2nd September 2021
Extracts from Gigi Foster’s testimony to a Victorian Parliamentary Committee on 11 August 2020
Came across this testimony by Gigi Foster. It is sharp and incisive. My slightly restructured and truncated extract, below.
COST-BENEFIT ANALYSIS IS A CRUCIAL REQUIREMENT OF ALL PUBLIC POLICY
I am an economist, and I look at this situation as an economist would, trying to privilege human welfare gains above anything else. I believe [in] a proper cost-benefit analysis of policy, of the effects of that policy. Those effects are not just in relation to health outcomes right now from a particular disease but in relation to all human welfare outcomes today, tomorrow and for generations to come.
BURDEN OF PROOF ON THE GOVERNMENT
We need to ask the government to defend the costs of these lockdowns on the basis that they do in fact promote human welfare. I have not seen that analysis, and I feel that the burden of proof to provide that is on the government’s shoulders. It is not up to me or others questioning the imposition of these very radical measures to prove that those measures are not a good idea; indeed it should be the government’s responsibility to defend very radical measures like this on the basis that they in fact promote human welfare.
The government is responsible to provide analysis of the impacts of its policies, particularly in the case of such a massive policy like this.
What I am calling for is a cost-benefit analysis related to policy choices that the government is selecting, not in relation to just the pandemic or just the cost of COVID—it is the overall, aggregate welfare cost of policy choices that the government has selected.
I believe that when the government communicates to its people, it has an obligation to explain why, particularly in the case of very extreme policies, those policies are required. That has not happened in this case. I still await a proper reckoning of why it is that wholesale lockdowns actually, on net, save lives.
The UK has done some modelling, which indicates that lockdowns on net are costing more QALYs than they are saving.
SHONKY EPIDEMIOLOGICAL MODELLING
The initial epidemiological modelling was claiming that we [Australia] were going to lose potentially 150 000, so that was off by an order of magnitude. It is important to bear that in mind. That is the kind of modelling that has not been updated and that has not been added to the data that we now know and other perspectives, including the aggregate human welfare perspective, which is the economic perspective on policy making in this area.
WE MUST FIGHT FEAR
Fear is a very powerful emotion because it essentially shuts out focus on anything but the perceived threat, so it is very effective in fight-or-flight sorts of scenarios where there really is a threat, but because of that as well fear can cripple us when we are responding to something that is actually not as big a threat as we are perceiving it to be.
If people are feeling fearful, uncertain, unsure what the future holds, they are going to be less likely to invest, less likely to spend, less likely to do everything that we know economic activity is based on, and that means that our economy and our society will be held back. As I think FDR said, ‘The only thing we have to fear is fear itself’—that is exactly applicable now.
STOP A UNILATERAL FOCUS ON COVID
The government needs a new message. It needs to abandon this idea that COVID deaths and COVID cases are where all of our focus should be.
LOCKDOWNS ARE A MASS SACRIFICIAL EVENT
In the past six months we have witnessed a mass worldwide sacrificial event driven by a fear of the unknown and essentially an abandonment of post-Enlightenment thinking. We have been swept up in hysteria and the fanaticism of crowds. Now, the post-Enlightenment response to these uncertainties you are speaking of that we face right now, such as what will the long-run health impacts be of this virus, that post-Enlightenment response is no different than in any other scenario: we use the best data available at the time to generate our best guesses of the damage and then we factor those guesses into our analysis. If you do that, you still come out in favour of not having a wholesale lockdown.
Lockdowns and social-distancing measures inflict unemployment, business collapse, education neglect, health neglect and loneliness. The virus does not do these things; government directives do these things, as we are seeing right now in Melbourne. Like many people around the world, I have come to the conclusion that the costs of wholesale lockdowns are far greater than the benefits.
Around the world countries that seemed to avoid a first wave initially simply had one later on. There is little difference in COVID death rates between countries that imposed harsh lockdowns and countries that did not, with mortality differences more related to how well authorities managed to shield the most vulnerable in retirement homes, nursing homes and hospitals. Shielding the general population has largely proven futile, causing misery for no long-term gain and preventing immunity from emerging.
This leads me, then, to the costs of lockdowns. The biggest cost is that of mental health sacrificed due to loneliness, anxiety and other suffering directly related to locking people away from the broader social sphere. The IMF reports that lockdowns per se have large impacts on economic activity, and these impacts will be felt in suffering for years to come until our economies recover. Children’s schooling disruption during lockdowns is also costly in future forgone wages of those children, lower productivity of their parents and lifetime costs of more domestic violence and the development of bad habits.
If these costs count, which they should just as much as should suffering due to COVID now and in the future, including longer run impacts, then we need a common currency in which to measure both them and COVID-related deaths and suffering. That currency can be quality-adjusted life years, statistical lives or WELLBYs—wellbeing years, a currency recently developed at the London School of Economics. QALYs are appealing in the present context because they are commonly used to measure welfare gains when making decisions about the allocation of scarce resources, yet QALYs do not count the importance of loneliness, mental health suffering, loss of dignity or loss of joy. The WELLBY does include those elements and is therefore particularly useful in the present scenario when these human costs loom so large. The COVID deaths that may have been saved so far via wholesale lockdowns are mainly of people over 70. In ethically fraught situations like battlefield triage, for example, or decisions about who gets scarce organs or which drugs to include in the PBS, we recognise that saving a 20-year-old means saving more human welfare than saving an 80-year-old. This recognition is embodied in the concept of QALYs and WELLBYs.
In these same currencies we can measure other costs of our response, including crowded-out or delayed care for problems other than COVID both now and in the future. This includes deaths due to delayed screenings or other care because of lockdowns. More broadly it includes all deaths sacrificed in the future because we were not making investments into approaches to making life better and longer that we would have been making had we not been putting what money we had disproportionately into COVID research while simultaneously reducing the total bucket of money available through stabbing our economy in the stomach, which is happening right now as borders remain closed and trade, tourism, arts and education are taking huge hits with no endgame in sight.
Research and development in health and other welfare-promoting areas is financed mainly by the government, which spends about 40 per cent of GDP in developed countries. When our GDP falls, so too does that spending, which translates into deaths not visible today but occurring over a period of many years. Other less visible costs include the damage to wellbeing of higher unemployment now and yet to come and for young people the long-run scarring of entering a job market in a recession. My back-of-envelope estimate for Australia indicates that even with conservative assumptions that bias the case in favour of lockdowns, wholesale lockdowns harm welfare at least three times more relative to a counterfactual of not locking down in a COVID-19 world.
What should governments have done? They should have controlled fear, directed resources and attention towards protecting the most vulnerable, set policy based on the knowledge of a range of experts rather than only health scientists and evaluated the likely impact of their policy choices on total human welfare as time progressed and more data became available.
COSTS OF LOCKDOWNS
Several of the cost areas [include], for example, mental health costs, loneliness, social isolation; the cost of reduced immunity while we are sitting at home instead of being outside and enjoying our time with friends; the unemployment costs; and the future GDP reductions, much of which is due directly to lockdowns per se.
It would be nice to have very quick access to reliable data in this country on very many aspects of human suffering. I did manage to find some data on suicides here in Australia and also looking overseas at how many suicides have been brought about by this economic recession and the lockdowns. I have been able to piece together an estimate. That is what we do in economics: we try, using the best data available, to come up with a reasonable estimate.
We are talking about statistical lives lost now and in the future. I am counting, for example, the mental health suffering that people endure when they are locked in their homes. If you aggregate that suffering across all the people who are subjected to it and you use currencies like QALYs and WELLBYs, you can essentially equate those, that amount of suffering, to an amount of deaths—okay? Of course some of the deaths that are sacrificed are also real, live people today who are going to die because of the lockdowns rather than being saved because of them. That would include, for example, people whose cancers are not diagnosed as early or people who fail to get help for their stroke or their heart attack because they cannot get out and they feel scared about it. So, yes, it is all of the human welfare costs put into a currency that is usually used in normal times to weigh up costs and benefits and to allocate scarce resources.
BENEFITS OF LOCKDOWNS
My cost-benefit analysis assumes very conservatively that a large number of deaths would be directly avoided by lockdowns, but that assumption has no basis in fact. Every other assumption I made in that cost-benefit analysis is well supported by actual reference to literature and findings from economists and others overseas, but the claim that lockdowns save lives—I have not seen evidence that that is true. So I have made a very conservative assumption in favour of lockdowns, in favour of trying to find that lockdowns are helpful, but even with that, I still find that wholesale lockdowns are not the way to go. What instead should happen is targeted assistance towards people who are most vulnerable.
INCOME SUPPORT IS A “REMEDY” FOR A SELF-INFLICTED WOUND
I think it is a good idea to provide income support, like JobKeeper for example, and to provide additional support in a temporary way to people who are struggling because of actions the government has taken. But saying that somehow those provisions are equivalent to fixing the actual fundamental problem, which is that our economy has been stabbed in the stomach, is quite facile. It is not a long-term solution, and it is essentially treating the symptoms rather than treating the disease itself, and the disease is one that we have inflicted upon ourselves. Giving people money stems a bit of suffering in the short run but it does not solve the problem in the long run, so we are still left with massive costs of wholesale lockdowns for which the solution is simply to get the economy moving again with considered and thoughtful, creative and targeted assistance for people who are the most vulnerable in our societies.
TARGETED POLICY WAS NEEDED
We [need] a very conversation that should have been had about four or five months ago, which is rather than wholesale lockdowns—a blanket ham-fisted sort of general policy, not targeted, scattergun—how do we direct the resources we have towards people who are most likely to get serious symptoms or die from this virus if they contract it? Indeed, what we would like is to set up an institutional environment in which those people most likely to be exposed to COVID are those least likely to experience serious symptoms. And in fact, often what we have seen in countries, whether or not they have had lockdowns, is that it has been the opposite. The people most likely to get exposed are those who are the most vulnerable because they are sitting in aged-care homes, in nursing homes, in hospitals, on cruise ships et cetera. And so that is exactly the question that we need to answer and that we can learn from other countries about, because other countries have gone through this. There is knowledge about how to protect people in old-age homes—how to make people who are coming into contact with those who are more vulnerable aware of the risks and how to show them how best to protect themselves and others—and that is where our resources should be going.
We are spending so much of our efforts and our money on these blanket wholesale lockdowns that have not been proven to work. When I say that something is not working, I mean in terms of total human welfare protection—I mean in terms of the aggregate net lives saved.