This is the ninth in a series of essays exploring the economic, social and cultural effects upon the daily lives of persons living in the United States, western Europe and more broadly around the world, as we emerge from the global Covid-19 lockdown pandemic.
By Matthew Parish
One of the principal insights of economics is that faced with uncertainty, those who best assess the quantum of risk, harm and advantage are the individuals incurring those risks, harms and advantages. The further a decision-maker about any such matter becomes from the person suffering the loss or the benefit, the less accurate or reliable the decision-maker will become. That is because, mutatis mutandis, individuals have a higher incentive to take care of themselves than does anybody else. This insight is sometimes crassly articulated in expressions such as that the economic actor is perfectly rational and perfectly selfish.
The problem with such an articulation is that no person is either perfectly rational or perfectly selfish and hence such an axiom seems to found economics upon feet of clay. Nevertheless the economist’s retort is that such a simplifying assumption, even if obviously false, gives us an insight into the rationale for economists advocating government policies that press down risk-reward decisions towards individuals rather than up towards governments.
This economic impulse might invite us to look quizzically at government-mandated lockdown schemes put in place in response to a pandemic virus. Why should the decision about how to protect people be taken at the level of national government, a long way from the domain of the individual that classical economics suggests such decisions should be taken? Why don’t we let people decide for themselves how to read to the risk? It is now undisputed that the risk posed by Coronavirus as a health hazard is very much dependent upon a person’s age, underlying health condition and lifestyle. People whose life habits involve mixing in large groups in close proximity indoors (such as dancers, gym goers, and users of confined public transport) have higher risks of contracting Covid. The older and those with immune system deficiencies and certain other illnesses – such as those of the lung – have higher mortality rates in the event that they do contract Covid. Because each individual is different, why try to have government prescribe the same policy for everybody?
Contagious as Covid may be, particularly where groups of people are in close proximity (this is undisputed), its mean mortality rate is not particularly high at approximately 2.7% worldwide. This figure varies from country to country and, more fundamentally, from one age group of infected person to the other. Figures in England recently published suggest that Covid mortality rates may vary from as high as 12.9% in persons over 75, to minuscule in persons under 35. Therefore it is rational for younger persons to be (far) less concerned by Covid as a dangerous disease than it is for older persons. The classical economist’s argument is that the most rational response to the Covid pandemic will likely therefore vary depending upon age group; accordingly a national lockdown strategy that imposes the same restrictions upon everyone irrespective of age is inappropriate.
“But national Covid policies are complex enough as it is; further cutting of the cake by having different policies for different age groups would become unmanageable.” This argument misses the economist’s point, which is that governments should not be in the business of legislating at all as to how people ought to behave in response to a risk, whether for the young, the old or for anyone in between. Each individual can and should undertake the risk assessment as it applies to them, for themselves. The data and information is available; the principal task for government is to persuade people to study it.
Moreover individuals are in far better a position than government to work out how to weigh the losses incurred by them by complying with a Covid restriction than governments are. This is because governments’ assessments are inevitably so broad brush. Governments do not actually trying to measure the harm caused by the Covid restrictions they are imposing in any systematic way, simply because it is impossible to do so. But that is is precisely what they must be bound to do if they are to legislate for an entire population.
Injecting an ingredient of uncertainty into the equation – for example by asserting that we don’t know how much economic damage is caused by a particular measure of social restraint – is an argument for further pushing decision-making down to the individual. That is because the individual is far more qualified to estimate the amount of loss he or she may be suffering from complying with a given Covid related restriction, than the government is to estimate the amount of loss a whole society of people may be suffering from as a result of the same thing. Guesses are easier at the local and individual level. Individuals are better at guessing about the likely result to themselves than Presidents or Prime Ministers are at guessing about the likely result for 5 million, 50 million or 300 million people..
“But the person who contracted Covid may expose others to risk of contagion.” Of course that is right; it is precisely what renders the Coronavirus so confounding a foe. Indeed Covid’s particular curse (but by no means unique; Ebola and HIV both have this quality) is that a person may infect another several days before he or she shows any symptoms him or herself. Therefore, so the argument goes, the government must instruct us all what to do, lest we take unnecessary risks with the health of others. Even granted the right to take risks with our own health, we do not have the right to risk the welfare of others.
This argument is bogus, save insofar as it is confined to intentional attempts to spread the disease, which like other intentional acts of harm against another person should as a rule be criminalised because nobody has the right intentionally to harm another person going about their lawful business. The reason the argument does not work is that government is incapable of assessing the magnitude of the risk it is seeking to legislate away. The quantum of risk involved depends inter alia upon the kinds and numbers of people a potentially infected person might spend time with. A person with solitary habits manifests a far lower risk than a person working in a particularly sociable elderly people’s home.
The people with the best capacity to assess the gravity of risk of being infected in circumstances that will have potentially grave effects upon one’s health (remember: for the greater majority of the infected the symptoms are mild or non-existent) is the person whose health is ostensibly at risk. Therefore the decision as to what measures of social separation with other people are worth taking having regard to the size of the risk, the potential consequences of infection and the costs of enduring social separation are best taken not by the government, that cannot possibly collate data across the situations of all putative victims / persons who may become infected; but rather by those putative victims themselves, in whose name the government purports to enforce across-the-board measures of protection.
In other words, an elderly person worried about the disease would be well-advised to shield themselves from others who might in their assessment pose a risk to them. A person in another high-risk category (for example persons with poor immune systems) may likewise choose to self-shield. In each case it’s up to them, depending on how they assess the risk. This is what economists understand by the concept of liberty: the right to make decisions affecting one’s welfare for oneself. It is a better system than command economies, as the history of the second half of the twentieth century demonstrated.
“That’s like saying a person scared of being hit by a drink-driver shouldn’t go out on a Friday evening.” No it’s not, because in the drink-driving scenario the party best capable of minimising the risk of harm potentially caused to others is the drink-driver him- or herself, not the putative victim who doesn’t know which of the drivers on the road have been drinking and which have not been. Therefore the law places the risk of injury (and correlative penal and compensatory consequences) on the drink-driver rather than upon any of his potential victims. What the law does not do is prescribe that given that drink-driving is a possibility, the government should minimise the risk of drink-driving causing accidents by prescribing that on Friday evenings all cars should drive 10 vehicles apart.
That would be preposterous, when shifting risk onto the persons most capable to avoid or mitigate that risk is a far more effective method of mitigating risk than would be prescribing uniform rules, ancillary to the principal problem of interactions between individuals causing danger, that purport to address the danger but in respect of which no cost-benefit analysis has been undertaken. It is literally inconceivable to undertake a cost-benefit analysis in respect of an anti-Covid social distancing measure across an entire society, even knowing as much as we do now; because it is already extremely difficult for an individual to do this just for themselves. It is exponentially more difficult, and therefore preposterous, to suffer government legislating for millions or tens of millions or more, in the absence of any data enabling them to do this.
Risk is part of life. Everyone takes risks every day, whenever they get out of bed and for that matter even if they do not (they might suffer from bed sores). The way society manages risk is not for the government to participate in incalculable risk-cost-benefit analyses accumulating unknown data sets amongst unknowably large groups of people, and thereby compute, like an infinitely complex sausage machine, some artificial prescription (only take lie-ins on Saturday mornings to avoid the risks of bed sores). Instead the proper approach is to assess which party is best able to estimate any specific risk and for the law to shift the risk onto that person. With the spread of a contagious disease, it is the victims who are best placed to assess the risk-cost-benefit calculus involved in taking onerous measures to avoid it. As a corollary, it is an essential principle of liberty that the victims are entitled to make those assessments autonomously – in other words, as they see fit (or not).
This system assumes knowledge. The victims, who the economist will advise to take such measures as they think fit to minimise their risk of infection, must be aware of the best relevant data about just how contagious and dangerous once contracted Covid is. To the extent that this information may not be available to them, they may have to guess the details for the health side of the cost-benefit equation. At the current time, the government does not have any apparent data for the economic and psychological side of the cost-benefit equation.
Hence for these sorts of risk-weighting exercises (health versus economics) to be of high quality, the data must be known and available. Whereas at the beginning of the Coronavirus crisis in March 2020 no data was available on either side of the equation, and therefore government in imposing coercive lockdown measures was entertaining pure guesswork on both sides of that equation; now we do have a lot of information about contagion and mortality of Covid, and therefore individual people are far better placed to make their own decisions.
Economics prescribes government intervention in daily market behaviour, such as individuals deciding whether to take measures to reduce the risk of infectious diseases, where there is an information problem. Information problems arise for example where data relevant to an individual market participant’s assessment of risk is or could be available, but for some reason just isn’t. Therefore government prescription may legitimate exist to force that information into the open; cigarette companies must inform their customers how dangerous their products are, typically with warnings on the labels.
The most obvious piece of information that potential victims of Covid, as market participants in a contagious disease pandemic, would benefit from, is information about whether other people they habitually spend time with are infected. Providing this information would increase the quality of their decision-making in assessing whether to undertake social distancing measures to reduce the risk of their being infected,
Following this logic, the most propitious form of government intervention in the Covid crisis would be to require people to take frequent Covid tests. Governments have not actually been doing this. They have been spending huge amounts of money in other ways for scant obvious benefit. For example, they have taken to distorting parts of the economy through bizarre subsidy schemes such as eating in restaurants from Mondays to Wednesdays – the British government’s attempt at a Keynesian subsidy programme during August 2020, which surely led to an increase in Covid cases because it encouraged people to socialise in indoor environments more than they would ordinarily want to.
A better Keynesian subsidy programme would be to develop mass virus testing centres, and compelling citizens to attend for tests no less than (say) once a week or so. This would serve as a stimulus programme because it would cost a lot of money. It would also be useful. With such a programme, individuals would have far more information that they need, to take the decisions they should properly be taking rather than government taking those decisions for them, to secure their health and that of people around them. The restrictions upon their individual liberties would be far less than they are now.
“But we have to protect the national healthcare system against being overloaded.” This argument is fallacious, because it assumes that government has a stronger interest or a greater skill in preventing such an event than do individuals acting with collective effects upon the system as a whole, those individuals being properly appraised of the issues – in other words, having the relevant information available to them. This sort of bogus argument could be used to ban cigarette smoking altogether, on the grounds that the hospitals cannot cope with all the lung cancer cases. The reason why smoking is not banned is, for the economist, because properly appraised of the dangers, individuals themselves avoid risky behaviour patterns involving tobacco smoking to a sufficient extent. In turn, government health services adapt to consumer need (as they ought to) rather than consumers being instructed to adapt to government availability of service, which is how the Soviet Union worked.
This “don’t overload the system” style of logic is a perennial danger of a government monopoly, but it is facetious. If for whatever reason governments are going to provide services in lieu of private people or companies, then they need to meet consumer demand, not dictate it. In the context of Covid, governments haven’t even managed to respond correctly to consumer demand for medical services. That’s because governments aren’t experts in operating in markets; they are not efficient at predictions based on data, because politics gets in the way and causes governments to act politically rather than on the basis of what is in society’s best interests. In a number of western European countries, governments have built excess hospitals to meet Covid cases for which there has not been a demand for medical services and that now lie largely empty. As we know more about Covid, we know that since it is rarely deadly or even dangerous, consumers do not in fact want hospital treatment in the greater majority of cases.
“We are afraid; we don’t trust ourselves to get it right; we need a strong leader.” History teaches us persistently that where societies lose their liberties, it is seldom if ever because their leaders take people’s liberties away from them against their will. Rather it is because people voluntarily give up their liberties in the face of some perceived threat because they wish to be told what to do. But economics teaches us that it is not in our interests either as individuals or as a society for individuals to give up our freedoms to take difficult choices and hand them over to government to make instead. The life of a human economic actor, as opposed to a mere animal, involves the right and responsibility to take decisions about risk, cost and benefit.
Difficult choices often arise, because the world is a risky place and we cannot much predict the future. Therefore we as individuals will make better decisions than our hapless politicians, scrambling around amidst infinities of matrices comprising impossible data trying to set the same rules for everyone, when in fact the most efficient outcome is one in which people take decisions for themselves or amidst their own social units: and the lower down the decisions are made, the better. The individual makes a better decision than the family head. The family head makes a better decision than the head of the local church or community. The community head makes a better decision than the regional Mayor. The regional Mayor makes a better decision than the Prime Minister. The Prime Minister makes a better decision than the Secretary General of the United Nations.
It seems we are learning this, but very slowly. We maintain the propensity to blame our national politicians for setting complex and illogical rules, when with the benefit of hindsight it was surely always inevitable that these confusion contusions upon our freedoms are precisely what they would always have done once we had decided to accord them the task. Some countries are now pushing down decisions about lockdown and other measures against Coronavirus to local governments. That is an improvement; but the decisions actually need to be pushed still further down, all the way to the domain of the individual.
We are each of us different in a multitude of ways relevant to assessing the risk of this virus, about which quite enough is now known for us to take our own intelligent decisions, just as is the case with smoking tobacco. We need to re-discover a culture of personal responsibility, if we are to manage the Covid pandemic consistently with not acquiescing in our governments taking coercive measures that will so damage our economies as to leave ruins for future generations.
The government might guide us in our individual decisions; but we might be sceptical of much of its advice, preferring that our leaders instead persist in providing us with information rather than advice and instructions. In this way we may build ever greater capacities to decide rationally for ourselves what levels of self-restraint are most appropriate to guard against the virus while it passes over our lands amidst these coming years, until a vaccine is found or it just dies out. We need to make these individual decisions ourselves, without scalping the remains of our economic lives and indeed and those of our personal and social lives given everything government has done to damage our economy and private lives so far,
We can barely imagine all the unintended consequences of what governments are now dictating to us. As things stand we are looking at population dips, as government regulations intended to keep strangers apart, taken as a whole, must inevitably reduce the quantity of procreation that people of fertile age are having with one-another. Is this really a price we want to pay in our imagined combat against Coronavirus? Surely it is a decision for each of us individually to make, in light of our own values and bodies, how much to procreate. That applies even where there is a danger in the act of procreation. Even HIV, in its day a virus far more deadly than Coronavirus to certain groups of people, did not cause the government to impose social distancing as a way of stopping people from having sex. Instead the approach properly adopted was education, information and leaving the final choice with the individual.
Should we really see this as a fight at all against a virus? Do any of us really believe, knowing what we do now, that we can through acquiescence in substantially blind government dictate battle this virus into the ground and somehow defeat it through collective self-deprivation? If we do not subscribe to this military model of common suffering in the interests of defeating a phantasmagoric enemy, then we might better use the language of self-management, individually weighing up Covid risks against all the other risks that exist in the world and that we manage perfectly adequately on a daily basis without so distorting our lives and ruining our earlier generations’ economic achievements.
We all in our hearts know the truth of what this article tells us: that the only way of managing the Covid pandemic without destroying ourselves in the process is to undertake individual responsibility rather than ask governments to prescribe coercive lockdown rules. But in the words of John Maynard Keynes, upon whose ideas governments are now so keen to rely in their fiscal stimulus packages, the difficulty lies, not in the new ideas, but in escaping the old ones, which ramify … into every corner of our minds. It is for this reason that it will be such hard work to overcome the Coronavirus.
Matthew Parish is an international lawyer and scholar of international relations based in Geneva, Switzerland. He is an Honorary Professor at the University of Leicester; was elected as a Young Global Leader of the World Economic Forum; and has been named as one of the three hundred most influential people in Switzerland. An expert in UN reform, he is the author of several books and over three hundred articles. www.matthew-parish.com
The views expressed in this article do not necessarily reflect those of TransConflict.