Friday, April 03, 2020

Tallying the Covid-19 Actuarial Ledger

The Covid-19 Debate: Economies Really Are Made up of Real People

by Rob Slane - The Blogmire


April 3, 2020

The headline of this piece is admittedly very, very dumb. It’s dumb because everyone knows that real people work in economies. As such, it’s on a par with news that paper is made from wood pulp, apples grow on trees and fire is hot.

But the reason it needs to be stated is that the past couple of weeks has convinced me that many people actually don’t seem to know this at all. Judging by comments I have seen in numerous articles, and the pushback I and many others have received from questioning the proportionality of the measures put in place to deal with the outbreak of Covid-19, there seem to be many people who think that the economy is all about money and commerce and wealth. Well, there is that, but principally it is about people.

It works like this: I or A.N. Other state that we believe shutting down most of the economy for an indefinite period is an astonishingly disproportionate and dangerous way of tackling the threat from Covid-19, and we are immediately assailed with responses that run along the following lines:

  • How can you equate money with people’s lives?
  • I can’t believe you’re bringing the economy into it when we’re talking about saving lives.
  • What a callous person you must be to put wealth and profit before people.

For what it’s worth, I work for a company that deals with labour market data. On the systems we use, such data looks like a bunch of numbers. Yet we are aware, for example, that when we look at the numbers of jobs in the Restaurant and Pub sectors (approximately 1.6m in the UK), each of the single digits that go to make up that number is actually a person. A real, live person. A person with thoughts and feelings. A person with a heart and soul. A person who works to earn money to put food on the table, to pay the rent, to keep the lights on. Some of them have families, and therefore have dependants to feed, clothe, shelter etc as well as themselves.

But this is not all. Those numbers represent people who spend their earnings on goods or services that other people and companies produce. And those other companies themselves employ real people who live real lives, who produce so that they can earn, so that they can eat, be clothed, have housing and generally live.

Economies are not numbers on a spreadsheet. They are not GDP figures. They are not the balance of payments or the inflation rate. Rather, they are a vast interconnected web of workers, workplaces and transactions in which real people buy real goods and services from other real people.

What the British Government, and many other Governments around the world are doing, is to put their national economies into meltdown on a scale never seen before. And no this doesn’t primarily mean lower GDP figures on the spreadsheet, thought that will of course occur. But that is simply an outcome, not an input. What it primarily means is that the vast interconnected web of transactions involving real people buying real goods and services from other real people has largely come to a shuddering halt. With what consequences?

On the one hand, we might say that it is impossible to tell right now, and so attempting to make accurate projections or forecasts is a fools game. But there are a couple of things we can say with a fair amount of confidence:
  • Unemployment levels look set to rise to levels last seen in the early 1930s — possibly greater.
  • Businesses are going to be closing on a huge scale (no matter what the Government says about helping them out).

The UK unemployment rate for March will be released around the third week of April, and it is uncertain how much of a drop we will see in those figures, as the lockdown period only began in the third week of March. We may have to wait until the following month’s figures to see the real impact on this country, although there has been a huge slump in employer hiring over the last few weeks (see here), which may give some indicator as to what is to come.

However, we don’t need to speculate too much on this, because the weekly unemployment figures have just been released for the US. They make for truly shocking, jaw-dropping reading. According to the Washington Post:

“In March, more than 10 million Americans lost their jobs and applied for government aid, according to the latest Labor Department data, which includes claims filed through March 28. Many economists say the real number of people out work is probably even higher, since a lot of newly unemployed Americans haven’t been able to fill out a claim yet. The U.S. government has not released an official unemployment rate, but economists say it has probably jumped to 10 percent, a massive and sudden spike from February, when the nation’s unemployment rate was 3.5 percent.”

Did we read that right? 10 million people lost their jobs! A probable rise from 3.5% to 10% in one month! How does that compare to the Great Depression of the 1930s? Again, the WaPo article tells us:

“The gravity of the job losses is staggering. During the Great Recession era, the U.S. unemployment rate only hit 10 percent for one month in October 2010.”

Please remember, that 10 million is not just a statistic. They are people. Real people, with real needs in order to live their real lives. And these real people now no longer have the means of earning money to feed themselves and their families, and many will be worried sick for their future. Yet, as if that were not bad enough, millions of them are being denied the right to go out of their house to look for work. Millions of perfectly healthy people, perfectly able people, perfectly capable people are now without jobs, without the means to support themselves and their dependants, and without the ability to go out and find new work (if there is any). By the way some have talked, it’s almost as if they think we’re all on an extended holiday, which will soon be over, and everything will then revert back to normal. To such, I would suggest digging up some Depression-era accounts of what life is like when such vast numbers of people lose their jobs at one time.

I wonder when the truth of this will actually dawn on some people. I wonder when the truth of the situation will actually hit home that the debate over the measures placed on an populations by their Governments was not, is not, and never will be one over people vs money, or lives vs stuff. It is, it was, and it will always be people vs people; lives vs lives, because economies are made up of people and if you cause them to crash and burn, you cannot fail to cause huge and lasting damage to people and their lives. All of which means that if you are going to take decisions which will inevitably lead to a TRULY UNPRECEDENTED increase in:
  • Unemployment
  • Failed businesses
  • Increasing mental health issues
  • Suicides
  • Domestic violence
  • Mass poverty
  • Not to mention a burgeoning police state

…you’d better be jolly sure that it is the ONLY reasonable course of action to take, and that it is ABSOLUTELY necessary to tackle the threat.

But is it? Judge for yourselves.


As I write this, the official number of current Covid-19 cases is 1,012,486. The official number of deaths is 52,932. On the surface, it would seem that the mortality rate is around 5.23%. However, there are two reasons why this figure is certainly over-inflated by a large factor:

Firstly, the actual number of Covid-19 cases will be vastly greater than the official number of confirmed cases, because by their very nature these figures only include those who have been tested. Add to this the fact that the majority of people who contract Covid-19 display only low to mild symptoms, and it is not difficult to see how the actual numbers of infected will be significantly higher than that reported in the official figures, meaning the actual mortality rate is far lower as a percentage than that being reported.

Secondly, the data on deaths from Covid-19 is extremely unreliable, as people are being recorded as having died from it, even if it was not the primary cause of death. This has been seen very starkly in the case of Italy, where the scientific advisor to the Minister of Health, Walter Ricciardi stated very plainly that only 12% of patients recorded as dying from Covid-19 actually dies from the illness.

“The way in which we code deaths in our country is very generous in the sense that all the people who die in hospitals with the coronavirus are deemed to be dying of the coronavirus […] On re-evaluation by the National Institute of Health, only 12 per cent of death certificates have shown a direct causality from coronavirus, while 88 per cent of patients who have died have at least one pre-morbidity – many had two or three.”

These two points are hugely important. If the unknown infection rate is far greater than the known infection rate — which it is — and if deaths are being erroneously recorded as deaths where Covid-19 was the primary cause — which they are — then that 5.23% mortality rate suddenly looks way, way over the top and is likely to in fact be around 1%. Certainly, Imperial College with their Ever-Changing Pandemic Modelling Machine, now estimate deaths of around 5,700 people in Britain — less than an average flu season (which is around 17,000 in England). Of course, they will credit the relatively low level of deaths on their advice to the Government to shut the country down, but sorry, it won’t do. Firstly, they revised their figures to this amount after just a couple of days of the lockdown, when they could have had no proper, scientific way of knowing what effect it would have. And secondly, neither Japan nor South Korea took such colossal, life-changing actions, yet both somehow managed to control the outbreak without destroying millions of jobs and without locking millions up under indefinite house arrest.

Would you crash your economy — made up of people — for that? Would you put millions — of people — out of work for that? Would you lock millions — of people — up under house arrest for that? Remember, they’re real people you’re putting out of work and real people who are being cooped up like dogs for months on end. Some will be forced into poverty. Some will lose their sanity. Some will commit suicide. Some will become violent in their own homes as they lash out in impotent rage at what they perceive as their humiliation. Some will become impoverished. Some will die alone. Some will lose the will to live.

And do you know something else, here’s a question for all those who say it is necessary to Save the NHS (a curious expression, since I had thought that the NHS was there to save people, not the people to save the NHS): When thousands upon thousands of businesses have collapsed; when all those millions are out of work — who, but who exactly is going to pay for the NHS? The Government? The Government can only raise money by taxation, borrowing or printing money. The first solution won’t work, as there won’t be enough taxpayers. The last may be used, but if it is will almost certainly lead to a massive rise in the inflation. Which leaves the second — saddling us, our children and our children’s children with enormous and unpayable debts for decades to come.

It all reminds me of a line from the Steve Martin film, The Man With Two Brains, where the renowned brain surgeon, Dr. Michael Hfuhruhurr is castigating his fellow brain surgeon Dr. Alfred Necessiter for his experiments on live people which are so prone to error that they lead to 12 deaths for every one success.

“The only time we doctors should accept death,” says Dr. Hfuhruhurr, “is when it’s caused by our own incompetence”.

“Nonsense,” says Dr. Necessiter. “If the murder of twelve innocent people can help save one human life, it will have been worth it.”

I have been shocked at the way that so many of those who have wholeheartedly supported the measures being put in place have pitched this as a people vs prosperity debate. It is not. I have been shocked by the way that so many have then suggested that those questioning the proportionality of the measures are somehow heartless and care more for money than for people. This is absolutely untrue. I know people who have lost their lives from Covid-19. It is heart-breaking for their families, all the more so because the restrictions mean that they will not get the opportunity to give them a dignified funeral, which is a vital part of the grieving process. I have prayed much and will continue to pray much for these families that:

“The peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus” (Philippians 4:7).

The question, however, is not whether such deaths are tragedies. Of course, they are. It is not even whether something should or shouldn’t be done. Of course it should. The question is purely one of proportionality, and is this:

People will die and people will suffer from Covid-19. But is the response, which will likely destroy millions of jobs held by people; ruin thousands upon thousands of businesses run by people; cause a huge deterioration in the mental health of multitudes of people; precipitate a big rise in the number of suicides of people; plunge into poverty and despair millions of people — is this response proportionate to a virus which is likely to end up killing several thousand or several tens of thousands (as die every year from influenza)?

I submit that the answer to this is very clearly no. But I think it’s time for those who dismiss this as a people vs money issue to stop pretending that it is. It is very clearly a people vs people issue, and are you quite sure these methods are really likely to save more lives than they destroy?

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