SAGE advice from some economists might help

As the government has said, its strategy on COVID-19 has been driven by the science. Specifically, it has been informed by SAGE, the Scientific Advisory Group for Emergencies.

SAGE comprises a number of very distinguished epidemiologists and physicians. And the same is true of the three other committees that feed them.

These experts supported the economic lockdown—and its extension—as a way of flattening the infection curve, preventing an unmanageable surge in critical cases and deaths. And most of us have gone along with that.

But we are starting to realise that locking down an economy for three weeks is very damaging. Locking it down for six weeks is disastrous. Each business that closes spreads trouble to many more. And they in turn to many more others. So, the failures and unemployment multiply, like a virus ripping through our productive network.

Given the enormity of that, you might think that economists would be involved in the lockdown decisions. But no: there are no economists on SAGE, nor the committees that feed into it. No Roger Bootle, Mervyn King, Paul Ormerod, John Vickers, Patrick Minford nor others who could explain the cost of lockdown and how best to unwind it.

Advice that has such serious economic impact should not be decided by physicians alone but by economists too.

Lockdown and the size of British housing

The man has a point here:

Tom Wall highlights one of the great problems in our housing, lack of space, which is exacerbated by the Covid-19 pandemic (“Two adults, five children, one room: ‘It’s really scary but what can I do?’”, News). We have a confusion of “overcrowding” standards in housing law and even the latest minimum standards for licensing of houses in multiple occupation originated in the 1930s – is 10.22 square metres really adequate for two people to live and sleep in as their permanent home? We need an overhaul of these standards that must recognise the adverse health effects of lack of space and crowding, including the spread of infectious diseases, unintentional injuries and mental ill health.

Prof Gabriel Scally, quoted in the article, is right: the housing market has led to the modern equivalent of the Victorian slums that the new diseases will just love. At the same time, we build the smallest new homes in Europe, so we are storing up problems for the future.

Dr Stephen Battersby

Britain does build the smallest new housing in Europe. The bit that the Good Doctor gets wrong being “the housing market has led to…” the problem in fact being an absence of market, not existence. For planning laws only allow permission to be granted for projects of minimum density - it is this which leads to 30 to 35 dwellings per hectare. Given the cultural preference for a des res with a garden this and this alone explains the less than 80 m2 rabbit hutches now built as new housing.

Back before we had such a prescriptive planning system speculative builders used to throw up those 30s semis and detacheds that people now fight to be allowed to buy. One solution is therefore our oft suggested blowing up of the Town and Country Planning Act 1947 and successors.

Another possibility is that we just insist upon those in the planning system - from the MPs who vote on it, the civil servants who administer, the local councillors who approve and the planning officers who examine - live, en famille, in the estates of shoe boxes they allow. As we are rather sure very few to none of them do now. At which point we can just leave it to public choice economics, that insistence that public servants are subject to the same economic incentives as the rest of us, to return us to a system of new dwellings being houses that people would like to live in being built in places that people would like to live.

That or the blowing up, either would work.

For once we're going to take The Guardian's advice

The Guardian tells us that the current troubles mean we should think about food, where it comes from, how, what we might do about all of that:

The Guardian view on the future of farming: let’s think about food

Editorial

The British food system, as well as individuals’ diets, needs to be balanced. Price is not the only factor

Entirely true that price is not the only factor, it never is and never has been. The aim of having an economy at all, let alone an economic policy, is to maximise human utility. Price will of course be an influence here, possibly a dominant one, but never the only.

As it happens the same edition of the same newspaper warns that the country might be running out of tinned tomatoes:

Suppliers ration stocks of tinned tomatoes after surge in demand

“Ration” is a bit extreme as a description, warn that the supply is not infinite perhaps:

Italian tomatoes make up about three-quarters of UK stocks, according to the Grocer trade journal, and are canned between June and September.

Diego Pariotti, the head of export at Conserve Italia, which owns the Cirio tinned tomato brand, said it could meet usual order levels but not “crazy demand”. He added they had told customers: “If you don’t start calming the fever we won’t get to the next crop.”

....

McDiarmid said: “It’s a seasonal crop. It’s finite. What was picked last year is what was picked and that’s all there is until 2020 harvest. We can’t bring forward the harvest.”

Which is a useful education in how things used to be. The Hungry Times were not in winter, they were in June and July. It is just before the next harvest that the supplies from the year before are in danger of running out. It is the weeks just before the fleets of combine harvesters sweep through the fields of golden grain that bread is in short supply.

With tomatoes there is added detail. It’s possible to hothouse them in the UK but as Adam Smith said about wine in Scotland it’s easier - consumes fewer resources - to get the product shipped in from where it grows freely under the Sun. Spain - largely employing a different cultivar - ships us fresh tomatoes, Italy these canned being talked about.

So, thinking about farming and food, what should we do about this? Clearly, we should be maximising the number of different harvests that we gain our supplies from. The best method of gaining copious year round edibles being to ship in from places that pick and process across the calendar rather than being reliant upon just the one event a year. Southern Hemisphere farms, for example, might well be canning tomatoes in the January to March window to match that July to September in Italy. Which would neatly cover any possible shortages in May and June, wouldn’t it?

We have indeed done what The Guardian advises, thought about food and farming. We desire more globalisation and free trade in food. Not that we expect The Guardian to come to the same conclusion, despite its origin as a paper campaigning against the Corn Laws, but we can hope, right?

We're against the idea of salary caps

We have entire think tanks - the High Pay Centre for example - dedicated to the idea that some people earn, or are paid, too much. Thus, perhaps, there should be limits, salary caps, on how much people may earn. We are against this, yea even in association football:

Tony Bloom, the Brighton & Hove Albion chairman, suggested that it may be necessary to introduce a salary cap for top-flight players as a depressing picture started to emerge yesterday of the financial predicament Premier League clubs are in.

The reason for our opposition is that this is a distinctly pro-capitalist move.

Bloom, while seeing the problems with introducing a salary cap, was not averse to the idea. “If it’s going to work, it needs to be worldwide — certainly Europe-wide — and I see big difficulties with that,” he said.

“But something, I think, does need to change. Otherwise, salaries, player salaries, will always increase far too much and it becomes unaffordable for clubs. Certainly, I think something like that will be talked about. I see it being very difficult to come to fruition, though.”

Markets work best when they’re allowed to work. An outcome of this being that the money flows to whoever has the scarce resource. Being able to play professional sport at the top level is a scarce talent - certainly more scarce than the possession of a ground to play it upon, the ability to design and or buy a strip or the possession of a brand name. Thus all and more of the money in sport flows through to the players, none to a negative amount sticks to the hands of the capitalists.

We’re entirely happy about this.

It’s notable that American sports teams are generally profitable. They are also all a cartel - there’s no promotion up or down into and out of the professional leagues, making the team itself the scarce item - and have strict salary caps. It is these two things that limit the portion of the overall cashflow heading toward players and thus make them profitable. European sports near all have that promotion up and down. In association football a club can move from only just above amateur to the very top rank in mere years as both Rangers and the old Wimbledon and now again the new one have shown.

This does mean that we’re against UEFA’s financial fair play rules as well, which are a lighter version of the same restriction upon player incomes.

This is all most apparent in sports, where the scarcity of the talent is most obviously pronounced. But it is the same in any arena where salaries are restricted - it’s all a manner of increasing the incomes of the capitalists.

We should point out that we’re entirely happy with capitalists earning, just as we are with labour however talented or not. It’s just that to us financial fair play means the outcome achieved by a free market, not a set of rules designed to favour one side or the other. And the truth is that salary caps, as with other earnings restrictions, favour the capitalists, not labour. Our opposition is to the thumb on the scale, not the measurement itself.

Start scaling back the lockdown today

We all agree that lockdown should only be eased once we have passed the peak.  But what peak? There are three possible: infections, hospital admissions and deaths. The numbers in hospital or in intensive care will also peak, or have done so, but, if they are collected at all, they are not reported. The original strategy, and it was right, was to spread the emergency so that the NHS could handle it. Those who are infected but stay at home are little, if any, burden on the NHS.  In any case the Department of Health and Social Care (DHSC) do not have the slightest idea how many non-hospitalised cases there are in the community. They are not tested (unlike Germany) and not sampled. 

So far as deaths are concerned, the DHSC only tracks English deaths in hospitals.  For the saddest of reasons, deaths actually reduce the load on the NHS. The DHSC has very little idea of how many Covid-19 deaths occur in care homes or domestically.  The number of deaths is compiled from certificates completed by GPs visiting, online or in person, corpses who tend to be unresponsive as to their symptoms. The GP has to guess or take the opinion of the unqualified carer or leave it to a coroner weeks later. The weekly estimates by the National Statistics Office are not reconciled with the daily estimates by Public Health England (PHE).

In short, the only peak that matters, for lockdown exit purposes, is that for hospitalisations.

So how does that analysis compare with the “five conditions” announced for starting exit yesterday: “They are: ensuring that the NHS can cope across Britain; a sustained and consistent fall in the daily death rate; evidence that the rate of infection is decreasing to “manageable levels”; enough testing and protective equipment to meet demand; and no risk of a second peak large enough to overwhelm the NHS”?

Firstly, Downing Street has no mandate on health matters for Britain, only for England.  Secondly the DHSC has no reliable figures for deaths and hospitalisations is a better measure for NHS coping.  Thirdly, the DHSC has no measures of infections. Fourthly the government claims we already have enough protective equipment even if the front line does not agree.  Once hospitalisations are falling and now that local suppliers are filling the gaps, we can begin. 

He is, however, right that caution should be exercised. Returning too quickly to normal too soon might precipitate a major second wave of hospitalisations. But that is a matter of how the exit proceeds, not when. Whether it is at the end of April or June, the second wave problem remains the same.  And we certainly cannot wait for the entire population being vaccinated in two years’ time. For a discussion of the urgency of leaving lockdown see yesterday’s paper “Reopening Britain” by Eamonn Butler and Matthew Lesh. Being later in the pandemic experience than our largest European comparators, notably Italy, Germany, France and Spain, allows the UK some evidence of other lockdown exit experiences.

PHE reports Covid-19 tests, both positive and negative, and deaths, daily and cumulatively.  No comparative data or trends are shown and there is some misreporting as past data are amended, making the figures exceedingly difficult to track.  Frankly, the data for the latest day should be disregarded. The figures for positive Covid-19 tests are reported now as “cases” but the cumulative discrepancy for the UK (between the total and four nations’ figures) was 7,151 (7%) on 15th April which may be explained by Pillar 2 swab testing for key workers and their households. PHE’s elucidation “cases in people who have not been tested are not included in the confirmed case counts” is textbook Zen Buddhism.  We have to take these “cases” as proxies for Covid-19 hospitalisations.  Obviously, there are quite a few patients thought to have Covid-19 who turn out not to have, quite a few who test positive but wrongly and some who test positively but do not need hospitalisation.  As the trend lines compare like with like, such problems probably do not matter.

The trend on hospitalisations looks like this:

It would appear from the above graph that hospitalisations have peaked but even if not, a cautious and gradual relaxation of lockdown should now be put in hand.  It can always be frozen or reversed if cases turn upward again. The more serious matter is that no lockdown exit strategy has yet been announced. Perhaps the DHSC and Public Health England have yet to give that matter any thought.  As discussed in an earlier blog, it would not be surprising if that were the case.  We need urgently to know what it is, to shine sunlight upon it, to debate it and, hopefully, for us all to support and implement it.

Marci Shore's "The Taste of Ashes"

The Berlin wall fell in November 1991, marking the beginning of the end for  Communism in Europe and the reopening of the Eastern bloc. In reality the spectre of communism continued to haunt those who had lived under totalitarianism. The Taste of Ashes is a beautiful yet sad recollection of the author’s, Marci Shore, an associate professor of intellectual history at Yale, travels throughout the old eastern bloc in the 1990s. Part history and part travel writing, it retells the memories and stories of individuals as they fit into the history of the regimes they lived in. 

The most obvious memories of communism in Western popular culture are the police state and informant neighbours. Recent stories of curtain-twitching neighbours reporting on each other to the authorities during the coronavirus crisis for going out twice in a day pale into comparison as banal mundanity of the everyday to the betrayals from friends and families under regimes in Eastern Europe. How easy it is to slip into that mindset though. How cheaply our integrity sells. 

In the novel The Joke by Czech author Milan Kundera the committed Communist party member and university student Ludvik writes a joke about Trotsky on a postcard to his girlfriend. For this, he is expelled and sent to work in the mines where he often looks back on the moment of his expulsion — his professors and closest friends raising a hand to cast him out. 

“Since then, whenever I make new acquaintances, men or women with the potential of becoming friends or lovers, I project them back into that time, that hall, and ask myself whether they would have raised their hands; no one has ever passed the test: every one of them has raised his hand in the same way my former friends and colleagues (willingly or not, out of conviction or fear) raised theirs. You must admit: it’s hard to live with people willing to send you to exile or death, it’s hard to become intimate with them, it’s hard to love them.” 

A sense of suspicion can survive long after the fall of the regime. This was especially felt in Czechoslovakia, as it entered the painful period of “Lustration” (a Roman purification ceremony) which revealed the extent to which so much of the population were informants. The exciting new world was intercut with revelations of betrayals of the old. Shore describes how even some of those most admired were exposed for cooperating in some way, shaking the confidence even in some of the resistance leaders that had helped bring about this new free political order. 

Speaking to the father of one of her students at the school she taught at in Czechoslovakia, Shore recounts how far the culture of informing and spying spread. 

“His family did not go to May Day parades; every year he and his wife asked that their children be excused because the family would be away in the countryside. One year the teacher appointed one of his son’s classmates to spy on them: she had suspected they had not really left town.” 

It is a reminder that it was not only the state spying on its citizens but its ideology permeates so deep that many normal people are turned into curtain-twitchers, poking their noses into the lives of others.

In the same conversation, he narrates about the stagnation under communism. Shore writes, ‘around 1970 time had stopped; afterward there was no movement, only stagnation. He had never believed he would live to see a way out.’ Instead of innovation and progress, there was only bureaucracy and management. 

Attitudes and culture survive years after the systems that created them disappear. It is no surprise that a country that had banned entrepreneurism for years, found itself with a lack of entrepreneurial, or can-do spirit, in the population at large. The ‘computer says no’ attitude of bureaucracy was not immediately replaced by the initiative and hustle of capitalism. 

“The realm of the not possible was expansive: it included the new, the uncommon, the difficult, as well as the vaguely inconvenient, the previously unconsidered, that which someone was not in the mood to do at the moment. And nothing could be done without the proper rubber stamp. To acquire the proper stamp, it was usually necessary to acquire a series of them, each a prerequisite for the next. A given stamp was generally in the hands of a single person, a local bureaucrat who had been made inordinately powerful by such a possession and who might prove to be capricious, or greedy, or resentful – or simply absentminded, or ill, or lazy, or indefinitely on vacation.” 

Among the students she taught briefly in Czechoslovakia, Shore noted:

“My students were bright – they had been accepted to the only university preparatory school in their region – but they were also passive, in some sense deadened at sixteen or seventeen. They preferred memorization and rarely expressed any opinion. Communist content had been purged from that school, but a certain totalitarian for – or rather an acute sense of the world’s restrictiveness – lingered.”  

Shore’s work is remarkably easy to read, and adept at portraying the wide range of emotions felt by the people she met. From the apathy of many, to the sorrow of many of the Jews visiting the countries of their parents, to the anger of those Jews left behind in what others see as simply a graveyard country. A generational divide in attitudes is also observed with the excitement of the young at new opportunities and an almost romantic view of the old for some of the security of the old regime, especially after their pensions became quickly eroded by the inflation of the 1990s.

Also interesting is the nervousness of a return to fascism, especially relevant by what we are currently seeing in Hungary but also seen by how the far right in Germany (the NPD) have historically been more successful in the east of the country. In many of the countries she travels through there is a struggle to come to terms not only with the faults of communist regimes but also with those of many of their predecessors as well. 

Marci Shore’s book is an excellent lockdown read, and a healthy reminder of what impact the sort of society we are just having a glimpse at — but which became all too miserably the norm for those in Eastern Europe under the oppression of socialism.

We think we might have discovered the problem with the coronavirus public health response

There are tales of horror from the public health world concerning the coronavirus. CDC and the FDA in the US combined - presumably on the grounds that no bureaucracy likes to see other people doing its job - to prevent testing for the virus. Even, at one point, banning home testing kits. Here in the UK Public Health England has not exactly covered itself in glory despite that £4 billion and change a year they get. Even when people try to defend the World Health Organisation they do so by harking back to the half a century ago eradication of smallpox, not by reference to anything being done right now.

We think we’ve found the one little detail, the perfect exemplar, of what has gone wrong. Writing in The Guardian a professor of public health, at Imperial no less, tells us of her work:

Mathematical models are being refined to predict the extent and speed of spread and estimate the impact of control methods. My own group is studying the response of communities, showing how the epidemic is amplifying existing social inequalities.

We’re in the middle of a pandemic, exactly when we’d like to know interesting things from the public health wallahs, they’re still off treating the subject as a branch of grievance studies. They’re not even being coy about it, the evidence is being proudly presented as with a two year old showing off the new potty training skills. We would, professor, rather prefer to know how not to kill people while still preserving civilisation and some semblance of an economy. Rather than, say, how disease perpetuates the inequities of a patriarchal and neoliberal capitalism or whatever it is you think you might be able to show.

That is, the problem with the public health response to the coronavirus is that public health isn’t about public health any more. So, perhaps we should stop exalting the subject - or even looking to it for advice?

We need a plan for when lockdown ends or there won't be an economy to reopen

Our latest paper, written by Dr Eamonn Butler and Matthew Lesh looks at the economic urgency growing for a plan to reopen the economy at the end of the lockdown once medics say it is safe to do so. Without one, too many firms are stuck in limbo and are running out of cash. Each one that folds creates issues for others in their supply chains, for their shareholders and their customers. With half of British firms thinking they’ll run periliously close to running out of cash in the next three months we need the UK government to explain how it’ll reopen the economy and allow the private sector to start raising revenue again. If they don’t, there’s a possibility that there won’t even be an economy to reopen at the end of this.

Time to get rid of the idea of cultural appropriation and other Marxist identity claptrap

When the pandemic is over, it’s possible that a few things that once seemed important to some people might leave with it. This could include some of the more arcane elements of what constituted the “Woke” culture. For example, some people used to fret about what they called “cultural appropriation,” castigating people from Western white cultures who adopted practices from other cultures. Justin Bieber was slated for wearing his hair in blond dreadlocks, and university students were derided for holding costume parties themed on countries such as Mexico or Japan. 

It’s nonsense, or course. When we take on board things done by other cultures, more often than not it’s cultural appreciation rather than appropriation. The walls of my house feature paintings done by a Western artist in the Chinese style, but this is a tribute to Chinese culture rather than the theft of it. I love Chinese cuisine, and I don’t mind in the slightest if some of it is prepared by non-Chinese chefs. Indeed, I sometimes cook in that style myself, as I do in the style of many countries. When I dress, as I often do, in clothes that echo the fashions of Eastern countries, it is because I admire that style.

At the heart of this absurd idea lies the notion that we should all live in boxes with labels on them. Western Europeans are supposed to live like stereotypical Europeans, without enriching their culture with outside influences. It would be a duller and poorer world if we did this. We’ve always taken outside ideas and influences, usually because we admire them. When the Pope and his predecessor wore sombreros on visiting Mexico, they were honouring Mexican culture, not mocking it.

It is identity politics gone mad to define us and limit us to one narrow culture. People are too complex, too diverse, and too multi-faceted to be confined like this. We express our own independent ideas, rather than simply giving expression to what someone else thinks is our class interest. We need to be treated as individuals, not dealt with merely as members of the groups that others want to define us by. 

There are people who prefer to dismiss our ideas as the mere expression of our group interest and identity. It saves them from having to listen to those ideas, or to consider them, or to argue with them. They claim that people in one box have nothing to say about those in other boxes, and no value to draw from them into their own lives. Fortunately, people are bigger than this, and the idea that they should be limited in this way will almost certainly have a short shelf life when the current pandemic is over.

Thanks very much, but we’ve had quite enough confinement of late, and when it’s ended, we’re not about to let a few obsessives continue to confine us culturally or intellectually.

What is this rise in child poverty being claimed?

We are being told that the recession is going to cause a significant rise in child poverty. By the method that this is normally measured we can’t see it ourselves:

Coronavirus will cause child poverty to soar. So what can we do about it?

We agree that this recession - and it’s a proper doozy of a recession too - is going to lead to a decrease in the economic resources available to many to most of the population. We’re entirely happy with calling that an increase in poverty. But that’s not actually how poverty is measured these days. Instead we use a relative definition, poverty is having less than others not less in toto.

That is, the current measure of child poverty - living in a household with less than 60% of median income - is a measure of inequality, not poverty. And here’s the thing about recessions, inequality falls in them. At first blush this should mean a reduction in child poverty. And, in fact, given that relative measure, that’s what does happen in a recession.

We can go into slightly more detail. Median income is clearly going to fall when GDP does by 25 or 30%. But the incomes of the poor are somewhat to largely to completely made up of welfare and benefits, none of which are going to fall in these difficult times. We’re going to see a compression of incomes at the low end that is. Top end incomes will fall, largely based upon profits as they are, middling incomes and the median will fall, bottom end incomes will be static. Because inequality falls then so does poverty given the way we measure that poverty.

We entirely agree that we shouldn’t be measuring this way - falling incomes will indeed cause more poverty sensibly defined. But that also means that in more normal times we shouldn’t be measuring poverty this way either.

We can go a step further. In the good times inequality expands because that’s just what happens. At which point the call is for more taxation and more redistribution to curb the rise in child poverty. In these bad times our commentators are insisting that the same cure must be applied - more taxes, more benefits, to curb the increase in child poverty. But if both good and bad times increase that child poverty then there’s something wrong with the measure of the poverty we’re using, isn’t there? And something very definitely wrong with the proposed cure if that remains the same whatever else is happening.

We’re as with medieval doctors and leeches. An entirely sensible cure for a limited set of problems but their application to every problem is closer to religion than sensible disease management. So too with this treatment of child poverty. If the answer is always the leech then we’re asking the wrong question.