Blog


The moral maze of Covid-19

Let’s take a deep breath and look at what we have spent so far on Covid-19.

This question is perfectly large enough to support a very fine PhD thesis and, actually, I will be surprised if less than 50 PhDs are not already being worked on paying attention to various aspects of it.  But and but. 

It very often pays handsomely to keep things simple – so let’s try to do that now and assess from a common sense point of view, Covid-19 and its costs to date for the UK nation.

What is the best financial measure of its cost?  Well, we could keep things really simple by looking only at the increase in government debt since the outbreak began.  Sociologically minded individuals amongst you will already be fuming at me because the accounting cost is but a tiny part of the whole story.  I agree but, here, I want to eliminate every cost that can’t easily be cash counted.

According to the Office of National Statistics, UK government borrowing has increased £174.5 billion more than at the same point last year to September 2020.

According to the think tank, The Institute for Government, public borrowing by the end of 2020/21 will be £317.4 billion above the government’s plans.  This is the figure I will take as the effective cost of Covid.

Now, to help clarify our thinking a little, let’s do a thought experiment.  Let’s assume we have a completely non-Covid hypothetical situation. In this hypothetical thought experiment, you are the UK Prime Minister and a group of trusted medical experts comes up to you and the conversation goes something like this:

Medical experts: “Prime Minister, we have wonderful news for you. We have found two ways of saving lives in the UK but, unfortunately, both are very expensive”.

PM: “That sounds great, but I am concerned you included the word, ‘expensive’ “.

Medical experts: “Well yes PM, both are expensive, and we think, because of that, the UK economy can only afford to go ahead with one or the other”.

PM: “Gentlemen, I am all ears. What are these exciting alternatives?”

Medical experts: “Sir, the first OPTION 1 is a medical breakthrough and it will extend the lives of elderly people by 2-3 years”.

PM: “That sounds very exiting indeed, what is the other option”?

Medical experts: “Well Sir, OPTION 2 is to spend the same money on researching a totally new way to produce vaccines”.

PM: “Right, I see. You have a ‘jam today’ option and a ‘jam tomorrow’ option. Have I understood you properly so far?”

Medical experts: “Exactly so PM. OPTION 1 requires that we spend £317 billion now, and we are excited to say that it will extend the life of many elderly people by 2-3 years, possibly as much as 4 years”.

PM: “Hang on chaps!  I wish you had mentioned the cost of OPTION 1 earlier. I suppose you have in mind to spend a similar stupidly large amount on OPTION 2. Anyway, what exactly is OPTION 2?”

Medical experts: “Well PM, OPTION 2 would involve spending the same amount but spread over 10 years. Here we have in mind speeding up a development which without the investment might take us 25 years to achieve, possibly 50 years”.

“PM, OPTION 2 would involve setting up a totally new world-class vaccine research facility. The thing is PM we think now is the time to start work on developing a totally new type of vaccine. One which we feel sure will work for all current and future variants of disease”.

PM: “OK. Let me try to summarise here. On the one hand we could spend £317 billion to extend the lives of the current elderly population by let’s say 4 years. And this we are calling OPTION 1.”

“And with OPTION 2, we spend £32 billion per year for possibly 10 years, and we end up with a totally new vaccine that effectively puts an end to any need for future vaccine research. We in fact have a super killer vaccine that will work on any disease current and future with only small adjustments needed to make it work on something new”.

“Am I understanding you correctly”?

Medical experts: “Exactly so PM. But there are two extra points we need to make sure you understand about OPTION 1”. “It will only extend the lives of the current elderly population – it won’t be at all useful for elderly people of the future”.

“Secondly, in total, we expect OPTION 1 will have a life extension effect on 200,000 lives, maximum 500,000 lives.

PM: “Chaps. I have heard enough. No government in its right mind can countenance spending the equivalent of £630k to £1.6 million per life extended. That is perfectly ridiculous.”

“Therefore, OPTION 1 is a complete non-starter”.

“I do rather like though the OPTION 2 idea. Please now go away and prepare a full report including a cost benefit analysis. I will allocate £6 million now to cover the cost of this work and I expect your full report in 6 months or sooner”.

Its something to think about, isn’t it?  How many lives might we otherwise have been able to save with the same money as we are set to spend on Covid-19?

With Covid-19, there is one monstrously large elephant in the room which no politician dares to openly discuss.

Link to Institute for Government report: https://www.instituteforgovernment.org.uk/sites/default/files/publications/cost-of-covid19.pdf

Posted in Economy, Health, Investments