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Gigi Foster on Q&A: Economist says Australia shouldn’t have gone into coronavirus lockdown

An economics professor has been slammed as ‘cold’ and ‘heartless’ for suggesting  Australia prioritised health over the economy by going into coronavirus lockdown.

University of New South Wales Professor Gigi Foster sparked outrage from fellow panellists and other economic professors while answering questions about the  impacts of shutdown measures on Q&A on Monday.

Professor Foster suggested Australia hadn’t properly weighed up the economic consequences of tough restrictions introduced to reduce the death toll, and argued the ‘economy is about lives’ too.

‘What frustrates me is when people talk about the economic costs of the lockdown they often don’t think in detail in terms of counting lives,’ Professor Foster said. 

Economics Professor Gigi Foster (pictured) sparked controversy when she appeared on Q & A

‘Has anyone thought about how would you get a measure of the traded lives when we lock an economy down? What are we sacrificing in terms of lives?

‘Economists have tried to do that and we try to do that in currencies like the value of a statistical life.

‘If you do that kind of calculus you realise very quickly that even with a very, very extreme epidemic, in Australia, we are still potentially better off not having an economic lockdown in the first place because of the incredible effects that you see.

‘Not just in a short-run way but in many years to come.’

Australia has successfully flattened the coronavirus curve after implementing tough restrictions

Australia has successfully flattened the coronavirus curve after implementing tough restrictions

Professor Foster claims Australia would have been better off had a lockdown not been enforced because of the economic effects. Pictured are shoppers queuing outside a Melbourne supermarket on Monday

Professor Foster claims Australia would have been better off had a lockdown not been enforced because of the economic effects. Pictured are shoppers queuing outside a Melbourne supermarket on Monday

Her views prompted a shocked response from fellow panellists on the ABC program.

‘How can you say that?’ ACTU secretary Sally McManus fired back.  

‘We’re avoiding what’s happened in the UK, what’s happening in the US, the idea of having our ICUs overrun, our healthcare workers dying as well is just the most horrible thought.’ 

‘It’s horrible either way,’ Professor Foster replied. ‘The coronavirus has made the world awful. There’s absolutely no doubt about that. 

‘In order to have a proper discussion about trade-offs, you need to think in terms of lives you’re giving up.

‘I know it’s invisible lives and difficult to imagine when we aggregate, for example, all of the health effects and the mental health effects and the effects of people right now who have illnesses other than COVID-19.’  

There were 6,623 cases as of Tuesday morning, with more than 4,200 recovered. 71 people have died

There were 6,623 cases as of Tuesday morning, with more than 4,200 recovered. 71 people have died 

Professor Foster believes human welfare costs should be considered more broadly. Pictured are people in Melbourne on Monday

Professor Foster believes human welfare costs should be considered more broadly. Pictured are people in Melbourne on Monday

Earlier in the program, Professor Foster said human welfare costs should be considered more broadly.

‘I reject the idea it’s lives versus the economy. It’s lives versus lives. The economy is about lives,’ Professor Foster said.

‘It’s about protection of lives and human welfare and livelihood.’

Simon Longstaff, executive director of The Ethics Centre disagreed with Professor Foster’s argument. 

‘There’s so many things we can do to address the economic consequences on people’s lives. It’s not just the economy. Incidents of mental health. There’s many things which are human fact beyond those,’ he said.

Professor Foster later proposed Australia could implement a herd immunity strategy until a coronavirus vaccine was found.

She copped a roasting on social media for her ‘heartless’ and views, while others described her as ‘harmful’ and ‘arrogant’. 

‘She lacks capacity to appreciate that a mass outbreak would lead to same shutdown within a short time frame. A broad and orderly controlled shutdown is preferable to chaos of humans and companies dropping like flies,’ one viewer tweeted.

Professor Gigi Foster sparked outrage from fellow panellists, economists and viewers

Professor Gigi Foster sparked outrage from fellow panellists, economists and viewers

Another added: ‘Has Gigi considered the economic cost of post traumatic stress on a population like Italy? Is there a model for the way the economy and people behave after that?’ 

‘What a disgraceful and cold thought process this woman has,’ a third said. 

‘Has no respect for humanity, is all about the economy and the money.’  

Professor Foster was also criticised by some in her own profession.

‘Hundreds of us warned today against the views like Gigi Foster’s,’ University of Melbourne economics Professor Chris Edmond tweeted.

‘I’m an economics professor, and Gigi does not speak for me,’ Steven Hamilton, a U.S-based professor tweeted.    

But not everyone was critical.

‘Gigi Foster makes some excellent points and should not be trolled,’ one supporter tweeted. 

Australia's economy has been crippled by the coronavirus lockdown with major retailers such as Myer forced to temporarily close their doors

Australia’s economy has been crippled by the coronavirus lockdown with major retailers such as Myer forced to temporarily close their doors 

Nearly 3.5MILLION Australians could lose their jobs because of coronavirus shutdowns – but top economists warn PM not to ease restrictions yet

Researchers say a quarter of all Australian workers could lose their jobs because of the coronavirus shutdown, as 35 top economists warn lifting restrictions too soon would only damage the economy further.

In a working paper released on Sunday, the Grattan Institute crunched the numbers and found between 14 and 26 per cent of Australia’s entire workforce could be out of work as a direct result of the current lockdown.

The policy researchers used three different methods to estimate the likely labour force impact of the lockdown, but all three metrics were in broad agreement.

People queue at Centrelink in Norwood, Adelaide on Thursday (pictured). Both the Grattan Institute report and an open letter signed by 35 economists warned against lifting the lockdown too soon or the economic damage would be worse in the long run

People queue at Centrelink in Norwood, Adelaide on Thursday (pictured). Both the Grattan Institute report and an open letter signed by 35 economists warned against lifting the lockdown too soon or the economic damage would be worse in the long run

According to their preferred method, the researchers found 26 per cent of workers would be laid off, which is 3.4 million Australians out of a 13-million-strong labour force.

‘Some may quickly return as spatial distancing measures are relaxed, but a shock to employment of this size and speed is unprecedented in Australia,’ the report said.

The report, called Shutdown: estimating the COVID-19 employment shock, said the hospitality industry would be the hardest hit with 60 percent of jobs lost in accommodation and food services, followed by arts and recreation.

Unemployment is forecast to be at its worst level since the Great Depression

Lower-income workers were twice as likely to lose their jobs compared with the highest earners, the report said, with young workers more likely to be affected than older, more established staff.

‘But we expect the hit to employment will be large in most industries, all age groups, and for men and women,’ the report said.

The report said that if all 3.4 million Australians predicted to lose work were classified as unemployed then the official unemployment rate would rise to 30.2 percent – the highest level since the Great Depression.

Call for direct cash after pandemic  

The Grattan Institute says Australia should be ready to pay cash directly to households to boost spending after the public health crisis of the pandemic subsides. 

‘Direct cash transfers to households could boost spending, accelerating the pace of economic recovery,’ it says.

‘Failing to provide that support will condemn many Australians to a long and deep recession, harming their long-term economic potential.’ 

This future fiscal stimulus would boost aggregate demand.    

The institute expects workers in the education and training, retail trade and real estate sectors are also at risk alongside hospitality and recreation.

‘Younger Australians, people on low-incomes and women are likely to be the hardest hit because they are more likely to be employed in the occupations and industries most affected by the response to COVID-19,’ it says.

Source: AAP 

According to a Federal Treasury forecast this week, unemployment is set to rise to 10 per cent in the June quarter – the first time it has hit double digits since 1994. 

A 10 per cent unemployment rate is estimated to represent 1.4 million people out of work, an increase of 700,000 in the next three months. 

Not all people who lose their jobs will be regarded as unemployed, however due to the JobKeeper program, while others will remain employed on reduced hours or in adapted roles.

Others will find work with another employer while some workers will drop out of the labour force and stop actively seeking work. 

The report cautions that the ultimate hit to employment from the coronavirus will depend on the public health strategy adopted.

In the report’s best-case scenario, the virus is eradicated from Australia with tough stage three restrictions kept in place for three months. 

As a result the economy would be able to reopen earlier and recover.

An alternative suppression strategy designed to keep infection rates low but only allowing a partial let-up of restrictions would mean economic activity would be curtailed for up to 18 months until a vaccine is found – which would ultimately harm the economy more.

‘The least costly strategy – from both a public health and an economic perspective – appears to be eradicating COVID-19 from Australia,’ the report concluded.

‘There’s no doubt this strategy would have big short-term economic costs, and some risks. But there is also enormous economic upside if we eliminate the virus and the economy can more or less return to normal.’  

‘And eradication is likely to pose fewer economic costs than alternative strategies such as ‘flattening the curve’.’

The report said the economic damage would take a long time to be repaired, warning that the odds of a V-shaped recovery are extremely slim.

The report, called Shutdown: estimating the COVID-19 employment shock, showed hospitality would be hardest hit especially in accommodation and food services, followed by recreation

The report, called Shutdown: estimating the COVID-19 employment shock, showed hospitality would be hardest hit especially in accommodation and food services, followed by recreation

People in a polite social distancing queue outside Centrelink in Norwood, Adelaide on Thursday. About 3.4 million workers are likely to lose their jobs temporarily in the lockdown

People in a polite social distancing queue outside Centrelink in Norwood, Adelaide on Thursday. About 3.4 million workers are likely to lose their jobs temporarily in the lockdown

The report said the JobSeeker and JobKeeper payments had helped lower- and middle-income workers to survive but the Government may have to provide more assistance as time goes by – especially as economic growth had already been slowing in Australia when the virus struck.

‘COVID-19 is the largest economic shock since World War II and will likely weigh on economic growth in the medium term,’ the report said. 

In a letter to Prime Minister Scott Morrison, 35 respected economists warned against winding back the lockdown too soon, saying an early relaxation would deliver an even bigger financial hit due to the virus’s ability to spread exponentially.

‘We recognise the high economic costs of the measures,’ said George Washington University assistant professor of economics Steve Hamilton, one of the letter’s organisers.

‘But these are dwarfed by the lives that would have been lost and the even greater economic damage caused if the virus was allowed to get out of control.’

‘You can’t let an exponential process get away from you, even a little bit,’ he said, as quoted in the Sydney Morning Herald.   

Current Reserve Bank of Australia board member Ian Harper was one of the highly respected economists who signed the letter, as was former member Warwick McKibben.  

The Federal Government had signalled it might ease some restrictions as early as next month with Prime Minister Scott Morrison saying on Thursday that trying to eradicate the virus with a harder lockdown would be ‘against Australia’s way of life’.

Scientists have said the number of new cases could be slashed to zero by the middle of June if the lockdown persisted for another two months.

The Grattan Institute paper showed 2020 will be the worst year since the Great Depression

The Grattan Institute paper showed 2020 will be the worst year since the Great Depression

Those with the lowest incomes are the most likely to lose their jobs, the report said

Those with the lowest incomes are the most likely to lose their jobs, the report said

Mr Morrison rejected this idea saying the economic and social damage that would cause was ‘not a wise trade-off’ and he didn’t want to ‘copy’ New Zealand’s tougher lockdown. 

The JobSeeker package brought the Government’s total economic support for the economy to $320 billion or 16.4 per cent of GDP, which will have to be paid back at a future date. 

At the same time the Government is facing a fall in expected tax revenues. 

Economist Steve Keen told Daily Mail Australia that the government could simply print money to pay off its debt.

‘Governments can create any amount of their own currency they desire by running a deficit and have it financed by the Central Bank,’ Professor Keen said.

The problem with printing money is that it can cause inflation or a trade deficit, but Professor Keen said those were the ‘very last’ problems that exist right now. 

Treasurer Josh Frydenberg has so far lifted the government’s debt ceiling to $850 billion.

A separate research paper by left-wing think tank Pro Capita said worries over debt were misplaced, and that the Federal Government would have to spend even more money to revitalise the economy once the pandemic ended.   

 

Read more at DailyMail.co.uk