Your money or your life?

(April 6): Here’s the moral and emotional dilemma raised by the Covid-19 pandemic: Do we save lives or do we save the economy? In blunt terms: How much is every life worth?

As we watch CNN’s broadcasts of US President Donald Trump’s daily briefings, we will find that he and his Republican supporters basically reflect a utilitarian view about the economy when it comes down to shutdowns: “We can’t have the cure be worse than the problem.” In other words, is the cure (the lockdown) too costly to save lives?

If we look at the Shock and Shift pandemic chart first raised by the Imperial College Coronavirus Response Team, the policy choice is to “flatten the curve”. On the left-hand side is the sharp, steep curve of infections, which will be very steep if you do not practise social distancing. The flatter curve represents the cases that require hospitalisation, as those infected requiring hospitalisation lag the infection by two to four weeks. The Chinese and Italian experience so far is that many who are infected will survive with only mild symptoms. But in the 65 years and older group, even younger ones with existing illnesses could suffer mortality rates exceeding 10%.

The real bottleneck is the number of hospital and ICU beds available to those who are critically ill. If there are insufficient beds, ventilators and hospital staff, then the fatality rate will climb because the hospital systems cannot cope.

When the UK government realised from the Imperial College study that the death rate would be unacceptable, as well as risking the possible collapse of the National Health Service (NHS), the initial policy of allowing the virus to spread and reach “herd immunity” was reversed. The UK then reverted to lockdown mode, initially through voluntary social distancing. But this costly delay, as well delays in the US, already allowed a substantial number of the population (exact number unknown owing to the lack of testing kits) to be infected.

Looking ahead, we would expect the number of UK and US cases to accelerate, as has been shown by the US now overtaking China as the No 1 country with the highest number of Covid-19 cases. With numbers doubling every three to four days, we are already seeing hospitals in New York City reaching capacity, with higher mortality rates.

According to the Imperial College model, in an unmitigated scenario, an unchecked virus could infect seven billion people worldwide and cause roughly 39 million deaths this year. Social distancing to reduce the rate of social contacts by 40%, coupled with a 60% reduction in social contacts among the elderly population (at highest risk), could reduce this mortality by around half. The health systems in almost all countries would be under incredible strain.

The Organisation for Economic Co-operation and Development has estimated that the advanced countries could lose 2% of gross domestic product for every month the lockdown occurs. A two-week lockdown and reopening by Easter (mid-April as recommended by Trump) would cost the US only 1% of GDP, but a two-month lockdown would cost 4% of GDP, bringing the country to recession.

Herein lies the dilemma between the science-based technical expert, such as Dr Anthony Fauci, and the political decision-maker, Trump. The 78-year-old doctor is the most experienced technical expert around and he talks common sense. Human lives matter. On the other hand, the 74-year-old politician is more concerned about the economy and his chances of being re-elected.

This, then, is the great moral and ethical dilemma before us. Irrespective of which side of the political spectrum you come from, some form of choice will have to be made. The right-wing realist thinks that, given the rapid spread of the virus, it will be impossible even with effective lockdowns to stop the virus from eventually infecting most of the global population. The left-wing humanitarian thinks we must save as many lives as possible, irrespective of the financial and economic costs.

Most politicians will, therefore, opt for something in the middle. Impose an enforced lockdown to stop the rapid spread so as not to overwhelm the health system, and then open up the economy to regain livelihood for wage earners and businesses. This inevitably means that, if it takes 12 to 18 months to find an effective vaccine, then we have to accept both longer lockdowns and economic damage, as well as higher mortality rates and sickness than ideal.

This is why what happens in the US, which accounts for one quarter of world output, the strongest military power and 31% of the world debt, is so critical to events going forward. If there is a miraculous V-shaped recovery, a victorious Trump will be re-elected in November and a more confident America may lead G20 to a concerted global stimulus recovery package. Prestige recovered.

If, however, the pandemic gathers momentum and a longer lockdown is necessary throughout all 50 states, then an economically and sick America may blame outsiders and become more inward-looking than ever. A confident Alpha will be generous. A wounded Alpha will pick a fight for the smallest of reasons.

A global pandemic needs global cooperation. What we are witnessing is a very complex situation in which every country is fighting its own health and economic crisis, with insufficient global resources to help. The International Monetary Fund has offered US$1 trillion of its resources, and G20 has pledged US$5 trillion, which is at present a simple addition of individual country reflation efforts. These are respectively 1.1% and 5.7% of world GDP (US$88 trillion). Considering that global debt is US$255 trillion (according to Institute of International Finance data), such assistance is a drop in the ocean in terms of potential debt relief alone.

Condivergence is happening right now. If the rich and ageing economies get hurt more, the gap between the rich and poor will converge. But if the young and poor countries get devastated by the pandemic with little aid to recover, the divergence will widen. This time is truly, then, a volatile, uncertain, complex and ambiguous (Vuca) period.

There are too many unknown unknowns going on at the same time. Hope for the best and be mentally prepared for further bad news. As Fauci said, the virus determines the timetable, not anybody else. We have to be humble to acknowledge that however powerful man or science can be, they cannot dictate what that virus will do.

Tan Sri Andrew Sheng writes on global issues from an Asian perspective.
The views expressed are solely those of the author.