UK government to pay up to 80% of wages for employees not working
bbc.co.ukI will happily pay 45% tax on my salary knowing the Gov has my back in difficult times like these. I'm fortunate enough to still have a job, but I'm happy I live in Europe.
I'd be shocked is most people on this page who are fully employed devs/techs/etc in the US do not already donate roughly 45% to the government. SS and Federal, plus state (3% for me, and almost 4% for local), now that's just on income, not anything you spend. Again, here we go. 9% sales tax in my municipality, plus individualized taxes on a variety of goods the government deems bad. This includes markups on booze, tobacco, sugary drinks, then we have car registrations, gas taxes, yearly renewal of misc fees like the license for our dog, drivers license ID renewals, then property tax, taxes on utilities like telecom, then we have run of the mill court things like speeding which are 45 tickets that balloon into 200 dollar ones when you add all the fees on top. Fees to file things you are required to file for. yes. I bet if we took a full accounting of the taxes we all actually pay in a lump sum, it's closer to 45%.
If you consider your healthcare spending as part of your overall tax package (so as to make the comparison apples-to-applies with other countries which mandate that), the picture looks even less rosy.
> I'd be shocked is most people on this page who are fully employed devs/techs/etc in the US do not already donate roughly 45% to the government.
Yeah, but 45% would be federal income tax only in Europe. Social Security, pensions, sales tax etc pp would be on top, and are generally also considerably higher than in the US.
Sales tax is on top of course, but social security and state provided pension is included in the 40% to 52% here (the percentage depends on total yearly income)
We pay between 0 and 100 euro per month for health insurance, which covers basically everything with a very low co-pay amount (like 150 euros per year max)
Student loans are also much much lower. We pay 1600 euros per year tuition, the rest is government paid.
So the 40% may sound very high, but if you look at what is included compared to what the middle class in the US spends on student loans and healthcare I think we're not much worse off over here.
> Sales tax is on top of course, but social security and state provided pension is included in the 40% to 52% here (the percentage depends on total yearly income)
Likely depends on the country. It's not in Germany, and 45% is the highest tax bracket which few people will reach, but 43% is very achievable and you'll find plenty of knowledge workers in that bracket as it starts at ~55k €. Add ~20% sales tax, very high taxes on power and fuel etc.
The social net has a very high price, we need to stop prancing around the facts. I still think it's largely worth it (although it does contain very strong moral hazards), but I don't believe in hiding the truth so people don't come to different conclusions.
Indeed very country dependent. Netherlands is 50% (used to be 52) starting around € 55k. That sounds higher than Germany, but then in our case social security and an allowance for elderly is included. So in the end I guess the part of your income you pay is similar in most European countries it's just structured differently. And indeed, it's a very big part.
The US has a low income tax, but then the middle class needs to pay for their own health insurance (at $ 600 a month), disability insurance and pension etc. which means they end up not far different from Europe.
The big difference is at the extremes of the scale, the very poor and the very rich. In the US the poor don't have any health insurance, disability insurance, or pension etc because they cannot afford it. And the very rich in the US are way better off than they would be in Europe, because for them a low income tax greatly outweighs the costs of insurance etc.
For reference in France.
There is a first layer on companies having to pay 25% of salaries to taxes, then a second layer of 25%, then a third layer of income tax 0 to 30% depending on total sum and how many dependents.
So all employees are already above 44% taxes before income tax :D
>>I bet if we took a full accounting of the taxes we all actually pay in a lump sum, it's closer to 45%.
In other countries then it may be 65% if you count gas taxes etc etc. VAT (sales tax) is 20+% in a lot of countries
> I bet if we took a full accounting of the taxes we all actually pay in a lump sum, it's closer to 45%.
Yep, and you don't get healthcare for that, or post high school education.
I’m only willing to pay the minimum rate that people richer (including wealth) pay. Which is probably around 0%. I think that’s fair, and as long as it stays fair I’m also willing to pay more (20, 40, 50% - as long as noone richer than me is paying less). Taxes as they are now (with exemptions for capital gains) are completely unacceptable to me.
Why would you prefer the government to manage your money instead of investing and saving it yourself?
Because government is an easy way to work together on big problems. Things like charity are great, but the participation rate tends to be a whole lot lower than you can get from taxes.
The OP was praising high taxes. If he paid lower tax, he would have more money to spend, also on helping others. Do you think it's ethical to force people into charity?
Simple. I trust the British government to do the right thing more than I trust the likes of HSBC, Microsoft, Google, Unilever and any other company that's built by greedy people whose sole concern is generating profits for themselves and their shareholders.
Wait. Do you think it's the right thing now for the FED, ECB and other central banks to print money day and night and eradicate savings of hard working people via inflation?
I'm not sure why you bring up those companies in response to my proposal of managing your own money. But since you mention how purely evil those companies are, last time I checked they were employing real people, working on real products and services, supporting their families and contributing to the economy. I'm not a fan of big corp, bit it's not so black and white.
I didn't use the word evil so I'm not sure where that's coming from. I pay less than 45% of my income in tax to the government. With the rest I invest a large chunk in the private sector anyway. So I know it's not black and white. But in times like these I'm glad I invest in the government.
The government is already doing that for me. My tax contributions go towards pension, healthcare, public services... I don't have to worry about taking a bank loan to go to the hospital or what I'm going to do when I retire.
I used to take things for granted, now news like "I have to pay $30k for Corona virus hospital treatment" make me appreciate being born in "socialist" Europe. To each their own.
Do you think the government is managing your money better than you would? Aren't you concerned that big part of it funds the bureaucratic apparatus itself? Aren't you concerned that you are not paying for your own retirement and in our aging Europe 30 years from now there will be not enough working people to pay for yours? Don't you think that paying a lower tax (e.g. 25%) would leave you with more money to cover that 30keur for yourself or generously help others?
In theory if you saved the difference in taxes...but then we don't generally save, but consume.
max 2500 pounds. Say for 6 months? A Year? That's 15k to 30k. This is not enough to justify "45%" taxes for life...
It's not about breaking even financially. It's about knowing you're never going to end up homeless or starving when your luck turns bad.
There are plenty of homeless people in London.
Being homeless in Britain is essentially a choice. It might be surprising to you but people do actually make that choice.
It's not just consumption.
You (or I) would need to save for worst-case scenarios and get very few economies of scale: you can't have 0.001 of an epidemiologist on retainer.
The government can at least pool risk (and everything) over the entire country.
It's bold move, but necessary to stop people going into work. The tubes here in London were still packed a few days ago, because low wage earners still need to travel in to earn and put food on the table.
I can't see how it touches low wage earners. In reality most of chippies & corner shops pay most with cash + minimal wage. For them - nothing changes.
It does work pretty good though for city workers - managers, devs, etc
How does a significant reduction in wages count as "works pretty good"???
This is the biggest government intervention in the UK economy since WW2, by far. These are interesting times.
This makes more sense for me than sending $1000 checks to people who still have a job.
Giving everyone money makes sense as fiscal stimulus once the economy is back to normal. It does not make sense now because people are avoiding spending and many will not need the $1000 and not spend it.
Targeted help now and then a jolt when it's over.
Mm no, a lot of people are already wondering how to pay rent. If anything, that $1000 needs to be higher, and adjusted for cost of living by area.
Sure but then isn't it better to take this approach - 80% of your salary for people out of work and nothing for people still employed - than to give an arbitrary amount of $1000 to everyone regardless of local cost of living?
Sure, they could do it through unemployment claims as well.
While that supports people, which is the most important thing, it does not preserve the status quo jobs.
That means that when we are able to restart the economy, we start with massive unemployment and with companies which have simply ceased to exist. Much better to just put everything in the deep-freeze and then pull it out, ready to go when we can.
Yeah, that would be nice, I just don’t know that we can pull off what you’re talking about.
Because it should penalize anyone who kept working or who was in an essential occupation?
This is about helping people in need and not a gift from government.
Whether you call it a gift or not doesn't change that it's functionally a penalty on working.
I feel lucky to be working and occupied. It has been a much more sure position, and I'm not left to dwell on the shit storm we're all going through.
What penalty? it's the other way around, you take a 20% penalty if you stop working, and note that it's not for people who voluntarily stop working.
You can easily save 10 to 20% when unemployed because you don't have to pay for daily transportation (tube/train/car), lunch outdoors every day and a few other things. So the difference in disposable income is about null in most cases.
You can take lunch from home and eat that. I know enough people who do that. People who bought yearly or other long term tickets (majority of frequent travellers) dont save.
Even if that is the case, it's not your choice, as I said before - it does not apply to those voluntarily unemployed. You are projecting arguments of basic income onto an economic solution for a pandemic where people are suddenly forced into unemployment or unpaid leave for a very specific reason...
Given a lack of choice how can paying wages make any difference to their employment behavior. I'll repeat: this is not basic income.
This had nothing to do with basic income. We're talking unemployment for people who get laid off from their jobs.
Then you clearly didn't read the article, the headline is:
> The government will pay the wages of employees unable to work due to the coronavirus pandemic
When you stop working, you also get a lot of time back.
Yes of course, that's exactly what's happening at the minute. Everybody who can't work is having the most terrific fun on this unplanned holiday time they've suddenly been handed where they don't have to pay bills or buy food or support dependents./s
You're surely just being deliberately naïve here, playing the naif? I just don't really see the point I guess
Ignoring the penalization of work is being naive? Ignoring the "not having to work" in calculating how well off someone is, because you can make a snarky remark about how mixed a blessing it is to stay home, is naive? I would say the opposite.
I could just as well ask if you're just trying to be clever devil's advocate here.
Yes, I think you're being deliberately naïve. Maybe if people were spherical cows, you might have a point, but you're just acting as if there is no such thing as society, as if people aren't going to want friends and family (in particular) who can't work to be supported through this period. It's a slightly bizarre way to view this handout, given the situation that is very clearly occurring.
And some people will make that calculation and figure out a way to officially be unable to work and pick up government money. That's always happened, it's called malingering.
Well, I guess if people didn't avoid work because of the incentive effects of social assistance systems, then your model would be better, but that's not the world we live in.
>And some people will make that calculation and figure out a way to officially be unable to work and pick up government money. That's always happened, it's called malingering.
Wait, you agree this happens, despite just having waxed eloquent about "living in society", but then condescend to everyone who suggests it does? Right, I'm the one wasting everyone's time here...
Then what point are you really trying to make here then? Because on its own, what you're saying is a non-sequitur, it's as if you're just ignoring what's going on. Some people will take advantage of this handout. So what? Most people will not, and most working people are not looking at this the way you describe (it doesn't have almost universal public support because everyone is rubbing their hands with glee at the thought of cheating the system).
Edit: it's as if you're talking about a completely different thing to what this actually is: as per the sibling comment, this is a benefit going to people losing their jobs, for reasons they cannot control in any way.
You understand that soon many people will lose their jobs who have done nothing wrong? They are not avoiding work but they are being laid off.
As someone who can and does work from home, I do not perceive it as punishment and I am fine with people in worst situation then I am getting supper.
Yes, but the goal should not be to treat everyone fairly. The goal should be to help people get through this crisis.
I would rather not get $1000 and not have to fight a large portion of the population for new jobs once this is over.
Are you upset you don’t have a wheelchair?
I don’t understand the question.
Essential occupation folks can be paid at the top. Premium for weathering challenging times on the front.
How so? Their money still buys things, they keep living. What else matters?
It doesn’t penalise anyone. The money goes to those who need it.
No because the money will also be paid to middle class + people who still have jobs and who can WFH or have paid sick leave.
Not to me.
Just sending out money to everyone is simple. It can be done fast.
But can it actually be done fast, whilst making sure none is double-dipping? Are all 18 year olds eligible, including folks that never worked?
You might be right, but it's not obvious that the difference is material.
The point of paying everyone, or at least every adult, as that it's a lot easier to check for double-dipping (especially later when people know you will pursue them after finding out), than to spend weeks or months checking for all the zillions of corner cases and rules and demanding complex proof needed in ordinary benefits / social security schemes.
In the UK it is known, by government studies, that a huge amount of money that people are entitled to in benefits is never claimed because people either don't know about it or are put off by bureaucratic hurdles. Government officials generally don't draw people's attention to what they are entitled too, and often make mistakes, occasionally fatal (people have starved to death). And some people get what they are entitled to only by appealing bad decisions, with the appeal success rate being rather high.
Right now, especially for people such as those who are self-employed or with complex finances (savings and debt at the same time, etc), proving elegibility to benefits is very difficult, especially if done from scratch when they don't have well organised documentation to hand. (Normally it's a once-a-year thing, to file taxes.)
But the need for urgent finance in the current crisis is the same for everyone without enough cash.
Some self-employed or gig economy people are panicking about affording food right now, and retaining shelter; let alone bills, and that's a terrible situation to suddenly happen, especially to large numbers of people.
What I would advocate for, in a crisis such as this, is helicopter money to everyone at first, and then gradually introduce more nuanced systems that take a bit longer, and give people time to plan for. So that at least nearly everyone can be safe with regards to food and shelter in the short term.
To be honest, a small amount of double dipping doesn't matter a whole lot. Like oops, you changed your name and we sent cash to both names. shrug mistakes happen, keep it. The total expenditure is negligibly affected. Mistakes can be ironed out in time. Sneaky bastards will be caught with their hand in the cookie jar and prosecuted.
Simplicity first.
Or payroll tax reduction. While it might help some deserving people, it's also going to benefit people who don't need any help.
payroll tax deduction also hurts social security and Medicare.
But what happen to those they were out of Jobs just before the Virus, and now could not get a new job because of the Virus?
They continue to receive unemployment checks as before?
Thanks. Forgotten about that.
if you're referring to the US initiative, isn't it just an early tax "refund"?
as in - no one's giving anyone anything. It's all just shell games.
The money is meant to keep the economy working by encouraging spending, not specifically to help the recipient (though that will be a side effect in many cases).
How do you justify that interpretation?
Notably this now leaves a gaping self employed person shaped hole in the otherwise impressively woven safety net.
If the UK is following Denmark here, that will be announced in 4-5 days. Here full time employees get 75%, part time 90%. Self-employed get 75%, while those particularly hard hit get 100% compensation on regular bills (in addition to the income compensation).
Only if you're not paying yourself a salary and social security taxes?
At least in Norway that is very clear - if you're self-employed - you're usually much better off actually employing yourself.
Yes but they have increased universal credit amounts substantially, that will go some way to close the gap.
> but they have increased universal credit amounts substantially, that will go some way to close the gap.
I don't think that is true.
They've increased UC by £20 a week. To our USA friends that is USD $23.30 a week.
I don't think that counts as substantial. It is barely going to touch the gap.
Almost nobody who was working last month self-employed is likely to be able to afford their rent and bills, or even just their family food bill, on UC going forward.
While on UC, in theory you can also get your rent paid. But only if you are renting somewhere substantially below the median market rate for the area.
Since the area is assessed over quite a large region, that means virtually everyone in a decent city has a rent level higher than is covered anywhere in the city, and people are normally required to move to the edges or beyond (or often into dodgy accomodation that would fail inspections).
But people cannot move now.
They can change their eating patterns, and refuse to pay bills (but watch out because debt collactors still have their jobs, and credit files are still recording).
And full tenants can stop paying rent, and avoid eviction. But watch out because when protective measures stop, evictions will resume because people will not be able to pay the backlog of debt. Especially if the landlord sees it as an opportunity to refurbish and raise the rent (I've seen this happen, find an excuse to get rid of the current tenant then add a 25% rent hike in the ad for the next one).
Worse than that: If evicted (eventually) due to substantial non-payment of rent, in normal times people struggle to find another landlord that will accept them aftwards, because landlords may contact a previous landlord for a reference.
But tenants can't move to a cheaper home suddenly, especially not all at once, and with no money or drivers to move everything.
(And lodgers, who are tenants living in someone's home with the landlord, are still not protected from eviction under current measures as far as I can tell. They are covered by different rules than tenancies, have few rights, are highly vulnerable if the landlord wants them gone. Notice can be as little as 1 week. There are a lot of lodgers in the UK.)
If there was rent deferral of some kind that would help. (Ideally where the government pays the rent so the landlord does not know the state of the tenants finances.) But the government has, currently, said no to direct help for renters. They have tweaked the housing allowance, but only by a small amount so it still doesn't cover the rent for the majority of people in suddenly changed circumstances.
And even with all benefits added up, it's still much less than the 80% that most salaried people are getting.
Self-employed are looking awfully screwed at the moment.
And people who got made redundant just recently are also getting a rough deal, unless they are lucky to have an employer who undoes the redundancy somehow.
Those people are unlikely to be able to get a personal loan to cover their shortfalls either. Many with already bad credit rating will get "computer says no", but those with good credit have a problem too: After passing the rating, they will be asked for proof of income, because it's the law in the UK since a few years ago that lenders must get that proof. Which people suddenly without jobs cannot provide.
First remote work, now UBI: Covid-19 is planting the seeds that both are possible and can be beneficial to society in the future.
Microsoft Teams is okay but hopefully there will be better tools for this market.
In the year 2020 a chat application takes 15 seconds to load old messages on an 8 core machine with a gigabit connection...
I do wonder if it would be easier and cheaper to bite the bullet and move to a universal basic income. This situation cold be going on for years.
While I'm generally pretty receptive to the idea of a UBI, it is wholly incomprehensible implementing one would be "easier" or "cheaper" than directly addressing COVID-related wage loss.
Additionally, something as pivotal as a UBI is exactly the kind of thing that you _wouldn't_ want to implement as a reaction to a temporary crisis. You're likely to create the wrong abstraction based on contingencies of the situation.
Dude. This is to make up for the economy being shut down. i.e. no trade happening, no revenues. How are you going to finance UBI in those condition? No economy = no one paying for UBI. This is going to be financed by borrowing.
You need a UBI on a level that allows people to live. That’s a lot of money. Better to extend unemployment benefits for a limited time.
This is 80% of pre-existing wages!
And, even though it's an employer subsidy, this is more beneficial in the long run if the economy recovers, because employers don't have to go through the fire/hire destruction and deadweight loss.
I will retire immediately if I can get a 80% UBI.
People have different incomes right now so that wouldn't work for anyone making more than the minimum
They want to keep the businesses going ready for when we come out of the other side of this.
And people keep saying that basic income is impossible.
This is an astonishing U-turn, and a very welcome one. I just hope the social distancing isn't too late.
> And people keep saying that basic income is impossible.
This has nothing to do with UBI. It's a temporary measure designed to be counter-cyclical against the current catastrophe.
The defining feature of UBI is that it never ends. That's the opposite of temporary measures like this.
The two can't be compared as equivalent.
You understand this only helps in the short term right? Yeah we'll live, we'll also be poorer than ever at the end of this, and someone's gonna have to pay back this debt.
Yes, of course everybody understands that. Most also understand that the reason for being “poorer than ever at the end of this” will be because of the event itself and not the response to it, will understand that we will collectively have to “pay back this debt” and that either of these facts affect the suitability or otherwise of guaranteed income policies.
>>> the reason for being “poorer than ever at the end of this” will be because of the event itself and not the response to it
I'd beg to differ on that. If the economy was left to crash, the cost of housing and rent could go down, which is the main expense for most households.
What the cash injections are doing is holding these high at all costs, transferring money to those who already have assets. The non owner classes will be poorer than ever, facing ever unaffordable housing with extra taxes to cover the bailout debt.
Instead of this. The government could decide that leases for the tax year 2020-2021 are getting their prices slashed 10% and there would be different consequences on the economy.
It's all largely driven by human decisions. The virus has no say in that.
It’s in effect a very low interest loan which will keep people from selling assets when the market is down. That’s a huge net positive relative to not doing this.
If it can minimize the odds of a depression, it might even be a cash flow neutral option.
.. fortunately, this is being borrowed at 0.1%. And we can go lower. Expect to see negative rates. The irony is it might have to be a Tory government that raises taxes to cover it.
And will be massively expensive, will be financed by borrowing. Can't in any way be used long term.
> This is an astonishing U-turn
A u-turn from what previous position and by whom? Universal basic income hasn't really been debated seriously in the UK, so nobody had a previous position to u-turn against.
The previous policy has always centered around increasingly aggressive eligibility testing, to the point that the DWP spends more on appeals in an effort to prevent disabled people being able to eat than it would on just paying them the benefits they are entitled to. Then there's the nightmares of "universal" credit.
Regardless of the merits or demerits of UBI, this is not really a time to study it. The economy has been stopped by the government with the expectation that the government will lift sanctions in the future. That is not an everyday condition at all.
There are many studies, people should first read them. It's not a new idea whatsoever, yet somehow many "tech" guys think they discovered it. It's probably as old as money itself. It's even in the Bible: The Year Of Jubilee, Israelites used to do this regularly, every 50 years. It probably saved them many financial crises.
Who said it's impossible? Of course it's possible. But this Conservative government isn't doing that, it's paying businesses to keep their employees on the payroll. That's a very different strategy than UBI.
Of course it's possible. There's a money printer in every central bank, by definition of fat currency. Who says it's impossible? They may say it's a bad idea (by saying something like it will have bad economic consequences).
I keep enough food in my pantry so I can keep eating for a week or two without going to the store. the fact that I have a buffer to draw on doesn't mean I can keep eating forever without going to the store.
The economy circular, so its more like if you also hard a garden and used your poop as fertiliser.
> And people keep saying that basic income is impossible.
It's not impossible, but Americans voted against it overwhelmingly less than two months ago, well after this epidemic had already started.
I thought the election was in November?
Probably referring to the lack of support for Andrew Yang in the primaries.
It's impossible not because its hard to give people money.
It's impossible because the corporate mega machine is already auto programmed to extract as much cash out of people, in ways most people can't even comprehend.
How else do you end up with huge inequality or with a subprime meltdown?
It's not enough to just give people cash, you have to protect them from a machine that has already proved multiple times its vastly superior to any regulatory mechanism on the planet.
If China, South Korea or Japan haven't done any such thing having been hit harder, totally feels like corporate lobbies are pulling the strings in US and UK taking full advantage of fear as they did to get the banks bailed out in 2008.
This is not going to last forever.
Could someone correct me if I am wrong.
UK is going to print lots of GBP to fund this, and in doing so, it will devalue its currency, since EU will possibly be doing much of the same, the Euro and GBP will devalue against US ( and everyone else ), assuming US on a relative terms did not print as much ?
Or is this assumption wrong?
Why print? Borrow
Indeed. Borrowing has never been cheaper.
So, with all these people not working... when do our supplies start to run out? I mean, the stores are getting replenished now; but what happens when the supply chain dries up for a period of time?
Will we be able to boot-strap the supply chain to keep the economies of the world rolling?
The amount of labor necessary to keep people alive and infrastructure from crumbling is a small portion of all the work that is done.
(UK) Shelves are already very empty. Oddly this time the fresh stuff is still there and the non-perishable has gone. "Luxuries" are widely available, necessities aren't.
There's a lot of seasonal stuff in cold storage - the apples you buy are from last year.
Why is it odd? Idiots can fill their lofts and garages with loo roll but there's only so much fresh produce that people can stockpile. Although I have no doubt that the same idiots are trying and most of it will go to waste.
The smaller stores are fine. It's only really the supermarkets where there are stock issues.
There is no reason to expect that supplies will start to run out. The people who are not working are broadly not involved in the supply chain for essential goods.
Anyone listened properly to the speech? First they were talking about "grants" then started mentioning interest and how nice they are not to charge it for a year, then started talking about LOANS, presumably to be paid back.
There are several support elements available to businesses. There has previously been the announcement of interest free loans, and grants to small businesses.
Today they announced that the government will pay 80% of furloughed workers' salaries, up to £2500 per month. That does not need to be repaid. They also announced today that the interest free period on the loans will be extended to 12 months, up from 6, which is separate to the salary intervention.
The cap is £2500 per month before or after taxes?
They said it was slightly above the median so must be before tax.
It is all funny fake made up money anyway ... there is enough resources for everybody.
Unfortunately this isn’t true. A massive amount of debt is going to be racked up in this time. The economic impacts are not immediate, but they will come.
Debt is just consuming now what we will produce later. That means that later we will have less. Luckily, the number which tells us how much it costs to shift production temporally: the real interest rate, is low. As a result, we can deal with the impact over the course of decades.
As long as there is no crisis of confidence in the ability to repay that debt, it will not be an issue.
> Luckily, the number which tells us how much it costs to shift production temporally: the real interest rate, is low.
That measure has been meaningless for a long time now since the central banks manipulate it for whatever goal they are currently trying to achieve.
With the amount of uncertainty in the current economic climate if interest rates were set by the market they would be skyhigh as nobody would risk loaning money.
And that's where free market as an institution would get us all killed.
The government recognises that we can easily keep essential supplies going with only a fraction of the population working. Most people who are not working now were doing make-work jobs anyway. There's easily enough to go around. The government just has to do what it can to convince us we're not missing out to our neighbours.
Theoretically, it’s less than the cost of letting everything fall apart for 2 months of pausing business.
2 months seems optimistic ... SARS died out all by itself but I don't think this one will so a vaccine which is a few months off will be critical for folks to go back to "normal".
Vaccine estimate is 18 months according to the Imperial College:
https://www.imperial.ac.uk/media/imperial-college/medicine/s...
Vaccines in human trials in the US now need to go through a 14 month observation period to understand effectiveness and side effects.
Influenza vaccines, if they are any guide, are only 50-70% effective and need to be renewed annually.
Ask people if they are willing to sacrifice 18 months of their life so that someone with an average age of 79 and existing health complications can live another couple of years and you will start to deal with the problem honestly.
By my calculations for every 1 year of saved life (average age 79) we are paying for it with 10 years of lockdown life (average age 35-40).
I wonder if the global debt levels will start the next wars. At some point one of the bigger countries will not be able or willing to serve its debt and who knows what will happen then?
Is it feasible to go to war with a country to collect on debts, though? If they're already having trouble paying, and the creditor is successful in its war, the debtor's economy will be so deep in shambles that repayment will be next to impossible.
If you can print money, you can always service the debt. The only problem is will the demand for your money keep up? That depends on what alternatives people have.
unless you're an emerging market largely tied to financials through the US dollar. then you're looking at some serious trouble, especially if you're not food-independent.
>there is enough resources for everybody.
Not if the factories and stores are all closed for extended periods of time.
It won't be long until we have shortages.
There's no reason the factories providing short-term necessities can't be kept open.
There's a lot more to life than necessities.
The definition of a necessity is that you cant live without it.
It seems like there's two things where money is never an issue; war and the preservation of the status quo. This should be remembered when progressive reforms are rejected.
> It seems like there's two things where money is never an issue; war and the preservation of the status quo.
Right. The government's policy should act counter-cyclically to counteract major issues like this. It's better to reserve our spending for when we need it than to spend indiscriminately when we don't.
You want government monetary and fiscal policy to act as a counterbalance to natural instability, not as an amplification.
> This should be remembered when progressive reforms are rejected.
I agree, but for different reasons. It's important that we avoid overextending ourselves during the good times, because we need to keep our options open when we find ourselves in times like these.
> It's better to reserve our spending for when we need it than to spend indiscriminately when we don't.
To save money in a large pile is not a proactive thing to do. It's reactive. The proactive thing is to have a far reaching social safety net and a stable social institutions.
Has anyone calculated the value of life that we are saving here?
The Imperial College report had 510,000 dying in the UK under a no-action scenario. Average age lets say 79 as the virus progresses.
510,000 * (82.5-79) * GBP 30,000 (QALY for the NHS) = 53.5 billion pounds based on the funding methodology used for the NHS.
Instead the Uk seems to be willing to throw its entire GDP at this problem, 3 trillion pounds. This seems... completely unjustified.
How can we justify this sort of effort for Coronavirus, but not Climate Change, Obesity, Air Pollution, which will kill many more than COVID-19? Is it just because Coronavirus does it spectacularly in 3 months and all of those other things take decades?
I can assure you if tomorrow we woke up and the world was 2 degrees hotter and people were dying left right and centre from it, the same thing would have happened with climate change.
> Average age lets say 79 as the virus progresses
No idea what you're on about. Most people in the UK don't even make it to 79 as is, nevermind with a highly contagious and dangerous virus floating about.
> Instead the Uk seems to be willing to throw its entire GDP at this problem, 3 trillion pounds
Again, what are you on about? The British government has definitely invested (invested, think about that word) a huge sum of our GDP at this problem, but everyone I've spoken to here has been more than happy with this decision even though we're all the fortunate ones that have managed to keep our jobs.
Thousands of people are already dying from this in one small concentrated area in Italy, in a matter of weeks. Shall we just say fuck it and let thousands more die here too? Should the whole world say the same thing? Shall we let the entire economy hit the sort of fucked levels we haven't seen since like WW2?
There are many problems in the world, sure. Not so many of them are as simple as a deadly virus plaguing the planet. You think we can just spend 15% of our GDP in a single year and solve obesity, climate change, and air pollution?
Also shouldn't you be celebrating since this has massively cut down on CO2 emissions and is already changing many people's commuting/working habits, possibly permanently?
> Is it just because Coronavirus does it spectacularly in 3 months and all of those other things take decades?
Yeah something that can fuck humanity in 3 months is definitely worth putting some more thought in to than something that won't be felt for decades away. How can you write a sentence like that and not understand it at the same time?
> I can assure you if tomorrow we woke up and the world was 2 degrees hotter and people were dying left right and centre from it, the same thing would have happened with climate change.
That’s the point he’s making though, we’re overcommitting resources to this problem because we can see it. Once climate change is apparent enough for people to panic, it’ll be too late.
> Thousands of people are already dying from this in one small concentrated area in Italy, in a matter of weeks. Shall we just say fuck it and let thousands more die here too? Should the whole world say the same thing? Shall we let the entire economy hit the sort of fucked levels we haven't seen since like WW2?
Looking at the data from Italy, 98% of the people who died were retired, had pre-existing conditions, and were making no noticeable economic contribution. I’m not saying that economic utility should be what determines someone’s value of life, but the argument that spending trillions of dollars to save the lives of some 85-year-olds “avoids economic disaster” makes no sense. If a world leader were acting in a purely Machiavellian manner, they would let the virus run its course as quickly as possible so productivity could return to normal.
May I remind you that the doctor that does in china was 30 years old. This disease does not just kill old people.
Secondly, let's do this mental experiment, let the disease spread - how do you expect society to function, nevermind economy, if ~5 % of the population is dying of pneumonia and 30% are severely ill. I doubt you'll be able to get served as Starbucks.
It’s quite alarming that no country (as far as I’m aware) is taking a more rational approach towards coronavirus policy.
Any attempt to make an argument of this sort in the current panic is being seen as insensitive and met with outrage (“you don’t care about me/someone’s parents/grandparents”).
If the consensus ends up being that we need to put an 18 month hold on all activity and spend trillions of dollars to extend the lives of a few hundred thousand octogenarians, this will be a mistake that resonates for generations.
Also, the current policy being pursued isn’t a simple “spend x, save y lives” trade-off. An extended period of isolation will not only have economic effects (greater poverty, on average, will reduce life expectancy for many), it’ll also result in a higher incidence of mental health issues and suicide. Children will have their educational development severely disrupted. When the calculus on this policy becomes clear, it could be possible that we end up trading many millions of years of aggregate future life to save a million people who’ve already lived very full lives.
I’m an economist, I get your Cost Benefit Analysis. But I think you’re missing two factors: firstly the psychological cost a community where senicide occurs (https://en.m.wikipedia.org/wiki/Senicide).
Secondly, the fact that governments are not rational. This UK government is beginning to wake up to the fact that it will lose all public support in coming months and is making belated attempts to shore up some public support.
> This UK government is beginning to wake up to the fact that it will lose all public support in coming months and is making belated attempts to shore up some public support.
lose support over what exactly? are you foreseeing a scandal of some sorts?
There’s going to be huge criticism over mismanagement of the crisis. The criticism will be at two levels: 1. You didn’t act fast enough and lots of people died before their time. 2. When you did act, it was too late and that has ramped up the cost to the economy.
As it is we might be headed towards a yo-yo epidemic. Interesting argument here: https://marginalrevolution.com/marginalrevolution/2020/03/he...
Ps wasn’t sure if you were being sarcastic...
thanks for the reply. interesting link as well.
i was generally curios since some polls indicate growing satisfaction with the ruling Conservative party as well as the PM.
to me it seems that most of the world is in "flattening the curve" mode in order to alleviate stress on their health systems. as such this disease will run it's course and i don't think there will be a scandal in the UK as most countries will be either the same or worse-off. but an inquiry? definitely.
> Any attempt to make an argument of this sort in the current panic is being seen as insensitive and met with outrage (“you don’t care about me/someone’s parents/grandparents”).
IDK, maybe it's just some of us are willing to sacrifice a bit if it means that people don't get turned away from hospitals because they are no longer "economically productive"?
I, for one, would much rather spend a few weeks/months wondering how long I can go without paying my rent as I have no current income than do something like, say, go invade Iraq for a third time.
It's all about perspective methinks...
Can you show me how you calculated the 3 trillion dollar cost? Are you for example counting loans to businesses as if none will be paid back? Are we talking about the economic impact or direct costs or both?
To be clear the UK has 29 million workers who make an average of 28k pounds. If 60% of them are off work and can't work from home paying 80% of that wage to 60% of them would appear to cost about 32 billion pounds per month.
The GDP in 2019 was 2.21T pounds. If we had to pay 80% of 60% of the workforce for 6 months this would cost 195B pounds or 9% of the GDP aprox.
This would be about 400k per life saved which is still a lot of money but honestly would you rather the rich have bigger mansions or your fellow vulnerable citizens be alive?
It is deceptive to claim that the only people dying are 80 year olds. Here is a local that just died in my state aged 42.
https://komonews.com/news/coronavirus/breast-cancer-survivor...
She had an pre-existing condition: compromised immunity after a stage 4 cancer.
Are you ok with killing all such people? These people are all around you in your community. They don't wear a badge to let you know they are vulnerable?
What does a pound or a dollar even represent anymore? They are being printed and given out with little consideration to the impact.
I think we are going to see hyperinflation at some point, particularly if this is dragged on for the 18 months necessary for a vaccine.
Why would I go in to work and stack shelves when the Government will just give me money to sit at home? Why would I even go into the hospital to operate a Ventilator?
The point is that the UK (and many other countries) are essentially 100% oriented around COVID-19, to the extent that the entire resources of the country and its people are dedicated or impacted by it.
Lets reiterate the death rates, from Imperial College's own report:
0-9: 1 in 50,000
10-19: 1 in 16,667
20-29: 1 in 3,333
30-39: 1 in 1,250
40-49: 1 in 667
50-59: 1 in 167
60-69: 1 in 45
70-79: 1 in 20
80+: 1 in 11
The above is slightly less than the risk of death from any cause.
Why does anyone do anything at all? Mate, if everyone sat on their arses all day we wouldn't have been the species that we are.
> The above is slightly less than the risk of death from any cause.
So let's slightly less than double the death rate for anyone that catches this _highly_ contagious disease? Get real mate, come on.
People might not go in to stack shelves but they will go in to save their fellow citizens lives. 1 in 3333 20 somethings and 1 in 1250 30 somethings is still a fuck ton of people. This is basically the base of your economy.
Because all of your numbers are wrong and assume that the person gets the best intensive care possible. In a pandemic like Italy, the healthcare system is overwhelmed and you cant get care an ventilator. Then death rates go up 20x, and yound people start dying too.
You would do those things because collective survival of organised civilisation depends on it
> but not Climate Change, Obesity, Air Pollution,
How does Climate Change directly kills people now? In its most catastrophic failure in the future, it will. But we still have time to fix it.
Obesity is a Choice. I have never heard of people getting Obesity in third world countries where they dont even have enough food.
Air Pollution may shorten our life spans, but its origin also improves our quality of living and lengthen our life expectancy. So it really is a trade off.
I would even go as far as to say if anyone thinks we should put those money for Climate Change and not to save those elderly will be morally wrong. But that is just my personal opinion.
Climate change should be treated as an emergency, we are already on an unavoidable course for misery. It cant be mitigated any more. If you read IPCC report, it assumes massive negative emissions, larger in cost than the entire oil industry we have today.
Preventing climate change is a fantasy. Sont take it from me, watch Bill Gates discuss the topic.
Firstly, is QALY really the right number to use here? We are talking about deaths.
Secondly, yes, 500000 deaths in the short term is much more alarming and destructive than the same in the long term or some time in the future.
Interesting this age thing...I bet older people are all for it, others less so. Might even solve any unfunded pension problem :) but then no age group is safe and everyone is scared. Topped off with the government's job to do the best for all citizens.
> This seems... completely unjustified.
Um, no. Firstly, not everything is about rational economics. No sane and functioning democracy is going to allow 500k people to die if it can stop it.
500,000 people with an average age of 79, the vast majority of whom are in poor health with existing conditions. This is what the data from Italy shows.
Coronavirus is just the last nail in the coffin - it brings forward the deaths that would have occurred over the next 1-2 years into the present. The panic is irrational.
Humans are irrational creatures. They're not robots. This is a feature not a bug.
What's the cut-off where it's okay? Like, you can stop all road traffic deaths, just stop driving. Sure, it might cost you a lot etc, but no sane and functioning democracy is going to allow x people to die if it can stop it, right?
Some of the tens of millions of people under 40 who will have to cover all that debt over the next decades might beg to differ.
You are already covering debt for a lot stupider reasons at least you can console yourself that the money was worth spending.
The point is precisely that views differ on whether the money is worth spending ;)
I think a half a million people are worth saving even if some of them get decades more of life and some only get A single decade more of life.
Damn right and no people who watch 500k people die for nothing is going to tolerate the continued rule of such a government.
> How can we justify this sort of effort for Coronavirus, but not Climate Change, Obesity, Air Pollution
I do think we would react the same way to any of the other issues if you only the side effects were more 'immediate'. Things like climate change do not impact day to day life currently and especially not in western world. It's just too easy to ignore them right now.
The irony of course that land use change drives both increasing zoonotic epidemics and climate change.
http://m.nautil.us/issue/83/intelligence/the-man-who-saw-the...
yes it is, that's how humans think, it is whats it is...