before we get a vaccine,” he tells me.
Even if the immunologists are right in their guess that you can achieve “herd immunity” once about 60 per cent of the population has been infected, that still means that we have to somehow cope until another 58 per cent of the planet’s people have contracted the virus. The world has a long struggle ahead.
So should we just surrender and return to “normal”? More people will die from COVID-19 but won’t the economy recover, and isn’t that a pretty key consideration? Sweden gets a lot of attention. Is it doing the right thing? Take a few minimal precautions but otherwise let the virus rip. Donald Trump is doing the same. Although the picture across the US states is variegated and the national story muddled, it’s been much less restricted than Australia. Trump is now insisting that US schools stay open and activity continue regardless of a rising death toll.
The architect of Sweden’s policy says no, it did not do the right thing. The country’s top epidemiologist, Anders Tegnell, last month conceded that too many Swedes had died: “Clearly, there is potential for improvement in what we have done in Sweden.” He would have advised more restrictive measures if he’d known at the outset what he knows now, said Tegnell. The government has announced an inquiry into its handling of the pandemic.
Sweden’s neighbours Norway and Denmark went much faster and harder imposing restrictions in the early phase. One result is that Sweden has suffered 545 deaths per million of population, 10 times worse than Norway’s rate of 46 per million and five times more than Denmark’s 105.
And the economy? Did Sweden at least get an economic benefit from its greater physical freedoms? None is evident. The OECD predicts that its economy will shrink by 6.7 per cent this year. This is the same as its forecast for Germany – negative 6.6 per cent – yet Germany had more much rigorous lockdown and a death rate one-fifth Sweden’s.
“They literally gained nothing,” as Jacob Kirkegaard of the Peterson Institute for International Economics in Washington told The New York Times. “It’s a self-inflicted wound, and they have no economic gains.”
The US seems to be in a similar situation. While Sweden has the fourth-highest death rate among major developed nations, America is two places down the rankings with the sixth-highest. Its death rate is 410 per million population. And the US economy is expected to go backwards at about the same rate – a 7 per cent contraction, according to the OECD.
Australia, like New Zealand, has a death rate so far of just 4 people per million population, another realm compared to any of the Nordics or Europeans or the Americans. And the Australian economy is expected to do better as well. It’s not pretty – a 5 per cent shrinkage this year on the OECD’s forecast – but less ugly than the others. In other words, it’s a misconception that fewer health restrictions will lead to better economic vitality.
The reason is straightforward. Economies run on confidence. People need confidence to spend money. Businesses need confidence to invest it. And lenders need confidence to lend it. The word “credit” is from the Latin “credere” – to believe. A successful economy is one where everyone believes in future income and future returns on investment. How much confidence can you have if your friends and relatives and neighbours are struck down and dying in large numbers from an invisible plague that has no cure? It won’t matter whether the shops are open and the footy is on.
The outbreak of infection in Victoria immediately hit confidence. Australia’s Reserve Bank this week said in its assessment of the economy: “Uncertainty about the health situation and the future strength of the economy is making many households and businesses cautious, and this is affecting consumption and investment plans.”
There is no zero-sum trade-off between health outcomes and economic ones as many politicians imply. You’ll have heard many of them demand that health protections are removed to “reopen the economy”. It’s vacuous political puffery. Because health outcomes and economic activity are points along a continuum, and that continuum is confidence. The better the health situation, the more confident consumers will be to spend and businesses to invest.
We can’t keep the country in a debilitating binary choice between shut and open. Nor can we surrender to the virus, because we’ll have many dead Australians and a moribund economy as well.
The trick is to find a way to live with the virus. To maintain clean public health while allowing as much freedom of movement as possible. Australia has not yet found that modus vivendi. “Until we find a vaccine, we need to find a new way of living,” says Peter Doherty. Some Japanese officials have talked about finding “a new lifestyle”.
The new way of living needs a new mindset: “We should be thinking ‘the assassin is out there, and if I move around I have to be very careful’,” suggests Doherty, “until there’s a vaccine”.
Australia is groping its way slowly towards finding a new way of living. There were two refinements this week. One, the Morrison government has decided to halve the number of people arriving from abroad, from around 8000 a week to 4000. This is designed to better manage the quarantine process that went so badly wrong in Melbourne.
Second, health experts are now recommending people wear face masks if they aren’t able to keep their distance from others. On public transport or shopping malls, for instance. The main reason that Australian health officials weren’t giving this advice from day one was that the country had a shortage of masks. That problem is well on the way to being solved.
Governments are also going to need to be much more vigilant in reorganising public events and movements, too. Large numbers should be okay, but only where people are distant from each other and disciplined about it. So the outlook for nightclubs, for instance, is poor.
Christianity began with the idea that good souls would pass directly from this earthly life into a heavenly afterlife. But the church invented a middle phase. Around the turn of the second and third centuries it came up with a concept later named “purgatory”, a place of finite suffering before souls could proceed to heaven. We’ll need to get used to it. Until a vaccine is found, at least.
Peter Hartcher is political editor.
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Peter Hartcher is political editor and international editor of The Sydney Morning Herald.