CNN yesterday:
UK economic output shrank by 20.4% in the second quarter of 2020, the worst quarterly slump on record, pushing the country into the deepest recession of any major global economy.
Writing in The Daily Telegraph, Allister Heath weighs in:
So now we know: Sweden got it largely right, and the British establishment catastrophically wrong. Anders Tegnell, Stockholm’s epidemiologist-king, has pulled off a remarkable triple whammy: far fewer deaths per capita than Britain, a maintenance of basic freedoms and opportunities, including schooling, and, most strikingly, a recession less than half as severe as our own.
To be fair, it is worth adding that Sweden’s performance (when it comes to deaths per capita) does not appear so impressive when it’s compared with its Nordic neighbors, where the response to COVID-19 was more coercive, but those comparisons are half-complete. We will not be able to come to anything like a final judgment until we see how much of a ‘second wave’ there is in Sweden when compared with elsewhere (on that topic, it’s worth keeping an eye on Denmark).
Nevertheless, Heath’s broader points hold good, and are not exactly irrelevant when it comes to examining how different U.S. states (or, Mayor de Blasio, cities) have handled the pandemic:
[I]f a drop in GDP is unavoidable, governments can influence its size and scale. Politicians can react in one of three ways to a pandemic. They can do nothing, and allow the disease to rip until herd immunity is reached. Quite rightly, no government has pursued this policy, out of fear of mass deaths and total social and economic collapse.
The second approach involves imposing proportionate restrictions to facilitate social distancing, banning certain sorts of gatherings while encouraging and informing the public. The Swedes pursued a version of this centrist strategy: there was a fair bit of compulsion, but also a focus on retaining normal life and keeping schools open. The virus was taken very seriously, but there was no formal lockdown. Tegnell is one of the few genuine heroes of this crisis: he identified the correct trade-offs.
The third option is the full-on statist approach, which imposes a legally binding lockdown and shuts down society. Such a blunderbuss approach may be right under certain circumstances – if a vaccine is imminent – or for some viruses – for example, if we are ever hit with one that targets children and comes with a much higher fatality rate – but the latest economic and mortality statistics suggest this wasn’t so for Covid-19.
… My guess is that only half of [the] first-half collapse in Britain’s GDP would have happened under a variant of the Swedish model. This means that the other half – some £250 billion – was an unnecessary cost caused directly by the lockdown itself. The decision to shut everything down, rather than to impose and promulgate extensive social distancing, hygiene measures, ubiquitous PPE and testing, means that we have wasted a quarter of a trillion pounds worth of GDP, as well as needlessly ruined the education of millions of children and cancelled the health care of hundreds of thousands of adults. I suspect that this immense, unbearable additional cost saved very few additional lives, and that almost all of the gains came from social distancing, not the lockdown….
This is a catastrophically high price tag for the British state’s systemic incompetence, the uselessness of Public Health England, the deep, structural failings of the NHS, the influence of modelers rather than proper scientists, the complacency, the delusion, the refusal to acknowledge that the quality of the British state and bureaucracy are abysmally poor.
Even more depressingly, a Swedish approach was always unrealistic in Britain. Panic and hysteria were the only possible outcome when the failure of the system became apparent. I’m not seeking to absolve Boris Johnson of blame, but he would have found himself in an impossible situation had he sought to ignore the official advice, and he inherited few, if any, working levers to pull.
So what now? How should Rishi Sunak, the Chancellor [the finance minister], reboot the economy? Sweden, once again, is a role model. After decades of socialist decline from the early Seventies, the Swedes slashed the size of their state (though it remains too big), liberalised their economy, reformed their schools along market principles and scrapped their counter-productive wealth tax.
They learnt that the state cannot drive prosperity: only the private sector can do that. The Tories used to understand this: Sunak needs to take inspiration from Tegnell, and push for a Swedish, liberal approach to saving our economy, trusting individual initiative, not resorting to a top down, Whitehall-knows-best attitude. HS2 [a wildly expensive, embarrassingly unnecessary train project] and green projects are not the answer. The Conservatives will only survive their handling of Covid if they don’t also botch the recovery.
Unfortunately, this is Britain’s Conservatives we are talking about, so a botched recovery is almost a certainty.
