A Very Costly Cure

Social distancing and lockdowns will flatten the contagion curve, but they will also flatten our GDPs. As Venezuelans know very well, broken economies can kill, too.

Photo: Carlos Jaimes.

Donald Trump recently said that the U.S. could not “let the cure be worse than the problem itself,” hinting that America should be back in business as soon as possible. Although Trump’s words probably reflect more his electoral worries rather than sincere insight, they highlight a question that many governments will soon start facing. 

Will the economic fallout of COVID-19 be as bad as the disease itself?

This question is pushing countries like Sweden to try a risky balance between responsible public health responses and limited economic disruption. While the government encourages social distancing, children are still in school, and restaurants remain open.

The Netherlands is another country relying more on self-responsibility than in restricting its citizens’ movements. Elderly folks are advised to isolate from the rest of the population but only brothels, beauty salons and businesses that require close interaction with customers have been forced to shut down. Cafes and restaurants are only allowed to provide take out. Other stores, including bakeries and flower shops, are working as usual. Prime Minister Mark Rutte defended the measures by saying the Netherlands is a “grown-up country,” where people are expected to comply.

Will the economic fallout of COVID-19 be as bad as the disease itself?

One of the reasons why healthcare hasn’t collapsed over there is that a relatively small proportion of complicated patients are admitted to ICUs. Almost 60% of the 1,760 people who have died in the Netherlands are over 80 years old, but only 21% of hospitalized patients exceed that age. Obviously the Dutch are not letting their elders die; in a society where euthanasia is widely accepted and individual liberty is extremely valued, doctors can advice their patients not to seek further hospital care if their prognosis is too bad. These patients die at home, with top-level palliatives care to make sure they don’t suffer.

Ethical concerns apart, this approach is still very controversial. The Netherlands, with a population almost five times smaller than Germany’s, has more deaths, and just ordered a thousand new ventilators to increase the ICU capacity of a health network that starts to feel strained. Although far from similar to the situation in Spain or Italy, cases and deaths in Sweden are increasing too, and the government is facing pressure from the scientific community to enforce more stringent measures. 

These “soft lockdowns” may not be working very well, but it’s also true that keeping a long-term quarantine is challenging, especially in weak, underdeveloped economies. 

In Venezuela, for instance, where the full power of state security forces is used against the population, internet usage data from Google reveals that activity in grocery stores has reduced by 44%, by 25% at workplaces and 62% at restaurants. This reduction is considerably higher than that in Sweden or the Netherlands, but it’s still way lower than in Spain or even neighboring Colombia.

Germany has combined massive testing with relatively soft measures (most stores are closed, but people are still allowed to walk and exercise, except in a couple provinces). It’s also planning to study a test to identify patients who have developed immunity upon infection, so they can be put back into the economy. The country has achieved a remarkably low number of deaths, even though it’s the 4th nation with most cases in the world. 

This strategy may shorten the duration of stringent measures, reducing the impact on the economy and, if it’s successful, it’ll likely be the model to follow.

However, as we reach 1,2 million cases worldwide and many countries are left with no option but to extend quarantine measures, Trump’s concern is actually a real one. This cure might be very costly, but that’s the only one we have.