It doesn’t stack up

A new book by two Covid commentators at least got it half right, argues IPA Adjunct Fellow Sinclair Davidson.

In a recent Financial Review op-ed Richard Holden—using a magnificent turn of phrase, “In the grand tradition of smart-arse academics-cum-columnists telling politicians ‘I told you so’ …”—told them so. Well, Steven Hamilton and Richard Holden have written a whole book telling us how right they were during the Covid years. The story they tell has two parts: the pre-vaccine and post-vaccine periods. They suggest Australia got policy in the pre-vaccine period largely correct and policy in the post-vaccine period horribly wrong. They, however, made the correct policy recommendations at every stage of the Covid crisis. To be fair, that is one version of events, and they tell a good story in making that argument. Other interpretations of the story can, and should, be told too.

The Hamilton-Holden version of events is that in the early stages of the crisis, lockdowns were necessary to prevent exponential growth in the rate of infection while a vaccine was being produced. Once a vaccine was produced the government should have vaccinated the population as quickly as possible and returned us to normalcy as soon as possible.

To be fair, they make a very good argument that Australia got the vaccine roll-out horribly wrong. The roll-out was slow, Australia did not diversify sources of vaccines, regulatory approvals were slow, the states should have taken the lead in vaccinating the population, and so on. If all anyone had to go on in understanding what happened in Australia in 2021 was the Hamilton-Holden account, there would be little argument about the accuracy of their version of events. As it is, they are correct on the facts.

The challenge facing Hamilton and Holden is that they are not just observers—disinterested academics writing a modern economic history—they were participants in the events they chronicle. As economists who participated in the various arguments and debates that occurred during the pandemic, they are now quick and keen to explain their role, and to cite their op-eds, at length, in illustrating their points. But they are somewhat reticent about their impact in justifying the initial lockdowns.

Were mandated lockdowns necessary?

In early 2020, 265 (mostly) academic economists had signed an open letter to the government making several arguments, including: “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.” For public consumption that statement got summarised as “there is no trade-off between public health and the economy”. Indeed, the book includes a heading ‘The trade-off (or lack thereof) between health and the economy’. To be fair, in some long-form interviews, Richard Holden did qualify that statement to being no trade-off “in the short run”. That subtlety was overlooked in much of the subsequent events of 2020-2021.

That open letter also stated, “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.” There, hidden in plain sight, is what could be the conclusion of a cost-benefit analysis. Yet, in the foreword to this open-letter they had condemned cost-benefit analysis and stated, “a callous indifference to life is morally objectionable”. Was that statement then, merely an opinion? If so, why did the signatories identify themselves as being ‘economists’ and not ‘concerned citizens’?

Unsurprisingly, Henry Ergas and Jonathan Pincus, writing in The Australian, described this letter as “gibberish”.

Nonetheless, the ‘arguments’ contained in this open letter became economic policy orthodoxy. Anyone and everyone deviating from the party line was howled down and condemned as callously indifferent to human life. I was interested to see how Hamilton and Holden would discuss this letter and its consequences. They do discuss the letter and state they were responding to several arguments made by ‘commentators’:

Some of these commentators denied outright that the lockdowns would save lives. Others claimed that although they would save lives, they would damage the economy and infringe on personal liberties, and the resulting trade-off wasn’t worth it. Some others argued that those hardest hit by the virus were either old or suffering from other conditions, and so their lives were worth less than those of younger, healthier people.

The problem is that Hamilton-Holden do not name these ‘commentators’—they don’t even footnote them. With one exception, in an otherwise well-referenced book published by an academic publisher, there is no reference to any economist arguing against the Hamilton-Holden viewpoint. Step up the mild-mannered and softly spoken Adam Creighton, formerly of The Australian newspaper and now Chief Economist at the Institute of Public Affairs. No mention of people such as Gigi Foster, Paul Frijters, or Sanjeev Sabhlok. The only other nay-sayer mentioned in the book is Pru Goward, whose contributions are dismissed as being “well-meaning but vacuous”.

The huge public policy failure was the slow roll-out of vaccines.

That open letter performed two important functions. It delegitimised the notion of performing a cost-benefit analysis at all, while simultaneously establishing the idea that those people who were undertaking a cost-benefit analysis were using incorrect counterfactuals. They repeat that argument:

The idea that our policy choice was between ‘a buoyant economy without social distancing and a deep recession with social distancing’ was the epitome of a false dichotomy.

Ironically, that statement is correct. But then—as far as I can recall—nobody was suggesting that was the comparison being made. Indeed, Hamilton-Holden provide no citation or reference to anyone making that comparison or suggestion. As it turns out, many people had already begun to engage in voluntary social distancing. The question is: were the mandated lockdowns necessary?

Hamilton-Holden neatly sidestep that question until much later in the book. It is only in the context of compulsory testing that they think to ask, “what is the proper balance between individual rights and community protection in a liberal democracy?”. This, we are told, is a basic trade-off. What we’re not told, however, is whether Hamilton-Holden consider this is a trade-off in the short run or the long-run. Later, we read:

There were examples of extremely callous decisions by policymakers. There were examples of restrictions that improved public health not one iota, but that deterred economic activity or infringed on basic liberties. People were given tickets for sitting on park benches. There were examples of blatant overreach in enforcing curfews, movement restrictions, and protests. A pregnant woman was manhandled—literally—for protesting on social media. Managing a pandemic is not a perfect science, but some of the measures represented a distinct failure by policymakers to optimise given the constraints.

Not quite ‘let them eat cake’, but very much ‘mistakes were made, let’s try to be better next time’. I am focussing on the Hamilton-Holden open letter and its fall out because, to my mind, it explains what happened next. Hamilton-Holden do not discuss the initial lockdowns much. Their chapter focuses on the JobKeeper roll-out and discussions about the Great Depression and the Global Financial Crisis. While they acknowledge that deliberately stalling economic activity is very different from stimulating stalled economic activity, they focus on previous economic crises.

Furthermore, they suggest Australia had a V-shaped economic recovery from Covid. Perhaps if you look at things such as GDP and employment you might think so. But when I look at empty store fronts, business failure statistics, high inflation, and declining living standards I do not think the Australian economy has recovered at all.

That is not the failure that Hamilton-Holden point to. They point to two subsequent policy failures that occurred. First the decision to insist on PCR testing as opposed to Rapid Antigen Testing (RATs) was a mistake. They are entirely correct—this is something economists would understand better than health officials. But this is not a huge public policy failure. The huge public policy failure was the slow roll-out of vaccines. When asked about the slow roll-out then Prime Minister Scott Morrison had said “It’s not a race”.

We cannot expect them to be too self-critical.

Hamilton-Holden make a good argument to suggest it was a race, that vaccines should have been rolled out much quicker, that the government should have optioned supplies of all the vaccines that were being developed. They quite rightly criticise the government’s efforts to turn the vaccine procurement into an Industry Policy initiative. They criticise the then Queensland Chief Health Officer, Jeannette Young, for promoting vaccine hesitancy by saying she didn’t want 18-year-olds dying of blood clotting when they would not otherwise die of Covid. Ironically, they then perform exactly the kind of cost-benefit analysis, displaying exactly the same “callous indifference” to human life, that they had previously accused others of displaying. They are correct—but it seems somewhat at odds, given their previous arguments.

They struggle to explain why this error occurred. I have a simple answer. Hamilton-Holden had convinced anyone and everyone there was no trade-off between public health and the economy, and having shouted down anyone who said otherwise, why wouldn’t the government believe it had the luxury of time in making sure the vaccines were safe and effective? In any event, given what we now know about the side-effects of the vaccines, was Jeannette Young really wrong?

So here is the thing. Hamilton-Holden suggest there was a Covid strategy in place: hunker down as best you can until a vaccine appears and then vaccinate the population as quickly as you can. Their entire argument rests on that being the strategy Australia adopted, and ‘we’ got it half right. I do not recall that strategy being articulated at the time. The impression I have is that the authorities made things up on the hop and adopted more of a muddling-through approach. In fact, Hamilton-Holden concede that “for a time … the public at large conceptualised the pandemic objective” as being to “flatten the curve”. It is obvious that at some point Australian governments adopted other objectives, yet those subsequent objectives were not well articulated to the general public.

This book is a challenging read. It does cover a lot of policy ground relating to the choice of testing regime, and vaccine procurement and approvals. But its coverage of the actual lockdowns and economic shutdown is limited (beyond the debate about JobKeeper itself), and the role economists played in shaping the decisions about lockdown is almost entirely missing.

Of course, Hamilton and Holden themselves shaped a lot of that debate, and we cannot expect them to be too self-critical. This book will be most useful to future scholars trying to understand the thinking of some of the important players in those recent events.

This article from the Autumn 2025 edition of the IPA Review is written by IPA Adjunct Fellow Sinclair Davidson.