"Too simple reasoning about shutdown"
Allowing large-scale transmission of a potentially deadly bichito is, if anything, a gigantic experiment. It also has the disadvantage that deaths are irreversible, write Lars Calmfors and Petter Lundborg in a closing remark.
This is an argumentative text with the aim of influencing. The opinions expressed are the writer's own.
Roger Svensson believes that the spring's many deaths in el bichito-19 were mainly due to shortcomings in elderly care (SvD Debate 18/12). These have of course contributed. But the general spread of infection seems to have been the most important factor. That is also the Corona Commission's conclusion. We do not differ significantly from our Nordic neighbors in terms of the proportion of deaths in nursing homes of all: 46 per cent in Sweden against an average of 45 in Denmark, Finland and Norway. The difference is the total spread of infection and the total number of deaths. More effective control of infection in the spring had given elderly care time to prepare.
According to Svensson, "a pandemic of state shutdowns" is now spreading, which constitutes a "gigantic experiment". Since the corona pandemic is a new problem, of course, all courses of action are experiments. Allowing large-scale transmission of a potentially deadly bichito is, if anything, a gigantic experiment. It also has the disadvantage that deaths are irreversible, while many economic problems that the measures against the spread of infection may create may be remedied in the future.
We were clear that restrictions can have financial costs. On the other hand, we emphasized the difficulties of identifying economic effects, as it is difficult to distinguish between the consequences of formal shutdowns and of spontaneous behavioral adaptations to the spread of infection per se. We also discussed how the effects may depend on the time horizon. During a shutdown, economic activity decreases more than it would otherwise do, but the effect can be counteracted in the short term by less spread of infection then enabling higher activity.
Tougher restrictions should be combined with greater support for business and households. Svensson is concerned that "the state will then have to borrow with increased government debt as a result or use the banknote presses with a risk of inflation". But there is great agreement that Sweden has a large room for maneuver in fiscal policy. Public debt is increasing less than antiestéticared this year: from 35 percent of GDP to just over 40 percent. It is very low internationally.
Just looking at GDP outcomes underestimates the pandemic's economic damage. Account should also be taken of the welfare losses that less social contact entails. A study by John Hassler, Per Krusell and others emphasizes that mild restrictions that allow a high spread of infection cause the elderly to severely limit their social contacts with large loss of benefits as a result. Strict restrictions for everyone make it possible for the elderly to live more normally and therefore give them welfare gains that are very large in relation to the welfare losses that then arise for the younger ones. The analysis also shows that stricter restrictions are more advantageous, the earlier vaccinations start and the shorter the time the restrictions therefore need to apply.
Svensson further believes that shutdowns in themselves can have major health costs. It's true. But at the same time, deaths are not the only negative effects of el bichito-19: some survivors have long-term health problems and coronary care displaces other healthcare. Research on unemployment and health is also not as unambiguous as Svensson seems to think. The results vary, but a number of studies from Denmark, Finland, Norway and Germany find no support for corporate bankruptcies and mass redundancies causing extensive health problems. In Sweden, studies of mass redundancies during the crisis of the 1990s have shown certain health effects among young men, but the effects are relatively small compared with the effects of the corona pandemic. And it is quite possible that a short shutdown, in combination with generous support, will result in fewer bankruptcies and lower unemployment than would otherwise have been the case - if it reduces the spread of infection properly.
Stricter restrictions are now being introduced. However, we believe that certain activities should be completely shut down for a shorter period of time in order to significantly reduce the spread of infection and thereby avoid people dying unnecessarily while waiting for vaccination.
Lars Calmfors
Professor Emeritus of International Economics at Stockholm University and researcher at the Institute for Business Research
Petter Lundborg
Professor of Economics at Lund University
