Despite all the draconian measures already imposed by Australian governments, ABC health expert Dr Norman Swan thinks we still need to do more. Just after I woke up this morning, I heard him on ABC Breakfast suggesting an even wider shutdown: “If we want to get back to some semblance of normal life and economy, it’s got to be short, sharp, and today.” This is a view increasingly being shared by many Australians. In an excellent article PANIC IS OUR FRIEND! published earlier this week on Club Troppo, Nicholas Gruen argued:
The government didn’t take coronavirus seriously at first. As it’s amped up the seriousness of its response, it’s done so reluctantly and now it’s in no man’s land, with strong social-distancing measures that will cost the economy a bomb. But those measures are not strong enough to rid the country of the virus. So they’re with us until we gain herd immunity, which will take the best part of the year.
We’ve picked a scenario that is the second-worst for health (the worst being doing nothing) but it seems to me to be the worst possible option for the economy.
I spoke with Nicholas about his views on the coronavirus response in my latest Economics Explained episode.
Use these (approximate) timestamps to jump right to the highlights:
- 4:00 – Nicholas discusses his recent article on coronavirus policy PANIC IS OUR FRIEND! which argues in favour of strong, early action on coronavirus, rather than the incremental ramping up of restrictions we have seen
- 7:50 – Nicholas notes these decisions are challenging because panic itself has costs, as argued by Paul Frijters in his article The Corona Dilemma
- 12:30 – discussion of John Quiggin’s Option value post on the benefits of early action
- 14:05 – Nicholas suggests policy makers should follow Google’s example and experiment and AB test policy responses, generating feedback to improve policies
- 15:05 – discussion of what Ben Shapiro calls The Un-askable Question
- 26:35 – Nicholas observes “when things change they become highly unpredictable” in our discussion of what coronavirus could mean for our future economic system
- 36:00 – conclusion of discussion with a quote from Nicholas’s article: “Right now, panic is the friend of anyone who doesn’t want to get this disease, which continues to surprise on the downside (i.e. the bad side).”