NORTHERN ECONOMIST 2.0

Tuesday, 23 June 2020

A New Plateau for Ontario?

Well, as of tomorrow, pretty much all of Ontario moves into Stage 2 of the post-COVID lockdown reopening and this has been fueled by the continued decline in daily cases in Ontario. As the accompany figure below shows, after the mid May plateau around 400 cases, decline appears to have resumed and yesterday June 22nd was one of the lowest case days since late March coming at 161 new cases. However, I would venture that the decline is about to slow again again and we are about to have a second plateau at around 200 cases per day. Indeed, today's numbers show a rebound to 216 and if you look carefully at the LOWESS curve, it has slightly flattened out about the same way as I noted before the last plateau in a post in mid-May.

If this turns out to be the case, then Ontario's daily COVID profile will soon come to resemble a series of downward steps rather than a steady decline. If we plateaued at 400 in mid May and then at half the numbers in mid to late June, by the end of July if we half yet again we will still be getting 100 cases daily. Ideally, the goal is to enter a "plateau" where the daily case growth is actually 0, but that is unlikely given that so many people have really already relaxed their attitudes. Baring zero new cases as a goal, Ontario needs to see daily case growth of 0.1 percent or lower by the end of July. If that were the case today and the growth rate of cases was 1/10 of one percent, then there would be only about 34 new cases today. We have a ways to go.

Tuesday, 16 June 2020

Canada's Long Summer Break

As Canada begins to make significant inroads in driving down the daily new cases of COVID-19 and the number of recoveries rises further, the path forward is two-fold. First, we need to make sure that we continue to monitor the infection rate and take steps to ensure that there is not a re-ignition of the pandemic and a second wave. Second, after three months of lockdown and reduced economic activity, we need to get the economy moving again – albeit carefully, with new rules and procedures for reopening to comply with the first step above. Nevertheless, the challenge is daunting given a national unemployment rate that has soared to over 13 percent with 3 million unemployed and nearly as many underemployed with fewer hours of work.

We cannot afford a second wave given the economic damage that has already been done to the economy. Many businesses may indeed never reopen and of those that remain, if they do not reopen this summer, there will be even more attrition going into the fall. Part of the issue is the fall in demand but part of the issue is also the ability to find workers to start doing things again given the incentive effects that rapidly designed assistance packages appear to have created. There is anecdotal evidence and public commentary that the CERB is paying many people to stay at home and that some people getting the CERB may not be entitled to it. Naturally, the numbers alone raise eyebrows given that up to 6 million Canadians are either unemployed or working fewer hours but over 8 million are apparently receiving CERB benefits. The stories range from PEI to Ontario and have prompted proposals of a crackdown.

This makes today’s announcement about the two-month extension to the CERB particularly concerning. While the government tried to place conditions on receiving the extension – such as "actively looking" for work though how that could even be monitored is a good question – these apparently did not pass so we are stuck with two more months of a program that may cause some disincentive effects when it comes to re-starting the economy this summer. Now it stands to reason that support like the CERB was needed to deal with the onset of the pandemic and making sure that people did stay home during the lockdown. However, the numbers suggest that many more are collecting the CERB than the employment impact numbers suggest have been impacted.

For the upwards of two million Canadians collecting the CERB that appears in excess of the sum of those unemployed or with reduced employment, the last three months have seen the start of an early summer. With today's extension of 8 weeks, Canada has now embarked on providing a relatively generous long summer to several million people rivaling all that time off of school for the kids. There may indeed be some very nice social benefits to all of this as people have more time to enjoy their families and do the things they have always wanted but ultimately the CERB is costing about $17 billon a month which means by early September it will have cost nearly $90 billion. And, if more businesses shut down during the summer because they cannot restart due to labour shortages, then there will be even fewer businesses open to hire people come September and we end up with a self-reinforcing circle and a call to extend the CERB yet again.

Without a vaccine or effective treatment to COVID-19, there may indeed be many arguing its not safe to ask people to go back and that the CERB be extended. At the same time, given the traffic I have seen in Thunder Bay this last week, I imagine the fear of COVID-19 may apply to returning to work, but little else. If the CERB is to be re-extended, then perhaps a declining benefit designed to ease people off the support and back into the labour market makes sense. If the first three months are $2000 per month, perhaps the extension should come in at perhaps $1500 if only to set a precedent when the inevitable calls come in August to extend the benefit yet again. Canada’s support to those hit by COVID-19 has been considerate and appropriate but it needs to have a long-term purpose. It needs to help facilitate a transition back to economic re-engagement and not become a permanent fixture given the haste with which it was cobbled together. If this is the start of a basic income program, it needs to be better designed. On the other hand, maybe this all just a lead up to calling a fall federal election.

Thursday, 4 June 2020

Ontario’s Slightly Firmer Swedish Squirrel Approach to COVID-19

After over two months of “lockdown” in Ontario, our progress with respect to COVID-19 appears to have reached what can only be termed a plateau. We have avoided worst case scenarios like Spain and Italy and not overwhelmed our hospitals but we are not seeing our numbers of new cases consistently go down as in some other provinces across the country such as Manitoba or B.C. To be fair, Ontario does have some of the most densely populated parts of the country – namely the GTA – and the combination of dense populations and an international airport are factors which made the COVID-19 situation worse. Ontario is not PEI or Manitoba.

At the same time, our response to the onset of COVID-19 could have been quicker – here Ontario was not alone given the federal response – and the resulting “lockdown” was not really a lockdown in the sense of some of the European countries such as Italy or Spain. While those countries were hit harder, they were at the front end of the pandemic and responded more firmly with their lockdowns. In Italy, the “lockdown” was a complete shutdown where you could not go out unless it was to the grocery store or pharmacy and if stopped while out you needed to justify where you were going to police. As a result, despite a more severe outbreak and having four times Ontario’s population, Italy is now registering fewer daily new cases than Ontario.

Ontario’s approach to COVID-19 in the end is a sort of Swedish approach with a fuller shutdown, less public compliance and a bigger economic cost in terms of shutdown. Sweden’s population at just over 10 million people is close to Ontario’s 14 million. Its approach in the end has been less successful in that it currently has a total of about 41,000 cases and 4,542 deaths compared to Ontario’s 29,047 cases and 2,312 deaths. The Swedish approach has been less damaging to its economy - even schools and restaurants remained open – but its daily case numbers have not gone down settling into an equilibrium between 500 and 1000 new cases a day. The problem with the Swedish approach is not only the higher death rate but of course the greater risk of the pandemic re-igniting given the larger number of embers.

Ontario’s approach in the end has parallels to the family of five squirrels nesting in my rear yard’s pine tree. Obviously, they are sensitive to COVID-19 given that they are sticking to gatherings of five. However, they are a bit of a nuisance. Despite my obvious attempts to discourage them, they do pretty much as they please as they gallivant from tree to tree. However, they are very skittish and if I play hawk calls from my phone, they scamper away and lay low. That seems to be the case in Ontario where despite a pandemic emergency and rules on social gatherings, people still pretty much go about their daily business including gathering in public parks and even participating in demonstrations in large densely populated cities. And, the relaxed approach and lack of attention to details is even in some of those institutions that we were all most afraid of being overwhelmed – our hospitals. And then, as soon as something goes wrong, we act. Its not a consistent strategy.

This story on Thunder Bay’s CBC web site regarding a commuting physician with COVID-19 symptoms working at Thunder Bay Regional for days is an unfortunate case in point. While I am certain that this is a complex story with many dimensions, the essence to me is that the hospital was not consistently following its own protocols – whatever they happen to be – and once a problem emerged, the response was the squirrel thing – a rapid shutdown again of all its “non-essential” surgical and outpatient procedures. I suspect that in the end, the mortality rate is going to rise in the coming year in Ontario but more of the rise will be attributable to delayed diagnostics and medical procedures than from COVID-19 itself.

In the case of Thunder Bay Regional, the interesting part of the story is that there will now be an investigation but that “the full report may be kept under wraps.” Really? Are we implementing Chinese Communist Party management principles in Ontario health care? I would be interested in knowing why during a pandemic an incoming commuting physician was not tested for COVID-19 as a matter of course especially given that the physician was exhibiting symptoms. True, they could be seasonal allergies, but given the difficulty of separating COVID symptoms from allergies, should not the medical staff worker have been tested as a precaution? Is there not a supervisor this physician reports to who could have compelled testing on first mention of “allergy symptoms” to remove doubt? As an aside, was this physician flying back and forth to their other abode or driving?

In the end, what do I really know? I am a simple country economist observing the world from my home – be it presidents and prime ministers trying to make decisions affecting the welfare of their populations, hospital administrations and public health units dealing with health care, or squirrels foraging about their daily business. To date, the motivation and behaviour of the squirrels has been the easiest to understand.

Monday, 1 June 2020

Ontario’s “404 Error”: Is This As Good As COVID Is Going to Get?

Well, it is June 1 and after several months of dealing with the pandemic, Ontario’s daily number of new cases was 404. Oddly enough, the internet “error” signal as your case number is probably divine commentary on the state of Ontario’s efforts to date on dealing with the corona virus. It does appear that Ontario has stalled when it comes to reducing the daily number of new cases and after last week’s large gatherings at Trinity-Bellwoods Park and now the demonstrations in Toronto over the weekend, there will likely be another spike in cases about two weeks down the road. Toronto has already been responsible for a disproportionate number of new cases in Ontario and this will likely get worse.

Of the 3,409 cases added to the Ontario total between May 16 and May 23, the Toronto Public Health Unit area added 1,955 of them – nearly 60 percent of the total. The population of this area in 2016 was 2.7 million out of 13.5 million for Ontario as a whole – a 20 percent share. So, it appears that COVID-19 in Toronto is occurring at about three times the provincial rate and it does not look like it is going to improve anytime soon.

The crux of the matter is illustrated in Figure 1 which shows the number of daily new COVID-19 cases from January 25^th to June 1^st with a 0.5 bandwidth LOWESS smooth. The results do not require a degree in statistics or epidemiology to interpret. We appear to have a reached a daily plateau in terms of the number of new cases. In terms of the growth rate of total cases, we have not cracked the 1 percent daily growth rate barrier. Indeed, the best we ever did was May 26^th and 27^th when we got down to 1.1 percent, but the growth rate has inched up since and today was 1.5 percent. By way of comparison, Italy is now down to a 0.1 percent growth rate in total cases.

And speaking of Italy, here is another interesting comparison. In Figure 2, Ontario and Italy daily cases are plotted since January 25^th and guess what – despite having about 4 times our population and one of the worst outbreaks of Covid-19 in the world, Italy is now at about the same number of daily new cases as Ontario.

So, we do have a problem and the problem is Ontario’s disjointed attempts at dealing with the pandemic. Like much of the country, we moved slowly at the outset in dealing with the pandemic and this still seems to be the hallmark of the Ontario response. Case in point. Pearson airport today announced new strict health measures for dealing with COVID-19-effective June 1^st including the compulsory wearing of face masks everywhere in the terminal. Interestingly, these were not announced April 1^st or even May 1^st but June 1^st. Seriously? Airports are under federal jurisdiction, why so long in finally announcing and implementing these types of measures? The federal government is probably too busy rushing funding to one group after another – today it was $2.2 billion for municipalities - as a sort of fiscal atonement for the sin of not being ready for the pandemic and then reacting too slowly when it began.

I think a glimmer of hope is from the news reported in Italy that Dr. Alberto Zangrillo, the head of the San Raffaele hospital in Milan apparently has claimed that ““the virus clinically no longer exists in Italy”, provoking a furore in Italy. “The swabs performed over the past 10 days have showed a viral load that is absolutely infinitesimal in quantitative terms compared to those carried out a month or two months ago.” Essentially, the virus has begun to mutate and has become less lethal. As for Dr. Zangrillo – he looks like a pretty solid researcher type to me given his Google Scholar page. Of course, this has been challenged by health experts and I certainly would not rush out into the street to demonstrate in public celebration. Nevertheless, Italy has been ahead of the curve with respect to the severity of the illness and if this is true, then it is a glimmer of hope. We could use a lucky break from the lack of initial awareness and plodding approaches of both the Ontario and Federal governments.

Wednesday, 20 May 2020

Politicians, Direct Answers and The Malaise of Our Times

Steve Paikin had an excellent post recently asking whether it was too much to ask for a direct answer to a direct question? His main point was how several leaders in Canada had developed the habit of not dealing with simple straight forward questions and instead were embarking on long, meandering non-responses often prompting journalists to ask the same question again. This meandering approach to answering simple questions with relatively simple answers – he provides some examples in his post – risks eroding a lot of the capital our politicians have built up during the recent crisis. As he concludes: “these leaders are inviting a flattening of their popularity curves if they continue to obfuscate, rather than doing what the public has richly rewarded them for doing in the past: just answering a straight question with a straight answer.”

My original thoughts on this issue posted in a comment were that “I agree Steve but am not surprised. It remains that politics is dominated by communications staffers rather than people who can « do things ». It’s only during a crisis that expertise and ability become important, otherwise it’s simply about the message and old habits die hard.” Indeed, the constant desire of politicians and their staffers to manage situations and message has led to an odd twist on a societal level borrowing a bit from the Marshall McLuhan phrase: "The medium is the message" - its only the medium, there is no message. In our politics and work lives, what matters is not the content at all but how it is communicated with more emphasis on how things are said than what is said. In the hands of skilled practitioners of this art, you can have both the content and very skilled messaging. In lesser hands, well …. you get long meandering responses with many turns of phrase and empathic expressions designed to sound clever or comforting but which really say absolutely nothing and may mean the responder is hiding something ranging anywhere from a hidden agenda to their ignorance and lack of ability.

In the best-case scenario, you can get nothing but words and platitudes from leaders but life goes on because the issue does not matter and you can tune out. During times of a full belly, you can indulge nattering politicians and bureaucrats who like to hear their own voices and promote agendas based on the aspirations and the lobbying activities of their friends and connections. In times of crisis, this is a problem and may lead to opportunities for plain speaking leaders who can get things done but once the crisis is over, they are often dumped – think of Winston Churchill at the end of the Second World War. However, the worst-case scenario occurs – and believe me there is always a worst-case scenario – when the focus on communication and the message becomes a means of stifling debate and dissent and can become a fundamentally undemocratic force that prevents new ideas from coming to the fore.

My best example of this is a meeting many years ago when after making several points in plain and direct language, I was told that I was making everyone uncomfortable. Foolish me, rather than simply saying “Sorry,” I instead directly asked why everyone was uncomfortable? After all, I was presenting evidence on the matter under discussion in careful and measured language. After a pause, I was told that it was not what I said but how I said it. Apparently, a polite laying out of a list of facts that contradicts the direction based on wishful thinking that everyone else wanted to go made everyone uncomfortable. This was not about how I said it, it was indeed what I said and in the absence of being able to muster empirical evidence or facts against the position I had taken, the response was designed to shut off discussion by making it about how the message was communicated.

The long-term response has been a corrosive effect on our society and institutions that has indeed paved the way for populism. The railing against the lack of evidence and mindlessness of populist policy is being led by the same masters of obfuscation who got us here in the first place. They are at their wits end because their communication is not having an effect against another communication. After all, if it is how you say something rather than the logic or evidence underpinning it that matters, then what does it matter what the facts are? If reason and evidence are just window dressing to hang a message on, then how can one combat fake news or simple policies not based on evidence? If all the focus is simply on optics, spin, communications and messaging, then what you are telling everyone is that facts and evidence do not matter. If its all about appearance and presentation, then is it any surprise the world is in the state it is in?