Choices that matter are often hard. That is one of the messages of Matthew Hooton’s lengthy column in the Herald this morning, which people really should read if you possibly can. It isn’t that Hooton is saying anything particularly new, but he is putting it firmly in a contemporary New Zealand context. He poses the choices around handling the coronavirus pandemic as primarily those for the Prime Minister (and Cabinet), but really we should think of them as choices for New Zealanders as a whole, for which elected leaders – none of whom here was seriously chosen for their ability to confront the gravest crisis in many many decades – really should primarily be there to facilitate and articulate, but perhaps help shape too, our collective view; the choices we wish to make on matters that affect life and death – perhaps for many – and the functioning of our society and our economy.
As it is, the government has already failed us. What other conclusion can we reach when much of the country is in lockdown, officials and ministers are deciding by the hour whose businesses will and won’t survive, with no apparent exit strategy? There appear to have been alternatives (see Taiwan and South Korea). It isn’t as if this virus became an issue in New Zealand with no notice – Taiwan drew it to the attention of the WHO in December, Wuhan was locked down two months before our own lockdown, and so on. All the evidence is that the government (political and official) simply did not take the threat very seriously at all for far too long (whether reflected in complacent commments from the PM, minimising tweets from the Ministry of Health, the casual approach of the Reserve Bank (with the Treasury Secretary sitting on the key committee). And even if they would like to claim they did take the threat seriously – if so, perhaps they could produce the draft detailed lockdown plan from even, say, three weeks ago – they certainly did not level with the public, did nothing (as basic as, for example) to alert supermarkets that the public might soon be wanting more and different stuff (eg basics like bags of flour to bake our daily bread).
Worse, they still aren’t levelling with the public. We finally had the Ministry of Health release earlier this week various background modelling exercises done for them on contract by academic researchers – including one dated 27 February (itself labelled a “revised preliminary report” so presumably the government had the guts of it earlier. That report notes
We estimate likely deaths to be between 12,600 and 33,600 people in our “plan for” scenario
Did the public see or hear any of this from the Prime Minister, the Minister of Health, or the Director-General at the time? There was no hint of any of it – let alone any greatly accelerated planning – in thePM’s press conference a few days later. And at the time the Ministry was still playing down not only the risk of asymptomatic transmission, but of any sort of community outbreak more generally. If they were taking it all very seriously, they chose to treat us like children and keep us in the dark. More likely, most of them weren’t very serious, and of course that was reflected in the way they were then setting about designing their (backward looking China focused) support package (before events began to overwhelm them). Since the government and officials never acknowledge any of this, and still refuse any semblance of pro-active transparency, it is hard to trust a word they say any longer – no doubt, some of what they is useful, but who can tell the difference? Who knows whether they won’t lurch again – as they’ve done several times already.
This was the government that some time ago committed itself to much greater transparency around the release of Cabinet papers. It was a pretty good initiative at hte time. But as far I’m aware we have not seen a single Cabinet paper or any of the key officials papers on any aspect of the unfolding crisis, whether health or economic.
And in particular we’ve seen nothing that sets out any sort of cost-benefit framework that is influencing the government’s decisions (thus the Otago health modelling is useful in its way, but in isolation it adds not much to our ability as citizens to either evaluate the choices/processes the government is using, or to reach a view on the best way forward). We just get the latest lurch. A few weeks ago it became apparent that the government had adopted a mitigation approach – the PM was on a stage waving around a “flattening the curve” graphic. But we’ve seen no serious analysis of what led them to that option. Now a senior official – not even the PM or an elected Minister – tells the select committee that the government is set on an elimination approach. But we’ve seen no serious analysis of the costs and benefits, risks and potential mitigants, of that either. And then yesterday, the Director General of Health – again not even the PM – appears to double down, telling us that there is no Plan B, and that suppression will simply be maintained however long it takes. But again, no papers, no analysis, no nothing, just rhetoric. Not even a hint of what considerations our politicial masters took into account, what weight they put on them or of any fallbacks or contigency plans. It isn’t like a real war – the enemy isn’t listening. And we are supposed to be citizens, not children. It is our country, economy, society, and lives, not those of the politicians and senior officials?
I don’t have a particularly strong view on the appropriate policy at this point, given where the government complacency and lack of planning got us to. It is the process, the total lack of transparency, lack of engagement, and – frankly – lack of any evidence of a robust disciplined policy assessment (yes, even under quite some time pressure) that really bothers me right now. No one made any of these officials and politicians take their current positions: they sought them and accepted them, and they simply do not seem to be doing even an adequate job, let alone displaying the sort of excellence one would hope for in a crisis. It is revealing about the degradation of our political and official systems and agencies in recent years, but confirming worst fears is no consolation. People can rise sometimes rise above themselves in a crisis, but there is no visible evidence of that from any of the key political or official players so far.
From an economist’s perspective there is no sign of any attempt at a serious cost-benefit analysis of possible alternative strategies. Did Treasury not insist on one, or did Ministers refuse to have any such work done? Or is there such a document lurking, hidden from citizens? Whatever the answer, the Prime Minister has offered us nothing, just flat assertions and – presumably on her behalf – “there is no alternative” rhetoric. There are always alternatives and choices. Even in wars that pose near-existential threats, surrenders eventually happen, when things go badly enough different from plan.
All we’ve been offered so far – and even that not released for days after the Prime Minister claimed to be relying on it – was some modelling by researchers at Otago University. This is where the central estimate of the “worst case” of 27600 lives lost comes from. Of itself, this number doesn’t seem terribly enlightening – it involves a similar share of the population getting infected, and the proportion of the infected dying, – that people were talking about at least a month earlier. Intelligent readers of the ongoing debate would have got to numbers in a similar ballpark. But it makes good headlines, which seems to be the main use the report has been put to.
The biggest problem with the report, from a disciplined policymaking perspective, is that it offers precisely no marginal analysis. That probably isn’t a criticism of the report, since most likely that sort of analysis wasn’t asked for by the Ministry of Health. But it matters quite a lot in evaluating current policy choices. Thus, we have no analysis at all – or so it appears – of the likely death toll if (for example) the over-70s put themselves into isolation for six months. No analysis, that I can see, of the likely death toll if the public were seriously alarmed about the risk and chose extensive physical distancing themselves. No analysis, I can see, for what difference the actual partial lockdown might make relative to variants on it (tighter and looser). No analysis of what difference a very aggressive test, trace and isolate strategy might make, perhaps in the context of a less severe lockdown. Nothing. It is almost all framed in an “all or nothing” way.
And then there is just nothing anywhere about the economic and social costs. Again, doing so isn’t easy. As I noted to someone who emailed me yesterday, it is easy enough to produce huge numbers for the economic cost – GDP could easily be $75 billion lower this year than last (roughly 25 per cent), with further losses (but smaller) next year and beyond. It is really easy to get to a $100 billion figure.
Some sceptics of the government’s substantive approach will then compare $100 billion to the value of the lives saved. Suppose we could save all 27000 people in the Otago modelling only by the approach we are adopting. For general government cost-benefit analysis we know that the assumed value of a life saved is around $5 million dollar, but if that is – in principle – roughly the price we’d pay to save someone of median age, we know that the very elderly are most at risk of dying from this virus. If we halved the value of the statistical life of those most at risk – using say $2.5 million per person (which would probably be generous) one could tot up expected savings of $67.5 billion and conclude the strategy just does not make sense.
But that would also be all or nothing thinking, not focusing on the bits of the equation the New Zealand government choices actually affect. The case for any particular intervention by the New Zealand government can really only sensibly be evaluated looking at the marginal benefits (lives saved, mostly in this case) and the marginal costs. To illustrate, consider the economic side. If our government were to lift all domestic and border restrictions tomorrow (an absurd proposition, but this is for illustrative purposes only) it isn’t as if those $100 billion economic costs would just evaporate. There would be hardly any foreign tourists (apart from anything else, most governments are strongly advising their citizens not to travel abroad, if there are even flights), and probably not many new foreign students. And what of New Zealanders? The risk of the disease wouldn’t go away – in fact, it would probably be greater than it is right now – and plenty of people would choose to be extremely cautious – whether about work, schools, social occasions, air travel or whatever. Oh, and the uncertainty around future policy – and global economic activity – wouldn’t change one iota, and extreme uncertainty is the great enemy of most spending and investment. We would still have a very serious recession on our hands. Those losses simply aren’t relevant to the case for the lockdown (present or possibility of extensions, perhaps without foreseeable limit).
Quite how then one puts a number on the marginal cost of the lockdown, or variants to it, is a challenge. It is clear that if it were removed tomorrow, some firms would spring back into operation, but how many? How many would have many customers? I don’t know the answer, but it isn’t clear that the government – with all its resources – has made any effort to either. And that is pretty inexcusable.
And, as noted, there is no analysis of the lives saved at the margins either. And absolutely nothing on what it means for a society to be simply shutdown by order of the state – individuals (many live alone) consigned to, in effect, solitary confinement home detention for an indeterminate horizon, funerals/committals totally banned (for all intents and purposes), people dying alone with spouses or children simply banned from making their own choice to be at the bedside, and so on through the less dramatic implications. If the Director General really speaks for the Prime Minister in his “no Plan B” rhetoric, are they open to Christmas – community, society, festivity – being scratched this year, even though it is still almost nine months away.
It is as if the government is afraid of confronting and dealing with real hard choices – and being honest on what they value, what they don’t – and just prefers now to deal in simplistic rhetorical absolutes, when not much is very absolute at all. We deserve a great deal better from our Prime Minister, her Cabinet, and the phalanxes of highly-paid officials and agencies who surround them. In the end, these are our choices – our lives, societies, economies – and the government system is supposed to be our servants not our masters. When, with all the resources at their command, they simply don’t do the analysis, and aren’t open with us – radically so, given the gravity of the crisis – they betray our trust. That is something governments can ill-afford in times like these.