WASHINGTON – There is little doubt that government-ordered business shutdowns to stop the spread of Covid-19 have damaged the US economy, but the exact cost has not been clear.
Researchers from the HEC Paris business school and Bocconi University in Milan have reached a sobering calculation: the closures beginning at the pandemic’s onset in March through May saved 29,000 lives – at a cost of US$169 billion (RM691.8 billion), or around US$6 million per person.
“Governors saved lives on the one hand, but reduced economic activity on the other,” Jean-Noel Barrot, a professor at HEC Paris and member of France’s National Assembly, told AFP.
How to address the world’s largest coronavirus outbreak has become a vexing, politically charged question in the US where the virus has infected more than 12.2 million people and killed nearly 257,000.
Cases are surging nationwide, prompting many states to again implement restrictions on businesses.
But, Barrot warned that changes in Americans’ behaviour may make renewed business restrictions less effective.
“As people become, perhaps, more responsible, as they wear more masks and so on, the effect that we’re seeing on infection is going to probably go down.”
Unprecedented shutdown
The March orders were applied unevenly by state and local governments, but caused unprecedented disruptions to the world’s largest economy, prompting a debate over the government’s role in forcing people to change their lifestyles in the name of public health.
Critics have said the restrictions, which were relaxed to varying degrees in the spring and summer, are a costly assault on personal freedom, while supporters say they are one of the ways the out-of-control virus can be contained.
A June study published in Nature found that without social distancing and business restrictions, the US would have seen cases hit 5.2 million in early April, rather than their actual level of around 365,000.
Researchers at Columbia University, meanwhile, found that more than 35,000 lives could have been saved had such measures been put in place just a week earlier than their mid-March imposition.
Though nowhere near as stringent as in other countries where curfews were strictly enforced and rule-breakers penalised, the restrictions’ effects on the US economy were seen almost immediately.
Weekly applications for jobless aid shot up, with nearly 6.9 million filings in the week ended March 28, while the unemployment rate skyrocketed to 14.7% in April from its historic low of 3.5% in February.
Using data from JHU and the US Census Bureau, Barrot determined the various US shutdowns cost about 0.8% of total US gross domestic product, but reduced the death toll in the period surveyed by around a quarter.
States’ moves to loosen the restrictions, and massive stimulus spending helped the economy heal, pushing the unemployment rate to 6.9% in October and weekly jobless aid filings down to around 750,000 – still higher than the worst single week of the 2008-10 global financial crisis.
While Barrot said new blanket restrictions may not be as effective in preventing deaths this time around, they will certainly remain expensive.
“What we need to think of (are) contingency plans to avoid having to, so to speak, burn so much of our collective wealth in order to stay alive.” – AFP, November 24, 2020
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