This article is from the Autumn 2020 edition of the IPA Review.
Awareness is growing that the coronavirus disease might cause two catastrophes. Speaking on the night of 24 March 2020, Prime Minister Scott Morrison put it this way:
We’re dealing with two crises. We’re dealing with a health crisis that has caused an economic crisis. And I am very concerned about the economic crisis that could also take a great toll on people’s lives; not just their livelihoods, the stresses that that will put on families. The things that can happen when families are under stress. I’m as concerned about those outcomes as I am about the health outcomes of managing the outbreak of the coronavirus. And it is a delicate task for the National Cabinet to balance those two. Lives are at risk in both cases.
On one hand, we face a public health crisis unlike any we have seen in recent years: a disease that can be deadly for the elderly and the vulnerable (and in rare cases, for others), that seems to spread rapidly, and that can be carried innocently by asymptomatic people. As the philosopher and risk expert Nassim Nicholas Taleb points out, where a risk is unquantifiable but known to be potentially catastrophic, precaution dictates you act as strongly as possible. This is because, by definition, you cannot tailor your response to something you do not understand.
On the other hand, the most effective action we can take in response to that potential catastrophe is, assessed in the same terms, itself potentially catastrophic. The costs of the current ‘flattening the curve’ policy are also unquantifiable: we do not know how many people will lose their jobs or their businesses or their homes or their investments, and—most importantly—we do not know how an economic collapse will affect people’s lives. Economic collapse will create people who cannot afford a home or sound nutrition, whose living standards are much lower perhaps for most of their lives, and who are placed under extraordinary psychological pressure. They will be killed by our overreaction just as surely as the victims of coronavirus will be killed by our inaction.Continue reading