Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday 11 August 2020

The political economy and psychology of COVID rebounds

You can call it a second wave, or a resurgence of the first wave. But whatever you call it we are seeing in some European countries a steady (and occasionally rapid) increase in new cases after a longer period when new case numbers have been coming down or been stable.

A good reason to not call this a second wave is that the first wave never went away. Changing social behaviour, aided by government support and a lockdown, reduced new case numbers rapidly. However governments relaxed the lockdown before new cases fell to almost zero, and so domestic transmission continued at a low level. But why have the number of new cases started increasing in the last few weeks in many countries, after a period of apparent stability?

The simplest answer to this question is why shouldn’t they. The natural development of the virus is to create an explosive increase in cases. The first wave didn’t come near to creating herd immunity, so if people started to behave as they did before the virus emerged a second explosion is the inevitable result. What governments and those advising them must have hoped is that

  1. social behaviour had been sufficiently scarred by the pandemic that people didn’t relapse into pre-virus behaviour, and instead that they continued to social distance, wash their hands etc

  2. changing social behavior was sufficient on its own to keep R at or below one, even though the economy returned to normal, and most social restrictions had lapsed.

  3. the country’s track, test and isolate (TTI) technology was good enough to deal with any local outbreaks.

Even if (b) and (c) are correct (and there is no certainty they will be), there is the danger that (a) is a function of the length of time since the initial pandemic. This will be true particularly for an age group where the virus is much less of a personal threat. It is therefore quite possible that the economy remains depressed because a large group of people worry about resuming their previous levels of social consumption, and at the same time another group of people are happy to forget about the pandemic altogether.

Another factor that may account for the recent pick up in new cases is the increased social mixing that generally comes from taking holidays. Someone who has an asymptomatic case of COVID-19 could possibly infect not just their usual social circle, but also all the people they meet on holiday. Such cases, because they transcend local areas, may be more difficult for TTI to deal with.

Why were governments so keen to end the lockdown? The political economy here is pretty obvious. Governments are under pressure from business, together with individuals.who fall through or are substantially disadvantaged by the government’s support apparatus. Because social consumption is such a large part of the economy, this pressure from social consumption sectors can be intense. For the holiday industry, almost a whole year’s business may be lost over a few summer months.

In addition governments start worrying about the cost of the support they are giving. Just the hint that the current level of support may be reduced is also enough to get individuals and businesses putting pressure on governments to relax the lockdown as soon as possible. National Treasuries may add to that pressure. Finally there is the ideology of neoliberalism, which can elevate the economy to become an entity that is more important than the people within it. That influence is very clear in the UK. (Whether the UK is on the point of joining other countries suffering a COVID rebound is difficult to tell, but in some parts it probably is.)

At some point the rise in cases in some countries may force them to reimpose elements of lockdown, particularly when schools reopen. There is a danger of a cycle of periodic lockdowns as cases rise and then fall, at least until a vaccine is available. One possible alternative is to make elimination of COVID-19, rather than just its suppression, the goal of each national government. Few governments have made elimination of COVID-19 their goal, with three exceptions being New Zealand, Scotland and Northern Ireland.

Why might elimination be a better strategy? Individual psychology is shaped by social (in this case government) goals. Most governments have focused on changes (the first derivative), then people and so typically the media has done the same. If cases are rising you throw everything you have at the problem, if cases are falling you can steadily relax any lockdown, but if cases are steady (and governments tolerate that) COVID drops down the news lineup. So (a) above is more likely to fail if governments focus on changes rather than elimination.

If instead the focus becomes eliminating any new cases then initial lockdown might be a little longer, but you could achieve some positive results. First, those that are naturally cautious know that it is safe to resume social consumption, and so the economy recovers more completely, although with bigger short term costs. Second, you would save more lives. Third, and this is much more speculative, if new cases start to emerge that becomes headline news and it receives the full attention of government and TTI resources (see very recent developments in New Zealand). However New Zealand’s success with this strategy owes a lot to enforced quarantine for anyone travelling from overseas, which would be more difficult for most other countries.

I do not know whether an elimination strategy would be more successful at avoiding the kinds or rebounds in cases we are seeing in many European countries, but what is very surprising is that there seems to be little public debate on this question outside Australia. There should be a lot more debate in the UK beyond the pages of the Lancet, given the different strategies pursued by the different nations within it. With previous administrations we would expect some kind of strategy document from the UK government on something so important.

Still knee deep in boxes, so next post will be in a few weeks time.

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