The coronavirus pandemic is reshaping the nature of political decision making as government leaders are compelled to link changes in their policies to the number of lives lost or gained.
The toughest public policy challenges since the Second World War will confront governments in the next few months as they strive to save lives while simultaneously restarting businesses shuttered by their coronavirus fighting policies.
Governments are continually making decisions with an impact on the quality of the lives of their constituents. Sometimes those decisions may even have life and death consequences.
A commitment to war is the most obvious example of an explicit life and death decision taken by a government. But policing occupational health and safety rules, perhaps less dramatically, would also qualify. So, too, would approval regimes for medical treatments and drug use.
Every year, finance ministers must ration scarce spending resources. Decisions about income taxes and sustainable debt burdens frame how much can be spent on modernising roads, regulating food content or administering animal quarantine laws. Population fatality rates can rise or fall on these decisions.
Taxing tobacco sales at a rate that falls short of making nicotine prohibitively expensive implicitly balances the value of the marginal preventable death and the impact on the incomes of those growing, processing and distributing tobacco products.
Hiking electricity prices adds to the death rate among older residents unable to afford the marginal cost of heating while ensuring greater comfort for the income earning majority and utility company shareholders.
Despite the seriousness of the consequences, governments take great care to camouflage the trade-off between life and livelihood in day-to-day policymaking, counting on policy impacts being sufficiently diffused so as to make direct attribution unclear.
Very rarely are the lives at risk from a government policy choice equivalent to the allegation that Churchill decided to let the German air force bomb Coventry in 1940 rather than reveal British knowledge of enemy communication codes. (Churchill’s biographer Sir Martin Gilbert has explained why this is a myth.)
Sending the virus to Coventry
Stymieing the Covid-19 pandemic leaves governments with unfamiliar Churchill-like decisions as they move to rejuvenate economic activity, knowing they will put lives at risk.
The pressure on political leaders to get people back to work is growing by the day as policies to control the coronavirus pandemic have resulted, within a matter of a few weeks, in hitherto unthinkable damage to national economies.
The United States government has announced that 20 million Americans lost their jobs between March and April alone. Those with the least protection against economic ill winds are facing the most devastating personal losses.
The impact of the current policies goes well beyond these highly visible immediate effects. Future generations will confront a hobbling debt burden even in the best of times, as a consequence of the policy approach in the past two months. The ability to deal with the financial demands of any fresh pandemics over the next two or three decades has been compromised.
Living standards in emerging economies, home to the world’s poorest, will forever be worse than they otherwise would have been. The capacity of advanced economies to offer development aid to compensate has been curtailed. Most likely, life expectancy will be shortened.
The most optimistic scenario for countries like the US, the UK and Australia, among many others, involves an imminent return to work, albeit phased, as governments gain confidence that lowered Covid-19 infection rates remain within the bounds of national hospital systems to cope.
In taking this course, political leaders in advanced economies are trying to balance the pleadings of their public health officials for caution, on the one hand, with permanent losses in living standards and the evident reticence among voters to stay at home indefinitely, on the other.
Government leaders know that departing from the most rigorous social distancing practices to reopen locked-down businesses and resume normal commercial activities runs the risk of re-energising the pandemic and causing tens, or even hundreds, of thousands more to die.
If a fresh wave of infections were to hit, prematurely reopened businesses would be forced to close again, others may be shuttered for longer, some may simply cease to exist and incomes will suffer another blow. This second scenario would be far bleaker than the first.
Prolonging the economic contraction in response to a second wave of fatalities would lengthen the duration of high unemployment. The strength of any ultimate recovery will have been jeopardised and almost certainly slowed. With more serious damage to business and consumer confidence, the effectiveness of fiscal and monetary policies aimed at bridging income losses will diminish.
With expectations of business resumption dashed, weakening equity markets could persist for as long as social distancing policies are required, further decimating the accumulated savings of a generation about to retire.
However bleak this scenario may sound, there is an even more catastrophic set of outcomes in which the Covid-19 disease envelops regions with the least adequate public health resources, ineffective quarantine arrangements or living conditions which prevent social distancing.
Evidence of the disease passing through unpoliced borders or refugee populations will necessitate redeployment of funding and medical efforts from economically advanced countries, exacerbating already unsustainable financial balances.
More severe and prolonged regional and international travel restrictions would result.
Shutdowns under such a scenario would last until a vaccine can be deployed globally, posing a multi-year threat to the viability of even today’s most financially secure businesses.
Large-scale unemployment would become more deeply embedded globally as short-term policy measures to relieve its impact are overpowered by contracting international commerce.
Trade-offs are unavoidable
Some economists have railed against the idea of a trade-off between life and livelihood. They have urged governments to put everything they can into saving lives and only then turn their attention to repairing moribund economies. They question whether economies can ever function acceptably without first conclusively solving the medical challenge at the heart of the economic problem.
Choosing to stop the deaths and only then working to get people employed is consistent with how governments normally behave.
In advanced economies with strong tax bases and enough financial firepower in reserve to cope with emergencies, the marginal cost of a remedial response to an unexpected physical threat usually appears slight relative to the benefit and the value communities place on individual lives.
So, as bushfires raged in Australia last summer, no one seriously questioned whether fire fighters should be using so much water. Nor did anyone baulk at buying more water-bombing planes.
In the face of natural disasters or calamitous accidents, every effort is thrown at finding survivors, or even saving properties, no matter how improbable the task. Only when the risk of survival is deemed to be zero does the effort subside.
The Covid-19 crisis is on a different scale. The chance of eliminating fatalities is zero. The upper limit of deaths could be in the millions. Bad, bleak and catastrophic are the three daunting scenarios confronting those in charge.
The lowest possible death toll, government leaders of every political hue and temperament agree, involves knowingly imposing unprecedentedly severe and widespread economic hardship.
However reluctantly, the most well meaning governments now have to decide how many lost lives and how much financial pain can be tolerated. There is no ducking the responsibility. Even procrastination is a choice.