Costs and Benefits of Lockdowns

What is the issue?

Lockdowns have become the handy option amidst the spread of the COVID-19 virus.
In this context, it is essential to make a cost-benefit assessment of lockdowns in both social and economic terms.

Why are lockdowns becoming unavoidable?

As of mid-July-2021, 26.2% of the world population has received at least one dose of a COVID-19 vaccine.
Of them, only 1% live in low-income countries.
By contrast, the richer nations, such as the U.S., Canada, Germany and Britain, registered above 50% vaccination.
For India, the percentage of the adult population that has received at least one dose stands at 34.1%.
It is essential to eliminate this inequality in the administration of vaccines to ensure protection against the virus.
So, till that happens, long or short lockdowns from time to time will remain the only defence against the virus.

What are the challenges with lockdowns?

The impact of the lockdowns in economic terms is also to be taken into account.
The practicability of simultaneously protecting lives and livelihoods with the aid of lockdowns is questioned.
The trade-off between lives and livelihoods leads not only to a dilemma but a trilemma perhaps.
Draconian lockdowns help us keep on living, but they prevent us from earning a living.
With incomes drying up, essential expenditures such as those on food, health and education cannot be sustained.
This, in turn, implies that life could not be lived.
Extreme lockdown policies thus imply we cannot quite have our life and live it too, at least not meaningfully.

What does this call for?

The vicious trilemma (Livelihood, Saving life, Living life) needs to be torn down if humanity is to be preserved.
For this, the balance between the expected benefits of the lockdown policy and the costs involved has to be analysed.
If the latter is higher than the former, it is wise to adopt alternative policies, involving an excess of benefits over costs.
In other words, the nature of the trade-off has to be understood.

What do lockdowns cost?

The cost of lockdown could possibly be measured by the value of lost GDP. Here are some examples.
Both France and Italy imposed heavy lockdowns and suffered 3% shrinkage in GDP.
Not that people did not die, but the 3% shrinkage cost of keeping a number of people alive is significant.
Similarly, Finland, which experienced a negligible rise in the mortality rate, experienced a 1% fall in per capita GDP.
On the other hand, Lithuania performed miserably on its death rate front, but its GDP per person is expected to rise by 2%.
Research says that for every infected person cured in poorer countries, 1.76 children die on account of a fall in the quality of life.
This is worse than the trilemma scenario mentioned earlier.
The sufferings faced by migrant labourers in India is also to be considered.
Children are held back from school, increasing the cases of child labour.

What is the way ahead?

The cost of a human life is priceless.
In technical economic language, this amounts to asserting that the (monetary) price of a human life is infinitely high.
While this assertion is made, it is not suggested that lockdowns ought to be avoided.
Quite clearly, they are unavoidable for now.
But lockdown policies need to be carefully designed, guided by trade-offs between harsh and mild policies.

Source: The Hindu