Unlocking the COVID-19 lockdown
There's been a lot of talk about a trade-off between the economy and health, with some people saying that the lockdown, aimed at suppressing COVID-19, has been too costly for the economy. The logic is that, normally, if you have a bit more health (say by government adding another drug to the PBS) it has to be paid for and you have a bit less of something else (say government spending on schools).
Trade-off logic works well when you are talking about small changes at the margin. But the Covid-19 pandemic is not a small change at the margin where you can have a bit more or a bit less in exchange for something else according to your tastes. It is a big discrete thing and you don’t want any of it for obvious public health reasons (~150000 Australian deaths if no preventative measures were taken, according to the epidemiological modelling by the Doherty Institute). And if you do have it, with millions of sick people unable to work, you can't have a functioning economy. (How functioning is the NY economy right now?)
In Australia, the strategy of suppressing the coronavirus has been remarkably successful. The number of new cases is very small, and the number of active cases is under 1000, with few outside NSW. With this success, the question arises how and under what circumstances to reboot the economy while keeping the disease under control. Here, trade-offs are a real issue and much has been said already. (The German Chancellor, Angela Merkel, has spoken of Öffnungsdiskussionsorgien, loosely meaning “orgies of debate about opening things up”.)
If businesses are allowed to re-open relatively quickly, the economy may recover faster, but there will almost certainly be more infections. How many more infections are tolerable is not a question answerable by either epidemiological or economic modelling. This is a call that only governments as true representatives of the people can make. But if the lockdown is undone too quickly, unleashing a second, possibly uncontrollable wave of infections, society will have to lock down again, with likely even bigger costs to the economy.
The solution to this conundrum is a regime of extensive testing and tracing. Until and unless a vaccine is developed, a critical mass of the population will need to be tested regularly and often. Tracing of the contacts of people who test positive will also have to be extensive. All of this will be expensive and intrusive, but there appears to be no realistic alternative.