Section B: Evidence based management exercise

Read the following article and answer the questions listed in order to analyse it. You should adopt a critical thinking approach in viewing the case from sensemaking, CSR and evidencebased management considerations.

Health versus economy trade-off isn't a solvable equation Responses to the coronavirus are often presented as a binary choice: health and saving lives versus the economy. As Victorians suffer through a harsh phase four lockdown, that apparent trade-off between health outcomes and economic activity becomes even starker. Livelihoods will be lost, entrepreneurial dreams shattered, and economic output will be reduced by the decision to shut down most of the economy even though the other side of the equation - the value of the lives saved, or infections avoided - defies calculation. The renewed outbreak in Victoria, underscores the reality that, until there is a vaccine there is no cure for either the virus or the economy. Meanwhile, Treasurer, Josh Frydenberg, has said that the six-week Victorian lockdown will cost the national economy about $1 billion a week. Until Victoria lost control of the virus the national economy was expected to shrink by slightly less than 4 per cent this calendar year, with a horrific June quarter followed by a significant bounce back as the economy reopened. The numbers are now clearly going to be worse, given that Victoria represents about a quarter of the national economy and that its lockdown will have spill over effects even into those states that have, so far, been able to suppress the virus. The great unknown is whether the virus can be suppressed, and in the absence of a vaccine, is the Victorian experience likely to be the norm, with economies veering continuously between cautious reopening and then hard lockdowns and is there an alternative to Victoria's harsh response to the surge in its infections? The obvious reference point is the much-discussed the Swedish strategy. The Swedes didn't impose a lockdown, instead advocating voluntary social distancing, bans on large gatherings and table-only service in bars and restaurants. There have been about 6000 deaths attributable to the coronavirus in Sweden and its economy contracted by 8.6 per cent in the June quarter. The economic impacts weren't as severe as those experienced elsewhere in Europe - Germany's economy, for instance, shrank 10.1 per cent - but they are very similar to those of its Nordic neighbours and the death rate is about four times that of Germany's, about 10 times Denmark's and nearly 25 times Norway's, countries where the restrictions on activity have been far more stringent. That would suggest there isn't that much difference in the economic costs of doing little to contain the virus or adopting strong measures but there is, however, a very large disparity in the health outcomes. Economists are scrambling to put analytical framework around the "lives versus economic costs" question but there is no conclusive answer given the unprecedented nature of the pandemic for modern economies and the novelty of communities' responses to it. Some studies of mobility, using mobile phone data, have found that even as restrictions eased consumers behaved differently, with less activity, an avoidance of congested areas such as shopping centres and a shift away from non-essential activities suggesting that if the threat of the virus and fresh outbreaks persist, consumer fear of infection is likely to impact and depress economic activity. As restrictions are eased, infection rates can rise rapidly and quickly get out of control. The initial boost to the economy from reopening can evaporate almost overnight. It is, perhaps, the human and economic costs of continually opening and closing economies - big businesses won't invest or employ with that kind of prolonged uncertainty and smaller businesses won't survive it - that says prioritising the health response is also the best economic strategy. In the absence of a vaccine, that may have to be a long-term strategy, albeit hopefully with fewer restrictions and a reduced economic cost. There are academic papers that, having come to that conclusion, argue for more targeted containment measures once the virus is under control. They advocate strict quarantines for the infected and the most vulnerable groups in the community but a gradual normalisation of activity for those with some level of immunity or at low risk and argue for a granular approach to different industries and activities, depending on their levels of perceived risk. Constraints on activity could be dialled up or down, incrementally and tightly-targeted at a local level, in response to infection rates. It is possible to try to put a value on the lives lost to the pandemic and then try to compare that to the economic cost of the lockdowns but, apart from being a distasteful calculation with significant moral dimensions, the inputs are very rubbery, and the concept is simplistic. Health systems do put a value on lives to decide how much to spend on treatments. Comparisons between the value of lives lost and losses of economic output are made in a lot of pandemic-related research. Containing that side of the health-versus-the-economy equation to the value of lives directly lost to the virus would, however, grossly underestimate the pandemic's wider health and welfare costs. On the other side of the equation - the broader economic impacts - the experience of Victoria relative to those states that have reopened their economies will provide better insights into the costs of a harsh lockdown after an economy has started to reopen. With the threat of renewed infections still affecting the psychology and behaviour of consumers and businesses in the more fortunate states, we'll also have a better sense of what a post-pandemic normal might look like if the virus is suppressed but not eradicated. It is unlikely, however, to alter the convictions of politicians and many economists that the best economic strategy for responding to significant outbreaks of the virus is to lock the economy down as tightly as possible for as long as it takes to choke the rate of community transmission. A six-week or even three-month lockdown appears preferable to the long-term damage done if there were a rolling series of reopening and closures. The health and the health and economic outcomes don't appear, from the evidence to date, to be conflicting priorities but rather inter-dependent. Setting aside the moral questions, sustainable economic growth, even at a pandemic reduced level, can't be achieved unless the virus is sustainably contained, whatever the immediate economic cost.

1) Considering and discussing two of Clegg's characteristics of sensemaking, what is your interpretation of this article?

2) If the Australian Government could be aligned to the justifications of Corporate Social Responsibility (CSR) in their response to this crisis, how would you advise them? Discus two justifications