Which Way Out? Health Care, Economics, and the Endgame

Australia has deferred, temporarily at least, what looked to have been our worst health crisis in a century. Unlike Italy, France, the United Kingdom and the United States, our intensive care units are not yet overflowing. People are not yet dying in the corridors. Healthcare workers aren’t yet breaking down. The key words however are not yet. We know that things can spiral quickly out of control and places like Singapore, who were able to deal well with COVID-19, are now facing a second wave of infection.

This calm before any possible storm has allowed discussion of the “endgame” to start. Should Australia attempt to eliminate the virus, as New Zealand is attempting? Or should we just continue to “flatten the curve”, ensuring that the health system does not become overloaded? Or in a third less-popular possibility, should we just let the virus spread unchecked, to potentially develop herd immunity?

These last two paths (flatten the curve/let it spread) overlap. For example, Sam Lovick of the Australian Financial Review suggests now that have some control over the virus, the next stage must be to let it spread. Lovick wrote on 15 April, that “the best policy involves a managed increase in spread so that some degree of herd immunity develops, seeking to protect those most at risk while it does.” Herd immunity – with or without “flattening the curve” – is increasingly being pushed by members of the corporate world, and we can expect them to become an increasingly loud chorus. Internationally, particularly in the US, there is also an increased push to “get back to work,” as seen with recent demonstrations in over a dozen states.

Assuming that most reasonable people would be opposed to simply letting the virus spread without constraint, we are faced with the two other approaches – eliminating the virus or flattening the curve – each of which require different measures to be introduced. Eliminating the virus would require strict physical distancing (going “hard”) for a brief period of time. In the opinion of some, this would take around 4-10 weeks of social distancing with around 80-90% compliance (see Norman Swann’s discussion at the ABC Health Report). This approach seems to be the consensus of most health experts. Flattening the curve requires some of the same measures that are in place now, with some lifting of social distancing measures (opening schools, for example, or allowing a return to work of some non-essential jobs). The paths will also lead to significantly different outcomes. Eliminating the virus is a more difficult and uncertain goal but the side-effect is that the curve will be flattened anyway. Whereas attempting to “flattening the curve” essentially rules out eliminating the virus before there is a vaccine or herd immunity. It’s a road with no way back.

Each approach prioritises different things. “Eliminating the virus” puts health first, including the argument that there should be no avoidable deaths. “Flattening the curve” wants to balance the economy against health (and assumes that eliminating the virus is unachievable, or at least without too much economic pain).

The argument to “flatten the curve” through a controlled spread – the Federal Government’s approach in the early weeks of the crisis (following that in the UK and the US) – is pretty simple: the economy has to be rebooted. In the words of former foreign minister Alexander Downer, “We either save avoidable deaths & destroy society OR accept avoidable deaths & save society. The moral dilemma of our time”. A variation on this theme is the generational idea that we’ve mortgaged our children to save our parents.

There is no doubt that this economic crisis is unprecedented. The bailout packages from government haven’t been able to solve the problems and banks have begun to extend credit directly to corporations. No one know exactly where all this will end up, though unemployment of up to 10% in Australia is predicted in by some.

Still, as VAHPA has suggested before, the dichotomy of health and economy is false. In that piece, we pointed out that the economy isn’t just one thing that everyone agrees upon. We’ve seen this stark truth in the almost overnight changes to the Australian economy – at the stroke of both Federal and State government’s pens. For decades we have been told “there is no money for welfare”, that the “unemployed are responsible for their own predicament”, that “healthcare should be a profit-making exercise”, that “privatisation is the best way to run things”. Within the space of a month, COVID-19 has forced the Federal and State governments to overthrow all these truisms. Suddenly welfare payments have been doubled since the unemployed are “at the mercy of forces beyond their control.” Suddenly private clinics are being propped up by public money and private hospitals are going to take any overflow COVID-19 patients from public hospitals. Market forces are unable to solve any of the problems posed by the crisis.

If the economy can be changed in this way, then it can be changed in other ways too. What the economy actually is, is up for debate. Why can’t we both protect everyone’s health and avoid all unnecessary deaths and use this as an opportunity to reorient the economy in a way that benefits the majority? We are presented with an opportunity to have a public debate about what our priorities are.

In fact, this debate is already occurring, but few people are focussing on using the crisis to improve what was already a system with too many inequalities and stresses. We can expect the corporate world to continue arguing for a return to submitting health, education and other services to the dictates of market forces. In health, we’re familiar with these prerogatives: they’re the source of all the policies and practices that emphasise the “numbers” over patient care, that have seen staff numbers decline and unpaid overtime spiral out of control in our hospitals, that VAHPA members have to consistently struggle with in their workplaces. In many ways, the Federal Government stimulus packages follow just this market-first pattern. As with the policies back during the Global Financial Crisis (GFC) of 2008-09, the stimulus packages mostly transfer public money to private hands – including vast transfers into the hands of the wealthy. Discussions about these sorts of bailouts are going to continue for industries like the airlines industries.

In a similar vein, Professor Robert Breunig from the Australian National University’s tax and transfer policy institute, has already raised the idea of increasing the GST, a policy that will push the burden onto the poor and the young, since a flat tax disproportionately affects those with less money (though for Breunig it would have a greater impact on the wealthy since they spend more).

What are some alternative proposals that would help build a fairer and more just Australia?

One option would be for public money to go towards initiating new and better infrastructure projects and public institutions. This is the way that China responded to the GFC. Such public expenditure could include directing public money into health care, public hospitals and schools, improved rail networks, and so on. But this conflicts directly with the ideology which says that institutions/services should be in private hands. Rather than bail out failing companies, the government could step in and ensure that this public expenditure goes to the employees who make the systems run. Or in failing industries like the airline one, it could step in and take ownership of it. This is something that the Australian Greens have made their policy. Although VAHPA doesn’t align itself with any pollical party, there is certainly some sense in Greens leader Adam Bandt’s argument:

“The government should bring it [Virgin Airlines] into public ownership. Public ownership of Virgin may be the only way to save jobs and ensure Australians can remain connected as we travel in a carbon-constrained world. If we’re spending public money, we should be getting public ownership. It’s as simple as that. Private companies shouldn’t feel entitled to public money when they need help, only to turn around and abandon workers in their hour of need. Our government likes to pretend they’re good economic managers but forking over billions in public money without getting an ownership stake is a bad deal.”

Another possibility is to return to a more progressive taxation system, which would see income tax increase more steeply for those with higher incomes. Currently, Australia has close to a flat tax system: just over a decade ago it collected “26% of the income of the bottom 40% of households compared with 33% from the top 40%.” Things have not got any better since then and recent budgets have proposed even more tax breaks for the uber-rich. The main argument for a more progressive tax system is that the wealthy should put back into the society that has allowed them to do as well as they have. This would obviate the need for an increase in the GST.

These are just two ideas we need to keep alive. Whether a policy of virus elimination occurs or a policy of “flattening the curve”, these kinds of policies would help us come out of it with a healthier economy – and we wouldn’t need to sacrifice lives to achieve it.

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