South Africa: Economic Disaster caused by the Lockdown

Advocates of the lockdown ignore the most basic law of life, that benefits have costs, and that costs easily exceed benefits. People’s most “essential” need is income; the country’s most “essential” need is production. The government’s decision to extend the lockdown might cause more premature deaths than far less extreme measures, or even lifting existing measures completely. The economic and human rights impact is more extreme than all but a few realise.

The best way to extend life is to replace poverty with prosperity. Poverty is a killer. By increasing poverty, the lockdown increases the death rate. The health and wealth loss is likely to exceed real or imagined lockdown benefits. Wealth destroyed by the lockdown could fund universal healthcare, which would save tens of thousands of lives.

All experts agree that there is great uncertainty about the lockdown’s benefits. Experts admit to knowing almost nothing with certainty about the health implications of totalitarian lockdown, such as whether it will merely ‘flatten the curve’, that is, have roughly the same number of infections spread over a longer period, or whether it will save a few thousand lives.

Against that uncertainty, we know with absolute certainty the extent to which freedom has been obliterated temporarily, and will probably be compromised permanently. And we know with certainty that it is an is economic scorched earth policy.

People unable to sustain medical scheme payments will be deprived of critical healthcare. Not only are South Africans being subjected to totalitarianism and economic ruin, but the lockdown might, on balance, have negative health impacts, especially for the poor.

The FMF’s research suggests that the lockdown costs the country at least R10 billion daily, or R350 billion in five weeks. That is enough for 3.5 million RDP houses; enough to house all homeless people and people crammed into overcrowded shanties. It is enough to feed 30 million undernourished people daily or build twenty hospitals… every day. It could fund universal healthcare, modernise and upgrade all clinics, and fund thousands more doctors, nurses, teachers or police.

I know of households, and small and informal businesses, where income has fallen to zero. All said that they were told that they do not qualify for assistance. Their lives are ruined.

Aspects of the lockdown are probably unlawful; they are certainly inhumane for many. What may not be sold is irrational and arbitrary. How the law is interpreted varies widely. For instance, one store I visited would not sell a toilet bowl plunger; another did. One would not sell tools; another did. A store manager could not tell me whether chewing gum or chewing tobacco is food.

The bizarre prohibition of tobacco and alcohol is reprehensible. In addition to violating human rights, normal people are incentivised to resort to crime: trading in black markets, looting and burglary. Increased depression and stress, in addition to being locked down, is increasing domestic violence.

Economic loss is eternal: R350 billion or more is being lost forever. It can never be recovered. Compounded at 10%, the loss doubles every seven years. At 5%, it doubles every fourteen years. One of the hardest things to do during a fear-inducing pandemic, is retain perspective. Statistical analysis based on official estimates suggests that COVID-19 deaths, if, as predicted, two thirds of all people get infected, will be somewhere between 25,000 and 250,000. That range reflects the degree of uncertainty. Reduced deaths by other preventable causes could save more lives: 17,000 road, 63,000 tuberculosis and 43,000 murder deaths, for instance.

What the government should do urgently is lift the lockdown, promote healthy behaviour, promote prosperity by implementing long overdue pro-market structural reforms, and to get those people lucky enough to have a job, back to work. Employers could be induced to promote safe working conditions (as mandated by labour law), and police and soldiers could be explaining and encouraging safe behaviour.

There is rarely a greater need than now to appreciate the iron law of life that there are no benefits without costs.

The FMF is an independent, non-profit, public benefit organisation, created in 1975 by pro-free market business and civil society national bodies to work for a non-racial, free and prosperous South Africa. As a policy organisation it promotes sound economic policies and the principles of good law.

Photo Credit: Dan Burton