The 21st century was, until last year, defined by two pivotal events: the terrorist attack on New York’s World Trade Centre in 2001, and the global financial crisis of 2008. The first fueled a massive expansion of security and intelligence services which permanently eroded individual freedom in the name of a “war on terror”. And the second caused a major global recession and prompted significant re-regulation of the financial system.
The Covid-19 pandemic of 2020 and 2021 will dwarf them both in consequence.
The spread of a ‘novel’ coronavirus from Wuhan, China, beginning in late 2019, has induced the biggest economic shock in a century and war-time levels of public spending. Governments have introduced the most extreme infringements on human rights ever in peace time, making ‘anti-terror’ incursions from 2001 seem mild. The episode year will be remembered not for the death toll from Covid-19, but for the response to it.
By July 2021, 4.1 million people had died from or with Covid-19, the disease that can result from infection with coronavirus, known specifically as SARS-CoV-2. Obviously deaths are sad affairs and public-spirited governments have a responsibility to minimise them where possible. But it is also incumbent on governments to put risks in perspective, and weigh benefits of attempted mitigation against the costs, be they economic, social, psychological, or even constitutional.
In 2019, 55.4 million people died at an average age significantly below that at which the average Covid-19 death was recorded, which is well over 80 in most rich countries. According to the World Health Organization, each year communicable diseases kill more than 3 million people. Many deaths, including many of the 170,000 annual deaths in Australia, would be avoidable with greater spending and stricter rules, but as a society we choose not to attempt this.
In each of the influenza pandemics of the late 1950s and 1960s between 1 and 4 million people died, roughly the same proportion of the world that has died from Covid-19. Yet few recall these pandemics today; governments didn’t put hundreds of millions of people in indefinite lockdown or force them to wear masks outside for more than a year, which was the case in California, for instance, the biggest state in the US. Instead, governments tore up their carefully crafted pandemic plans, some published only a year or two before the new virus emerged, and suspended time-honoured freedoms of movement, association, trade, for indefinite periods.
Masks and “social distancing” were enforced by police. Digital platforms Facebook, Google and Twitter began censoring criticism in the interests of “public health”. In Victoria a pregnant woman was arrested in her own home for supporting an anti-lockdown protest on social media. Police used video footage to track down as many of the tens of thousands of protestors they could following demonstrations against lockdowns 17 months after restrictions began.
Public debt soared to the highest level since World War Two as governments introduced a vast array of subsidies to compensate businesses and households for lost income and employment. Inevitably, the waste was enormous.
Perhaps the biggest legacy of the pandemic will be the precedents for public health interventions on at least as drastic and invasive a scale in the future, when a virus at least as deadly emerges again. The balance of power between individuals, households and private businesses on the one hand, and the state on the other was permanently altered.
THE PANIC BEGINS
As a journalist writing for The Australian, I became one of the earlier critics of lockdowns, a view I soon learned was far from universally appreciated. In mid-April 2020 I wrote a column, given a provocative headline by an astute sub-editor: “We might be over-reacting to an unremarkable virus”, which prompted a furore. It is still the most read article I’ve written in almost 10 years as a journalist, eliciting over 180,000 views – about 20 times what a typical column might enjoy. I argued that as more “real data rolls in — as opposed to the wildly inaccurate epidemiological forecasts of millions of deaths globally and many thousands locally — justifications for massive interventions, fiscal and civil, are dwindling.”
When it emerged in early 2020 many, including me, feared the world was facing a virus as lethal as the Spanish Flu, which killed up to 50 million people in a year from the middle of 1918, including around 15,000 in Australia. Based on China’s experience in Wuhan, experts were a foreshadowing a case fatality rate (the number of deaths as a share of the number of confirmed infections) of 3.4 per cent, a much higher figure than the 2.5 per cent CFR sometimes attributed to Spanish Flu. Epidemiologist Neil Ferguson from Imperial College, London, predicted 2.7 million people would die in the US and UK unless governments introduced lockdowns.
In a climate of hysteria, it was little wonder governments dumped their previous pandemic plans, which called for calm presentation of the facts, and keeping as much of society open as possible. Yet by April it was becoming clear to me and others, from looking at the statistics on cases and deaths pouring in daily from various websites, that initial estimates were looking to be wildly pessimistic. The Doherty Institute modelling provided to the federal government in early 2020 said 5,000 intensive care unit beds would be required to accommodate Covid-19 patients, even with strict isolation and social distancing rules. In reality, fewer than 100 were needed at any point in 2020, one of many facts that might have led an observer to suspect initial fears were unfounded.
Japan, Sweden and Brazil, for instance, three quite different nations whose governments eschewed lockdowns to varying degrees, were not exhibiting anything remotely like a Spanish Flu rate of deaths. India, whose poverty and high population density made enforcing public health orders relatively challenging, provided reasons for optimism. Even now, almost 17 months on, the disease has killed around 420,000 in a nation that lost over 15 million to Spanish Flu, when its population was a quarter of its current 1.3 billion. Moreover, it was becoming clear that fatalities were concentrated among the very elderly and frail, in contrast to previous flu pandemics, which killed children and young adults. More effort should have been given to strategies to protect vulnerable and co-morbid populations, many experts argued.
I also quoted one of the world’s top epidemiologists, Stanford University’s John Ioannidis, who said the risk of dying from Covid-19 for a person under 65 years old was around same as from “driving a distance of nine to 415 miles by car each day”. A few months later, Ioannidis published a review of 61 serological studies where the median infection fatality rate (the number of deaths as share of all those infected, asymptomatic and symptomatic) was 0.27 per cent – a very small fraction of those initial estimates.
Regardless, the column – and those that followed it – elicited such a torrent of abuse I changed my name on Facebook. I was accused of being aligned with QAnon, a far-right conspiracy theory group in the US (at which time I had never heard of ), by a prominent ABC journalist. My brother, a high school teacher on the NSW south coast, found via his students a highly defamatory article about me in an obscure online publication The National Times. My parents became worried about my safety. People were hysterical. It was easy to see how, in an earlier era, advanced societies had quickly become authoritarian. In private, plenty of senior Australians agreed with me, but few would say so publicly.
Writing about Covid was nevertheless gratifying in one sense: unlike much of economics reporting, policy decisions affected millions of people’s lives very directly.
Governments grossly over-reacted with untried pandemic measures that made little difference to the trajectory of the virus but caused enormous damage across multiple dimensions. That was my basic argument. Covid-19 clearly caused loss and heartache, but governments needed to argue not only that draconian measures “worked”, but also, that their benefits justified the costs. Moreover, even if that second hurdle were met, was it right to trample on individual rights?
It’s difficult to demonstrate even the first threshold was met. It quickly became clear that the correlation between the strictness of a country’s non-pharmaceutical interventions (NPIs) – the academic term that encompasses lockdowns, mask-mandates and forced school and business closures – and Covid-19 cases and deaths was weak. One early US study, comparing the infection and mortality impact of different responses of 50 US states, found lockdowns lowered infections by 44 per cent after three weeks but had no reliable impact on mortality. A more recent study, comparing 10 different countries, found no evidence tougher restrictions reduced the growth in Covid-19 infections. Another, looking at data from 23 countries and 25 US states by economists from the US Federal Reserve and the University of California, found growth rates of Covid-19 deaths surged and dissipated rapidly in parallel, regardless of policy. “[Failing to account for this] may result in overstating the importance of policy mandated NPIs for shaping the progression of this deadly pandemic,” they concluded. The American Institute of Economic Research listed 35, mainly academic, analyses that raised doubts about the effectiveness of harsh measures, as of April 2021.
The point here is that the impact of lockdowns was and remains highly contested, and that the burden of proof should rest on those who seek to force others to behave against their will.
THE HARMFUL ALLIANCE
In June of that year, Nobel prize winning scientist Michael Levitt tweeted that 2020 had been a “disgraceful situation for science. For political reasons—we as scientists let our views be corrupted [and] failed the younger generation”. I have despaired similarly about economists and journalists, two privileged groups that served our societies poorly during the pandemic. I’m in a reasonable position to judge both. I am a full-time journalist, and I studied economics at three universities, starting my career at the Reserve Bank of Australia and before that briefly at APRA. Some Australian journalists, such Steve Waterson, Chris Uhlmann and John Kehoe, and economists, such as Peter Swan and Gigi Foster, opposed the reaction to Covid-19 with facts and logical arguments. But after more than a year on the front line, so to speak, too few in either group spoke out against government overreach and fearmongering. Indeed, many actively spoke out in favour, almost fervently, of what were unprecedented interventions with debatable benefits yet certain, if complex, costs.
Characteristic of this group of economists’ views was an open letter, signed by more than 100 economists, released in April last year that urged fulsome support for government measures. It dismissed the “trade-off between the public health and economic aspects of the crisis” as a “false distinction”. “The measures put in place in Australia, at the border and within the states and territories, have reduced the number of new infections,” it asserted, without pointing to any evidence, or any idea of what might occur when measures inevitably ended. Economics was built on the idea of trade-offs, and the notion that, armed with the right information, individuals were best placed to make their own decisions. It had long been a counterweight to policies that had superficial moral appeal, such as fixing prices or wages, or providing ‘free’ goods and services, but which ultimately caused more harm than good. As French economist Frédéric Bastiat observed in the 18th century, good economists are concerned with the “unseen” as much as the “seen”.
Economics also stresses how personal incentives motivate individuals and institutions, such as journalists, politicians, health bureaucrats, as much as selflessness. In the 1970s, there emerged a branch of economics known as public choice theory which questioned the idea that governments are “benevolent dictators”, selflessly acting in the public’s best interest. Rather, according to public choice, governments and bureaucrats tended to act in their own self-interest, as everyone else was assumed to. Consider the groups that determined the response to the pandemic: the media, politicians, the bureaucracy, “experts” and voters. All had powerful incentives, either financially or psychologically, to over-react and in some cases even to maintain restrictions for longer than necessary.
The media has long profited from fear and exaggeration. The more readers, the greater the revenue from sales and advertisers. Whatever era Covid-19 emerged in, it was bound to be presented sensationally. But in an era where traditional media has hemorrhaged billions of dollars in advertising revenues to digital platforms and online classifieds, the incentive to attract readers and viewers has been honed even sharper. Pictures of coffins, mass graves, patients on ventilators, became the norm of pandemic reporting. Journalists would seek out the youngest victim to create the impression everyone was at risk, even if the facts suggested entirely the opposite. In Queensland a 30-year-old man was reported for days to have died from Covid-19; it later emerged he had serious underlying health issues and didn’t even have the virus.
Deaths were almost never presented in context of total mortality or morbidity. As noted by three Spanish and German academics in a perceptive article:
The media have the incentive to portray danger. The story of the government as a hero who provides a resolution to threats is very marketable. In fact, mass media spread panic by presenting SARS-CoV-2 as an unprecedented threat.
Stories about rising Covid-19 cases outnumbered stories about falling cases, even when cases were falling, by 5.5 to one, they observed. Governments were poised to over-react too. “The whole aim of practical politics is to keep the populace alarmed and hence clamorous to be led to safety,” American journalist HL Mencken once observed. Politicians naturally looked for opportunities to introduce concrete, superficially effective policies, under the laudable objective of “saving lives”. This was especially true when they were personally insulated from the costs of lockdown policies, which were unevenly distributed, falling mostly on the young, the poorly housed, small business owners, and hospitality and retail workers. All these groups had little political sway.
A global pandemic supercharged this tendency to overreact. Once other governments started locking down, the political risk of not following suit was significant. If a government didn’t implement a lockdown, it would be blamed for the outbreak. Whatever the virus did, the safest political option was to implement lockdowns.
Traditionally, the bureaucracy has different incentives from elected leaders. It gains little from the political success of its masters and has the resources and inclination to offer objective, realistic advice, whatever might be electorally popular at the time. Covid-19 changed this equation a little because the bureaucracy itself benefited from an interventionist stance. Lockdowns provided scope to work from home, which was in effect a considerable pay rise for most bureaucrats because of the reduced costs of commuting.
Few journalists checked the accuracy of sensational forecasts or recommendations. Meanwhile academics’ applications for research grants were more likely to succeed where they could demonstrate a record of public contributions. Everyone was wining except the uninformed public, which has little time or inclination to keep up with the latest data.
Behavioral economists and psychologists have long known humans focus disproportionately on negative potential outcomes, known as a negativity bias. The thought of dying from the virus overwhelmed the very remote possibility for most people. Even the very elderly had a 95 per cent survival rate, as UK Chief Medical Officer Chris Whitty spelt out numerous times in March 2020. The “identifiable victim effect” meant individuals were more concerned about saving lives from particular identifiable causes such as Covid-19, than from cancer or drug overdoses.
Economists failed in two further ways: relying on superficial correlations and making untenable assumptions. Ross Garnaut, one of Australia’s most prominent economists, speaking on a live panel with Treasury Secretary Steven Kennedy in February 2021 said countries that had dealt with the coronavirus best, had the best economic outcomes.
Countries in our western pacific region did relatively well, they were the good performers. Taiwan right at the top, Korea, China, Japan, Vietnam, Thailand, New Zealand and Australia. The developed countries in rest of world did poorly namely, the UK, continental Europe the US and Canada.
This was the most common economic argument from lockdown supporters: there’s no trade-off between health and economic outcomes. Governments should therefore be as aggressive and intrusive as they like to eradicate the virus. There was indeed a correlation between decline in gross economic product and Covid-19 deaths and cases, but the idea the stringency of government response explained it was fanciful. Garnaut’s group of “successful” countries, for instance, all responded in very differently ways. Taiwan, for instance, never locked down, while Japan barely tested any one by comparison to Australia and New Zeala