# COVID-19 vs the economy



## Eddy Edson (Oct 26, 2020)

A chart of COVID-19 fatality rates vs Sep quarter GDP change:



I cribbed this from an Oz think-tank piece basically patting Victoria on the back for squelching widescale community spread down to nothing: https://theconversation.com/finally...ld-after-unprecedented-lockdown-effort-148808

The intent is clear - good health outcomes = good economic outcomes. Which IMO is fine but as with everything the details are at least as important as the headline. 

Eg: In terms of this chart, you obviously don't want to be the UK but is it realistic to want to be South Korea, and if not, even being Sweden or the US would be better. How did they manage to get better economic outcomes with similar fatality rates, versus the UK?  

And obvious questions about what things look like going forward. Eg: Does Oz now have a stronger base for getting the economy back on track or has closing the borders caused long-term disadvantages versus other places? 

And so on ...


----------



## Bruce Stephens (Oct 27, 2020)

Amity Island said:


> Is this chart claiming that all those dead people have caused the bars and restaurants to shut and go out of business? have put millions on furlough, have caused thousands of missed appointments, thousands of excess deaths, isloated people from their family, have forced people to wear masks and socially distance?



It's showing a correlation between good health outcomes (fewer deaths from COVID-19) and better economic outcomes. (With some outliers.)

It's hard to avoid making a causative link: really controlling the infection gives you a better economic outcome. If we could invent a country I'd really love to see an alternative Sweden which did a much better job at protecting care homes. I wonder how close to Denmark they could have got.

And (in our own world) a graph showing that but with the US states separately. (Since there's not been a very coherent federal response and the states were hit markedly differently I'm not that sure that treating it as one country is informative.)

I'm not sure how much it all depends on luck, though. When each country got infected people and where they arrived, how old they were, etc. And obviously local conditions: some countries had recent experience of SARS and/or MERS. And Sweden apparently has an unusually low number of people per residence.


----------



## Bruce Stephens (Oct 27, 2020)

Amity Island said:


> How does someone dying or having an infection have a detrimental effect on the economy? or as the graph suggests, how does countries with the worst death tolls have the worst economic outcomes?



The graph doesn't show that. What it does show is an unexpectedly (to me) good correlation, with a few outliers. I assumed quite a bit of the differences between countries would be more to do with chance, but the quality of the correlation suggests there's some quite strong underlying effects. Though it's also possible the correlation is partly created by choosing what to put on the graph (they have Italy, France, Spain, Germany, but also the EU).


----------



## pm133 (Oct 27, 2020)

Amity Island said:


> Hi Bruce,
> 
> The question I was trying to put across was,
> 
> How does someone dying or having an infection have a detrimental effect on the economy? or as the graph suggests, how does countries with the worst death tolls have the worst economic outcomes?



It could be the other way round.
A poor economy usually means cuts are being made to essential services like the NHS.
We deliberately run our NHS at about 85% capacity if I remember correctly.
The problem then is that when a pandemic hits like covid, we don't have spare capacity in the system, we have shortages of ventilators, PPE, staff amd a host of other things which then leads to more deaths than other countries with better run economies suffer.


----------



## Bruce Stephens (Oct 27, 2020)

pm133 said:


> A poor economy usually means cuts are being made to essential services like the NHS.
> We deliberately run our NHS at about 85% capacity if I remember correctly.



80-85% is the pretend target, but actually (especially during winter) it's regularly well over that. So yes, we were poorly set up to begin with, with (relative to many of the others) fewer doctors, nurses, ventilators, ICU beds, hospital beds, etc., per unit of population.

I'm not sure your hypothesis matches the graph. The x axis is percentage growth of the economy over some period (probably January-September or something) not the absolute size (or size per unit of population).

So it's looking at how many COVID-19 deaths there have been (per million population) against change in economy size.
(For some perhaps specially selected group of countries and groups of countries.)


----------



## Abi (Oct 27, 2020)

The Japanese situation is interesting. I read that they are naturally more reserved and talk less in public places- ( forbidden I believe on some modes of public transport) . Plus ultra hygeinic I belive

I would not trust any statistics from China


----------



## Eddy Edson (Oct 27, 2020)

The FT has a chart with some more/different countries:






			https://ig.ft.com/coronavirus-global-data/


----------



## Bruce Stephens (Oct 27, 2020)

Amity Island said:


> I still don't get the correlation shown between a virus and the effect it has had on the economy, as the original post suggests.



The correlation's clear enough, surely? Those countries (the ones at the top, also mostly to the right) which managed to control the virus really effectively (and so had few deaths) also have the better economic growth. (On the whole, though the US and Sweden also don't look that bad in economic terms. Still only about as good as Denmark, which had many fewer deaths.)

So if we brought February's Boris Johnson in a time machine to spend a day now and showed him all the data he'd surely see that there's decent reason to think that acting quickly and decisively is best both for limiting health impacts and not harming the economy. The idea (at least in this case) of a conflict, a need for "balance", is an illusion.

That doesn't say what we ought to do now, necessarily. Though now honestly reminds me quite a lot of March so I strongly suspect not doing something really significant and sharply is a mistake both for deaths and for the economy. As hospital admissions and deaths increase (not so far off Vallance's alarmist graph) the pressure's going to grow, and the more we delay the worse things will get (and so the more expensive it'll be).






						Why do some find the economics/health trade-off so hard to get? Because it’s like the Phillips curve.
					

The distinction between the short run and long run traditional Phillips curve (not the New Keynesian variety) is so ingrained in economists...




					mainlymacro.blogspot.com


----------



## Bruce Stephens (Oct 27, 2020)

Eddy Edson said:


> https://ig.ft.com/coronavirus-global-data/



Yes, that's an excellent (free) story. And https://ourworldindata.org/coronavirus has lots of DIY graphs.


----------



## Eddy Edson (Oct 27, 2020)

Bruce Stephens said:


> Why do some find the economics/health trade-off so hard to get? Because it’s like the Phillips curve.
> 
> 
> The distinction between the short run and long run traditional Phillips curve (not the New Keynesian variety) is so ingrained in economists...
> ...



From that blog post:


_The irony is that taking firm action to suppress the virus to very low levels is popular, and as we have seen very recently will reward any politician with the foresight to think about health rather than the economy.  _

I think this has been one of the really interesting things, politically.


----------



## Eddy Edson (Oct 28, 2020)

Amity Island said:


> The latest business outlook (from same company that produced the graph) consultancy Deloitte Access Economics tips Victoria to suffer the biggest fall in gross state product in the 2020-21 financial year, which just began.
> 
> 
> 
> ...



Which is absolutely consistent with the more virus spread = worse economy message, given that Vic has had far & away the most infections and most deaths of any state in Oz.


----------



## Eddy Edson (Oct 28, 2020)

https://ourworldindata.org/covid-health-economy  lets you play around with basically the same data sets, allowing you to select different countries. 

With the familiar message:


_Have the countries experiencing the largest economic decline performed better in protecting the nation’s health, as we would expect if there was a trade-off?

The chart here shows the same GDP data along the horizontal axis. Along the vertical axis is the cumulative number of confirmed COVID-19 deaths per million people.

Contrary to the idea of a trade-off, we see that countries which suffered the most severe economic downturns – like Peru, Spain and the UK – are generally among the countries with the highest COVID-19 death rate.

And the reverse is also true: countries where the economic impact has been modest – like Taiwan, South Korea, and Lithuania – have also managed to keep the death rate low.

Notice too that countries with similar falls in GDP have witnessed very different death rates. For instance, compare the US and Sweden with Denmark and Poland. All four countries saw economic contractions of around 8 to 9 percent, but the death rates are markedly different: the US and Sweden have recorded 5 to 10 times more deaths per million.

Clearly, many factors have affected the COVID-19 death rate and the shock to the economy beyond the policy decisions made by each government about how to control the spread of the virus. And the full impacts of the pandemic are yet to be seen.


But among countries with available GDP data, we do not see any evidence of a trade-off between protecting people’s health and protecting the economy. Rather the relationship we see between the health and economic impacts of the pandemic goes in the opposite direction. As well as saving lives, countries controlling the outbreak effectively may have adopted the best economic strategy too._

It's obviously way too early to be very confident of long term impacts and there will obviously be a different mix of factors in different places.

In Oz, the Reserve Bank is now forecasting positive growth for this quarter and next, so no longer in recession, with the impact from Victoria in particular being less than previously feared, and picking up now that the Vic lockdown has been very successful & the state is opening up again.  But there will be fallout from a tail of bankruptcies and people exhausting their savings, exacerbated as govt support measures come to an end. 

So who knows? But you can bet that the outcomes here and in Vic in particular are going to be *way* better than in places which didn't take tough measures early enough at times when the virus was increasing. The trailing pain of border closings and periods of early tough lockdowns in some regions will be small by comparison.

From an Oz perspective, not moving quickly to close borders looks more & more like the single biggest mistake most countries have made.


----------



## Eddy Edson (Oct 28, 2020)

Amity Island said:


> Here in the UK they've killed more than saved.



Where do you get that from?


----------



## Robin (Oct 28, 2020)

Amity Island said:


> HI Eddy,
> 
> Keeping this as laconic as possible.
> 
> ...


How do you know that? We will never have the graph that shows deaths plotted against a healthy, unlocked economy, because most countries did lock down.  It's my personal opinion that they locked down because of the backlash of public opinion every time anyone mooted letting the virus run its course. But nobody protesting back in March that the vulnerable should not be sacrificed to Covid, ever thought at that time that the vulnerable would be sacrificed to cancer or heart attacks instead. Hindsight is a wonderful thing.


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> Are you saying long drawn out lockdowns/restrictions used around the world help?



Some do, some don't. They help when they're sufficient to help control the virus, that is, to get you to a place where more sustainable restrictions together with testing, contact tracing, and isolation can keep levels low. They're harmful when they're not sufficient, both to health and to the economy. (It's also possible that a sufficient lockdown isn't practical for the UK because our numbers are so high, and our government seem to be set on keeping our test, trace, isolate system so ineffective.)


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> All the graph confirms is that all the countries are in negative economic growth, caused _not_ by a virus (as the media likes to show as the cause for all the problems) but by lockdowns and restrictions.



Not just by lockdowns and restrictions. Also by people's reactions to the prevalence of a new infectious disease that (we now know) isn't too dangerous to younger healthy people but becomes increasingly dangerous as age increases. With that kind of virus out there theatres (for example) can't open for long, because their target audience is significantly at risk and will tend to avoid going. Similarly, Pret A Manger will be in trouble since lots of people who can work from home will do so. And so on. A government can certainly try to pretend the virus doesn't exist, but people are going to react to it even so.

(As some have commented, the virus on its own may have some positive economic effect in the medium term by predominantly killing older people. Much as other illnesses tend to, but this one seems particularly skewed by age.)


----------



## mikeyB (Oct 28, 2020)

The unemployment figures show it’s mainly younger people who have been worst affected. It’s the gig economy that has much reduced. There are companies such as Serco who have benefited greatly from government contracts, on yet another Serco failure, our  test and trace. It’s boom time for management consultants.


----------



## Eddy Edson (Oct 28, 2020)

mikeyB said:


> It’s boom time for management consultants.



Yep. Great, isn't it?


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> A virus is invisible, how can people have reactions to something they can't see? I think what you are referring to is the result on people's behaviour to a 24hr, 7day a week, relentless media led fear campaign.



Partly, yes. Maybe mainly. But even without the media (and without any testing) we'd know of people becoming ill, sometimes seriously so. I guess we'd see it as an unusual influenza. People would still react, though I'm sure not as much as with the deliberate efforts from the government. It would be hard to hide the overwhelming of some hospitals in the harder hit parts of the country and the fatigue of those working at them.


__ https://twitter.com/i/web/status/1321348653966086144


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> These stats are all there to help defend and make their case for lockdowns,



Our government really, really, doesn't want to impose lockdowns! It would _love_ to reopen as much of the economy as possible with as few restrictions as possible.


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> I think that's where we will clearly disagree on that point, because i'm firmly under the understanding from the aims of the fourth industrial revolution, the great reset and the green agenda (which are widely publicised and real agendas) that although the lockdowns may have in the first instance have been used as a covid19 measure, I don't think we'd still be in lockdown if there wasn't also the 7.6% target in carbon emissions reductions to meet from 2020 - 2030 and beyond.



I think that view is an very implausible conspiracy theory. I really don't think the various world organisations (who've recommended against lockdowns, arguing for extensive testing, contact tracing, supported isolation, together with limited local measures where those aren't sufficient; lockdowns were always supposed to be to give time so you can increase capacity for the other things)  have enough power to do that, and if they did there's no chance whatsoever that they could keep it hidden, especially with so many rather powerful vocal groups who still want to deny global warming is even happening.

I think it's vastly more likely that things are much as they appear: different countries were hit in different ways by the virus, and have different population densities and distributions, different histories, different leaderships. Some (like those in Eastern Asia) had recent experience of nasty viruses and so used the same playbook, largely managing to handle the virus effectively; some (Australia, New Zealand) handled it rather well but at the expense of largely cutting themselves off from the rest of the world. And the rest of us handled it with varying degrees of success, depending on luck and leadership.

It's true that international travel is drastically reduced, and presumably will be for a while. And in many countries local travel and other activities are much reduced. As far as I'm aware nobody thinks that's anywhere near sufficient to address global warming; it's really just a blip in what appears to be the inexorable rise in atmospheric greenhouse gases.

It's also true that there's a hope that we'll "build back better", with increased working from home, less business travel, etc. Maybe that was the plan all along, but opportunism seems rather more likely to me.









						Saturday Morning Breakfast Cereal - In Charge
					

Saturday Morning Breakfast Cereal - In Charge




					www.smbc-comics.com


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> I'm not talking conspiracies



I think you are. Overall, it looks like the virus is sufficient to explain what governments have done. And while the proactive actions of places like New Zealand seemed harder to understand back when they made them, I think it's easier to see them now as gutsy calls that turned out well rather than actions driven by some other reason. I don't see any reason to look for other explanations.

I think the connection with global warming (that many of these measures, though probably not all, also helps to reduce our CO2 production) is just a coincidence. As are the opportunities that they suggest for the future.


----------



## Bruce Stephens (Oct 28, 2020)

Amity Island said:


> that we were one of the best prepared countries in the world for a pandemic.



As was the US. Turns out we were mostly prepared for pandemic influenza and we're lead by Boris Johnson (surrounded by people chosen for their loyalty to him), and the US has Donald Trump with similarly chosen people.


----------



## Eddy Edson (Oct 29, 2020)

Eddy Edson said:


> From an Oz perspective, not moving quickly to close borders looks more & more like the single biggest mistake most countries have made.



Snippet from Guardian live blog:


_A coronavirus variant that originated in Spanish farm workers has spread rapidly through much of *Europe* since the summer, and now accounts for the majority of new Covid-19 cases in several countries, including 80% in the *UK*, the Financial Times (paywall) reports.

An international team of scientists that has been tracking the virus through its genetic mutations described the extraordinary spread of the variant, called 20A.EU1, in a research paper to be published on Thursday.

Their work suggests that people returning from holiday in *Spain* played a key role in transmitting the virus across Europe, raising questions about whether the second wave that is sweeping the continent could have been reduced by improved screening at airports and other transport hubs._


----------



## Bruce Stephens (Oct 29, 2020)

Amity Island said:


> Please don't tell me it's to save lives.



It is, I'm afraid. (Not yet: for the moment we're getting probably ineffective measures regionally.)

But yes. You saw the videos of some hospitals in northern Italy in the spring, and in New York at the peak of the infection? The government really doesn't want that, with doctors choosing who they have to let die. They really want to "protect the NHS" in the sense of preventing that kind of chaos; they seem OK with all elective surgery being postponed (that happened in winter even before COVID).

And yes, that means some other people will die instead, but I don't think there's much of a choice. The NHS is limited, and if it has to work hard on COVID patients it's not going to be treating so many cancer (or other) cases.

So likely the choices are we control the virus and (I hope) also keep most other NHS services available, though more limited; we allow the virus to spread out of control and the NHS becomes the COVID service again, with very limited other services, and lots of unnecessarily dead COVID patients too. (And yes, most of the dead COVID patients will be old people, but many will be losing years rather than months of life. And they won't all be old.)


----------



## Eddy Edson (Oct 29, 2020)

Eddy Edson said:


> Snippet from Guardian live blog:
> 
> 
> _A coronavirus variant that originated in Spanish farm workers has spread rapidly through much of *Europe* since the summer, and now accounts for the majority of new Covid-19 cases in several countries, including 80% in the *UK*, the Financial Times (paywall) reports.
> ...



A thread on this by one of the researchers: 



__ https://twitter.com/i/web/status/1321725373391003648
For whatever reason, from July this strain of virus has become far & away the most prevalent in the UK (about 90% frequency) but not in other European countries:



Suggestion on how it spread so much in the UK:

_Combined with getting into a population cohort where spread was easier- perhaps those who were infected abroad were in more risky settings, which they also visited when home - this could have given 20A.EU1 a transmission advantage.  _

I guess consistent with: people on holidays in Spain got infected in bars, weren't effectively screened on arrival back in the UK, and then spread it in bars back home.


----------



## Bruce Stephens (Oct 29, 2020)

Amity Island said:


> Isn't that the same conclusion I have drawn?



I'd conclude that we need to impose measures which _are_ effective (in reducing infection levels), whether regional or not. I don't see the economy, healthcare system, etc., recovering without keeping the prevalence of infected people quite a bit below 1% of the population.

(Or, from my perspective equivalently, we need behavioural changes which do that. I'd prefer to minimise that and instead of coercion use advice together with support so that people can effectively follow the advice, with clear and worthwhile goals so that everyone understands why they're being advised. I'm sure some coercion is required, but probably less than the government thinks, if they tried effective communication again, maybe even with a bit of honesty.)


----------



## mikeyB (Dec 28, 2020)

The government science advisers have been shouting about a total lockdown nationwide, as they did in the Spring two weeks before the government listened, and as governments round Europe are doing.

I would have thought pragmatically a lockdown involving mass 
Vaccination would knock the current spread of the virus.


----------

