Australian Economists Publish Open Letter urging Continued Quarantine

In response to an increasing number of Australian commenters vocalising their desire for social distancing measures to be scaled back, 174 Australian economists have written an open letter addressed to the Australian government asking for policy makers to not sacrifice health for the economy, and that a second-wave of infections would be more damaging to our economy than the current pains of quarantine.

It is worth noting that the Spanish Flu saw three waves of resurgence before quarantine finally took hold properly, and it is no coincidence that the Spanish Flu preceded the last Great Depression. The team at Tower strongly believes that the short term suffering of a strict national quarantine will help the economy bounce back higher when Covid-19 becomes less of a threat.

The open letter is shown below in full.

19 April, 2020

Dear Prime Minister and Members of the National Cabinet,

The undersigned economists have witnessed and participated in the public debate about when to relax social-distancing measures in Australia. Some commentators have expressed the view there is a trade-off between the public health and economic aspects of the crisis. We, as economists, believe this is a false distinction.

We cannot have a functioning economy unless we first comprehensively address the public health crisis. The measures put in place in Australia, at the border and within the states and territories, have reduced the number of new infections. This has put Australia in an enviable position compared to other countries, and we must not squander that success.

We recognise the measures taken to date have come at a cost to economic activity and jobs, but believe these are far outweighed by the lives saved and the avoided economic damage due to an unmitigated contagion. We believe strong fiscal measures are a much better way to offset these economic costs than prematurely loosening restrictions.

As has been foreshadowed in your public remarks, our borders will need to remain under tight control for an extended period. It is vital to keep social-distancing measures in place until the number of infections is very low, our testing capacity is expanded well beyond its already comparatively high level, and widespread contact tracing is available.

A second-wave outbreak would be extremely damaging to the economy, in addition to involving tragic and unnecessary loss of life.

Sincerely,

Professor Alison Booth, Australian National University

Professor Jeff Borland, University of Melbourne

Professorial Research Fellow Lisa Cameron, Melbourne Institute, University of Melbourne

Professor Efrem Castelnuovo, University of Melbourne

Professor Deborah Cobb-Clark, University of Sydney

Assistant Professor Ashley Craig, University of Michigan

Professor Chris Edmond, University of Melbourne

Professor Nisvan Erkal, University of Melbourne

Professor John Freebairn, University of Melbourne

Professor Renée Fry-McKibbin, Australian National University

Professor Joshua Gans, University of Toronto

Professor Jacob Goeree, UNSW Business School

Professor Quentin Grafton, Australian National University

Professor Simon Grant, Australian National University

Professor Pauline Grosjean, UNSW Business School

Distinguished Professor Jane Hall, University of Technology Sydney

Assistant Professor Steven Hamilton, George Washington University

Professor Ian Harper, Melbourne Business School

Professor Richard Holden, UNSW Business School

Professor David Johnston, Monash University

Professor Flavio Menezes, University of Queensland

Professor Warwick McKibbin, Australian National University

Assistant Professor Simon Mongey, University of Chicago

Professor James Morley, University of Sydney

Professor Joseph Mullins, University of Minnesota

Professor Abigail Payne, Melbourne Institute, University of Melbourne

Professor Bruce Preston, University of Melbourne

Emeritus Professor Sue Richardson, Flinders University

Professor Stefanie Schurer, University of Sydney

Professor Kalvinder Shields, University of Melbourne

Professor John Quiggin, University of Queensland

Associate Professor Simon Quinn, Oxford University

Economic Advisor James Vickery, Federal Reserve Bank of Philadelphia

Professor Tom Wilkening, University of Melbourne

Professor Justin Wolfers, University of Michigan

Professor Yves Zenou, Monash University