Covid Choices for Head of the State

The Head of the state, be it a president or a premier has to make tough decisions. CoVID offered a unique challenge. The leader had to choose between lives saved through lockdown vs the lives lost due to economic contraction by lockdown. When u are the head of the state in a Pandemic, u cannot quantify economic contractions.

Cost Benefit analysis is not a straight comparison between economic contraction cost and cost of lives saved. The cost of a life is again a moot discussion point. It changes with age& is an approximation based on productivity. Some are giving 80+ yrs hardly $1Mn since they assume the person has no productivity.

When treatment in a hospital becomes such an transaction where the productivity, cost of life base on age matter, then treatment perse becomes a transaction between the insurance company/govt in case of pandemic and the hospital. The patient survives only till the insurance company wants him to. ICU deaths are well known globally. Hospitals are rewarded for reducing the number of ICU days.

In such scenario,cost of life becomes just a mere transaction which satisfied the insurance company. To this, one has no choice to make the numerator bigger by including the lives saved due to zero pollution, zero road accidents, zero workplace deaths during lockdown period. This numerator needs to exclude the essential workers who are subject to all the above and are not exempt. We are roughly looking at around 1,50,000- 2,00,000 deaths saved due to 49 days isolation. So we are looking at roughly $1Tr in lives saved due to non corona causes during lockdown. Add to this the potential lives saved due to Lockdown. Estimations judge them to be around 100,000 lives if unbridled exposure is allowed. Assuming this is upper limit, we stare at another $1Tr USD.

We cannot add to this the economic cost of business lost, wages lost since that is not easy to be defined in a cash based economy like India where there is more business done under the table without bills than a GST fulfilling business community. Taking GDP cost, we are losing $240Bn/month of idling. This cost is not one time. Idling cost rolls over due to salaries still being paid despite no work. The shadow economy might be half of this.

Indian Stimulus added just $1.7 Tr but that didn't add to non-food businesses. It only focused on the COVID response. The only economic activity ongoing is currently the public administration, healthcare industry, agriculture, law and order. Of these, agriculture and healthcare alone is revenue. SC decision to make tests free hits the private sector for they need to find capital to provide it free.

Looking at above scenarios, we feel that the cost benefit analysis wont give fair results in this Pandemic. Whatever assumptions economists make has to be made on textbook models. Noone can quantify the ongoing economic activity, the stimulus spending reaching the lowest of the pyramid, the poor being fed to keep them out of poverty.

Thus we conclude that Cost Benefit Analysis will be an academic exercise which after this whole event passes us, we sit down and calculate, it will not match our academic exercise since there will be many hidden components that wouldn't come out till whole data is found like for example suicide attempts outside the house.

The Head of the State hence has to take a gut feeling rather than spend time on Cost Benefit Analysis. He cannot wait till the economic costs are determined. Most economists are depending on older viruses events and the lockdown effects then. Technology has changed several dimensions.Today, information travels at the speed of light. As such, they fail to become good role models for us today.

We do not advocate a lockdown since South Korea,Japan & Taiwan have shown results without. The 21 day lockdown was fine but the extension was not right and will delay reboot of the economy.