Viral Myths: Why we risk learning the wrong lessons from the pandemic
9 February 2021
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Economic Affairs
4 February 2021
Education
22 February 2021
Economic Theory
25 June 2024
https://iea.org.uk/wp-content/uploads/2021/02/Viral-Myths-pdf.pdf
Summary
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- The Coronavirus pandemic has given rise to the phenomenon of ‘Coronfirmation Bias’, the tendency to interpret the pandemic as a ‘vindication’ of one’s own worldview. Three interpretations, in particular, have become part of the conventional wisdom:
- The idea that the UK was unprepared to cope with Covid-19 because a decade of ‘austerity’ had hollowed out the public sector, thus eroding the state’s capacity to act.
- The idea that Covid-19 is a crisis of ‘globalisation gone too far’, which strengthens the case for economic nationalism and communitarian parochialism.
- The idea that the NHS has been the star performer of the pandemic, and that we should be more grateful than ever for having it.
- All three of these conventional wisdoms can be challenged. We can see this by comparing the countries that coped best with the pandemic to the countries that coped worst.
- There is no obvious measure of ‘Covid performance’ which would allow us to rank countries by how well they dealt with the pandemic. Most countries got some things right and others wrong. We can, however, still identify the ‘best in class’ (the ones that did well according to almost any measure) and those that struggled most (the ones that did badly according to almost any measure).
- Among the ‘best in class’ are the four ‘Asian Tigers’ of Taiwan, South Korea, Hong Kong, and to a lesser extent, Singapore. They had exceptionally low levels of Covid deaths, they minimised the economic fallout, and they also managed to preserve personal freedoms and a semblance of normal life.
- Among high-income countries, the UK, Spain, Italy and Belgium are the ones that struggled most. All four had exceptionally high Covid-19 death rates and excess death rates, as well as particularly severe recessions, and stringent lockdown or lockdown-like measures.
- If we compare the best performers to the worst performers, three things stand out:
- The best performers have much lower levels of public spending, including healthcare spending.
- The best performers have open, highly globalised economies, with much higher levels of exposure to China than the UK ever had.
- The best performers do not have national health services. Their healthcare systems are not similar to the NHS.
- The claim of this paper is not that best performers did well because they have low public spending levels, that they did well because they have open economies, or that they did well because they have non-NHS-type healthcare systems. The claim of this paper is that an effective pandemic response is compatible with a variety of public spending levels, a variety of trade regimes, and a variety of healthcare systems.
- The ‘big story’ of this paper, then, is that there is no ‘big story’ to be told here. Our long-standing ideological disputes about what the size of the state should be, how open our economy should be, or what type of health reform we need (if any) are not going to be settled by a virus.
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