The Australian Institute for Progress ran an excellent webinar last night, on the economic response to the pandemic, featuring prominent Australian businesswoman and former ACT Chief Minister Kate Carnell and Griffith University Economics Professor Tony Makin. It’s certainly a good time for public discussion of the response to the pandemic.
In Australia, we see the unpredictable and increasingly draconian public health response is ruining businesses, crashing confidence (see the chart below and this ABC News report), condemning people to long-term unemployment, and risking a prolongation of the deep recession we’re currently in, with 1.6 million unemployed and a private sector on life support from JobKeeper.
Furthermore, the situation in New Zealand is terrifying and should be forcing us to reconsider our public health response. How confident can businesses be if they are worried that any future cases of COVID-19, no matter how few, will lead to a re-imposition or ramping up of restrictions?
It is time to ask our political leaders harder questions about why particular restrictions are being imposed. Kate Carnell gave a great answer when I asked her whether Premiers should be deferring to Chief Medical Officers and accepting their advice on restrictions uncritically. Carnell replied that we’re not very good at nuanced arguments. The politically simple (and strangely popular) thing to do is to accept the advice from the CMOs and to lock down our economies and close borders. But this comes at a huge economic cost, with associated adverse social and health outcomes.
As Henry Ergas and Joe Branigan argued in their recent Menzies Research Centre paper (e.g. check out Catch up on COVID-19 with Joe Branigan), we need to find a balance, where we can control the spread of virus without destroying the economy and breaking the spirit of the population.
I’m not a public health expert, so I have to concede it’s possible the CMOs are recommending the right approach. That said, I’d like to see them explain the normative or ethical premises that take them from there ‘is’ statements to ‘ought’ statements. How do they solve David Hume’s is-ought problem?
Economists mostly do this by adopting the normative premise articulated by Jeremy Bentham, that our governments should act to achieve the greatest good or happiness for the greatest number.
But how do our public health officials solve the is-ought problem? It can’t be that they’re abiding by the Hippocratic oath, to above all do no harm, because the restrictions they’re recommending to control COVID-19 are certainly harming many in the community who are subject to curfews, job losses, or business failures. And CMOs don’t appear to be Benthamite utilitarians, as they appear to be over-reacting to any new cases of COVID-19 and reimposing restrictions without regard for the adverse economic and social consequences.
It’s time for our CMOs to be clear on the normative premises and value judgements underlying their recommendations, and for our politicians not to simply defer to the CMOs, avoiding responsibility for the adverse impacts of the ongoing restrictions.
Business confidence is on the way down again.