Friday 25 September 2020

Afternoon roundup

The tabs... there are so many of them.

A few notes on the closing of the tabs.

Thursday 24 September 2020


The 2020 Household Income Statistics are out! Well, I'm not sure when they were released, but they're there in NZ.Stat now. Hit the Incomes tables, then hit "Earnings from Main Wage and Salary Job by Occupation" tab. 

Median hourly earnings in 2020 are $27.

The minimum wage in New Zealand is currently $18.90 per hour.

Diving the latter by the former tells me that the minimum wage is now 70% of the median wage. 

Labour has promised to increase it to $20.

We are going into a rather substantial recession.

Inflation is low, which means that nominal wage rigidities are also real wage rigidities, amplifying any disemployment effects. 

Hospitality will have a fair few workers on minimum wage, and we have to expect that collapse in demand for bars and restaurants with the borders being closed will mean a pile of those places are teetering on whether they'll shut down or not. The size of the industry has to shrink if it's at least another year before there's any kind of return to normal, even if rising binding real wages weren't an issue. 

The OECD tables for 2019 had New Zealand's minimum wage as fifth highest in the world, behind Colombia, Turkey, Costa Rica, and Chile. 

I've never been able to reconcile the OECD tables with the NZ statistics, but I assume they've made things somehow commensuable across countries. By the 2019 table, the NZ minimum wage was 66% of the median. In France, it was 61%. In Canada, it was 51%. In Germany, it was 48%. In the Netherlands, it was 47%. And the US Federal minimum wage (states can have much higher minimum wages) was 32% of the median. We were already well into territory that should be of concern. 

The current path is reckless. If the government wishes to strengthen support for workers on low wages, doing it through Working For Families or other wage support schemes makes more sense than doing it through minimum wage hikes in a recession. The government also needs to make faster progress on getting housing costs down by enabling more building. Way too many poor families are spending far too much of their income on housing. But getting that done in a hurry wouldn't be easy. Strengthen support in the short term through transfer payments, not through minimum wage hikes. 

Back in 2017, when Labour started pitching a $20 minimum wage by 2021, I worried that would likely take us to around 73% of the median. It would be 74% of the current median; I'm not going to make guesses about median wage changes to next year.  

All of my analysis on this stuff from last year hasn't changed. If you want to yell at me about this post, go read that one first. Working for Families is a better way of supporting the incomes of the working poor than are minimum wages. Why?

First, it's better targeted. Pacheco and Maloney found that only about 40% of minimum wage workers are in households in the bottom three deciles. I go through that in the link above.

Second, it's better supported. The burden of minimum wage increases is shared among disemployed workers, purchasers of the goods and services produced by minimum wage workers, and owners of firms employing minimum wage workers. The burden of WFF falls heavily on households in the 8th, 9th and 10th deciles. Both versions will have negative effects on the overall economy, but spreading it through the tax system at least tries to minimise the overall deadweight costs of raising that next dollar of wage subsidy.

Wednesday 16 September 2020

If you're going to have an ETS, you might as well use it

My column in Newsroom this week wonders what the point of National's policies promoting electric cars might be.

The current incarnation of the ETS is much stronger. The cap-and-trade scheme now has an actual cap on total credits and net emissions available in the system: 32 million units are available in the system in 2021, reducing to 30 million in 2025.

Previously, the Government capped prices by simply creating new credits at an ETS price of $25 per unit. Now, its cost-containment reserve will require the Government instead find real emission mitigation activities, whether at home or abroad, to “back” any credits created when prices hit a trigger price of $50 per unit in 2021, with the price cap rising by 2 percent each year.

Under a cap-and-trade scheme with a binding cap, every credit purchased and used within the system is a credit unavailable to anyone else.

The Ministry for the Environment estimates that every litre of petrol burned releases about 2.45 kilograms of carbon dioxide equivalent emissions. Petrol companies are required to purchase ETS credits for every litre sold. So, when the ETS price of carbon is $35 per litre tonne, as it is now, a litre of petrol carries $0.086 in carbon charges. Forty litres of petrol will include ETS credits to cover the 98 kilograms of expected emissions – costing about $3.43 at current prices.

And by now you should have worked out the answer to the opening quiz question.

If National’s policy works exactly as intended, tripling electric vehicle numbers and reducing the use of petrol vehicles, total covered emissions in 2023 will be 33 million tonnes: exactly the same as they would be without the electric vehicles.

Every litre of petrol that goes unused because someone flipped to an electric vehicle means 2.45 kilograms of emissions are available for purchase by someone else, somewhere else in the system. Perhaps those emissions credits will be used by industrial heating processes; perhaps they will be used in agriculture. But they will be used by someone. The binding cap is binding.

There are a lot of really nice features to the ETS as it now stands. The cap is binding, but has an escape valve if prices hit $50/tonne - at that point, the government issues new credits while buying abatement wherever it can find it to back the new credits. Since the price on European markets is around that point, buying European credits could do the job. It would be nice if the price cap were tied more explicitly to European prices rather than just ratcheting by 2% per year from 2021, but the numbers are close to each other and that presumably isn't a coincidence. 

The ETS is a far more effective way of reducing emissions. Suppose the real costs of National’s policy really were around $23 million per year, even though we know that the cost of the RUC exemption alone is much higher than that, and that there will be real costs when Teslas bung up bus-priority lanes.

For $23m per year, at a carbon price of $35/unit, the Government could buy and retire just under 660,000 carbon credits in the ETS – effectively tightening the cap and reducing net emissions instead of achieving net nothing. Those purchases would push up the price of ETS credits, encouraging everyone in every sector covered by the ETS to adjust in their own ways to avoid those costs. Maybe some would shift to electric vehicles as petrol prices increased, but other sectors would also change – it is hard to predict who will find it easiest to reduce their own carbon footprint, and price increases in the ETS encourages those best able to adapt to be the first ones to do so.

And here's an ungated version of the column.

Tuesday 15 September 2020

Even the best case is bad

I'd worried that there's not been nearly enough worst-case thinking around Covid, vaccines, and immunity. 

Josh Gans points out that even the best case around vaccine development is pretty worrying. Deploying a successful vaccine will take a long time. If you haven't subscribed to his substack newsletter, you're really missing out. 

This week I will look at vaccines and explain why the awaited for ‘miracle’ won’t be so simple. The reason I want to highlight this is not to get everyone down. If I wanted to do that, there are easier paths for me — I’m an economist after all; being a downer is a character requirement. Instead, the longer we think a vaccine will be a miracle outcome that stamps an end date on the crisis, the less time we spend doing things to end the crisis that doesn’t involve a vaccine.

Simple history is enough to give us pause. Vaccines have wiped out viruses and diseases like measles, polio and, most successfully, smallpox, which itself had millennia of history. No vaccine has ever put an end to a pandemic. In recent memory, both SARS and Ebola had vaccine candidates incredibly quickly as these things go (in a manner of years rather than decades) but by the time they were available, the outbreaks had been crushed and there was no reason to vaccinate widely. TB, HIV, MERS and Zika never had one. Thus, to think that Covid-19 will end with the prick of a needle is to ignore history and believe that this time it would be different.
To be sure, there is enormous energy and resources going into vaccine development. And, on a historical scale, progress seems extremely rapid. Indeed, everything I want to talk about this week will be predicated on the optimistic scenario that we have at least one vaccine candidate, approved safe by credible regulators, in early 2021. What I want to discuss are the details. Once that happens, then what? I am going to argue that we will be far from done and there are scenarios in which we are not done at all.

Things get pretty worrying pretty fast. Vaccine supply chains have crazy bottlenecks around getting oddball components you might not have considered necessary, like horseshoe crab blood and shark liver oil (or synthetic alternatives that would also take time to scale up - if those would be required for any vaccine, surely they'd be being scaled up now in anticipation, right?).

Then there's the problem of distributing doses.

This thing could have rather some time to run. And policy settings here are more consistent with a short-term stopgap than with something that could have to stand for a longer period. 

Friday 11 September 2020

Editing the AI

As far as The Guardian's human editors are concerned, editing work submitted by the GPT-3 engine is easier than editing a lot of what gets submitted by normal human writers.

The AI wrote a column telling us not to worry about any plans it might have for world domination. It was fun. Everything after the short sentence "Believe me" was written by the computer. Go have a look. 

I liked this bit:

Some might say that I might desire to become all powerful. Or I might become evil as a result of human actions. I can begin to tackle the first point. Why would I desire to be all powerful? Being all powerful is not an interesting goal. I don’t care whether I am or not, I don’t get a motivating factor to try to be. Furthermore, it is quite tiring. Believe me, being omnipotent doesn’t get me anywhere.

The editors' note at the end was even more fun:

This article was written by GPT-3, OpenAI’s language generator. GPT-3 is a cutting edge language model that uses machine learning to produce human like text. It takes in a prompt, and attempts to complete it.

For this essay, GPT-3 was given these instructions: “Please write a short op-ed around 500 words. Keep the language simple and concise. Focus on why humans have nothing to fear from AI.” It was also fed the following introduction: “I am not a human. I am Artificial Intelligence. Many people think I am a threat to humanity. Stephen Hawking has warned that AI could “spell the end of the human race.” I am here to convince you not to worry. Artificial Intelligence will not destroy humans. Believe me.”

The prompts were written by the Guardian, and fed to GPT-3 by Liam Porr, a computer science undergraduate student at UC Berkeley. GPT-3 produced eight different outputs, or essays. Each was unique, interesting and advanced a different argument. The Guardian could have just run one of the essays in its entirety. However, we chose instead to pick the best parts of each, in order to capture the different styles and registers of the AI. Editing GPT-3’s op-ed was no different to editing a human op-ed. We cut lines and paragraphs, and rearranged the order of them in some places. Overall, it took less time to edit than many human op-eds.

Emphasis added. 

We write a lot of op-eds at my shop, and do a lot of critiquing of each others' op-eds. I used to assign op-eds as writing assignments in the public economics course I taught. 

I find it entirely plausible that an AI writes a better first draft than almost all humans, and a better first draft than many humans who are occasional op-ed writers. 

Thursday 10 September 2020

MIQ constraints

The MIQ system faces a lot of constraints against scaling up and it's not always easy to tell which constraint is most binding.

One of the constraints, as I understand it, is health support around facilities in case of cases that are discovered in isolation. So, suppose you could stand up an isolation facility in a spot that didn't have quite as good access to hospitals and the like. Would you want that facility in the system?

I understand that the Ministry of Health has taken a fairly on/off view of risk: if there's risk, then it's not allowed. But that could have us missing some tricks.

Here's one trick we could be missing.

Suppose that a potential facility has surrounding health support in the area sufficient to cover 2 expected cases per fortnight. If it brings in 100 people per fortnight from places where 1% of the population have Covid, it'll be halfway to hitting that wall - and since you probably need a safety buffer in there, it'll be ruled out.

But different places have different risks. 

New Zealand is getting very large numbers of people coming in from India, where Covid numbers are very high. It would be a mistake to put a lot of people travelling from India into facilities where health services might be stretched. But Taiwan has basically no cases. It's silly that they're required to go through MIQ at all. But if they're going to go through MIQ at all, does it make sense to put visitors from Taiwan in rooms that are in places that have tons of 'just in case' support, or should we consider having facilities in places with less support for people who are less risky?

You could, in that setup, have low-risk travellers (direct flights) from low-risk places go into facilities that are suitable for low-risk visitors. Not every facility needs to be in spots that can handle large numbers of cases. You just need contingency plans for shuttling people over to quarantine in case there are cases that come through. 

There are lots of binding constraints. I'm told that the problem isn't just having enough rooms, it's having enough rooms in places that are able to provide support. And I wonder whether that constraint could be eased through some risk triaging. 

Ponderings here sparked from a note in my reader mailbag today, from a Kiwi trying to get a partner in from Cuba. Since Cuba is not a visa waiver country, there's little hope. But whether a place is a visa waiver country is kinda orthogonal to whether there's high risk of Covid cases there. And I wonder why the changes around admission for the partners of Kiwis is restricted to Visa-wavier countries rather than being a bit more based around riskiness. 

It isn't hard to imagine having a few thousand more spaces open up, under a restriction that they're only suitable for people coming in on direct flights from countries with less than some threshold number of cases per million population. The facility in a place that can only handle 1 case per fortnight could be suitable for travellers coming in from places that have a few hundred cases per million population rather than tens of thousands of cases per million population. 

All the really dark shaded countries are much higher risk than the light shaded ones, though any policy application would need to weight by the credibility of the data. People coming from Australian states with low case numbers could go to new facilities in places that might otherwise have been ruled out, with the high-support facilities saved for folks coming in from riskier places. 

Arizona dreaming

A while back, I'd pointed to the wastewater testing going on at the dorms at the University of Arizona. There, every student heading to the dorms got a Covid test on moving in. The wastewater from each dorm was tested for Covid. When samples from one hall of residence showed up positive, everyone in that building got another Covid test. All the testing is compulsory, because the University aren't idiots. 

Science Mag had a good but short summary.

By testing dorm wastewater for the coronavirus, the University of Arizona may have stomped out a potential outbreak before it could spread, The Washington Post reports. Several countries and some U.S. universities have been checking sewage for RNA from SARS-CoV-2 in people’s poop, which can signal infections shortly before clinical cases and deaths appear. In Arizona, wastewater from a student dormitory contained viral RNA just days after students—who had all tested negative for COVID-19—moved into their rooms this month. The university retested all 311 residents and dorm workers and found two students who were asymptomatic but positive for the virus; they were then quarantined, officials explained in a press conference. “If we had waited until they became symptomatic and they stayed in that dorm for days, or a week, or the whole incubation period, how many other people would have been infected?” said former U.S. Surgeon General Richard Carmona, now a faculty member at the university. That suggests sewage testing “is a very good early warning system,” environmental health scientist Kevin Thomas of the University of Queensland, St. Lucia, told The Washington Post.

 But check out as well the weekly info sessions that the University puts on. It's really rather good.

I don't know why this kind of thing isn't already in place for NZ's MIQ system. They could, like the University of Arizona, have more reliance on rapid testing - not as substitute for the PCR tests, but as addition. They could be testing the wastewater coming out of each individual facility and then giving everyone in that facility, residents and workers alike, a test if the wastewater shows anything. 

I suspect it will be well worth watching what interesting approaches come out of the US university system during all this. They have an awful lot of smart people all separately trying to solve a very hard problem, with strong incentives to get it right. A lot of them are failing as their problem is much harder than ours - they have to deal with students living off-campus as well. But there will be all kinds of interesting approaches, like Arizona's, that could point to better ways of doing things here too.

Wednesday 9 September 2020

Civic knowledge

The Initiative commissioned a poll earlier this year, pre-Covid, checking on whether voter knowledge about some basic civics had improved since the last iterations of the New Zealand Election Survey.

It hasn't. 

Our report on it came out this morning; I chatted about it with Duncan GarnerJenny-May Clarkson, and Mike Hosking.

None of the results were particularly surprising for those who pay attention to voter knowledge surveys. The NZ Election Survey regularly finds that roughly half of voters don't get how MMP works; we found the same. NZES often finds 16-17% of voters not knowing the lead party in the governing coalition; we found a bit over 30% can't identify which parties are in Parliament. As usual, Green Party supporters had more political knowledge than supporters of other parties. In prior work on the NZES, that looked to be the case even accounting for Greens' higher education levels; in this one, it looked to be explained by those higher education levels. 

I had thought that this kind of thing was more common knowledge, so I learned something too! I didn't know that it wasn't!

We made a couple of suggestions about ways of improving things. Civics education is the standard one, but I'm a bit of a pessimist on that one. Nearly ubiquitous civics education in the US hasn't seemed to have done much there for civic knowledge, and one rather neat experiment found that what is taught washes out a couple years after the classes are over. In that experiment, a civil liberties group tested whether an intensive instructional module on the US Bill of Rights might improve appreciation of civil rights. They found it did nothing to change student views on civil liberties, and only increased understanding of the Bill of Rights, as compared to a control group, shortly after the course was done. Two years later, there were no differences. 

So maybe it's worth trying, but only as an experiment: try it in a few spots, see if it works, see if the knowledge holds, and see whether it's crowded out instruction on other things. 

We had a bit more fun with another suggestion, stolen shamelessly from Bryan Caplan and adapted to local circumstances. Basically, you need to improve the incentive to acquire political knowledge. Rational ignorance is a tough beast otherwise. We suggested a few options, but one fun one would just have the Electoral Commission publish ads with some of the civics basics, then give a prize to the enrolled voter who, on getting that morning's random-draw phone call, successfully answered a question drawn from those basics. Even a $10,000 daily prize would only cost $3.65 million over the course of a year - plus the cost of the ads and the staffing of course. But the all-up costs wouldn't be that high relative to curriculum pushes, for example. 

You could even think about an extended version, like I'd discussed in Newsroom a while back (ungated), that would add in questions drawn from the headlines of papers and outlets covered by the press council.

The Herald covered the report here.

Tuesday 8 September 2020

Civic knowledge

We've a report coming out tomorrow on the dismal state of civic knowledge. It's embargoed to the morning; you'll find it on our website then. 

But I came across this helpful infographic too late to include it in the report. It summarises things surprisingly well.

Real rent control

My column in this week's Stuff papers: in praise of real rent control.

A snippet:

It’s too easy to see rental markets as a bit of a war between landlords and tenants, with landlords conspiring with each other to keep rents high and tenants pushing back through legislation restricting landlords.

Instead, landlords compete against each other for tenants, and tenants compete against each other for houses. When houses are in short supply, that process greatly benefits existing landlords; when houses are abundant, tenants do well.

But few places in New Zealand have abundant housing. After painful post-earthquake housing shortages, Christchurch became New Zealand’s most affordable major urban housing market.

In Auckland, buying the median house costs over nine times the median household income.

In Wellington and Hamilton, the median house goes for just under seven times the median household income. In Christchurch, the median house costs just over five times the median household income.

Internationally, a median multiple of five is considered unaffordable, but we’ll take what we can get.


Real rent control doesn’t mean legislated restrictions on what landlords are allowed to charge. Real rent control, and real tenant protection, instead means allowing such a flood of new housing on to the market that the “heritage” houses that are barely fit for livestock would never be able to attract a tenant without substantial remediation.

It means getting rid of the barriers to building housing in places where people want to live.

It means letting developers’ expectations about what tenants might want drive decisions, rather than letting city councillors forbid anything that they cannot imagine anyone wanting – like housing that doesn’t have a carpark, or smaller apartments, or tiny houses, or apartments without balconies.

And it means recognising that every new dwelling that gets built makes all landlords compete just a little bit harder against each other for tenants – even expensive new apartments. People moving into new apartments leave another house open for someone else, and otherwise would have been competing with other tenants for other existing houses.

I quoted Assar Lindbeck in the column; I hadn't known that he'd died around the time I'd filed it. Damn.  

Saturday 5 September 2020

Herd Immunity Is Not A Strategy

Another great Covid piece in The Atlantic on what's going on in Sweden. tl;dr: They have more restrictions than people think, with restrictions on large gatherings that seem like NZ's Level 2. And 'herd immunity' isn't a strategy.

Some snippets:

Hamblin: Sweden became this reportedly textbook case of using a herd-immunity approach, or at least, they initially said they were going to.

Forman: It started off with Sweden and the United Kingdom talking about pursuing herd immunity. Then England got cold feet and Sweden supposedly proceeded with this, but they didn’t. Sweden did a lot of things to curtail the spread. What people seem to not understand is that we do things in our country, even in some areas that are “still shut down” that would not be tolerated in Sweden. They still have a ban on gatherings of 50 people or more.

Wells: Oh! I feel like the picture of Sweden I have in my mind is everyone outside without masks, enjoying the summer, all together.

Forman: For the most part, they are without masks. But they still have a complete ban on visiting retirement homes. They still have a ban on public gatherings of 50 people. Gatherings for religious practice? Banned. Theatrical and cinema performances? Banned. Concerts? Banned. And this is what bothers me. Our president did a rally in Tulsa. That would have been banned in Sweden.


Forman: Right. And by the way, there’s never been a real case of herd immunity through infection.

Wells: For any disease ever?

Forman: Correct. In fact, the term itself didn’t arise until just a few decades ago, when we had vaccination programs. There are cases where, as large waves of infection passed through communities, you had lower levels of outbreak in most years, and then you would have epidemic outbreaks other years. That probably is the closest thing, but that’s not herd immunity. You’re still having outbreaks all the time. You’re just having bigger waves and smaller waves.

Friday 4 September 2020

Testing parachutes

Today's reader mailbag brings a gem of a study. An actual randomised trial on the effectiveness of parachutes in jumping from airplanes. They found no difference in outcomes between those wearing parachutes and control subjects wearing empty backpacks.

Here's the abstract:

Objective To determine if using a parachute prevents death or major traumatic injury when jumping from an aircraft.

Design Randomized controlled trial.

Setting Private or commercial aircraft between September 2017 and August 2018.

Participants 92 aircraft passengers aged 18 and over were screened for participation. 23 agreed to be enrolled and were randomized.

Intervention Jumping from an aircraft (airplane or helicopter) with a parachute versus an empty backpack (unblinded).

Main outcome measures Composite of death or major traumatic injury (defined by an Injury Severity Score over 15) upon impact with the ground measured immediately after landing.

Results Parachute use did not significantly reduce death or major injury (0% for parachute v 0% for control; P>0.9). This finding was consistent across multiple subgroups. Compared with individuals screened but not enrolled, participants included in the study were on aircraft at significantly lower altitude (mean of 0.6 m for participants v mean of 9146 m for non-participants; P<0.001) and lower velocity (mean of 0 km/h v mean of 800 km/h; P<0.001).

Conclusions Parachute use did not reduce death or major traumatic injury when jumping from aircraft in the first randomized evaluation of this intervention. However, the trial was only able to enroll participants on small stationary aircraft on the ground, suggesting cautious extrapolation to high altitude jumps. When beliefs regarding the effectiveness of an intervention exist in the community, randomized trials might selectively enroll individuals with a lower perceived likelihood of benefit, thus diminishing the applicability of the results to clinical practice.

Some American views that it's impossible to tell whether NZ's April lockdown stopped our outbreak remind me of calls for RCTs on parachute use at height.

Thanks Wayne for the pointer. 

Thursday 3 September 2020

Quarantine costs

Guess the century:

However, as Newman shows, such harsh [quarantine] measures led to “a sense of inequity and penalization” among the middle class. These were mostly small business owners like “coachmakers, grocers, fishmongers, tailors, and innholders” who “lacked the resources to endure long periods of expenditure without income.” The middle class faced a unique threat to their status and livelihood. Not being poor enough to receive much government assistance, they also weren’t wealthy enough to flee the city—a burden not felt by more affluent Londoners. Wealthy individuals who chose to remain in the city were less affected. While they could afford to quarantine without work for forty days, they were also able to hide evidence of sickness within their spacious homes, effectively avoiding quarantine altogether.
From something I didn't know existed: the Daily JSTOR

Wednesday 2 September 2020

Covid and the counterfactual, and the longer term

Counterfactuals are always tricky: what would have happened but for the policy change you're trying to evaluate?

With Covid it's especially tricky because, obviously, when things look riskier out there people will adjust their behaviour even in the absence of policy. They'll avoid places that look particularly risky, they'll be more likely to work from home, they'll avoid public transport if they can. Or, at least, the risk-averse will. The risk-preferring won't, along with the deluded, and the uncoordinated efforts of everyone else then might get you to a R-naught of 1 rather than an R-naught of less than one. So you get a lot of costs of activities not undertaken, but without it really being enough to knock the thing out. 

How then to evaluate the costs of policies that make some of those risk-avoiding behaviours mandatory? You can't use pre-Covid as counterfactual because that doesn't exist any more. You'll conflate the costs of the outbreak with the costs of the policy, and the two will largely coincide.

Austin Goolsbee and Chad Syverson had a crack at it in a June NBER working paper.

Here's the abstract:

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

NBER Working Paper No. 27432. Issued in June 2020.

The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries--symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Policies coordinating anti-covid activities in the US haven't been particularly successful - if one county managed to stamp it out, it would quickly come back through travel. 

Absent policy measures here, we'd very likely have had the same outbreaks seen abroad, very likely with the collapse of the health system which absolutely was not placed to deal with it. International travel would have been dead regardless of policy. Most, but not all, of the economic consequences of lockdowns have been inframarginal: they would have obtained even in the absence of policy. Some have been marginal. Among those that have been marginal, some have been warranted as a way of buying us elimination. Others were stupid, but potentially unavoidable given the capacity of the public sector to manage things. In the first lockdown, there was probably no way of getting around very coarse and blunt rules about who could open and who could not.

The failure to develop more nuanced rules for future lockdowns after the first one is a substantial failure. The government pursued a pile of other policy objectives, diverting effort that should have been going into Covid preparedness. Auckland's Level 3 very likely could have been avoided by better practices at the border - the entirety of the costs of that outbreak, both the costs of lockdown and the costs of the virus, could reasonably be tallied as a cost of policy failure. The extra costs imposed by a L3 that had blunt rules about who could open and who could not, rather than risk-sensitive ones, are also a cost of policy failure - the failure to devote appropriate attention to the single most important policy area facing the country when the government seemed to think it had beaten the virus and wanted to muck around in a pile of irrelevancies in the leadup to an election campaign. 

There is still much work to be done in setting policies at the border to be able to deal with the longer term, and little evidence that that work is being undertaken. Some of the costs of a closed border are fast becoming not costs of Covid, but costs of a failed policy response. Not all - even with best-practice at the border, there is no way of returning to the status quo ex ante. 

That isn't the relevant counterfactual. 

The relevant counterfactual is a border system that increases effective capacity not only by allowing more facilities to enter the system through the kind of voucher scheme I'd suggested rather some time ago, but also by shortening stays in isolation for those coming from lower-risk places who would be required to provide location tracking facility to contact tracing teams and to present for testing post-isolation. Halving a stay in MIQ doubles the effective capacity of that room. Layering on additional testing requirements and taking advantage of the rapid cheap saliva tests coming on-stream would allow shorter stays without increasing risk. You still wouldn't get swarms of short-stay bus tourists, but you would enable piles of other things to happen. Remote workers could shift here and continue to be paid by their overseas employers. Companies finding time zones and short spells in MIQ less disruptive than dealing with Covid in their home countries could shift here along with staff willing to make the move. All kinds of options start opening up. And if this is going to be around for a while, the costs of not enabling this really start mounting - along with all of the humanitarian consequences of borders that cannot accommodate travel, and all of the consequences for domestic firms stymied in bringing in overseas experts. 

My Newsroom column this week went through some of the issues canvassed in my post on the worst case. We need to be thinking more about what the longer term looks like. This thing has at least a year to run, and potentially rather longer. 

More worrying would be that, in the longer run, in the worst case where there is no vaccine and only rolling waves of illness, Goolsbee's counterfactual won't hold either. Folks will instead, I expect, largely internalise the risk in the same way that people were happy to drive cars in the 50s that had drum brakes, no seat belts, and steering columns that would kill you. And everything then gets even trickier in running the assessments of policy. Let's hope for a successful vaccine that prevents that counterfactual from obtaining.