“We can all recognise nonsense on stilts when it comes tripping into the room”
–David Berlinski
This article has been making the rounds on social media, and yes, it is nonsense on stilts. I will share the link in the comments rather that in the body of the post because I don’t want anyone to accidentally share the article without the refutation of it.
Let me begin by taking the arguments at face value.
First of all, the article disingenuously asserts that the Value of a Statistical Life (used by governments to assign a dollar value to each citizen’s life) is uniform for all age groups. It isn’t.
The article uses the maximum VSL to calculate the financial cost of projected Covid deaths, rather than the significantly lower VSL applied to the elderly, who form the overwhelming majority of Covid fatalities. Add to this the fact that the elderly represent a cost for the government by staying alive, as they receive monthly pension payouts which will become a savings for the government if they die.
When you adjust VSL for age, the article’s projection of a $1 trillion dollar loss, due to presumed deaths in the absence of a lockdown, immediately falls to $150 billion. When you subtract pension payouts, obviously, that cost is further reduced by at least another $10 billion or so. Later in the article, the author estimates the economic cost of lockdown to be roughly $90 billion; so we are already at just a $50 billion difference between the cost of lockdown versus the cost of having no lockdown.
In other words, just like the Imperial College study in the UK, the projections are drastically inaccurate; from $1 trillion to $140 billion constitutes a monumental accounting error.
Now, the other thing that has to be considered is whether or not the projected Covid19 deaths in the absence of a lockdown are actually excess deaths, or are, in fact, consistent with the expected average mortality rate in Australia (or any other country that wishes to use this same argument).
Data globally has shown that Covid has not, by and large, resulted in significant excess deaths – even in Italy; which means that the projected economic losses the author claims would result from a lack of lockdown, would likely occur anyway. This is precisely why the VSL for elderly people is lower than the VSL of young people. So, if we estimate that only a minor percentage of Covid19 deaths represent excess deaths, then only that percentage would be considered excess or avoidable economic losses. In Italy, only around 10% of Covid deaths could be considered excess deaths, so if we apply that equation to Australia, it leaves you with a total excess financial loss of around only $2.8 billion.
So now we have gone from an estimate of $1 trillion down to just under $3 billion. Remember, the article later estimates the economic cost of lockdown as being around $90 billion — $87 billion MORE than if there were no lockdown, when you are actually being honest about the numbers.
Now, looking even more critically, the entire premise is based on a false assumption, namely that lockdown saves lives. As stated, only a small percentage of Covid deaths are excess deaths anyway, but that is almost beside the point. Governments have not imposed lockdowns to save lives; they have imposed lockdowns to MITIGATE the spread of the virus – to stagger the infection rate over a longer period of time to accommodate the inadequacies of the healthcare system. In other words, lockdowns are not even intended to avoid the excess deaths; they are intended to space those excess deaths across a longer time frame; that’s all. So, ultimately, ALL of the economic losses attributable to Covid19 are going to happen anyway, with or without lockdown. So the argument is itself an utter fallacy.
What that means is that it is not a question of comparing and contrasting the losses of lockdown versus no lockdown; it is a matter of compounding the losses attributable to Covid with the losses attributable to lockdown.
Shutting down the economy does not, is not, will not, and is not intended to save lives and reduce economic losses caused by Covid deaths. Those deaths and those losses will occur either way, just with lockdown, you are adding (according to the author) ANOTHER $90 billion in economic losses on top of the losses caused by the deaths.
Now, one final point. The author says that the money spent by the government as “support” during the lockdown does not amount to “loss” it is “a transfer of resources from one part of society to another”, and that is true. It is a transfer of public money into the private sector with a concomitant policy of vast impoverishment, indebtedness, and bankruptcy for tens of millions of working people. So no, you cannot simply look at overall GDP to gauge the cost of lockdown to the health and stability of your economy. You have to look at household debt, at the value of your currency, inflation, cost of living, and so on. When you look at these metrics, the damage to the economy, and to people’s lives is almost unfathomable, and will persist for years if not decades.
This article, like every single other fanciful projection about all things Covid, is drastically, mind-bogglingly, and grotesquely wrong.