To close or not to close

Factory owners are in a dilemma—to close or keep their factories running.  There is no consensus. The default option apparently is to keep them running. 

Those in favor of this option argue that the workers are safer in the factories relative to their home conditions.  The owners have taken measures to improve hygiene, awareness among workers about behavioral protocols that can prevent corona infection and provided the necessary tools to practice these protocols.  Factory closure will disrupt their incomes, forcing them to return to their village homes and be impoverished. 

Even if all owners are doing what is claimed above, does this mitigate the risk of spreading the virus?  The standard risk management theory in this case is to flatten the curve by imposing drastic social distancing measures and promoting hygienic practices to reduce the transmission rate. This 'flattening the curve' would spread the virus infection over time, enabling more people to receive treatment if they are infected. .  What social distancing does is to reduce human-to-human exposures, which is the central mechanism of COVID19 transmission.  

Social distancing requires reduction of population density in any given location no matter how hygienic.  Ideally, we would like every individual to be completely isolated.  This could reduce the risk of contracting the virus to zero.  However, it is neither pragmatic nor necessary.

There are guidelines on what is a safe number of persons who can be in close proximity with each other.  Some say 4, some 10, some 25.  Irrespective of time and place, no one says it is 100 or 200.  Note that 4 out 5 Chinese, who had COVID19 infection, contracted it from someone who did not know they had it.  The enemy is out there nested invisibly in numbers.  Therefore, the lower the number the better.

The density of workers in our factories is in hundreds and thousands, not even in high double digits.  Workers are exposed to the most important channel of corona transmission—exposure to a large group of humans at the same time.  And not just when they are in the factories.  The commute to and from work exposes them to additional risks of contracting the virus.  

Workers could avoid all these exposures by staying home.  The home is a tiny little hut, most probably in a slum, with quite a few family members, probably 4-8.  If the factories were closed, they could move to their village homes where conditions are most likely safer.  

From a public health point of view, the argument that the workers are safer in the factories is bereft of any scientific logic, given that the workers are exposed to lower density at home, particularly their village homes and can stay home if not required to work.  If you assume, as seems plausible, many factories are not able to provide the hygienic conditions and protective gears to their workers, the argument completely falls apart.  The risk of spreading the virus multiplies many times the more exposed an individual is to high human density.  

One cannot help but wonder why do the owners want to keep their factories running?  

Take the case of garments.  They are reporting order cancellations to the tune of nearly $1.5 billion.  While this does not necessarily mean the pending orders have hit zero, it does suggest that the economic disruption cannot be as big as implied when it is claimed that temporary closure will cause massive losses.  

One argument made is that they are producing the orders not cancelled so that the buyers cannot use inability to deliver as an excuse for not honoring their contracts.  This ignores the fact that buyers can invoke "force majeure" which allows them to not comply with the contract because of compelling circumstances.  A globally declared pandemic qualifies as a compelling circumstance.  If the buyers are certain they cannot sell these orders in their markets because of collapsing demand and outlet closures, they will invoke force majeure and face the consequences rather than import a stock of liabilities.  What will the owners do with their accumulated stocks then?  It is not therefore clear the owners' calculus to keep factories running on contractual grounds is strategically smart. 

Factories serving domestic market are also facing a collapse in demand.  Dhaka is deserted.  Shopping malls barely have visitors.  Only the essentials are in high demand. The point is at a time like this the immediate economic loss due to closure is not as big as meets the imagination.

The economic loss is not the central consideration under the current circumstances.  What is central is the exposure of a vast number to the corona infection risk.  What may happen if a bunch of the workers get infected is even scary to imagine.  It could cause a public health catastrophe equivalent to Rana Plaza multiplied a thousand times perhaps.  Lets take the precautions before the workers are infected and not wait for dealing with it after they are infected.  Fire prevention is better than fire extinguishing.  This is no ordinary fire.  It is wild fire.

We are facing a tradeoff between lives and livelihoods.  How can one put the lives of the vast majority at risk for protecting the livelihoods of a much smaller group of workers and owners?   And speaking of protecting the livelihood of workers affected by the closure, are we to believe that our nearly $100 billion industrial sector is financially incapable of allowing a month or so of paid leave to about 6 million workers at a time of global and national health emergency?  Their cashflow constraint has been eased by the moratorium on loan repayments and relaxation of regulations on foreign exchange related transactions.  More support is sure to follow.  

Impact on livelihoods, if factory closures are protracted, can be managed collectively without risking health.  The latter is totally beyond anyone's control. Even the holders of nuclear power and the world's best scientific apparatus are helpless with regard to mitigating the COVID19 risk.  

Should we not take lessons from the experiences of Italy, Iran and New York on how bad the consequences can be due to the failure to act on time? Should we not take lessons from the success of China and South Korea on how testing, testing and testing, as advised by the World Health Organization, and strict enforcement of social distancing can help contain the spread of the virus?