What can economic history teach us about the lockdown?
The coronavirus pandemic is, of course, first and foremost a social crisis. It is testing the limits of the NHS, bringing out the best in our doctors, nurses and carers, and many others on whom we all rely.
But it is also a huge challenge for policy makers who are trying to protect businesses, jobs and incomes, so that the economy can quickly reboot once the lockdown is lifted.
Long-term benefits: History teaches us that vicious diseases cannot be allowed to run unchecked
And while the saving of lives is rightly the priority, the extent and duration of the economic disruption could also have significant impacts on our health.
Fortunately, history provides a few pointers. Perhaps the least surprising conclusion is that vicious diseases cannot be allowed to run unchecked.
One particularly grim study of the longer-term economic consequences of 15 pandemics, all the way back to the Black Death in the 14th century, found that the fallout persisted for as long as 40 years.
More positively, recent history shows that brief falls in economic activity, even large ones, do not necessarily lead to a deterioration in health outcomes.
US research suggests a temporary downturn is more often associated with a small improvement in overall mortality rates, due to indirect benefits such as a fewer traffic accidents.
Together, these studies suggest that it might be worth taking a large hit to the economy in the short term in order to get on top of coronavirus.
That conclusion is supported by a recent analysis (by economists Sergio Correia, Stephan Luck, and Emil Verner) of how US cities responded to the Spanish flu pandemic of 1918.
As you might expect, the cities that suffered the most deaths also saw a sharp and persistent fall in economic activity.
But, importantly, this study also looked at the impact of the sort of restrictions that the Government is imposing today, such as banning public gatherings, and closing schools, churches, shops and restaurants.
The researchers found US cities where authorities intervened earlier and more aggressively did better in terms of mortality, without doing any worse in terms of the impact on economic activity. If anything, their economies grew faster than others when the pandemic was over.
Obviously, none of these studies are exact matches for the current crisis. Economies may now be more vulnerable to some types of shock, for example, because of fragile ‘just-in-time’ supply chains and less secure forms of employment.
We are also more aware of some potential costs of social isolation, such as mental health problems or an increase in domestic violence.
Covid-19 itself does not appear to be as severe as the Spanish flu and is certainly less harmful than the Black Death, or the plagues of the 16th and 17th centuries. Mortality rates are also much lower than some more recent coronavirus outbreaks – MERS, in 2012, and SARS, in 2002.
Nonetheless, the evidence is refuting complacent assumptions made by armchair pundits – such as that Covid-19 might not be much worse than ‘seasonal flu’, or that it would ‘only’ be a serious risk for older people and those with existing health problems.
The prospect of the NHS being overwhelmed with coronavirus patients is something that should worry us all.
On the other hand, there are growing concerns that the lockdown is discouraging people from seeking care for other conditions. There are, therefore, no easy answers.
Experts, whether in healthcare or economics, have to make a balanced assessment of all the risks and uncertainties, and there are many. But history at least suggests that the lockdown should help save lives and reduce the long-term economic costs.
Julian Jessop is an independent economist
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