campusreview . com . au industry & research pay for attempting to keep the economy open . So , I think we may have to learn to live with manageable levels of the virus in the absence of a vaccine . But what is manageable ?
Without restrictions on social directions , the virus could quickly become unmanageable . And even in Australia where governments have been vigilant , health workers , for example , have been exhausted trying to manage the virus . And , so , we may not have gone close to overloading our intensive care units , but we ' ve certainly tested the capacity of our health workers . And the question is : is an accelerated level of cases among health workers and exhaustion and so on an acceptable price to pay for attempting to open up the economy ?
Are there any economic theories that address such a question ? For example , a monetary value we place on humans over their lifetimes ? I ' ll come up with two other ideas . The first one is about opportunity cost , and you referred to two commentators who stated some notion of what the so-called opportunity costs are of lockdown . Medical professionals also have some notion of opportunity costs . What we mean by that is , in healthcare , locking down services reduces access to the normal medical , surgical and dental procedures . And at some point , the damage of restrictive services through not treating other conditions may outweigh the damage of COVID-19 .
And , as you ' ve mentioned , there ' s also the mental health side of lockdowns . Things , for example , like opportunity cost . And that means that when COVID cases are increasing , these other costs may be outweighed by COVID damage , but when COVID cases are on the wane , it may swing the other way .
A second notion that economists have is that of comparison advantage , which implies that we should listen to experts . And in this context , that means the epidemiologists , and our governments at the federal and state levels to a large extent .
Now , the final thread of your question was about the monetary value of human lives . We could put a value on human years lost and measure the dollar damage of COVID-19 in terms of lives lost . That is , deaths among the old might imply fewer person years lost than deaths among the
Professor Gigi Foster , UNSW . Photo : Stuart McEvoy / The Australian
young . But apart from that , don ’ t forget that in non-fatal cases there might be other economic losses to do with reduced labour productivity due to illness , and that needs to be weighed against the economic damage that we see around us .
Living in Victoria yourself , what do you fear may happen economically if the state remains in lockdown for much longer ? Both media and politicians have predicted that hundreds , if not thousands , of businesses will go under or become so called phantom businesses . It ' s a very important point . And even with the return to relative normality in coming months , we will still have economic damage . Some businesses have closed , and they won ' t be back . Others might do surprisingly well . For example , domestic tourism demand might increase the number of Australians holidaying at home instead of travelling overseas .
But unfortunately , without international travel , even though tourism export might be offset by the home tourism boost , universities will not recover any time soon because they rely heavily on international students . So , I think the bottom line is that we ' re going to need a lot of intervention by government to help households and businesses recover from the pandemic .
Can you point to a country that has lived with the virus and kept businesses in the community open ? Did it work for them or did they need to embed COVID-safe practices in what they did ? You ' re obviously thinking of Sweden . Let ' s compare Sweden and Germany . Now recall that Germany locked down early . We can look at the economic data for Sweden and Germany , and it turns out that Sweden ’ s economy has only done slightly better than Germany . And , indeed , Sweden ’ s shrank by 8 per cent in the June quarter . Well , what was the price of this ?
Sweden ' s COVID death rate per capita has been five times higher than that of Germany . But having said that , its death rate per capita has been lower than that in the United States . That might reflect Sweden ' s comparatively accessible health system . But while we ' re making these comparisons , we shouldn ' t think for a moment that the Swedes have lived in freedom . Many have chosen a form of lockdown of their own in the absence of government enforcement .
And , from what I ' ve read , travel is down to 40 per cent of usual levels within Sweden . Having said all of that , their outcome may have been closer to that in Germany had there been better communication with migrant communities and early mask wearing in aged care units .
Finally , one might speculate that the Swedes will have better mental health outcomes than some other places , but I wouldn ' t be saying among those suffering COVID-related family bereavements . ■
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