COVID-19: How the political ‘bad guys’ fared better

As the UK contemplates yet again a change in direction, with more restrictions on activity to curb COVID-19, we should reflect on what is happening elsewhere in the world. Only a few months ago, Sweden was the heart of darkness: a country which, for unaccountable reasons, had gone off the rails, embracing weird theories about the pandemic, disdaining lockdown, resulting in the slaughter of its elderly population and ostracism from the club of civilised social democratic countries in Scandinavia. Now it emerges that they may have been on to something, with a consistent – and apparently successful – approach.

The most recent (very preliminary) economic data also suggests that the United States, under a president regarded by most progressive folk as a malign, Covid-denying buffoon, has suffered less economic damage than most of the rest of the developed world. And Brazil, presided over by another malign, Covid-denying buffoon, has got away with much less damage, and less impact on its poor, than its Latin American neighbours, like Peru, Chile and Argentina who took the pandemic seriously.

So, were the ‘Bad Guys’ right? The stories are complex. Brazil and the US are both federal countries, many of whose state governors and mayors did, in fact, push ahead with strict enforcement measures to reduce transmission of the disease, bypassing the president. Sweden, on the other hand, is actually far from being a libertarian paradise but has a variety of regulations to reinforce its largely voluntary approach.

Nonetheless, it is just about possible, from comparative data where it exists, to come to some tentative conclusions about what is working and what isn’t. It is necessary to look at both the incidence of disease and “excess” deaths, and at the collateral damage from preventive lockdowns. Economic costs matter not just for living standards but also for the public services which a smaller economy can no longer afford.  And the collateral damage also includes those who die because Covid-prioritising hospitals and GP surgeries around the world are not functioning for cancer and stroke patients.

At the apex of success in reducing infections are South Korea and Taiwan which had a well prepared “track and trace” system, strong social discipline to reinforce distancing and a competent state. They have experienced only a very mild recession and few casualties, with little recourse to lockdown. And, uncomfortable though it may be to acknowledge, China appears to be the one country to have both got on top of the disease and to be likely to grow economically this year though its recourse to lockdown, while time-limited, was brutal. Like it or not, the authoritarian Chinese state exerted its authority well.

Almost near the pinnacle of approval are those countries which have had well-organised testing and tracing systems, effective government and tough, targeted, interventions where outbreaks have occurred. They have reduced, but not escaped, the economic damage. Germany, Singapore and Japan all seem likely to see a fall of around 6 per cent in GDP this year. Less affected economically have been the countries of Scandinavia, Australia and New Zealand which may have enjoyed the benefits of relative isolation and low population densities, as well as generally smart governments. 

In particular, Sweden’s apparent success in getting on top of the infection and escaping the worst of economic damage (with an estimated fall of 4 per cent in GDP this year) has begun to restore its reputation after the initial surge in deaths. The lessons from Sweden are that common sense, consensus and self-discipline work better than convoluted, constantly changing, rules and regulations; that people respond better to being treated as adults than wayward children; that consistent, clear messaging is essential; and that schools and workplaces can and must be kept open.

There is a painful contrast with countries which have both high infection and death rates and serious economic damage: Britain, France, Italy and Spain in Europe and India, Argentina and South Africa elsewhere. All seem likely to see a fall of around 10 per cent in GDP this year in addition to relatively high death rates. Conditions obviously vary with some, poorer, countries facing very challenging conditions, as in India. But government competence is clearly a factor with lockdowns being introduced too late (Britain) or too soon (India); failure to develop effective testing and/or tracing systems (Britain and France); and failures to build cross-party, national, agreement (Spain especially).

For many, the epitome of incompetence would be the president of the US. The US has experienced exceptional death rates in relation to population. But the US economy has got off relatively lightly: the United States is expected to outperform Germany in minimising the damage with an expected fall of around 5 per cent in GDP, very painful but hardly in the territory of the Great Depression when GDP fell 30 per cent from peak to trough. The United States has benefited from the enormous monetary stimulus provided by the Federal Reserve as well as the big, bi-partisan, fiscal stimulus from Congress (at least until the impasse of the last few weeks). But we also have to ask: did Trump help or hinder?

Trump played the role of the hapless, incompetent, joker: the denials, the quack medicine, the apparent failure to understand notions like “herd immunity”, the contempt for masks and social distancing. But it now emerges, from the telephone interviews with the journalist Bob Woodward, that Trump knew exactly what was going on and fully understood the risks of the pandemic. He made a calculated, cynical but rational, decision: to resist announcements and actions which might damage consumer and investor confidence and undermine the economy. Minimising economic damage would be the best way to safeguard his re-election chances, even if it meant more deaths. Not nice, but not stupid.

Trump understood that there is a trade-off: death rates versus economic (and re-election) damage. The Covid deaths of 200,000 Americans (under 0.1 per cent of the population, mostly poor, older people in states unlikely to vote Republican) were – for him – a price worth paying. However much we may deplore the president’s lack of moral compass, he understands these judgements.

By contrast, I listen with despair as the British prime minister flails around for solutions, constantly changing tack with the choices the country has to face. Equally baffling are opposition spokespeople who act as if policy should be based on the premise that there must never be a single Covid-19 death. That is a recipe for lockdown forever and everywhere. As a “vulnerable” person in my mid-70s I think I would take my chances in Stockholm.