Thursday, April 2, 2020

Compromising on Corona

George Freeman, GeoPolitical Futures
March 11, 2020

Battling the coronavirus is essential. But the battle has costs, which are invariably measured against the gain. “No matter what the cost” – the approach many countries appear to be taking – is a principle that can be disastrous, particularly when the cost is so high that it cannot be borne socially. With the coronavirus, like all new and lethal diseases, alarm shapes the responses. As the cost starts to emerge, there is an inevitable recalibration. We are approaching that point of recalibration.

First the risk. The coronavirus seems as difficult to contain as other coronaviruses like the common cold. Some people do not know they have been infected, and many who never fall ill carry the disease. Everyone is suspect. The only safe course is complete social isolation. That is of course impossible. Jobs must be worked, children must go to school, food must be bought and consumed, and so on. Humans are inherently social animals, and the perpetual threat of infection undermines a fundamental human imperative: to be with other people.

Coronaviruses are persistent; they appear, disappear, reappear, mutate. There will be no clear moment at which the virus is eradicated, no moment at which the dread of a handshake or of a kiss on the cheek will go away. Obviously, there may eventually be a vaccine that can minimize if not eradicate the virus, but that is a ways away. In the meantime, fear will continue to haunt.

The virus is deadly, of course. In South Korea, which has maintained by far the most comprehensive statistics on the disease, the mortality rate for those infected is about 0.7 percent as compared to 0.1 percent for the flu. As with the flu, the death rate is higher among the elderly, especially those with other afflictions. As someone over 70, I can be permitted to say that this is a bearable risk compared to other risks.

In the United States, about 39,000 people died in automotive accidents in 2018. That is a bit over 3,000 people per month or 100 per day. It is a significant risk that most of us accept daily. We understand the risk, we take prudent precautions like not drinking while driving, and we live with it. We live with it because the price of not living with it is more than we are prepared to pay.

Life is a calculated risk, and the question is whether protection against the coronavirus is possible, and if possible, whether it is worth it. I raise the number of automobile deaths to drive home the fact that we do take calculated risks. There has not been an overwhelming demand to create automobiles that allow passengers to survive crashes beyond the point where we are – with airbags, seatbelts and better engineering. We demanded steps within the framework of the cost of increased protection, and the price of decreased mobility.

When the virus first appeared, the natural public response was to demand that the government stop it. Governments are useful things, but public expectations are sometimes extravagant. The next phase was to blame the government for failing to protect them. The third phase will be attacking the government for taking the steps it took to protect them. We are not there yet, but we are close.

The cost of the protections is not merely disruption of how we live, but also a significant economic cost.

The crisis has contributed to massive damage to the Chinese economy and, to some degree, to the decline in oil prices, since China is the leading oil importer. It has almost certainly contributed to the massive decline in equity prices. All of these will extract human costs as global economies move toward recession.

Recessions are common. Uncommon is the refusal to attend public gatherings, which has caused significant economic loss. Here in Austin, South by Southwest laid off a third of its staff on Tuesday after the festival’s cancellation. In New York, the governor has decreed that containment sites be set up to protect people from people who have the disease. In Italy, the solution has been to divide the country into different parts and forbid the movement of people between them.

The more sequestered the population is, the less efficient the economy becomes not merely for financial reasons but also because to produce things, even ideas, workers must be at their jobs, goods must be moved freely and so on. The coronavirus is frightening, but a recession that is more than just a cyclical event is also frightening, for it can extract a massive social cost as jobs are lost, banks fail and so on. The sequestration of larger and larger groups of the population cannot become a long-term feature of society without repercussions.

If the virus has a higher mortality rate than it does now, the risk-reward calculus changes. If the virus can be quickly eradicated by current measures, the calculus changes. But if the mortality rate remains the same, and if the virus persists in spite of best efforts, the risk-reward ratio remains in place. What will emerge is not a bloodthirsty indifference to life. All our lives are at risk. Rather, it will be the process of accepting a new risk and staying our social and economic courses.

The current imposition of increasingly intense measures, unless successful or unless the disease proves more dangerous, will lead to social adjustment and, of course, holding the government responsible for all prior fears.

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