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[00:00:08]

Hello and welcome to The Stand with Eamon Dunphy. The stand is proudly supported by Tesco at Tesco, our exclusive house for over 65 family carers and extremely medically vulnerable customers are every weekday, Monday to Friday, up to nine a.m.. Health care and emergency services have priority access at all other times now, more than ever, every little helps. Now the news on the covid pandemic and the and the virus this week is poor. And on Monday, the government announced new measures for an increased lockdown.

[00:00:51]

And there is apparently even in cabinet, no consensus about how best to tackle the crisis we are in. There are two issues public health, of course, and the economic consequences we will face if we don't have a measure of activity in our society that produces jobs and that allows businesses to survive. The question, I suppose, is can one reconcile the requirements of public health with the demands of an economy that is sustainable? Last week, the practice at covid committee invited a number of physicians and scientists to address it and one economist to represent the economic point of view.

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That was Dan O'Brien. Dan is the chief economist at the Institute for International and European Affairs. He's also a regular columnist with the Independent Group on the Sunday is in the Sunday Independent and most Thursdays he's in the Irish Independent. Dan, thank you very much for joining us. You gave evidence to the Iraq this committee last week. What did you tell them?

[00:02:12]

I suppose a number of things. And one of them, I suppose, to start with is that when you were a kid, every day on an average day in Ireland, seven people died of TB. That was a really bad thing. And TB devastated people's lives, but it didn't stop people from living their lives. And it was something that people came to terms with. And thankfully, medical advances made sure that it stopped being a thing that destroyed lives.

[00:02:44]

And hopefully that's exactly what will happen with coronavirus, and it'll happen much more quickly. But ultimately, my point was that we've been struck with something that's really bad, that's taking lives. And I know people who've been killed by coronavirus, but we do have to live with it because it's not going to go away in the immediate term. And what we do know is that the economy is going through a sort of shock that is really, really frightening.

[00:03:16]

Nothing like before 2008 was small beer compared to this. And that is going to have enormous consequences for globally billions of people. And in this country, hundreds of thousands, millions of people, and particularly for younger people who we have to remember are at almost no risk of dying from covid have a very low risk of even getting sick.

[00:03:46]

Yes, and that's a very interesting point you make. And it's a contentious point. Dan, first of all, the idea that it is relatively mild for younger people has perhaps encouraged younger people to be less rigorous, shall we say. However, there is mount a mountain now of evidence to suggest that there are a. Effects to the body, lungs and heart in particular, that may be lasting for young people, although and now we find in yesterday's figures, for example, 67 percent of those with the new infections are under 45.

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And there's a higher figure of eight percent last week of people contracting the virus who are under forty five. And there is a measure of agreement among physicians that this virus is much more damaging than it was first thought to be, even though you don't die.

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Well, I'm not I'm not going to go into the medical examiners. I'm not a doctor. And I know there are there are plenty of reports about about these longer lasting effects. Let me just say, this disease has been around for six months. It's very difficult to know what the long lasting effects are going to be when we just had it for six months. There are risks. There are risks. Every way we go on this thing, there is a risk and it's only a risk that this that a significant number of people will have longer lasting effects, including younger people.

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But that is only a risk. We can't know that for sure. Six months into a new disease. Yes. Well, what I'm saying is if you're twenty five twenty five year old and you're looking at almost no risk of dying, and if you get out of dying of it, if you get it, some possible risk of long term effects, if you get it, you're looking at you're unemployed, you're looking at most your friends are unemployed.

[00:05:42]

You're looking at the chances of the economy turning around where there won't be mass unemployment is years away, because when you have unemployment shock and lots of people lose their jobs and whole industries are decimated, which, you know, let's be honest with the hospital hospitality, travel business. Yes, there are going to be mass business failures, mass loss of jobs. That is not going to suddenly, you know, other businesses are going to just spring up overnight to replace those.

[00:06:06]

It takes time. Just as when the construction industry collapsed in this country 10 years ago, it took time for people to find other things, to do other things. Some people went abroad, some people went into different businesses. Didn't happen overnight. And it took years for unemployment to come back down. And that is now really what we're looking at. It's very unlikely that we are going to go back to, you know, suddenly snap back to full employment where we were last January.

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So that means younger people are facing a and it's always younger people who are worst affected by the labor market shock. They're the people who are on youth. Unemployment is always much higher than unemployment for older people. You know that that is the balance of risks you're looking at if you're twenty five years of age. And certainly if I go back to when I was twenty five years of age, you know, I know what which which, where I'd be, which risk I'd be more, more afraid of.

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But that said, you know, we're learning all the time about about those risks. And, you know, we have to keep open minded about the evidence, about how, as you mentioned, know, those sort of longer term effects, health effects we need to keep, you know, constantly appraised. We're in a new scenario. We need constantly to take on board new information and update how we look at the huge number of risks that we're facing as we go forward.

[00:07:27]

Yes.

[00:07:28]

I mean, and I want to talk to you about the economic consequences. I just make one point about the younger people, about 25 year old. They they may not be at risk of dying, but they're certainly highly likely to pass it on and therefore spread it in the community. But that point aside, I want you you know, you talked on Sunday about the horrifyingly clear evidence that's now emerging and it is emerging in Britain in a spectacular way down, as you cite in your piece, and that we are facing into something that we could never even imagine in terms of let's take job losses and the the industries you mentioned hospitality and travel, for example, and the possibility that a significant segment of that society that relies on travel, tourism and all of that may never reopen at all.

[00:08:33]

Yeah. You know, look, let let let's be honest. If you go to a rural town in Ireland where you've got a couple of pubs and those jobs are not booming businesses we've already had people who have people drink has changed. You know, these are these businesses are not making a lot of money. They've been closed now for five, six months. They many of them are simply not going to reopen. There's a lot of businesses that, you know, are just not going to be able to find a path back to profitability.

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And if you're running a business and you say there's no way I'm going to be able to make a living out of this, you're going to say, right, I need to, you know, stop hemorrhaging money at least. Husband, the resources that I have to look at starting a new business or or doing something else, but, you know, the brutal truth is that an awful lot of businesses, from pubs to gig events to travel businesses to coach hire are just not going to be able to survive this.

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So that means the businesses people have built up throughout their lives. A lot of businesses are going to go. The jobs that are associated with them are going to go.

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Now, the safety valve of just in passing. You mentioned the crash of two thousand eight, nine, 10. At that time, there was an option of immigration. That option in this crisis really isn't there, is it? It's unlikely to be.

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But let's just say something a little bit positive about that, that we've been on it. We have this long tradition of of leaving when things go bad, going back to the middle of the 19th century with the famine and probably before. And, you know, you often lose a lot of a lot of talent, a lot of energy when people emigration. If you look at the last crisis of 2008, you know, the vast majority of people who left were not actually people who didn't have jobs.

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They were either people who had jobs and moved to better jobs abroad or young people fresh out of college who left straight away. So when you don't have the volume, you could argue that you keep the talent and the talent will always find a way to do something because most people want to do something. So, you know, maybe maybe that's not such a bad thing, that there isn't an option to get out that will keep the talent and the energy and the innovation that those people have.

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And that that will that will that they will do things here that could and could actually accelerate the recovery rather than slower and for our economy and an open economy.

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And it's surely our problems are compounded by the fact that the United States and the U.K. and, of course, Europe, all of whom are serious trading partners for us, they are in a hard place as well.

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Yeah, like, look, the numbers are beginning to trickle in in terms of what it's done to output and employment. And it's really frightening. Like, you just, you know, look, I'm a data person as an economist. I look at graphs and and and check data all the time. And just the way the full you know, you put it into historical context, you know, you've got to expand the graphs because just nothing has happened like this.

[00:11:54]

There has never been folds like this in so many areas. And, you know, when you just don't create the wealth that we are so dependent on our our society, our economy is a fragile thing, as we found out in 2008 when Lehman Brothers went down. You know, it's a highly complex system. It's a fantastic system in the sense that it generates so much wealth and means that people aren't hungry and people have opportunities and a good standard of living in a way that our grandparents couldn't even imagine.

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But it is a fragile system. We knew that after 2008 particular, it has been hit by the mother of all shocks now. And, you know, we don't know where that's going to go. It's not going to be good that we can be sure about that. The economic consequences of this are extremely serious. For instance, within Europe, Italy was on has been teetering on the brink of going Greek for many years. This has pushed it over the edge.

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Italy, by every measure, has been really hard hit by this economically. And how Italy doesn't go Greek, it's hard to see. You know, we've had this European rescue recovery fund in large part that's aimed at preventing Italy from going Greek. You know, given the scale of that, the the shock, I don't think it's not going to be nearly enough. And how we get out of that problem alone is going to be a major issue for twenty, twenty one.

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But that is twenty, twenty one. It's it's getting through the rest of twenty twenty is going to be it's going to be difficult enough in the European context.

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How troubling is it that Angela Merkel is about to leave the political stage because she has been a leader and a finder of consensus and indeed in terms of the European package you referred to hers was one imagines that the voice that most were listening to and she got it over the line because it was by no means universally popular. I go a lot further than that in and say that she was completely decisive in terms of that happening, that up until her very sudden change in mid-May of this year, there had been a very traditional Germanic n No.

[00:14:14]

Transfer union position and southern countries looking for looking for for for solidarity out of a common EU budget. And it was her change in mid-May with with the manual macron, the French president, that totally changed the calculus and left the smaller northern European countries in a minority. They simply weren't able to resist the the weight of opinion within the European Union that she was absolutely crucial. And she has been such a force for stability. You know, people who've worked directly with her have sat around the table with her.

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You always speak of her incredible preparedness, how diligent she is on all of the briefs. She has a stack of documents in front of her. She can open to the exact page that she needs when she needs something immediately. She's been around. She feels like part of the furniture in Europe. She's almost a historical monument herself. She's been around for longer than far longer than any other EU leader, 15 or fifteen years now. And she has another year to run.

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So the German federal election isn't until September of next year. So she'll be around for at least another year or so. I suppose, if we want sort of continuity and and stability, having the by far the most influential and important political leader in Europe around for to see us through the next 13 months, you could could be viewed as something relatively positive.

[00:15:45]

Now, as somebody who advocates that, we learn to live with this virus the way we lived with TB, for example. And how does that work in practice? Because that is really that there's a huge division now in the cabinet. There was a very robust exchange. We understand, in fact, the minister for health has admitted it. And now even among the medical community, there are cracks appearing. There is no consensus about how to move forward with this.

[00:16:24]

What is your view about the way forward that is economically sustainable?

[00:16:31]

Well, let me start by saying I think I do not think I'm right about this. Some things you can feel your strong confidence in your views. I think we all need not to get into this sort of any time in a debate about this not to get into this sort of ego thing. I'm right. You're wrong. Yeah. We don't know where we are. We need to listen, I, I listen to medics. I've read more medical stuff in the past six months than I've ever read in my life to learn from people who are expert in their field.

[00:16:59]

And we all need to sort of listen and not nail our colors to firmly to a mast on any issue because things are changing so fast. We're learning new things. This is a new problem, a new threat to society. And we all need to sort of put egos to one side and try and build up a consensus on how to deal with what's the least damaging way for society to get through this. So that's that's the sort of preamble my hunch from the get go, looking at the first wave of data that came out of China and everything subsequently and we've touched on it already, is the difference in terms of vulnerability, particularly by age with there's a lot we don't know about it, as you've alluded to already.

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But we do know that there is a massive, massive difference in vulnerability. The older you get, the more vulnerable you are. If you've got an underlying illness, you're even more vulnerable as you get older. So that is a fact, a hard, uncontested fact that we have about this disease and we need to use that that fact and. Does that mean releasing the less vulnerable, as you cited earlier in our conversation, than the twenty five year old or 30 year old, 35 year old, does that mean and allowing them to get back in the workplace, does it mean loosening restrictions on the hospitality industry?

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Does it mean and this is a critical one. I see Michael O'Leary made another intervention in the last 24 hours. Does this mean allowing more travel and accepting? Yes, we do the best we can to make it safe, but we're going to go for it. I would I you know, saying we're going to go for it to be there. Are beat Trump in. Well, I like look, you know, I wear a face mask when I go out.

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I think we all should we should all wash our hands until they almost fall off, you know, those sort of things we need to constantly to keep distance, for example, you know, open, clarifies Jackson. Let a reporter in there for a night out. That's insane. I'm not advocating that in any way. But what I am saying is that, you know, we live in a world that is a lot worse than it was six, six months ago.

[00:19:21]

And that's not going to go away. And we have to live with reality. And you know what? I think that people should have to make choices based on the risk that they face as well as what how their behavior can affect everyone else. Yes. So I think it's you know, there are two things here. But, you know, my real worry is that we get to 18 months from now and we are in a Great Depression. We are back into a situation with mass unemployment, governments running out of money, not having the money to run basic health care systems.

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That is a feasible situation. Yes, that is that is how bad this could be. This could be worse than anything we've experienced before. And that is a frightening scenario. And, you know, when you have even the risk of that kind of a collapse, then you need to take it very seriously and and look at things and say, how are we balancing these things? But just in terms of where should we go from here? Again, in my column today in The Independent, I'm suggesting that we need to get you know, a lot of people are losing faith in this.

[00:20:36]

There's more and more criticism of the government in terms of the measures it's taken. I think there's not it's not entirely clear when they're coming out of the trigger points. And I'm suggesting today that maybe it will be a good thing for the government to say, let's look at the number of people being admitted to hospital. Let's look at the number of people in intensive care, because these are hard data. The testing data, we could be missing a lot of people.

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So the testing data is very important. But the really important thing ultimately is that we don't let our hospitals get overrun. And that was the original objective is let's manage this thing, bend the curve so the hospitals don't get overrun and that that affects everyone. And that's that is a disaster. Now, we're a long way from that now, but we use those metrics to say that the government says, OK, if our hospitals start moving towards filling up again, they would be the trigger points for for tightening and taking new restrictions.

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And that that may be way, maybe suggestion, maybe a way to have a clear message to people in terms of how serious this this is getting that, you know, it is it is hospital capacity. That is the because implicitly that is the objective of policy. It is to keep the hospitals from getting overrun. But the government goes back to being more explicit about that, saying, you know, way we're managing this is to prevent hospitals being overrun.

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And here are the numbers on how many people are going into hospital and how many people are in ICU.

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Well, the precursor for people being hospitalized, going into ICU and dying out are the number of infections daily. And last Saturday they were two hundred and on Tuesday to one hundred ninety five and yesterday fifty four. So first comes the infections, next comes the hospitalization. And then it gets very serious in terms of ICU capacity. But I think that's the bad news. The good news, if you can describe it as good news, is that the people who are being infected now are not in care homes.

[00:22:41]

They are not the elderly or people with underlying conditions because they're observing the rules. They are younger people. But nevertheless, those figures are rather frightening. Wouldn't you agree? I mean, as somebody who takes pays attention to data at two hundred last Saturday, one ninety five on Tuesday. That's terrifying. Well, it is it is definitely something that we all are watching closely and quite rightly, but there has been and this we've seen this globally, there has been a separation between the number of cases being found, for instance, the number of deaths, which is the really worrying thing that while cases have gone up.

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Let's go back to March CASIS rose and very quickly get started rising, and we have this really worrying increase in both cases and deaths, we're not seeing that now anywhere in the world. We're seeing an increase in cases in many places, but it's not transferring across in the same way into deaths. So we see that now there are six people as of yesterday's figures, there were six people in intensive care across the entire country, the republic. There were one hundred and fifty five people at peak.

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OK, so we've had this increase and it's been going on now for three weeks a month. But if we look at hospital admissions, two people were admitted to hospital yesterday with covid, OK, now that is a fraction of what it was at peak. So we're getting an uptick in cases. But because the cases are not cases in nursing homes, as many of them were early on, we're not getting the same feed through into hospitalizations and ICU usage.

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So that is a positive thing. And it may say that we're now more aware of the illness that care homes are taking much greater precautions as they were back in the day when it hit first, that those who are more vulnerable are being more careful and are not getting infected as they were six months ago. So I think there's some good news there in the sense that both hospital admissions and ICU in Ireland have remained very low and stable and have not ticked up as the number of confirmed tested cases have ticked up.

[00:25:02]

That is down. That's that that is good news.

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Now, Dan, the word unprecedented has been used to describe this. And, of course, it's entirely appropriate word in your study of economics, extensive study of economics. There really isn't anything we can compare this with in terms of scale. I noted the British figures coming out. I think they had the lowest fall in GDP for three hundred years. And the Great Depression in the United States has been cited as some some kind of guide. But as I understand it, this is much worse.

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What do you envisage in assuming we try to live with it? And what do you envisage as the best case scenario in 12 months time? And what would you envisage as the worst case scenario in 12 months time? That may be an unfair question, but I think for our listeners, it's very important that they get a feel for it.

[00:26:15]

No, it's a great question because I think people need to we need to think about it in those terms. So let's say the best case scenario is that treatments continue to improve. And that's something that the Iraqis committee last week that the medics were arguing about lots of things, including even the wearing of face masks. But one thing they all agreed on is the treatment of people who have have they go to hospital has really improved in multiple ways. So that's good.

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And that'll continue. So during all the time, big issue will be the vaccine. Of course, if there can be a vaccine, a successful vaccine that gets rolled out and so that the the health effects of this thing are brought under control and people feel more confident to go about their daily lives and that we get a recovery, that things go back to close to normal and. The things can recover. I still think if we can, you know, unemployment, even in the best case scenario, is going to be higher.

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This has been a huge shock. It'll be higher in a year's time under the best case scenario. But hopefully things could be going in the right direction under the worst case scenario. You know, it really is hard. To see how bad this thing could get, as I say, you know, modern economies are very fragile. You know, in the past when we had Spanish flu 100 years ago, it was much more deadly. By the way, you know, Spanish flu killed up to one hundred million people, which in today's world would be 400 million people.

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So far, the death toll for covid has not reached one million. So, you know, this is not nearly as bad as Spanish flu, it would seem at this point. And it's hard to find evidence of Spanish flu having much of an impact on economies, despite it being a much more serious in terms of killing more people and killing more people. Globalization, of course it was. But every every country, it was like everything else. We were all reading up on these things much more than we used to.

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And, you know, I just read recently, for example, that four percent of the entire population of India was killed by Spanish flu, apparently. I figure I read. So this was really devastating for for every country in the world spread around the world. And some countries were affected more than others, but it was extremely serious. But there isn't you know, if you look at the literature, either economic or historical, for the 1920s, there's very little discussion of the night of the of the of the Spanish flu.

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It didn't it doesn't seem to have any lasting economic impact or significant lasting economic impact or even short term. But this clearly has. So this is very, very different. And we we live in a different world, a we're reacting to it very differently and it's having an enormous impact. And as I say, economies are very fragile. We saw that with the way the Lehman Brothers crash ended up causing tens of millions of people to lose their jobs.

[00:29:24]

It led to a really deep recession we saw when Greece went Greek and had its collapse just how serious things can get for a developed economy and ourselves. We had a really, really serious recession that up to that point was pretty much, you know, almost unprecedented for for a developed economy in in sort of the last 50, 60 years that our recession was four years. It was a huge contraction of the economy and employment. So that was very serious.

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But this has the potential to be a lot worse. You know, I'm genuinely frightened by where we are now and how bad this could get.

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And if we factor in Brexit, you don't want to go there because Brexit is going to what was going to be extremely troublesome in and of itself. If we factor Brexit into the equation, it makes the picture look darker. Yeah, it does. But let's be clear, the effect of covid has already been multiple times as bad as and no deal Brexit. It would have been on its own. Now, if we get a no deal Brexit on top of that, you know, we're going to get an industry that's done quite well.

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The agriculture and specifically the the beef meat industry is going to get whacked next year. And we're going to have a major disruption for getting stuff into the country, which is the stuff that goes into making other products and it goes on for supermarket shelves. There's got to be major disruption the beginning of next year. If that happens, it's the last time we need another sort of big shock. So that is that has the potential to make things even worse down.

[00:31:05]

We're really grateful to you for joining us on Standdown. O'Brien is a columnist with the Sunday Independent and every Thursday in the Irish Independent.

[00:31:15]

And he is the chief economist at the Institute for International and European Affairs. He lived, incidentally, in 10 European countries. So he holds that particular distinction. Thanks very much, Dan. Thanks to all of you for listening and a very special thanks to Tasco, our sponsors.

[00:31:34]

That's all we have time for now. We'll talk to some.