Cure worse than disease?

The people of Pakistan are entering week four of the ‘Corona’ lockdown. As the debate rages on whether the lockdown should be strictly extended until the virus substantially abates or eased before then, it is important to take stock: (i) how has Pakistan fared so far in terms of morbidity and mortality versus other countries since the first 100 reported cases; (ii) the economic and social consequences of the lockdown; and (iii) the tradeoffs and choices we are likely to face as state and society in the days ahead.

Covid-19 is the world’s most devastating pandemic in terms of mortality, economic losses and social welfare since the 1918 Spanish influenza. The virus has thus far claimed over 100,000 lives with projections varying from the tens of thousands to several million until the earliest commercially available vaccine becomes available in 12-18 months. While the young are not safe, the novel coronavirus hits older people hardest, with an estimated fatality rate of 6.4 percent in people above the age of 60. Conservative estimates suggest that the cost to the world economy will be in excess of 2 trillion dollars.

April 16 marked the 30th day since the first 100 cases were officially confirmed in the country. To date the total number of cases (7,025) has been relatively limited and the curve of new infections has remained linear despite a ramping up of testing in recent weeks. Hospital patient load is normal and fatalities remain low (135). Meanwhile, the pandemic has spread exponentially in other parts of the world. Iran by day 30 had 29,265 cases, Italy 63,803, the UK 38,054 and the United States 187,194. These countries have also seen spiraling death counts and had their healthcare systems stretched to breaking point.

While testing in most countries remains limited and cross-country comparisons are statistically problematic, deaths and overflowing hospitals cannot be hidden. Pakistan and a clutch of other countries – for reasons yet to be scientifically established – have remained fortunate in relatively lower morbidity and mortality rates.

As lockdowns at home and abroad continue, the economic fallout for Pakistan is unprecedented with the poorest and most vulnerable bearing the burden disproportionately. Recent estimates, including by the World Bank, suggest that the economic cost of a month-long domestic lockdown in terms of lost output and income ranges from Rs1 trillion to Rs3 trillion. The World Bank is also projecting that GDP may decline by 2.5 percent this fiscal year – a first in 68 years!

The Pakistan Institute of Development Economics estimates that a general lockdown can cost 20 million jobs in agriculture, fishing, manufacturing, construction, wholesale dealers, transport, education and street vending. It also estimates that an additional 45-70 million people are likely to slip below the poverty line.

Going into the crisis, over 40 percent of children under the age of 5 were underweight. Since close to 55 percent of the population is close to the poverty line in normal years, a Covid-Lockdown shock will make them more food insecure with hugely negative implications for malnutrition.

A prolonged lockdown will also continue to keep around 50 million children out of school. As the economic crisis deepens and hunger and deprivation increase, violence and a breakdown in law and order are likely to follow. Anecdotal evidence from urban areas suggests crime is on the uptick.

The dilemma is real: begin unlocking and run the risk of the virus spreading faster or remain in lockdown with prohibitive economic and social costs. As we ponder this tradeoff, it is necessary to ask if the benefits of a prolonged general lockdown outweigh the costs in a country such as ours?

Yale economists, Ahmed Mobarak and Zachary Howell use country specific estimates of the economic benefits of lockdowns together with an epidemiological model of disease spread developed by scientists at Imperial College to answer this question. Their conclusion: ‘‘imposing strict lockdowns in poor countries – where people often depend on daily hands-on labor to earn enough to feed their families – could lead to a comparable number of deaths from deprivation and preventable diseases.’’

The reasoning underlying this conclusion is that rich countries have a much larger proportion of their population that is over the age of 60 and better state capacity for economic assistance to their people. Poor countries have weaker state capacity and their demographics and dependence on daily incomes mean that prolonged lockdowns can be a net-negative in terms of lives and welfare.

An equally effective lockdown is projected to save over 1.3 million lives and generate economic value 240 times larger for the US, compared to the value created in Pakistan where 182,000 lives could be saved. The question is how many lives will be lost and permanently impaired through food insecurity, malnutrition and a breakdown in law and order if a prolonged, strict lockdown continues? Recent evidence from India is disconcerting. At least 200 people died during two weeks of lockdown by hunger, suicides and violent crime due to loss of livelihood.

The ‘stay locked down or open up’ debate need not be zero-sum. The art of policy is to balance competing or opposing interests and outcomes. The policy choice need not be death by virus or death by starvation. The world is already deriving and implementing solutions – eg data-driven smart lockdowns etc to precisely these problems. We need to start doing the same.

The writer is an economist and entrepreneur.

Email: shussain@opm53.hbs.edu

Twitter: @SavailHussain