We are seeing some very different approaches to tackling COVID-19 which have huge implications for health and the economy.
On one side we have the US and UK. We both persisted with the Do Nothing strategy for a long time and have recently moved to Mitigation – which is designed to minimise the short-term economic impact
- Initial idea of herd immunity
- Late adoption of social distancing
- Social distancing rules are largely sporadic guidelines
- Low rates of testing
- No tracking of patient contact
On the other extreme we have China and S Korea, with countries such as Spain and Italy moving in this direction –Suppression – which has more severe short-term economic implications
- Strict social distancing rules
- High rate of testing
- Tracking of patients
How might these strategies play out?
Here my thanks to one of my readers who sent me this paper which does a far better job of explaining the ideas in my post Mar 25th. This paper is not only well-written, but it has an optimistic take on how this can be managed long term.
https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56
- Do nothing
Here the paper uses the same argument as my recent post i.e. the mortality rate once we have used up the capacity of the medical system will be far higher. He comes up with a figure far higher than mine with over 10 million deaths.
- Mitigation
He cites the Imperial model, but shows this also overwhelms the health system. The best case below assumes that all the current guidelines were actually firm rules that were being strictly followed.
- Suppression
This has a dramatically lower death rate with fewer than 10 THOUSAND rather than 10 MILLION people dying.
But what next?
The issue with suppression of course is that it can be seen to merely delay the problem. We cannot stay in full lockdown permanently and so surely will have to move to the mitigation strategy eventually?
NO
Buying time is extremely valuable. It means we have time to make ventilators and makeshift hospitals, develop treatments, expand testing capacity and trial patient tracking techniques. We will have more time to understand better how the virus spreads, and to protect ourselves perhaps with more masks and gloves. These are all critically important and it is better to face this battle later when we are more prepared for it.
The other big problem with COVID-19 is that it is so contagious. Every person is infecting on average 2.5 people. The scientists call this number R – for comparison the R of normal influenza is 1.3. The high number for COVIS-19 is causing the explosion of cases which we are currently seeing. But if we could get the rate of infection to below 1 person, then the virus naturally dies out.
Research must now be focused on how to reduce the infection rate in ways which affect our lives and economy the least. We can find our new normal – a way of living which is not the same as before but is not lockdown but does not involve millions of people dying. Maybe clubs and gyms are not open, but our kids are back at school and college and most of us are back to work in some fashion. Here the article provides an illustration of what such a policy menu might look like. We can choose to dial it up or down depending on the results.
Which policy is best?
As we see more data coming in, the path forward on policy becomes clearer. It is the path being taken by the countries who faced the virus first and who had the most severe problems early on. This has given the US and the UK time to learn from that experience but unfortunately I fear that the political and intellectual will to follow this path will only happen after the virus has infected a large part of our countries and has already overwhelmed our health services.
Applied Macro 