by Henry Buzar September 5, 2021 Checkpoint (Photo from PNA) In an interview of Mr. Sergio R. Ortiz-Luis Jr, Director for Corporate Social R...
September 5, 2021
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| Checkpoint (Photo from PNA) |
In an interview of Mr. Sergio R. Ortiz-Luis Jr, Director for Corporate Social Responsibility and Treasurer of PCCI and ECOP President with ANC, he echoed his opposition and of his group of businessmen to lockdowns as counter productive to the growth of the economy. This was also the concern of DTI Trade Secretary Ramon Lopez and reiterated by Socio-Economic Planning Secretary Karl Kendrick Chua who projected that the economy could lose P105B each week during the current two-week ECQ in MM.
Taking all sides of the coin, I can see the sentiment of the business sector and its rationale. Mr. Ortiz-Luis Jr is looking into the bigger picture of the health issue the pandemic brings. He postulated that if the business sector is losing 105B pesos per week, a portion of the losses could have been devoted to those who have severe cases (1.5%) and to the 0.9 percent critical if the economy continues to open up thus losing just a few billion pesos compared to the 105 billion peso lockdown loses.
Mr. Ortiz-Luis also argued that the country’s IATF and DOH should focus more on contact tracing and isolating infected people in hospitals rather than in quarantine buildings lacking facilities. He also opposed home quarantine because it contributes to family members getting infected. He emphasized that super-spreader events must be controlled but not offices whose employees were protected by strict health protocols by their employers. With lockdowns small businesses were forced to close their operation while super-spreader events were allowed by the government such as disorganized Bayanihan amelioration fund distribution to ECQ declared areas, cramped vaccination sites and others.
Newscasters countered that those are same sentiments ventilated by people who opposed lockdowns but were not taken seriously all throughout the World because of the graver effect of deaths to humanity as compared to business profitability.
A lockdown is designed to save lives emphasizing an argument that “every human life is priceless.” The DOH don’t want to overwhelm local hospitals and experience what other Asian countries suffered such as people dying in streets, hospitals deciding who shall leave or die, shortage and hoarding of oxygen tanks, mass burial and cremation prices, etc. Opening up also burdens health workers and frontliners whose lines were decimated by the virus.
So, what is the cost and benefit of lockdown? The Economist magazine offered an eye view of cost and benefit analysis. It argued that the costs include global unemployment, students missing school, and an estimate by America’s National Bureau of Economic Research that in poor countries with young populations, the economic contraction could lead to 1.76 children’s lives being lost for every Covid-19 fatality averted.
How about the benefit of a lockdown? Economists offered an explanation. They presented VSL (Value of Statistical Life). VSL measures what an individual is willing to pay to reduce a certain risk level or accept a risk level by not paying for the risk reduction. Example of VSL is the extra compensation that people accept in order to take certain risks. This is akin to the “game theory” wherein both players maximize their gain if given a chance. An example is when Hospitals would take Covid-19 patients if they feel monetary gain exceeds that of risk for their staff getting infected. VSL however is exposed to a lot of assumptions and have been subjected to sensitivity analysis.
So far, the cost to the government of a lockdown is huge. Providing people under ECQ amelioration is a costly undertaking. While most economists would favor amelioration or cash incentive assistance for people affected by lockdown since these are fiscal incentives and good for the economy during a financial crisis (expanding the money supply thru fiscal incentive) by way of extra cash to be used for consumption purposes ultimately creating additional demand for goods and services and livening up businesses the end result though is increased national debt.
In short, lockdown is counter productive to GDP growth due to business losing production and ultimately profit which is the life blood of all businesses. Many firms closed shop due to this. Many people were terminated and contributed heavily to unemployment. Without wages to provide for their family, some people resort to criminal acts and illicit activities contributory to the furtherance of social ills. Aside from material disadvantage, mental issues also arise. If one would really compute for all the costs of the lockdown to the society in general, we can therefore deduce that a handful of severe infections - could drag the economy by billions of income foregone.
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