It is not Health or Economy, it is Both or Neither – Stupid!

One key question directing pandemic policies in countries around the world has been: do rigorous policies to crush the Covid-19 pandemic – as implemented in East Asia, Australia and New Zealand – crush the national economies as well, or in other words, would economic recovery demand compromises [sacrifices?] concerning the health and life of people? If the answer to this question is yes, then one would expect that, compared to rigorous Covid-19 crushing policies, more lax policies that would on one hand accept more infections and, thus, higher mortality would on the other hand be rewarded with more successful economy (as demonstrated in higher GDP growth, or smaller GDP regress). Quite different approaches to this question have dominated the policies in East Asia, Australia and New Zealand (the East), vs. Western Europe and North America (the West). As the pandemic has already raged for about eight months, we need no more rely on logical/philosophical reasoning or econometric/epidemiological modelling alone. We can look at the data.

The association between the economy – from regression (down) to growth (up) on the vertical axle of the graph – as exemplified by the annual GDP growth rate from -25 to +10 % per year in the second quarter of 2020, and the domestic pandemic control policy – from rigorous (left) to lax (right) on the horizontal axle – as exemplified by the Covid-19 mortality per million inhabitants that had accumulated before September 19. 2020 in 39 countries. The size of the sphere corresponds to the volume of the domestic economy.

The graph above presents the annual gross domestic product (GDP) growth rate on the second quarter of 2020 (y-axle: from -25 to +10 %/year) [] vs. the accumulated Covid-19 mortality (x-axle: from -200 to +1000 #/million) up to September 19 [] in the EU-countries, the Eurozone, West-European Non-EU countries, eight East Asian Countries, Australia, New Zealand and North America. The size of each sphere in the graph corresponds to the respective GDP.

In this material of 39 countries on four continents the GDP/cap ranges from 2 082 (Vietnam) to 111 062 $/year (Luxembourg), 2nd quarter annual GDP growth rate from -21.5 (United Kingdom and Spain) to +3.2 % (China), and Covid-19 mortality from 0.29 (Taiwan) to 859.4 #/million (Belgium), i.e., all ranges cover more than an order of magnitude.

The key assumption behind my analysis is that the big differences in Covid-19 mortality do not reflect differences in the economic or health care capabilities of the countries [as they clearly do not appear to in the graph], but instead the informed policy choices that have been made by the governments and authorities, and the less informed behavioral choices that have been made by the people of each country concerning the relative valuations of life, liberty and economy (lacking a quantitative global database on personal liberty I have not included it in the analysis). In some countries the governments have valued presumed short term economic gains and even shorter term individual liberties higher relative to the protection of health and life than in some other countries. Consequences of these valuation differences far exceed those that might have been expected before the pandemic: they have resulted in over thousandfold differences in Covid-19 mortality between the countries. What apparently was not expected either is that the more relaxed or delayed domestic pandemic restrictions have not helped the economies to recover, but have in fact amplified the domestic economic regressions. 

The graph is free for everyone to read and interpret. I would pick up the following outcomes:

  • An increase of 100 deaths per million is associated with a 2 % decrease in annual GDP growth rate.
  • Comparing the four Nordic countries points out that Sweden, which has emphasized its lax approach to pandemic control and imposed the least restrictions has suffered ten times higher Covid-19 mortality than Denmark, Finland and Norway, but also lost more GDP than Finland and Norway.
  • Lumped together the West has suffered about 100 times higher Covid-19 mortality than the East . The respective GDP growth rate of the West has been -15 % vs. -1.4 % of the East (-8 % if China is not included).
  • All included countries have access to the same scientific and professional knowledge, technologies and medicines to control the pandemic. Besides, WHO provides information, training and materials to where-ever they might be in short supply.
  • There appears no relation between the economic, technological and scientific advancement status of the country and the Covid-19 mortality in it. Some of the very low Covid-19 mortality countries have authoritarian political systems, but others exhibit liberal, open and democratic societies, such as Australia, New Zealand, Taiwan and South Korea.
  • Also the health care systems, from free and government provided, to those based on public and/or private insurances, do not seem to explain the differences. Also the amount or proportion of money spent on health care, public or private, does not seem to play a role.
  • Having excluded a wide range of other possible explanations, I am forced to conclude that the causes that have resuted in vastly greater numbers of Covid-19 cases and deaths, respectively longer lasting social and societal disruption, and greater economic losses in the mostly Western countries relative to other, mostly Eastern countries, are the political choices made by political leaders amplified by cultural/social behaviour of the populations.

I do not seem to be alone in my critical view on the Western Covid-19 policies

Several economists have expressed similar warnings, and the same observation as above has been made in several other analyses: More successful public health protection is associated with  smaller economic losses.  I have not come across any study in support of the opposite – that you must strike a balance between public health and the economy – which still remains the default assumption for most.  The health and economy, not health or economy, choice should not have been too difficult to grasp, though, because the same observations were already made about the 1918 Spanish Flu responses.  People who are aware of and concerned about their own risk are less likely to focus on work, to consume and invest, and more likely to focus on self protection and personal savings.

The Lancet’s editor, Richard Horton concluded on June 14: The UK response to coronavirus is the greatest science policy failure for a generation.

The editors of the New England Journal of Medicine (Dying in a Leadership Vacuum 8.10.2020) could hardly have been more direct: With no good options to combat a novel pathogen, countries were forced to make hard choices about how to respond. Here in the United States, our leaders have failed that test. They have taken a crisis and turned it into a tragedy. The magnitude of this failure is astonishing. … the United States leads the world in Covid-19 cases and in deaths due to the disease, far exceeding the numbers in much larger countries, such as China. The death rate in this country is more than double that of Canada, exceeds that of Japan, a country with a vulnerable and elderly population, by a factor of almost 50, and even dwarfs the rates in lower-middle-income countries, such as Vietnam, by a factor of almost 2000. Covid-19 … many factors contribute to its severity. But the one we can control is how we behave. And in the United States we have consistently behaved poorly.

Swedish human rights activist Kelly Bjorklund and Andrew Ewing, professor of molecular biology and chemistry, wrote to TIME 14.10. a highly critical article titled The Swedish COVID-19 Response Is a Disaster about the Swedish Covid-19 policy that has been led by Professor Anders Tegnell. Their main message: Sweden and the U.S. are unique in their failure to reduce coronavirus mortality rates as the pandemic progressed.

The public and media response to the Covid-19 policy of Premier Jacinda Ardern in New Zealand has been very different from the above. In the Parliament elections a few days ago her Labour Party won absolute majority, 64 seats out of 120. The victory was deserved to say the least – her government has controlled the pandemic far more successfully than any other liberal democracy of Western origin, resulting in less than 1 % of the Covid-19 mortality per million compared to, e.g., the US, or less than 10 % compared to the ten most successful EU countries. To recover any of the now lost reputation in the eyes and minds of the world the West needs many more leaders of her kind.