Recommended Sponsor - Buy Original Artwork Directly from the Artist

Analysis by Keith Rankin.

Early Identification and Action

Keith Rankin.

We are now learning, from Covid19, one thing above all else. With epidemics, it is early identification and action that matters. When our Prime Minister, Jacinda Ardern, says that New Zealand’s government approach is to “go hard and go early”, she is only partly correct. What matters is that by going early you may not have to go hard; and that having (and understanding) information both enables early responses to outbreaks, and makes it possible to go no harder than is necessary.

Radio New Zealand ran a story this morning (9:20am) “Is business support shifting away from government elimination goal?”. As is often the case, the headline missed the nuanced point being made by the interviewee, Auckland Chamber of Commerce CEO Michael Barnett. The point being made was that, to avoid repeated hard and disruptive responses to each epidemic outbreak, early and precise action was required – in particular, through smart-testing and smart-confinement.

Smart testing means: symptomatic testing of people whose lives involve significant close contact with other people, sample asymptomatic testing of people who work at or travel through international or quarantine borders, and follow-up genomic testing (for positive cases) and sample antibody testing (serology). This is the information component of a smart-response strategy.

Smart confinement means focussing on restricting the pathogen rather than restricting the people; in the case of Covid19, the pathogen is the coronavirus SARS-Cov2. The major tools here are contact tracing, the temporary mandatory use of face masks in sensitive environments until an outbreak is contained, and the temporary closures of sensitive environments for which mask use is not always possible (such as premises that involve eating or drinking, or singing). The general idea is that speedy containment should minimise the time for which such temporary mandates and closures are required.

With regard to contact tracing, having a smart public health app and a smart public health card are complementary. A public health card (a ‘Covid Card’, kept in the same place as one’s drivers licence or ‘hop card’), which logs offline records of contacts can complement an app that, when deployed, can trigger a notification of a casual contact or a place recently frequented by a possibly infectious person.

Bureaucratic Bungles

There is much chatter this month about the failures of managers to keep critical facilities safe; facilities such as ‘managed isolation and quarantine’ (MIQ), ports of entry into New Zealand, rest homes, and medical facilities.

This is a systemic problem that is due in large part to a tone-deaf management culture which emphasises financial/accounting ‘costs’ over economic costs, and largely underestimates benefits; indeed, economic costs include the foregone benefits of cost-cutting measures. (See RNZ’s Doctors pen warning to Christchurch over DHB, and my Counting the Cost of Government Action and Inaction.)

This management culture in New Zealand goes back to the 1987 Treasure Briefing to government, called ‘Government Management’. (This policy briefing of course reflected management practices that were already fashionable in some other countries.) By and large, all government in New Zealand since 1987 have been responsible for the creation of a bureaucratic culture that overemphasises financial and accounting costs, and deemphasises societal benefits. David Clark was a Minister of Health who epitomised and reinforced this culture.

In practice, it means that if a government asks its officials to implement a policy, but makes some aspects of that policy ‘optional’, then these bureaucrats will choose to save costs by not implementing those parts of the policy, or by implementing a scaled down version of the policy. Further, such managers in charge of stockpiled resources – such as personal protective equipment (PPE) – will be reluctant to deploy or relocate such resources; much as misers who ‘save for a rainy day’ refuse to spend their savings when it rains on the grounds that it might rain even harder tomorrow.

The problem is compounded by management structures, where Ministries act as intermediaries between ministers and operational managers, and where ‘spending ministers’ – such as the Ministers of Health and Education – are intermediaries between their ministries and the Treasury ministers. If the Prime Minister mandates some policy, it has to pass through a whole bureaucratic chain – a chain which may have multiple points of resistance. The chain is from Prime Minister, to Treasury Ministers (who authorise a pot of money, even when there may be no practical reason for capped funding), to spending Minister, to the Ministry, to – in the case of public health – the District Health Boards (DHBs).

DHBs’ managers may interpret and respond to the mandate they receive in different ways, depending on the different extents of culturation present in each institution. A good manager will have heard the mandate from the top, and will question any discrepancies between the spirit and the letter of their instructions. Tone-deaf managers will take their filtered instructions literally, and will try to comply by spending as little money as possible. One result which we are familiar with is the grudging minimalist approach by managers towards upholding the safety of clinical staff.

Economic Principle

The general economic principle that should guide action is that of economic efficiency, which enters public policy as cost-benefit analysis.

The principle is that, if the marginal benefit of a policy action exceeds the marginalcost of that action, then that action should be undertaken (albeit with the possibility that parties who would bear that cost should receive appropriate compensation). By marginal, we mean ‘additional’. For example, in our present context, there may be a proposal to add a restriction to a society which is currently at New Zealand’s epidemic alert Level Two. If the best estimate of the benefit of the additional measure is that it outweighs the (best estimate) cost of that measure, then the measure should be implemented. And if the marginal cost outweighs the marginal benefit, then the additional policy measure should not be implemented.

(This process of analysis also applies to proposals to remove a measure that is currently in force.)

The most difficult part of this process is to produce unbiased estimates of these benefits and costs. And, within that, the difficulty exists in both estimating and discounting long term benefits and costs. By ‘discounting’, we mean weighting immediate benefits and costs against expected future benefits and costs. What matters is that the cost calculus used to make such a policy decision is transparent – publicly available, and able to be challenged. It does not mean that policy action must wait until challenges are exhausted. Rather, the process of challenge is a process of learning, and refinement of the analysis in light of new information.

One way that we can attempt to estimate long run benefits and costs is to evaluate past comparable episodes. The past episode that I find to be interesting here, is that of tuberculosis. We note here that the classic tuberculosis ‘pandemic’ began in the eighteenth century and only ended in the mid-twentieth century with the development of an antibiotic effective in treating the tuberculosis bacteria. (With ongoing global poverty and antibiotic resistance, it has been argued – by Frank Snowden – that the world is already in a second tuberculosis pandemic.)

Pandemics and Society: the Long Term

Yesterday I read They say, ‘learn to live with Covid-19. Here’s what I say back, by scientist Siouxsie Wiles. The most interesting part of Dr Wiles’ article was its discussion of the harmful aspects of Covid19 infection other than the possibility of imminent death. In this regard, Covid19 can be usefully compared with tuberculosis.

In Frank Snowden’s 2019 book Epidemics and Society, the emphasis is on the social causes and social consequences of epidemic diseases. Tuberculosis was a reality of life for two centuries that people had to live with knowing there was no cure. An interesting story – told by Margaret Heffernan in Uncharted, how to Map the Future Together – is one about the history of economic forecasting. The three pioneers of this statistical art – Irving Fisher, Roger Babson and Warren Persons – were all diagnosed with tuberculosis. (Two of these lived beyond the age of 80, and may have been false positives.) It meant that they lived their lives under the cloud of considerable personal uncertainty, and that circumstance most likely contributed to their quests to minimise economic uncertainty.

Until the end of the nineteenth century – when Robert Koch proved that tuberculosis was an infectious disease – the disease had ‘romantic’ connotations. (Indeed, the pale and drawn appearance of women with tuberculosis seems to have been the precursor for the widespread twentieth century preference for skinny models in the fashion industry.) In the ‘Romantic era’, tuberculosis was seen as an inherited condition that particularly affected creative white people (it was called the ‘white plague’). So, while suffering from tuberculosis would usually lead to an early death, there was no stigma attached to it. Tuberculosis escaped the attentions of the ‘sanitary movement’ of the 1830s to 1850s; the movement that attributed most other diseases to ‘filth’. (In fact, tuberculosis existed in poor and non-white communities, but was largely undiagnosed and unnoticed.)

After the 1880s, tuberculosis gradually came to be understood as a contagion – typically but not only passed from person to person – that caused substantial damage (scarring) to a person’s lungs and could also damage other organs. It was revealed to be a ‘tricky’ disease of remissions rather than cure; an ailment that might activate at any time in an infected person’s life, and an ailment that would typically and substantially reduce both quantity and quality of life. It was discovered that fresh air – preferably dry mountain air – and minimal stress could substantially extend tuberculosis remissions. More generally, it came to be understood that people benefited from remission from work. Tuberculosis may have played a large part in the perception from the 1880s to the 1930s that the most important improvements to living standards were increased leisure rather than increased household incomes; in those years productivity growth did not mean economic growth.

These points are very pertinent today, because the bodily damage created by SARS2 (Covid19) and SARS1 may be similar to that created by tuberculosis; ongoing though intermittent, and requiring affected people to lead less stressful and less precarious lives than the lives they might have been anticipating in 2019. We no longer live in a world – as we did in the later decades of the twentieth century – where young adults could believe that they could get infectious diseases with impunity, knowing that their diseases would either self-cure or be cured with drugs such as antibiotics.


Covid19 is taking us – in a way that cannot pass unnoticed (as SARS1 did) – into a new era of changing estimations of long-run costs and benefits. It is a disease that, while survivable for most, is a disease that nobody wants to get. Nevertheless – like tuberculosis in the nineteenth century – a substantial minority of the world’s population will have it, and will have their whole lives physically and psychologically affected by it. At the very least, this experience will modify the future economic choices that most of us make.



− 3 = 2

This site uses Akismet to reduce spam. Learn how your comment data is processed.