Real quarantine

When we lived in Christchurch, we'd tour occasionally out to Quail Island. Quail Island had been home to New Zealand's leper colony, and also served more generally for quarantine. Here's a bit of that history.

Although most migrants arrived fit and well, the authorities implemented disease prevention measures at the major ports. Before anyone disembarked, officials checked the health of the government migrants and the condition of the ship, and heard complaints. Ships with sick people aboard had to raise the yellow flag and go into quarantine, a dismal introduction to the New World for people who had already been cooped up for three to five uncomfortable months at sea.

Construction started before the island’s sale could be completed, so the government built cheaply and simply. In February 1875 the Rakaia (which had lost 11 passengers and still had 100 mumps cases aboard) became the first ship to use Quail Island. It would not be the last, but with migration tapering off in the late 1870s and steam taking over from the mid-1880s, the need to quarantine people declined sharply. From 1881 livestock were also detained here, most famously the dogs and ponies used by Antarctic explorers. Between 1901 and 1929 the Shackleton, Scott and Byrd expeditions all used Quail Island.

But sickness still drove people here. In 1918 victims of the influenza epidemic were sent here as Canterbury struggled to meet the crisis. Between 1906 and 1925 there was also a small leper colony. Just a few minutes’ walk from the barracks you will find the walls, concrete foundations and drain channels from the leper colony that sat on its own isolated terraces. Another few minutes’ walk away a solitary grave lies behind a neatly painted white picket fence. It belongs to the only leper to die here, 20-year-old Ivan Skelton, who was visiting relatives at Westport in 1918 when he was diagnosed with the ancient curse. Shipped off to Quail Island, he died five years later, far from his family.

I was increasingly aghast with the lack of quarantine or health checks as folks came in ahead of the border closure, then again with the rather informal nature of quarantine for residents returning from places where Covid was rife. The country had ample empty hotels.

I wonder how much of the total lockdown could have been avoided had we collectively not forgotten how to run proper case tracking, followed up by quarantine.

It does have a long history. Here's Lyman Stone's excellent summary. Read the whole thing. A few snips:

Before we get into what centralized quarantine might look like today, it’s worth walking through the history of this strategy. In Leviticus 13 and 14, Moses gave the people of Israel instructions on how to deal with outbreaks of infectious diseases (in this case, a skin condition; widely translated as leprosy, it is actually very unlikely that the disease described was true “leprosy.”). The instructions are a Bronze Age version of “test and quarantine.” Detailed diagnostic criteria are listed for experts to use to provide a diagnosis. Any cases that meet a very low standard for a “possible positive” were then isolated from the rest of the community in a secure location until they completed a certain window of time without symptoms.

This is textbook “centralized quarantine.” Infected people didn’t shelter in place, and isolation was not limited to highly infectious people. The instruction of God Almighty through His prophets to the people of God when they confronted a contagious disease was very simple: Isolate large numbers of people who might be infectious at a safe distance from the community.

...

Detailed study of medieval cemeteries in Scandinavia has yielded an answer. Leprosy was driven to extinction in many Danish cities before 1400. It persisted longer in rural areas. The cities where leprosy declined share a common trait: lazar houses. They established “leprosaria” where infected people were isolated. This resulted in a dramatic decline of infection in the wider population.

...

It is also, as it turns out, extremely beatable. There are numerous cases of bubonic plague being successfully controlled without modern pharmaceuticals, but the best-documented case is the city of Ferrara from 1629 to1631. Strikingly, the scientific paper about Ferrara’s successful management of bubonic plague was accepted for publication in December 2019, and just officially published last month.

From 1629 to 1631, a terrible wave of plague killed tens of thousands in every city in northern Italy. Except for Ferrara, where there were fewer than a dozen plague deaths. This was not due to luck: Several towns around the region’s official borders were hit hard, suffering thousands of deaths. But Ferrara, alone in the center of northern Italy, stood resilient and relatively plague-free.

Among the city’s strategies: Strict travel restrictions limited who could come to the city; trade goods were repackaged before being locally sold. Movement was limited, and most city gates were sealed. Mostly, these strategies worked. But not entirely. In August 1630, several cases broke out in the city. This should have been the end for Ferrara: Once you’ve got a few bubonic plague cases, it tends to spread. But the city’s officials deployed all options they had on hand: All those who were sick were put in centralized quarantine in the now-empty leper colonies. So were their close contacts, business partners, families, and others. Their houses were sealed up while they were away, and after a safe period of time scrubbed with a kind of medieval bleach.

There were a few other scares, which demonstrate how extreme the measures were. A postal worker got sick: He and everyone on his route were put into quarantine. A school child showed some symptoms: School was canceled for two months. If this all sounds surprisingly modern for 400 years ago, don’t be surprised: “Plague protocols” were written for many cities around the world. Unfortunately, they were often ignored. Ferrara is unique, not for having written rules, but for actually following those rules. Politicians in Ferrara shelled out a huge amount of money from their budget to pay for food for quarantined people, have doctors check on the poor, and generally keep their city safe. They succeeded.

As we come down into level 2, and desperately would like to stay there, it's worth considering proper quarantine for cases as they come up.

The question is why Americans didn’t leap to this response. Why did we, rather than using existing legal authorities and time-tested procedures, instead choose to lock down all of society, despite no precedent for such a response, and little evidence it would work? Why did we, instead of deploying a simple, easy-to-understand, low-tech solution that any local government could have implemented, focus on a futuristic testing-and-trace regime that is never going to be fully deployable? The legal authority for quarantine is very clearly codified in law, the historic basis for its effectiveness is obvious, and it was even used as a strategy against the 1918 influenza pandemic, polio, and against recent novel influenzas.

It's a good question here too. I disagree that there's anything futuristic about testing and tracing - but there is something silly about seeing it as a way of avoiding quarantine. I'd thought that testing was just a more accurate version of the older medical diagnosis, allowing for a narrower set of people to be quarantined. And contact tracing is needed for any kind of quarantine anyway. Wouldn't it rather be a strong complement to everything else, and a substitute for the broader and far more costly lockdowns?

Ownership and control

The line between state-owned and 'private' firms starts getting messy in bailout-worlds. 

AUT's excellent Akshaya Kamalnath provides an interesting example with the bailout conditions on Air France - KLM.

There’s much to say on the topic of airline bailouts unfortunately. Today’s post is about Air France-KLM and the strings its bailout comes with. (My previous posts on this are here and here.)

Apparently the French government will make a loan of £6.15bn to the airline on the condition that it scraps domestic air routes. The stated motivation for this is environmental do-goodery. Bruno Le Maire, the economy minister, provided the following reasoning: “When you can travel by train in less than two and a half hours, there is no justification for taking a plane.”

We talk about conflicts of interest in corporate law all the time. Usually, this is in the context of board decisions. Let’s use the same lens to examine this bailout condition and ask, who owns the French Railways (SNCF). No prizes for guessing that it is fully state-owned. Incidentally the SNCF has also been running under losses since before COVID-19 and the situation has only worsened after COVID-19.

(Thanks to Leonid Sirota for inspiring this post.)

And Leonid is also at AUT in laws. Huh. I'd known they had an interesting econ department doing lots of administrative data work; hadn't twigged that both Leonid and Akshaya were at the law school there.

Foreign students fleeing to New Zealand could consider putting together an interesting joint degree between the two departments.

Almost anything beats prohibition, including the draft cannabis legislation

The draft cannabis legislation, as written, is better than prohibition. Even without amendment, those inclined to vote should vote for it.

There's still a lot in it that I don't like though.

The prohibition on growers also running retail operations, presumably intended to prevent large commercial grow operations with vertically integrated retailers, will also prevent anyone from running the kinds of cellar-door operations that have been very important in wine tourism.

Sure, cannabis is nothing like wine. But is it that hard to imagine folks spending a morning at a grower's in Northland, seeing he fields, meeting the growers and workers, touring the facilities, sampling some of the product , having a bit of lunch maybe with a nice wine, ordering some for delivery back home, then bicycling over to tour a different one in the afternoon?

A whole lot of that would be illegal under the legislation as drafted.

The grower is not allowed to run a licensed consumption facility. Licensed consumption facilities are not allowed also to have alcohol. And prohibitions on advertising would likely make it hard even to put up a normal product list with descriptions and prices within the shop. The names of products and prices are fine; any additional notes wouldn't be.

Russell Brown, who's more a fan of the legislation than I am, also worries about this part

The bottom line of the section quoted above also embodies a more recent approach: a ban on vertical integration, which has been an element of reform in Mexico. No business will be able to both produce cannabis and sell it to the consumer, which restricts market dominance.

The economist Eric Crampton has already noted that the vertical integration ban would preclude “cellar door” type operations, where a producer could show and sell farm-grown cannabis to visitors (which would undoubtedly be popular with tourists). But I think there are larger impediments to that, most notably in the banket ban on advertising – including advertising inside R20 stores. You won’t be able to smell or see your weed – or even a picture of it – just a price list.

It’s not clear to me the extent to which even attributes of of the products will be able to be described, to tight is the advertising ban. But the particular effects of any given cannabis strain strain are governed as much by which terpenes are present as by THC level – weed that smells like cheese will have a very different effect to weed that smells like piney or citrusy, believe or or not – and anyone buying it needs some way of knowing that.

I do think there’s a level where this gets infantilising. If we’ve decided, as a nation, that adults can use this drug, then not letting them see it or get information about it, even on licensed premises, until they’ve bought it – when they will be free to look at it, smell it and consume it, even right there on the spot – just seems a bit silly.

And the cap on the quantity of cannabis that can be sold in the commercial market will make it very hard for the market to respond to changes in demand that can come with, for example, the return of tourism. Quantity restrictions will push prices up whenever demand is higher than normal, and that will encourage shifts back into the illegal or informal market. If the government had any intention of setting excise to try to maintain retail prices to consumers around where they are now, it'll be harder to do that under the quantity restriction.

The cap is likely to turn into a sinking lid where the cap is supposed to be set with a view to the purposes of the Act and the Harm Reduction Strategy, all of which focus on minimising the harms of use.

The Authority has to decide among potential growers vying for a share of the annual production cap. They're meant to take into account factors listed in Section 85, including representation of communities traditionally harmed by cannabis, generation of social benefits and employment.

Those applications come in for the share of the annual cap, so every year there will be costly application processes trying to prove the social worthiness of one grower relative to another.

There's no mention of potential tradeability of permits; it's presumably prohibited where the point of the permitting process is to make sure that the portions of the cap are divvied up according to the preferences of the Authority as guided by the Act. But that also could cause problems if a grower experiences crop failure in one year, for example. With wine, if one part of the country has a great year and another part is a bit average, it all washes out. If there's drought hitting apples in Hawkes' Bay but Central Otago's fine, then we get apples from Central instead. Nobody has to reallocate permits in accordance with social worthiness.

This whole thing looks rather ripe for rent-seeking.

And while the regime at least doesn't punish those under the age limit for being in possession of cannabis - or at least avoids criminalising them - it would criminalise social supply to 19 year olds in cases where, for example, a parent may prefer to provide a bit from their own home-grown supply than have the kid rely on informal supply from less savoury folks. Sure, in theory, illicit supply's supposed to be wiped out. But suppose you have an 18 year old at home that you know is getting weed elsewhere and that it's dodgy-as. Unless you're able to find and dob in the kid's supplier, you can't really block that access route. And you can't supply small amounts of better product for supervised consumption.

And if you regularly have guests over who consume cannabis, be careful about Section 177: you could be considered to be running an unlicensed premise for the purpose of cannabis consumption even if no money changes hands.

On the good side though:

• Excise would be based on weight and potency rather than ad valorem;
• Edibles will be allowed - though I don't see any mention of the standard-dose kinds of packaging that have been useful elsewhere;
• There's a review 5 years into the regime to see how it's working;
• It isn't as bad as prohibition. 

Media funding, prizes and public goods

The government's paid $50m to help shore up newsmedia companies' finances during Covid.

But the overall media funding problem is bigger than the current Covid mess.

I went through things in a bit more detail in Newsroom last week (ungated here). Too many news types want to find ways to have the government strongarm tech companies into rebuilding the old advertising-based funding model that worked until the 2000s - it's basically nostalgia for an era that just won't come back.

But where we wouldn't see any need to support buggywhip manufacturers against the rise of the car, there are reasons to expect the optimal amount of journalism is higher than we might wind up with where the personal benefits of being informed aren't all that high. 

I talked about it all with Jesse Mulligan yesterday afternoon on RNZ.

But you can get the nut of it from this snip from the piece at Newsroom.

That would not be a problem on its own. But there are reasonable ‘public good’ aspects to a thriving news sector. If an investigative journalist exposes a city councillor’s corruption, the benefits extend far beyond that newspaper’s subscribers being better informed. Worse, the benefits of being better informed have always been just a little ephemeral.

Sure, there is prestige in being able to hold one’s own in conversations about current events, but most of us really could ignore almost everything that’s going on in politics, and in policy, and in sport, without really noticing the loss.

It is then no surprise that the most typical findings of the academic literature on voter knowledge are that voters know very little.

This is hardly a new phenomenon. Even in the heyday of journalism, in 1964, well before the great decoupling of newspapers from classifieds and other advertising, only 38 percent of surveyed Americans knew that the Soviet Union was not a member of NATO – despite that the Cuban Missile Crisis had almost brought the powers to nuclear war only two years earlier.

And so we get to the nub of the problem. For most people, there is little personal benefit in getting the kind of information provided by serious journalists. So there is less effective demand for news than would be ideal, both because serious journalism directly provides benefits in democratic accountability, and because a better-informed voter base is likely to yield better outcomes at the ballot box.

There are two basic ways of trying to solve the problem. News producers could be directly subsidised, whether by philanthropists or by taxpayers. Or the rewards for being better informed could be strengthened. Let’s take each in turn.

Last year, the Stigler Center for the Study of the Economy and the State’s Final Report on Digital Platforms suggested taxpayer-funded vouchers could help fund news. Under this scheme, each adult would receive a $50 voucher to be used as a donation to their favourite news outlet. The proposal has a lot of advantages over other forms of state-funding. Rather than the Government or a panel of anointed experts doling out the money, individuals would reward outlets they most wish to support.

The proposal is interesting. The authors have thought through most of the obvious objections. But while the scheme would help reward the investigative journalism so important for democratic accountability, it would not do as much to encourage people to read the stories.

There is another way of encouraging people to pay a bit more attention to the world around them.

Growing up in Canada, radio stations often ran contests where they would phone someone at random and give them a prize if they could name the song the station had just played. It encouraged people to pay a bit more attention.

Imagine if the Government allocated $36.5 million to a prize pool. Every day, the editors of the various news outlets overseen by the Media Council would submit skill-testing questions drawn from the more important stories they had recently produced. Every day, some lucky Kiwi would get the phone call promising a $100,000 prize for successfully answering one of the questions of the day – with calls continuing until someone got the prize.

Suddenly, knowing what’s going on would matter for more than just water cooler kudos. Even if the odds of getting the call were low, the pain of getting the call and not knowing the answer would encourage paying attention to current events. That would help to drive subscriptions to the news outlets providing the news and build a better-informed electorate.

That seems more promising than letting the Government adopt mafia-style standover tactics to force tech companies to fund journalism.

Tobacco excise and living costs at the bottom

Statistics New Zealand's Household Living Costs Index again points to tobacco excise as imposing substantial cost:

Māori and beneficiary households feel the greatest impact from higher cigarette prices
30 April 2020, 10:45am

Higher cigarette and tobacco prices hit Māori and beneficiary households the most in the March 2020 quarter, Stats NZ said today.

Each quarter, the household living-costs price indexes calculate how inflation affects different groups in society, while the consumers price index (CPI) measures price changes for New Zealanders as one group.

Prices for cigarettes and tobacco rose 11 percent in the CPI this quarter as the annual tobacco tax rise took effect on 1 January (see Higher inflation in March quarter).

“The cost of cigarettes and tobacco was one key contributor to inflation for all household groups,” consumer prices manager Sarah Johnson said.

“Māori and beneficiary households felt the effect of this rise more than the other household groups we measured, partly because cigarettes and tobacco made up a greater proportion of their expenses.”

Cigarettes and tobacco made up more than 4 percent of all expenses for beneficiary and Māori households, compared with less than 3 percent for all households as a group.

Broader inflation of course is not looking all that strong currently - for those of us who don't smoke anyway. 

Working from home

It certainly can't work for everyone, but I wonder how many companies will be finding that they didn't really need nearly as much office space after all. 

Software firm OpenText is permanently closing about half of its offices and shedding up to five per cent of its workforce as it responds to the COVID-19 pandemic.

"We believe it is better to be decisive and clear, not slow and incremental," chief executive officer Mark J. Barrenechea said during an earnings call on Thursday afternoon.

A shift to remote work by more than 95 per cent of OpenText employees as the pandemic spread has been "amazingly productive" and as a result, approximately half of its physical offices around the world will not reopen, Barrenechea said.

Those offices are smaller and house about 15 per cent of OpenText's total workforce, which was approaching 15,000 employees in 35 countries earlier this year. Specific locations weren't identified in a release announcing the move, but a spokesperson confirmed that its offices in Waterloo — the company's headquarters — and Toronto are remaining and will reopen to employees when a return to work is possible.

"Our corporate offices, our centers of excellence, innovation centers and country head offices will reopen when we are able to do so," the company said.

About 2,000 employees at the affected offices will move permanently to remote work. Separately, a restructuring program will see the total workforce cut by up to five per cent, or roughly 750 people. Cost savings once restructuring is complete are expected to be in the US$65 million to $75 million range.

Remember those little experiments that Tim Harford talked about, where sometimes a road closure would lead people to discover an even better commuting route than they'd had before?

A lot of companies would have been rather reluctant to trial work-from-home options, whether because they didn't think the managers could properly keep an eye on things, or because they expected too great a loss in communication among workers and consequent discoordination issues. But they've all now had to try it.

I'm sure some people cannot wait to get back to their offices. I guess we're all wired a bit differently. It'll be interesting to see how many more folks are allowed to work from home once this passes though.

Open to minds - reopening to international students

New Zealand's today hit zero new cases of Covid-19.

With appropriate upscaling of contact tracing and rigorous quarantining of newly found cases, it's very possible to see New Zealand largely reopening, at least internally.

The rest of the world remains a problem.

And, sadly, a bit of an opportunity.

New Zealand could wind up being the only place in the world where you can undertake normal university study with lectures and student life.

That presents an enormous opportunity to expand international education. Incoming students would need testing and quarantine, and the system for doing that would have to be rigourous - no stupidity like jumping onto regional flights with other passengers from an inbound international flight. Doing it properly matters.

Reopening to foreign students doesn't just let the universities avoid cutbacks and bailouts, it also helps reboot tourism. We are not going to get substantial amounts of tourism if those coming in have to undergo a fortnight's quarantine. But we could see international students touring the country during their semester breaks rather than going home and having to quarantine again on the way back.

I wrote a short policy note on it last week.

Susan Edmunds covered it in the Fairfax papers:

Chris Whelan, chief executive of Universities New Zealand, said foreign students provided a level of funding that helped make it possible for young New Zealanders to attend universities at discounted rates.

“They also bring broader perspectives, a taste of different cultures and a wider world view to our campuses. International education has massive benefits for everyone.

“As well as reducing the cost of running universities for taxpayers, international students also bring nearly $700m a year of additional spending in sectors such as accommodation, food, entertainment and travel. When international students graduate, most continue to have a relationship with New Zealand personally and promoting it to others for tourism, further education, trade, research collaborations, and in diplomacy,” he said.

“Their presence here is also a key reason why every New Zealand university is world-ranked and can provide every domestic student with a world-class education.

“Welcoming international students back to New Zealand—when the time is right and all risks can be properly managed—would be an opportunity for New Zealand to grow our share of the international student marketplace.”

John Gerritsen also covered it at RNZ:

The chief economist from the New Zealand Initiative, Eric Crampton, said New Zealand's success in containing the Covid-19 outbreak gave it a strong competitive advantage other countries.

"A lot of the rest of the world is looking terrible for students. The universities are providing nothing like the kind of experience they've normally been able to provide, their lectures are shut down ... the night life is going to be shut down, the whole student experience is going to be severely diminished," he said.

"New Zealand will be looking remarkably attractive in that kind of a world. Students who previously might have looked to some of the more prestigious universities in America or in the United Kingdom as places to study will be able to look to New Zealand instead. It's a real proposition."

Crampton said northern hemisphere universities generally enrolled students in August, so New Zealand universities needed to set up a quarantine system so it could take new students in the middle of the year.

"We have to be able to open for the July semester start," he said.

Crampton said it appeared that New Zealand would be able to contain any fresh outbreaks of the disease better than most other countries, and that would be encouraging for many prospective students and their families.

He said there was also the opportunity to attract top staff because many foreign universities had introduced hiring freezes which would leave new PhD graduates with nowhere to go.

"If we prove sufficiently attractive to foreign students that we could start looking to expand our capabilities here, we would have access to a pool of talent that we would probably otherwise not be able to get to come to New Zealand.

"So we've got a real opportunity here but it all requires that the government be ready to start really rapidly processing international student visas and making sure those quarantine facilities are ready."

My column in this morning's Fairfax papers made the case as well.

And that presents some opportunities that should not be missed.

Most obviously, New Zealand should be able to join with others who have largely beaten Covid to re-open borders to quarantine-free travel. Once Kiwis can travel again from Auckland to Invercargill, there seems little reason not to also be able to travel to places like Taiwan – which has been more successful than either Australia or New Zealand in keeping Covid in check. South Korea should also be on the list, along with Singapore when its recent outbreak is back under control.

Doing it right would likely require mutual monitoring of each other’s pandemic testing, monitoring, and containment regimes. That kind of quality assurance would strengthen our systems and help ensure that the larger Pacific bubble could hold. Doing it seems well worthwhile; the OECD has suggested that poor international connectivity underlies part of New Zealand’s weak productivity statistics. Reopening the borders to places no more risky than other parts of New Zealand would help in rebuilding business links and in restarting tourism.

But there is more substantial opportunity, in some areas, for growing beyond what New Zealand had before the pandemic. New Zealand’s “lifeboat” status, when North America, the UK, and much of Europe are in turmoil, could particularly benefit our tertiary education sector. 

And I talked about it a bit in my panel chat with Kathryn Ryan on Nine to Noon this morning as well; that one ranged rather more broadly.

Doing it would require the universities putting up quarantine facilities that pass muster with the local Medical Officer of Health - that should be very feasible. It would also require those students to be able to get here - I expect the universities would need to have a few chats with Air New Zealand about getting a few international flights up in time for it to happen.

But it really really should be done.