Another sobering chart

On Saturday I showed the then-current version of this chart.

aus 22 march

As I noted on Saturday morning

It is much the same locally-exponential pattern we’ve seen in so many other countries.  If current rates of increase continue then by the end of tomorrow Australia will have per capita numbers akin to those in the US or UK yesterday.  That is the sort of impact exponential growth has.

Australia now has as many, slightly more, cases per capita than the US and UK had on Friday.

What about New Zealand?  In this chart I’ve shown the Australian numbers divided by five (to put them on the same per capita basis as New Zealand).

nz and Aus

Perhaps at a very first glance, New Zealand doesn’t look too bad.  But look across the chart not up and down.  Our latest observations are where Australia (in equivalent population terms) was just a week ago. There is no evident or obvious reason to expect that in a week’s time we wouldn’t be something like where they are now  (or if there is such a reason no political ‘leader’ has been willing to try to articulate one).

And yet our government continues to pretend to believe there is no community transmission, confirmed or not.  It is simply extraordinary.  Reversing the presumption now – in light of what has happened in ever other similar country, but most notably in Australia with whom until almost now we’ve had a Common (travel) Virus Area –  seems much the safer option.

Sadly, it seems on a par with how the government and the Ministry of Health have treated the threat from the start.  It was, after all, only about three weeks ago that the Ministry was tweeting, on its official account, that there was more to fear from rumours, stigma etc than from the virus itself.  Nine days ago, on their website they asserted that the risk of outbreak was low.  And presumably acted/advised accordingly?

And then there is the elected government and the Prime Minister in particular (the Minister of Health has been largely invisible and apparently irrelevant).   Because it is so easy to lose track of what was said even a few days ago I went back and read the transcripts of her post-Cabinet press conferences since the start of the you (28 January was the first).  Admittedly the questioning was often equally lethargic, but it was truly startling just how complacent the Prime Minister had consistently been.  There was no apparent sense of urgency, no apparent recognition that significant spread globally was –  if not a certainty – a very high probability against which the whole of government and the private sector should be preparing, and no attempt to get out in front and alert the public to the serious threat that was looming.

Now, you might argue that our Prime Minister wasn’t much different to those abroad, and from what one sees that might be a fair comment.    But it isn’t exactly an excuse for any of them is it, with the full horror of Wuhan already in view by the end of January.   You might also argue that few/commentators were sufficiently alarmed either, which is probably also fair.   But the government is the government –  hugely well-resourced by any other standards, and fully linked in to the intelligence and threat assessments of other countries.  On the economic side, it is not much more than two weeks ago that the Prime Minister was playing down the risk of recession – laughable, if not so serious, even then –  when now we are heading into the deepest (and they are all temporary) and most sudden deep slump in New Zealand history.

When they have finally taken actions, they’ve usually been like knee-jerk reactions (often a mere day or so after denying any intention of anything of the sort, going all the way back to the first China travel ban, which they were bounced into by Australia a day after telling the Chinese foreign minister they’d do no such thing).   And, most concerningly to me, there is simply no evidence of a strategy, and no willingness to engage the public on the options, choices and risks around threats and policies that have huge huge economic, social, and civil liberties implications for us all –  not for days, but potentially for months or a year or more.  It is simply inexcusable, and almost beyond belief (even as we have to watch it day by day).    The four-stage scheme they rolled out on Saturday is certainly no strategy, and although it might have been a welcome start six weeks ago, coming out with no substance in a much-vaunted Prime Ministerial address on Saturday, it had all the feel of having been dreamed up on the back of an envelope on Friday afternoon.  There is no evident strategy.  There is no evident exit strategy for anything done so far, or anything they have in mind.   Some of the specifics even look untenable, notably the detail of their schools policies.

In fact, the more I’ve reflected on the issue over the weekend, the more I wonder how much relevant planning has been done at all.    I was recalling the huge effort that went into pandemic planning in the public sector in abour 2005/06, which I had quite a lot to do with (the economic dimensions of).   The problem with that work, as I reflect back now, is that it was mostly based on something like a re-run of 1918, where a huge proportion of the population was off work sick, or caring for the sick, but that the country was never “locked down”, and it envisaged the pandemic passing through perhaps in waves, but pretty concentrated ones, as in 1918/19.  I don’t recall anyone giving any serious thought to the idea of closing the border indefinitely (short closures sure), to locking down the economy and social interactions for many months at a time.  Perhaps in the subsequent decade, official agencies revised their planning – I hope so, but I was in public sector economic agencies until 2015, and never heard a hint of that.     And given how lethargic the whole of government was in January and February you have to worry that officials, in our greatly diminished public service are just now making it all up as they go along.

One specific dimension that got my goat was the PM lecturing (and that was her tone, repeatedly) the country about stocking up in supermarkets.   She assures that everything not only is  fine now, but always will be, no matter what stage of the crisis we get too.

First, looking backwards, one of the supermarket chain heads at the weekend said buying last week was just ahead of that in the run-up to Christmas, “but for Christmas we have a long time to prepare”.  That seemed like a fair point for him to make, but why had the Prime Minister and the government not been working with supermarkets weeks and weeks ago to emphasis the fast-building threat and urging them to increase production to cope with possible surges in demand.  Such demand was entirely foreseeable, conditioned on a recognition of the risk.  The public shouldn’t be hectored by the PM for what is her failure and that of her government.

But the bigger issue is forward- looking where she has been grossly over-promising.  It might be reasonable to suggest people slow down for a few days and let the supermarkets restock (having herself been neglectful from the start), because it probably is reasonable to assume that supermarkets will remain stocked in the early days of any lockdown.

But the Prime Minister seems not to recognise at all that in such a climate many people will prefer to avoid supermarkets if at all possible, and to have inventory in the home rather than in a public place.  That will be especially so if and when the health system becomes overloaded –  as people warn it may within a month or so –  and people reasonably fear that if they and their families get sick they may not be able to get decent treatment.

And I trust the government to keep supermarkets open in some form or another throughout, and am moderately confident the basics will be kept available –  perhaps intermittently at times, and for some goods.  New Zealanders should not starve (Irish peasants used to have adequately nutritious diets of milk, potatoes and oats).  But, frankly, most people want more than milk, potatoes and oats.  And none of us knows (a) what production the government will deem essential, (b) what factories will still be adequately staffed (and distribution channels have to hold up), and (c) what other countries will deem essential. Because, you see, although the PM talks blithely of international trade in goods continuing, that only means much if international production of things New Zealand imports continues.  As just one example, I just had a look at the back of the dishwasher powder container, and was surprised to learn it comes from……..Poland.  Hard to imagine production of dishwasher powder would be an essential in Poland if/when they are in lockdown.  It is quite plausible that lots of non-basic non-perishable goods could rapidly become quite hard to get.  Buying extra now is utterly and totally rational, whatever the Prime Minister says.  To not do so would mean putting a great deal of faith not just in the good intentions and words of the government, but in some tail-event optimistic scenario about how everything will work in a period –  that as even the Minister of Finance put it –  could last for months.

Personally, I simply have no confidence in anything they say or do anymore.

(And, please note, nothing in this is advocating any particular set of anti-virus policies now.  There are genuinely hard choices.  My kids are still at school this morning (we had the conversation yesterday).  But there is no evidence of strategy, there is no evidence of engagement with the public re what the future holds, there is no evidence they’ve thought through the limits of the state (as Matthew Hooton put it on Twitter the other day, there are some things more important than public health, but what does the PM think those are?) and so on.   It is a pretty egregiously bad performance so far, all compounded –  this is an economics blog –  by the manifest inadequacies of the economic policy response to date from government and the Reserve Bank –  and yes, I have just seen the latest RB release.)

 

 

 

31 thoughts on “Another sobering chart

  1. When Morrison increased his support package to $180 billion over the weekend, Ardern and Robertson must have suffered coronaries

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    • During the GFC and Christchurch Earthquake, the National government borrowed $50 billion for their support package. This Covid19 shutdown is far worse in terms of job losses and the support is only a meagre $12.1 billion. It is far too little with the number of people that will be jobless. With the onset of winter lots of jobless people with no incomes is going to be frightening.

      I am shocked that the government would go to a level 2 lockdown when we have only 2 suspected probable community spread after 6,000 tests. I was quite surprised to hear we had already conducted 6,000 tests in the first place but if that is true then we are way too aggressive with going to a level 2.

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      • On the contrary Getgreatstuff, it is not the number of tests, (which is not at all impressive), but how they have been used. The overwhelming majority of the tests have been administered to arrivals from abroad or their direct contacts. This is classical affirmation bias. If you only look where you expect to find, that is the only place that you will find. Recall the cartoon of the drunk looking for his lost keys under the streetlamp because that is where the light is?
        Far from being Too agressive, the government response has been way too dithering. If there is a model to emulate, it is that of Singapore.

        Liked by 3 people

  2. Yes Michael the lack of a coherent strategy is disturbing. The current “flatten the curve” mantra which has apparently replaced “contain it and stamp it out” appears to be copying the British approach of somehow managing the spread of the infection so that cases do not outstrip the NHS’s resources. That approach is running into serious difficulty now with the UK predicted to be in Italy’s position by the end of the week with rationing of ICU care already beginning. As any good general will tell you it is crucial to launch a strong counter-attack against the enemy before he gets a foothold (something Freyberg failed to do on Crete). This is what we now need to do immediately by vastly increasing the rate of testing; isolating and quarantining by compulsion if need be those returning from overseas and those who may have tested positive; and by locking down the most impacted areas, possibly even the whole country. Time is running out if we are to have a chance of repelling the virus.

    As footnotes, it seems we now have a separate strategy for Maori which requires a separate funding stream. What is that? I also agree with your observations about the degradation of the public service. This is what you get when people are recruited and promoted for reasons other than competence, and when following “processes” is valued higher than achieving results. Ardern’s own government of identity politicians is a reflection of this. Finally, just checked our dishwasher brand – it’s also made in Poland. Hope you haven’t started a run!

    Liked by 1 person

    • The Maori strategy may be wise. I don’t know what the details of the strategy are but when this epidemic is over Maori and PI death and critical health problem rates will be far higher than for Kiwis of European or Asian origin. Partly because of natural immunity to similar viruses; in 1918 Maori death rates (from memory) were much higher and also because of their prevalence of extended families. So giving Maori extra funding is both a sensible medical decision but also a political get out of jail card against those who push the permanent victimhood thesis. Unfortunately with so many Maori leaders continually saying they are the victims of systemic bias on health and crime issues they have persuaded many Maori to ignore all govt recommendations on any issue. I noticed many PI and Maori multi-generational families gathering at my local beach over the weekend.
      When the ICU rationing starts there will be the same old -v- young issues that Italian hospitals have today but also an unhelpful Pakeha -v- Maori debate.
      The national emergency proves it is time everyone simply used the word ‘we’ for all new Zealanders however recently they arrived and whatever their origin.

      Liked by 1 person

      • Over 10,000 overstayers who are deep underground

        A risk to Auckland is in South Auckland where the bulk of the PI’s are. They are hidden to avoid being deported. To stay hidden they don’t register with the NHI health system. The National Health Index number (NHI number) is a unique identifier that is assigned to every person who uses health and disability support services in NZ.

        Auckland saw some of the problems during the measles outbreak where PI’s were over-represented in the un-immunised cohort. Often in cramped living conditions, frequently with up to 23 persons in a 3 bedroom house and will probably not present themselves to be tested for CV-19

        Immigration lawyer Richard Small says “these people are deep underground”.
        https://www.tvnz.co.nz/one-news/new-zealand/most-read-story-over-10-000-overstayers-in-nz-immigration-not-actively-looking

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  3. Is the (global) exit strategy a vaccine? (assuming the medical minds can crack it); given the spread and inability of some countries to cope, our borders have to remain shut indefinitely?

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    • I guess that is the best case, but would be some considerable time away and I have people who seem as if they know what they are talking about, who note that there is no vaccine for any coronavirus incl the common cold.

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    • Oh, meant to add that the alternative is the mitigation strategy the Dutch seem to have adopted and the Uk abandoned. That involves recognising upfront that a lot of people will die but throwing huge effort into limiting the damage to the most vulnerable groups.

      Hard to see what is politically sustainable for the required time horizon

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      • Latest from the UK is that they are planning doing just that; while I’m not sure if this qualifies as “a huge effort” it certainly seems a great deal more than we’re considering.
        From the D Telegraph:

        “The NHS will contact the elderly and those with serious health conditions by post tomorrow then, followed by a text and phone call, urging them to stay home.

        Medicines will be delivered by community pharmacists, while military personnel are helping to coordinate plans to deliver groceries with local councils and supermarkets.

        Robert Jenrick, the communities secretary said the Government had to “shield the most vulnerable to save their lives.”

        He said: “If you are one of these people I want to assure these people on behalf of the Government that you are not alone.”

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    • Our borders do not have to be kept shut. “” The practice of quarantine, as we know it, began during the 14th century in an effort to protect coastal cities from plague epidemics. Ships arriving in Venice from infected ports were required to sit at anchor for 40 days before landing. “”. NZ is now full of empty hotels; commandeer them for quarantine. If testing becomes cheaper and faster the quarantine period can be reduced to an optimum.

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  4. Meanwhile, China says its only getting 30-40 new infections per day with infections essentially ceasing after Emperor Winnie-the-Pooh says they are on top of it.

    What an absolute fraud that country is.

    Liked by 3 people

    • Let’s not be cowed into failure to address the real source of this:

      “By January 2nd this year, forty-one cases of COVID-19 had been confirmed in Wuhan province. That Xi Jinping and his commie crew knew the nature of the disease is shown by their immediate actions – a lockdown of military bases in Wuhan and the muzzling of doctors in the know. And yet they let five million people leave Wuhan province for Chinese New Year, many heading to other countries, before restricting movement three weeks later on January 23rd.

      The government of a nation knowingly let probable carriers of a deadly disease travel to other nations to likely infect their populations. At the very least this shows a malicious indifference to the fate of other nations (and the Chinese people).

      At worst it is a deliberate act of war.

      For too long, thanks to narrow mercantile interests, most of the world has been kowtowing to Beijing. If China weren’t so vital to the world economy, the Chinese government, which is run by a gang of corrupt authoritarians, would have the outlaw pariah status of their lapdogs North Korea.”
      Recent article on BFD by John Black

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  5. Some years ago travelled to Seoul in South Korea for a football tournament. Getting out of the place was an experience. The Military manned the departure lounge and Aerobridge to the plane. Passengers were aggressively “frisked” hard. No mucking around. Males and females were treated alike. This was just before body scanners. Never been back.

    The NZDF was deployed to assist with the Fox River rubbish clean-up

    Why is the NZ Military not deployed at NZ entry points to test every arrival

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  6. Michael, eradication is still possible and needs to be tried, today. Move to level 4 now. As far as possible everyone stays at home only going out for essentials. In essence over 70’s are there now.

    The virus needs new hosts to propagate so the only sensible objective is to stop transmission. The virus timing is 5 days incubation and 11 days sick (and transmitting). Therefore after 3 cycles of 16 days the virus will die out through lack of new uninfected hosts. Call it 48 days. Work and community involvement can resume. Anyone who has been infected (and surviving) is immune so they can participate earlier ( a good reason for serological testing).

    This will require schools to close and there needs to be allowance for childcare for critical industry workers. May be the schools can be the child care centre for those people.

    It is clear that not all people are self isolating after returning from overseas – that is why we are seeing the rapid increase. There have been graphic examples in the media the last few days of people chucked out of cafes and bars. They have ruined it for us all.

    To make this work all new arrivals need to be quarantined in circumstances where we are sure it’s happening – maybe the government needs to rent all those unused hotel rooms and throw the recent arrivals in there until they have done 14 clear days.

    Within 48 days we will have no new cases in the wider community and the infection will have fizzled out.

    We have friends who have placed their returning adult children in airbnb accommodation for 14 days – to avoid them infecting the whole household, This is the model. Not everyone has that resource – hence the government needs to step in.

    Introduce the Singapore SMS geo-location for all arrivals.

    If this lockdown action is not taken now then it will have to be taken later – when the numbers infected will be massively higher than now and the health system is under even more pressure.

    In that sense the government has no option – she does it now under controlled circumstances or it is forced on the government when the scale is out of control.

    Liked by 3 people

  7. What I find curious is we have few people dying.

    At this stage people coping with coronavirus is merely waiting up to weeks. Not great but much better than dying.

    Liked by 1 person

  8. Even if NZ does get ahead of this (which I truly hope will be the case), the supply chain implications from the rest of the world will be pretty enduring. As noted in the post, the fact that so many basics come from overseas, I do wonder what options exist or are being explored to even temporarily retool NZ manufacturing and FMCG products for domestic supply?I see distilleries are moving into hand sanitiser, but wondering if there may be a coordinated strategy to come?

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  9. “And yet our government continues to pretend to believe there is no community transmission, confirmed or not. It is simply extraordinary.” That is the single most infuriating and stupid part of the govt/MoH response. As Sir David Skegg wrote yesterday on Newsroom, “Why would this virus behave differently in NZ?”
    An essential part of an exit strategy will be an accurate antibody test, which I think is being developed in Singapore. If we go into a major lockdown, being able to certify who is immune to the virus will be an excellent way of introducing people back into the workforce.

    Liked by 1 person

  10. We’ve elected to keep our 3 children home from school and will do so for the forseeable future. To do otherwise a) endangers their health and b) reinforces a network of disease vectoring across the community. Our government and Health Ministry is in denial. It is simply ludicrous to think that limiting social contact in the adult population can materially stop community transmission when kid are travelling from home to school, intermingling and then returning home day after day. By the time the authorities detect widespread Covid 19 in our schools it will be too late.

    Michael I wish you and your family good health at this difficult time.

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  11. Yes, as I said a few days ago there seems simply no thought or planning being given to how to get out of this. On contrast the UK and US are actively working on how to solve it and coopting the best brains and resources to do so. Our government seems driven helplessly by events and public alarm.

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  12. Hi Michael

    Thanks for your blogs which I find quite thought provoking at times and always well-reasoned.

    Someone sent me this you tube clip this a.m. which is entirely relevant to your post today. I am of the view we need to be proactive as a country and not reactive

    https://m.youtube.com/watch?v=fgBla7RepXU
    cheers Mark

    Mark Johnson | Private Client Manager, AFA
    P: +64 4 499 0028 | M: +64 21 472 045 | Important Terms – please read

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  13. Michael, while I agree with some of your points, and share the view that the government has done too little too late, I think you are being overly negative and harsh in some of your criticisms. This is a situation where the government is damned if it does and damned if it doesnt. If they had closed borders earlier than they did, many would say that they had over-reacted and inflicted unnecessary economic and social dislocation. This (in all of its manifestations) is the classic ‘type 1’versus ‘type 2’ error dilemma. Hindsight brings clarity that is never present in the midst of decision making.

    It is very easy to carp and criticise as an observer. We can all to that. But I doubt you or any of us would do a better job than those in charge if we were in their shoes. Cut them some slack and be more constructive, please. Otherwise, you may as well change your bog from Croaking Cassandra to Croaking and Carping Contrarian!

    On the specifics:

    – I do not agree with your advocacy of negative interest rates. It would likely be destabilising to the financial system by risking deposit withdrawals – eg migration of funds to zero or negative yield government bonds or to zero or slightly positive interest rate deposits in Australia (with the attendant government guarantee and EFT transaction capacity in NZ). Moreover, negative interest rates will be unlikely to induce spending in this environment.

    – Your proposed arbitrary cut of 20% in wages and salaries makes little sense to me, given that it would distort relative wage rates and impede labour market adjustment. All that is needed is the flexibility for employers to negotiate reduced wage rates with employees on a case by case basis.

    – I think what is needed is a government guarantee of SME borrowings up to a defined limit and subject to banks being responsible for due diligence on credit evaluation. Those SMEs (and other borrowers( who were already on the brink of default pre-pandemic should not be bailed out. I was pleased to see the Aussie government go down the guarantee path.

    – On the more immediate response to Covid-19, I was pleased to see the govt announce today the decision to move to level 4. The details of what it means for essential supplies etc will obviously be critical.

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    • Hi Geof. Thanks for the comments. Obviously we differ. Perhaps the only point I’d make specifically now is that neither you nor I sought to be PM or senior ministers. The incumbents did, and the onus on them to do that job excellently and transparently. They cerrtainly aren’t doing the latter, and we seem to agree they have been lacking on the former.

      On negative rates, I might pick up your points and why i disagree, in a different post.

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  14. The Government’s post Cabinet announcements this afternoon on raising the alert level to the maximum are most welcome. We are no longer passively accepting the disease’s spread but taking the fight to the enemy. This is a battle we have to win.

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