Shutdown policy ignores economic consequences in order to minimize Covid-19 infections at any cost

By Christopher Cotton

Christopher Cotton, Ph.D., is a Professor of Economics at Queen’s University, where he holds the Jarislowsky-Deutsch Chair in Economic & Financial Policy and is the Director for the John Deutsch Institute for the Study of Economic Policy.

Before deciding whether we should start to reopen the economy, we need to understand what it is that we are trying to accomplish through the shutdown. If the shutdown is intended to slow the spread of COVID-19 and prevent our health care system from being overwhelmed, then we have room to start slowly loosening shutdown restrictions today. If, however, our objective is to minimize the number of Canadians that become infected or die from the disease, which seems to be the objective of public health officials today, then the shutdown may need to continue indefinitely.  

When we first shut down the economy in response to COVID-19, we were shown graphs projecting the need for ICU beds peaking significantly above capacity. We were also shown graphs illustrating how ‘flattening the curve’ would spread the infections across a longer period of time, give hospitals time to prepare, and prevent the medical system from becoming overwhelmed. Taking steps such as shutting down large parts of the economy, closing schools, and staying home was not about stopping the disease, but rather about slowing it down in order to avoid a medical-care catastrophe like what was happening in Italy.

The tradeoff was clear: Do nothing and face pandemic doomsday. Shut down for several weeks and avoid the worst-case scenario. Most of us were willing to take the necessary steps to slow the pandemic, and we would probably be willing to do so again.

By most accounts, the steps that we took were successful at flattening the curve and preventing catastrophe.  In many places, the aggressive prevention measures have all but stamped out the disease, and ICUs are operating well below their capacity as hospitals wait for an influx of COVID-19 patients that may never come.

This suggests that we have room to gradually relax the shutdown measures in many places, while still avoiding a situation where our hospitals are overwhelmed with the virus. This does not mean that we can turn everything back on at once. Rather, we can start to ease up on some of the restrictions, while closely monitoring infection rates. We can, for example, allow a greater range of businesses to go back to work, as long as they take appropriate steps to disinfect and maintain distances. But, we should avoid large group gatherings and continue to have people with any symptoms and vulnerable populations stay at home. We should also be ready to clamp back down if the data show that we are again at risk of overwhelming our health care system.

Why are we not doing this now? It is because, at some point over the past month, the objective of the shutdown has seemingly shifted away from preventing our health care system from being overwhelmed to instead minimizing the number of people that become infected by and die from the disease.

Last week, Canada’s Chief Public Health Officer Theresa Tam came out against a proposal to start easing restrictions in Quebec. She argued that now was not the time for such a plan because even if we can limit exposure to the disease to young, mostly-healthy people, some of them will still become gravely ill. An unacceptable outcome. “Even a young person might get severely sick or get into the ICU, so it’s not a concept that should be supported,” she said.

On the surface, this sounds reasonable. Relaxing shutdown restrictions will result in more people dying from COVID-19 than continuing a strict shutdown. So, let’s continue the shutdown because saving lives is worth any cost. Right?

It is not that simple. The shutdown of the economy, from closing schools to shutting businesses to preventing travel, is incredibly costly for society. Not only in terms of incomes and jobs but also in terms of many other things we care about from mental well-being to inequality to long-run health outcomes.

It is entirely possible that the global economic shutdown will kill more people indirectly than it saves directly. This includes deaths associated with increases in depression and suicide that accompany social isolation and economic struggles and those associated with increased alcohol and drug use, poor diets, and sedentary lifestyles. It also includes more than 100 million people around the globe that the New York Times projects are facing acute hunger in developing countries because of food shortages due to the global shutdown. “Instead of the coronavirus, the hunger will kill us,” said one resident of New Delhi.    

Add to this immediate and long-run economic loss and extreme disruption to our children’s education.

The costs of the shutdown are severe. We may agree that temporarily incurring these costs was worthwhile to give our health care system time to prepare and prevent it from being overwhelmed. We may also agree to continue incurring these costs for several more weeks if doing so then allows us to more fully restart the economy.  But, an indefinite shutdown is almost certainly not worth the costs.

There is no indication that officials are accounting for the indirect and longer-term consequences of their COVID-19 damage control measures.  It is not clear what conditions need to be met before we are allowed to start relaxing shutdown measures in some communities. Trade-offs are not being publicly discussed, and there is no known plan for restarting the economy.

We need an open discussion not only around the health benefits of the shutdown but also around its many costs. We need to understand that our public health officials and politicians are accounting for the trade-offs when setting policy. At this point, it is not clear that the federal and provincial governments are doing anything besides minimizing COVID-19 infections at any cost.