Covid-19 has posed difficult, uncomfortable, and often infuriating questions. Should we sacrifice our economy — our livelihoods — for the sake of the lives of some of us? Why? Is that fair?
We believe the lives do in fact matter for the livelihoods of all. It is not lock-downs that cause economic downturns, but rather the pandemic itself. The perspective I share is based on conclusions drawn from recent research on demographics and the 1918 pandemic.
A paper recently published by researchers at the Federal Reserve Bank and MIT, looked at social distancing measures and economic outcomes after the 1918 Spanish Flu pandemic. The authors found that cities with higher death rates suffered deeper and longer economic losses. They also found that cities that employed social distancing early and more aggressively did not experience economic damage over the medium term. In fact, these cities had a stronger bounce back in economic activity after the pandemic subsided.
Why?
The authors explain that even if government does not implement social distancing, people would reduce social interactions in order to avoid getting infected, thus causing an economic downturn. Brazil today is a prime example of this.
Conversely, when social distancing is implemented with strong leadership, the effort is orderly. The coordinated activities temporarily reduce economic activity, but also eliminate the sudden surge that would otherwise overwhelm hospitals… and in allowing hospitals to operate normally, lives are saved. In other words, it “flattens the curve.”
Wait, but didn’t the Spanish Flu affect more the young? Covid-19 primarily impacts those of post-retirement age. Is it fair to draw similar conclusions? Is such an economic sacrifice to save the lives of the elderly a reasonable ask? Is the debt the younger generations will have to bear worth the cost of extending lives by another 5 to 10 years?
While it is true that the highest mortality is among those 80+ years, hospitalization needs do affect a younger population. Anyone with diabetes, asthma, kidney disease, heart disease, high blood pressure, and a list of other conditions are at higher risk for hospitalization. According to research from the Kaiser Family Foundation, 41.4 million or 45% of the US population under the age of 65 is vulnerable due to pre-existing conditions. That is a huge number!
Because almost half of economically active population in the country could potentially need hospitalization, flattening the curve is imperative for the economy. Absent strong leadership, social distancing will be self-directed, and fear driven, depressing economic activity in a disorganized fashion, and worsening future economic prospects.