What Covid-19 mortality might look like if we all counted like the Germans

Germany Covid

One of the less covered aspects of the Covid-19 crisis has been the wildly differing ways in which countries – and within the US even states – count the dead. This in turn has made comparability between countries almost meaningless, with very little to be learned between the numbers of deaths in Italy for instance, and those in Sweden. And by the time you bring China into the discussion, comparability ceases even to be mentioned. The singular failing of the WHO is not failure to combat the virus (which it has little power to do), but failure to at least coordinate consistent numbers. On this basis alone, the WHO has been a fiasco.

The problem is that how one counts deaths, even though it sounds like it should be scientific process, is actually an art. There will always be huge amounts of subjectivity in interpreting whether a virus like Covid-19 constitutes the “primary cause” of death, or whether it is merely a “contributary factor”. The discipline with which a group of medical practitioners understand and stay within guidelines on this reflects all sorts of local conventions and culture. Generally, one might assume that the more technocratic a society is, the more strict they would be.

Step forward Germany. Throughout recent months, German numbers have been hailed as an example of what good governance should look like, with early testing being seen as key. Yet if you look at the details, a puzzle is presented: although German total deaths are much lower than that of France, for instance, its total numbers of infections are almost the same.

Total Covid deaths

Note: mortality rate defined as reported Covid deaths as % of total infections “Non-German Europe” are countries coloured in red; Source: Worldometer.info

All the good governance in Germany would, one assumes, mostly have led to lower deaths through lower infections, yet this has not occurred. Rather, the gap between total deaths is partly filled by the differences in counting methodology. In fact broadly speaking “Greater Germany”, encompassing Austria, Switzerland and Denmark, together average a mortality-to-infection rate at around one-third that of Non-German Western Europe (and this is already distorted by the fact that in Switzerland, non-German cantons are reporting much higher mortality than their German brethren).

So what is going on? Whilst I have no doubt that the Germans are doing better, they are not doing that much better. But at present, if there is a difference in counting methodology, I also have no doubt that I would lean towards the German over the non-German way. What then would the UK and other countries’ mortality rates look like under the German system?

First, I have assumed a simple re-basing of these mortality rates to the Greater German average, creating a like-for-like “Germanic deaths” number for each country. This lowers them substantially. “But”, I hear you cry, “is the German healthcare system not better?” Well, perhaps it is – though in fact there does not appear to be much consensus on this from various authorities. But let us say for the sake of argument that there is a qualitative difference, we might use a simple proxy such as the number of hospital beds per capita to readjust this number and make it more apples-for-apples.

Greater Germany Covid

Source (for beds): Nationmaster.com

Greater Germany does have a better-than-average provision of hospital facilities, particularly in Austria and in Germany itself. Taken together, the Germanic average of hospital beds per capita is higher than most other Western European countries, although France is also quite high. If we then adjust the “Germanic deaths” number upward again, by the number of beds, we have an indicator of what German-style Covid-19 death counts might look like.

European Covid like for like

Note: “adjusted” figures adjusted for hospital beds per capita compared to Greater Germany

Despite making this adjustment upwards, non-German Covid-19 deaths, whilst higher than Germany’s (and almost certainly correctly so), are still substantially below the current reported numbers. In other words, if the UK used German-style death counting, its numbers of Covid-19 deaths might be about half the current number and possibly well below. The same applies to all other countries in the region. I would posit that this is the basis of real comparability, not the published statistics.

Of course, this is all back-of-the-envelope stuff and many will complain that this does not take into account all the nuances of each country’s policies and virus reactions. But there can be no doubt that:

  1. Each country is counting in a different way;
  2. If the UK were counting along German lines, reported deaths would be much lower; and
  3. Conversely, if Germany were counting along UK lines, their numbers would be higher.

However taking into account what has been happening in each country, if I were to guess at who’s numbers are a better and more accurate representation of the real situation, I know where my money would be. But then, I am Austrian.

 

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(For reference I did the same analysis incorporating the Asian OECD statistics, which seem remarkably similar to Germanic numbers. China in particular, whatever else is may have covered up, has a stringent policy of how it reports Covid deaths and the region as a whole would likely be similar. However the outcomes from this analysis did not move the needle enough to start having to justify commonality between Asia and Europe)

Asia OECD Covid

Not all imbalances are created equal

Trump Merkel

Finally, an opportunity to get my teeth into something classically “asymmetric”: trade.

A piece recently crossed my path, dripping with the complacency of either ivory-towered elites not thinking through the real world; or worse, a Koch-sponsored lobbyist who knows perfectly well the costs of globalisation but wants to hide it in the sophistry of undergrad economics in order to shift the conversation amongst those who do not know better.

It turned out, of course, to be by Dan Hannan, friend of a friend but also the kind of writer who has something of the over-enthusiastic undergrad about him, and is a paid up neo-con – hence the telltale signs above. It was misleading on a number of accounts, and I would go as far as to say, was quite mischievous.

First, the article starts by making fun of Trump’s complaint over German trade policy. Of course, broadly speaking the Germans are exporting a lot because they make great stuff. That’s fine. But the problem is that a good chunk of their competitiveness has nothing to do with their quality of manufacturing and everything to do with a form of currency manipulation, in the shape of the Eurozone. In this regard Trump is perfectly correct to say that they are “selling too much stuff” – just as many would accuse China of the same in recent years. I hope the author was not attempting to criticise the use of simple language for simple people.

Secondly, Hannan goes on to make this statement:

Incidentally, there is nothing wrong with having a trade deficit with Germany, or with anyone else. Germans can do only two things with the American dollars that they get for their goods. Either they can import American products, or they can invest those dollars back in the United States. At the moment, they are doing a lot of the latter – to everyone’s benefit. The trade deficit is matched, down to the last dime, by the investment surplus. That is why we talk of a trade “balance.”

This is not entirely correct. The fact is that because it is dollars and not any other currency, the Germans (or anyone else) can directly take those dollars and invest them elsewhere without the US being involved. This is the burden one bears for owning the currency of international trade, the “exorbitant privilege” of being the world’s only real currency. Of course this brings benefits to the US too, principally the ability to print as many dollars as they want and continue to borrow in it, without causing inflation or lowering their credit rating. Nonetheless, America does suffer uniquely.

Last is the issue that has been exercising Trump, Sanders, Corbyn et al (though sadly not Theresa May), namely that not all imbalances are created equal. It is all very well having a capital surplus to match your trade deficit; but the beneficiaries of a capital surplus – financial and real estate investors for instance – are not the same people losing out from the trade deficit. Capital inflows hugely benefit landowners and bankers, but don’t do so much for others.

For most large countries, it would be a pretty sad and politically unsustainable situation to rely only on capital inflows (though small entrepôts like Hong Kong or Singapore might fare better). It would almost certainly lead to unemployment and inflated asset prices – just as it has done in the US. And it won’t be the homes of unemployed steelworker in Bethlehem whose prices go through the roof either; it’s going to be the flats of white collar urbanites in Manhattan.

Herein lies the limitations of much classic economic theory. This is even before we get onto the issues of Europeans freeloading off American defense spending and so on. Really, the question is how on earth do we expect most electorates to digest enough of these nuances to make rational voting choices? With the likes of Hannan doing the talking, in all likelihood they never will.