How pandemic management maximises spending

Broadly speaking, we can disentangle two approaches to pandemic management and policy (see https://doi.org/10.1515/ael-2021-0075)

On the one hand, individualistic approaches struggle to control and forecast pandemic diffusion in real time. They aim to track individual behavior and social interaction (and then advocate for draconian measures such as lockdowns and forced vaccination for all).

On the other hand, holistic approaches aim to understand the whole of pandemic as a social phenomenon, then advocating focused protection of vulnerable people, including through voluntary vaccination campaigns, while trusting pre-existing immune defenses, treatments and emergent natural immunity for non-vulnerable ones (see for example https://brownstone-org.cdn.ampproject.org/c/s/brownstone.org/articles/does-fauci-bear-any-responsibility-he-says-no/amp/).

Individualistic approaches maximise spending by fostering mass testing and vaccination for all.

For instance, by 31 December 2021, US performed more than 718 million tests, implying that the entire population was tested more than twice on average. However, people are not usually tested for cold and flu and other mild diseases. An holistic approach would argue for testing only serious cases, such as those which require hospital admission. And hospital admissions related to covid-19 were only 29.11 million in US over the same time window (24 times less).

Moreover, by 31 December 2021, US administered more than 511 million vaccine doses, seeking to vaccinate most of its population. However, an holistic approach argues for targeting vulnerable people (mainly the oldest and fragile ones). And US population over 65 years old is around 55 million (9 times less).

How do governments sustain all this spending for mass testing and universal vaccination? Mainly though public debt issuance and its monetisation by central banks.

According to the OECD Report on 2020, “OECD governments borrowed USD 18 trillion from the markets in 2020, equal to almost 29% of GDP”. In this way, they repeated exceptional central bank action taken to respond to the North-Atlantic Financial Crisis of 2007-08.

In addition, OECD central banks purchased government bonds in 2020: “Total net purchases by major central banks reached USD 4.5 trillion in 2020, more than half of the new securities (i.e. excluding securities issued to roll over existing debt) issued by OECD sovereigns in the year”.

And guess who got paid?

More on pandemic management and policy, including references, in the following article:

Data Source for tests, hospitalisations, and vaccine doses: https://ourworldindata.org/explorers/coronavirus-data-explorer