Covid-19 is a dry run for climate change lockdown

If you were wondering what the impact of climate change policies such as New Zealand's Zero Carbon Bill will have on the economy, the Covid-19 lockdown provides the perfect prototype. The Government's own estimates stated that passing the Zero Carbon Bill would reduce this country's GDP by up to 22% by 2050 ceteris paribus (e.g. see this document [PDF]), and the OECD recently estimated that the Covid-19 lockdown would reduce our GDP by around 30%, so the two events are roughly comparable in ultimate impact.

This comparison is not an idle one. Policy makers are already talking about using the Covid-19 lockdown as a prototype for zero carbon policies. The UN's Paris Accord organisation sees it as an “opportunity to...relaunch economies on low-emission, climate-resilient trajectories”. The UK's Climate Assembly sees it as a "test run" for the for potential climate change shifts they have been proposing. According to assembly representative Ibrahim Wali, the UK could achieve its zero carbon target if “people could stay home more, work remotely. Sometimes in life you just need a challenge to change the way you live and operate." In other words, we could save the world from climate change if we could just make the lockdown permanent. In France, the citizens' assembly set up by President Macron has similarly proposed closing down hypermarkets, prohibiting the sale of almost all existing cars and even banning advertising for consumer products (you would think the French in particular would be wary of citizens' assemblies, but apparently not).

They are right in the sense that the Covid-19 lockdowns closely model the impact of zero carbon policies. If you imagine that zero carbon policies mean you're just going to swap your car for a Tesla and that will be it, then you are mistaken. You will be much poorer, just as those who have already lost their jobs and businesses from the Covid-19 lockdowns are today. You won't have a private car. You won't be able to buy all of the food you currently consume and you certainly won't be dining out much. You won't be able to keep your house warm in the winter or cool in the summer. You won't have access to many of the drugs and medical treatment you may need to stay alive. And forget about being able to travel overseas - that privilege will only be for the ruling elite. So get used to it people, if you're in one of the many countries that have legislated for zero carbon you're going to be in permanent lockdown.

On the positive side, the much more immediate threat of Covid-19 has stymied efforts to create a new world order based on carbon zero policies. It also provides the opportunity for some real world climate change experiments - for example, the reduced air pollution may allow scientists to better understand the impact of atmospheric aerosols on climate change. In an even more interesting development, the lockdown may enable scientists to test one of the central hypotheses of anthropogenic global warming - that mankind's carbon emissions are responsible for almost all of the increase in atmospheric CO2 since pre-industrial times. If the hypothesis is true, the reduction in fossil fuel emissions during the lockdown should result in a corresponding reduction in the rate of increase in atmospheric CO2. Climate scientist Dr Roy Spencer is examining this impact in the atmospheric carbon levels recorded at the Mauna Loa observatory in Hawaii. If there is no corresponding flattening of the CO2 curve, then it follows that factors other than mankind's carbon emissions are significant drivers of the increase in atmospheric CO2. That would mean all our efforts and policies to reduce carbon emissions from fossil fuels will be for nought.

[Hat-tip: Breaking Views @NZCPR for many of the above links]

Should a Libertarian Accept Government Lockdown Assistance?

In a recent column in The Spectator entitled I have herd immunity, author Lionel Shriver wrote about herself:

I am a type. I don’t like groups. I maintain few memberships. I question and resist authority, especially enforcement of rules for the rules’ sake. I’m leery of orthodoxy. I hold back from shared cultural enthusiasms.

The same is true of me. I believe in the sovereignty of the individual - that every human being has the rights to life and liberty and to pursue their own fulfilment to the fullest extent that is consistent with everyone else enjoying the same rights. I believe the legitimate role of the state is solely the protection of these limited rights.

The Covid-19 lockdown has provided a dilemma for people like me who don't believe in government welfare assistance. My business is suffering - my revenue this month will be significantly down - and it qualifies for the New Zealand Government's Covid-19 wage subsidy. I have never received a government welfare payment and never envisioned doing so, and therefore I was very reluctant to apply for the Covid-19 business assistance. There are two considerations I took into account in making the decision on whether to accept the Government's handout. 

The first is philosophical, and to address that I looked to Ayn Rand for guidance. Rand was categorically opposed to government welfare assistance on the basis that it was immoral to forcibly take the product of one individual's work and give it to another. She believed that the needs of one person, no matter how pressing, do not create a moral claim on the product of the life of another. Rand's critics claim that she was hypocritical because she accepted US Social Security later in life. Onkar Ghate at the Ayn Rand Institute confirms this but points to the fact that she saw no conflict between opposing state redistribution programmes in principle and accepting what she saw as restitution for the theft of one's wealth in the first place. She likened it to accepting compensation from the proceeds seized from a robber who had stolen from you.

The other consideration I took into account was that the Government ordered this lockdown and (as I have said in earlier posts) if it is necessary that is only because of the Government's earlier inactions. So in effect, I regard the wage subsidy as fair compensation for the negligent damage the Government did to my business.

One other factor that finally convinced me to accept the Government's financial assistance is that my company and its shareholder-employees have large tax bills due at this time, for which the Government isn't offering any grace (other than some vague suggestions they may waive "use of money interest" and penalties). Our cash flow has been significantly impacted by the lockdown order, affecting our ability to meet the tax demands, so in the end we had no qualms about taking the assistance and applying it to the Government's legalised theft.

It does stick in my craw that even the most self-reliant of us have all become dependent on the state. I can't help thinking that this is seen by those in power as a useful by-product of their Covid-19 response. The metaphysical basis of almost all political belief today is social, cultural and economic collectivism. We are all just part of one big, global village, and, as in any village, every person should be concerned with everyone else's business. Self-reliance is seen as selfishness and is not to be tolerated, and if you think you know what is best for your own life, you simply don't know what is good for you.

I am not an anarchist. I believe that governments are necessary to solve human problems such as defeating an invading enemy and stopping highly infectious diseases. But governments have a long history of turning reasonable and necessary collective actions into enduring tyrannies. I fear that accepting the government's largesse may make me complicit in doing exactly that.

Later on today we will learn the New Zealand Government's decision on whether we will be allowed some relief from the universal house arrest we have endured over the last four weeks. Perhaps a positive decision will provide some comfort.

Covid-19 and the totalitarian instinct

Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety ~ Benjamin Franklin

I am concerned, but not surprised, by the reaction of many people to the Covid-19 lockdown - those who relish the fact that we are being confined to our homes by the government. For some, the New Zealand Government's comparatively low key enforcement of the lockdown is not enough, like this supposedly centre-right political commentator who wants it good and hard:

The mainstream media have rejoiced in the lockdown and seem to be promoting its extension through dubious surveys that say a majority of New Zealanders are happy for it to be extended. Of course, such survey results depend on the question - if people were asked whether they are happy for the lockdown to be extended if it cost more lives than it saved, it would produce the opposite result.

That is not a silly question. A British study by Bristol University Professor of Risk Management Philip Thomas concluded that if GDP per capita drops by more than about 6.5 percent for a significant period, more lives will be lost as a consequence of the lockdown than would be saved from Covid-19. This is unsurprising because the biggest factor in improved life expectancy in the modern world is economic prosperity. Reduce national income and more people die.

The response to Covid-19 in New Zealand, according to the Government's own estimates, is expected to reduce GDP by between 13% and 30% in the year to March 2021 in the absence of further economic stimulus. Therefore, we are well into the territory of the cost in lives lost from the lockdown being greater than those saved, even disregarding the negative impact on quality of life.

I used to be surprised by the collective self-loathing of many people in the Western world. Life is better in Western countries than anywhere else at any time in human existence by any measure, yet we are subject to a constant barrage of doom and gloom. In recent years this pessimism has been driven primarily by the narrative around climate change. The neo-Malthusian beliefs of the likes of Paul Ehrlich have become mainstream, with the dire prognostications of famine and disease due to overpopulation being replaced by equally alarming and unfounded predictions of calamity from global warming. On the positive side, Covid-19 has sidelined the constant scaremongering about climate change in the mainstream media. However, it has given those who pine for totalitarian solutions to every human problem a much more immediate threat to justify their misanthropic views.

At the heart of the totalitarian instinct is envy. It is the same instinct as H L Mencken identified when he was discussing Puritans: the haunting fear that someone, somewhere, may be happy - the same instinct that prompted a Radio New Zealand journalist to write this article about a lone surfer in Wellington's Lyall Bay. Such people would rather everyone is miserable than some be happier than others.

New Zealand's Covid-19 active and total cases - April 16, 2020

New Zealand should get out of its current level of lockdown mid-next-week.   Certainly, going by our current Covid-19 infection rates there is no reason to continue the current universal house arrest. But people aren't rational and political decisions are often a reflection of the worst instincts of the population rather than the best. Let's hope that is not the case here.

Taking the Law into Tribal Hands

A couple of years ago, I spent a month on a self-driving tour of Mexico. That country has a well-deserved reputation of being one of the most lawless nations on Earth. Mexico's murder rate, at around 25 per 100,000 of population per annum, is five times that of the United States and about thirty-five times that of New Zealand. There are entire regions of the country to which the warrant of the law does not extend or where the police are so corrupt they cannot be relied upon to enforce the law. When we were there, the Mexican president imposed federal police control over the state of Veracruz, sacking the entire state police force because it could not be trusted to uphold the rule of law, and since then the same has been done in Acapulco.

One of characteristics of a lawless Mexico is the prevalence of irregular enforcement of order (however those enforcing the "order" choose to define it). We got used to being stopped at unlawful roadblocks, often multiple times on a journey and on several occasions blockading entire cities. Many of these roadblocks were set up for the simple purpose of extorting money from hapless road users (particularly tourists like us - I think that rental cars in Mexico have special licence plates just to facilitate this). Others were established as protest actions in support of labour disputes or native land grievances. In most cases we weren't in any physical danger so long as we complied with their demands, but in one remote area of the country we were advised by Mexican Army patrols (the only legitimate authority in the area) not to stop for roadblocks under any circumstances if we could possibly avoid it. We were literally in fear for our lives.

I was reminded of my experiences in Mexico when I read about the "checkpoints" established by Maori tribal groups supposedly to stop the spread of Covid-19 to their areas. What makes these illegal roadblocks much worse is that they appear to have the support of local police and the New Zealand Government has refused to condemn them, which makes our country potentially as corrupt and as dangerous as Mexico. Of course, if I was to set up a roadblock at the end of my street, the police would be around to remove it and to arrest me as soon as you could say "rule of law".

We have seen the encroachment of special rights for Maori into New Zealand law for several decades, ever since Justice Cooke handed down his ruling in a 1987 Court of Appeal case relating to the sale of state-owned enterprises, which said that the Crown was obligated to act as if it were in a "partnership" with Maori tribes. This, of course, implied that Maori tribal authorities were equivalent to the Crown, with all the sovereign rights of an independent government. The problems with this are manifold, not the least being who defines what is a Maori tribal authority and whom do they represent? It is certainly not a recipe for universal, democratic, liberal government.

I have written before about how I believe legitimate political sovereignty derives solely from individual sovereignty, and therefore why I support the aspiration of any group of people for self-determination. If a distinct group in New Zealand, whether they are Maori or not, wish to establish a form of self-government, then that is their right. I also believe we all have an interest in ensuring all human beings enjoy the basic individual rights (of which the American Declaration of Independence remains the best definition with "life, liberty and the pursuit of happiness"), and as long as these rights are respected within the self-governing territory, then there is no reason for any external party to interfere with that self-government. What is intolerable is having two standards of law, or greater or lesser rights, based on ethnicity within the same jurisdiction. That is racism, pure and simple.

I will not submit to an illegal, racist, tribal authority that is trying to stop me going about my lawful business in this country. If I am confronted by an unlawful roadblock, I will act precisely as I was advised to do in that similarly lawless area of Mexico and I advise all law-abiding New Zealanders to do the same - keep your foot flat to the floor and keep going, no matter what.

[Hat-tips to Michael Coote at NZCPR and Bob Edlin at Point of Order.]

Where to from here?

I won a wager yesterday. I had a bet with a friend that the number of new Covid-19 cases in New Zealand would increase from the low of 29 the day before (we had 44 new cases yesterday). These things never plot smooth curves and it was inevitable that there would be some ups and down within the overall trend. However, I remain confident that New Zealand has largely got the spread of this virus under control [update: we are back down to just 29 new cases today], which begs the question, where to from here?

The prime minister appears to have no idea. Jacinda Ardern, at her press conference yesterday, said she will let businesses know the requirements for reopening two days before the Level 4 alert is lifted on 22nd April. It is obvious that Ardern has no experience running a business, because if she had, she would know that many businesses require more than two days to get up and running again - to schedule staff, reorder supplies, restart equipment, confirm orders with customers, arrange deliveries, etc. Not letting businesses know what they will and will not be allowed to do until two days before the lockdown ends adds more uncertainty to already difficult circumstances. The government came up with the impressive-sounding alert levels before we went into lockdown but it is apparent that they still have not developed the detail of what each level means.

The incompetence of this government has been revealed, as if there was any doubt prior, in its confused handling of the pandemic to date. Yesterday the prime minister announced that all international arrivals would be quarantined. Talk about shutting the stable door after the horse has bolted! Why didn't she do this a month ago, or at least at the beginning of the lockdown, rather than now when we've almost contained the virus within the country? It is obviously a knee-jerk reaction to the calls for a border quarantine from the leader of the opposition, Simon Bridges, and his launch of a petition to that effect. It has the appearance of policy-making on the fly and demonstrates a complete lack of forethought.

It is clear that this government does not have, and has never had, a strategy for dealing with Covid-19. It didn't have any objectives for the lockdown (other than the very vague "eliminate") and it appears to have no fixed criteria for how we come out of it. Priorities become obvious when you have a clear strategy and objectives. If the objective was, for example, to keep Covid-19 out of New Zealand, then the first thing you would do is quarantine at the border. The biggest problem of not having a strategy is you don't know whether you're succeeding or failing, and you don't know what to do next. That is why the prime minister is deferring the detail of next stage until it is almost too late - she simply doesn't know. And if you are serious about your strategy you don't prioritise unimportant objectives like vaping regulation in the middle of a pandemic - they simply distract from your primary goal.

The best thing the government can now do is get the hell out of the way. The end of the lockdown provides an opportunity for Jacinda Ardern and her colleagues to pat themselves on the back and say to New Zealanders, "Over to you, now." Let us all get back to our jobs, studies and social lives, and let businesses and other organisations determine how they operate safely, given the relatively modest risks that remain. The authorities should focus on what they should've been focusing on back in February, which is keeping infections out of New Zealand, and tracking and isolating the few cases left within our borders. But I fear our socialist-nationalist-environmentalist government will find that course of action about as appealing as a child sitting on the sidelines of a busy playground.

As bad as the Great Depression

We are starting to see the economic impact of Covid-19 with the announcements in the last few days of the closure by Bauer Media of its magazine publishing business in New Zealand and by NZ Media Enterprises of its Radio Sports network. Many other businesses are already struggling and we can expect to see many more announcements of closures and receiverships, notwithstanding the Government's wage subsidies and other handouts. The surprise expressed by Prime Minister Jacinda Ardern at the Bauer Media decision only shows her ignorance and insensitivity to the costs being imposed on New Zealand businesses. Of course, the Government's insensitivity didn't start with the Covid-19 response. Its treatment of landlords, farmers, banks and many other businesses as pariahs had already served to stymie business confidence since the socialist-nationalist-environmentalist coalition took power in October 2017. Only this week we have seen the implementation of a new minimum wage law, which prevents businesses from employing anyone for less than one of the highest minimum wages in the world. The government chose to go ahead with imposing this significant increase in costs on businesses despite the obvious signs that many companies will not survive the Covid-19 lockdown.

Make no mistake, we are in this Covid-19 situation for the long haul. Even if we bring the spread of the virus under control during the lockdown in New Zealand, and that is by no means certain at this time, it is going to continue in other countries for many more months, which means we will need to keep our borders closed for that time. Our tourism industry is facing a long period of utter devastation and many of our exporters may lose markets during this period. Domestic businesses such as retailers and restaurants will recover somewhat after the lockdown ends, but many companies and individuals will continue to hunker down, not investing or spending until they are sure the economy is well on the way to recovery. The OECD estimates [H/T Michael Reddell] that the impact of the Covid-19 shutdown on New Zealand will be amongst the worst of its members at nearly 30% of GDP, which is a similar impact to the Great Depression.

The Government will be gambling on an economic resurgence as soon as the lockdown ends. It will try and spend its way out of the downturn, as it always does. It will prime the economy with a flood of cash such as we have never known, and it is already doing this by hiking welfare benefits as part of its $12.1 billion "economic recovery package". The problem is that this money won't go a fraction of the way to covering the business and individual losses from the lockdown and consequent recession. Besides, the economic situation is primarily a supply-side (i.e. business investment and revenue) problem and governments today seem to only understand demand-side (consumption) policies.

Many politicians and voters don't seem to appreciate the reality that every dollar spent by the government needs to come from taxpayers, who need to earn that dollar in order for the government to take and spend it. Even when the government borrows money to fund its splurge, it is just postponing the bill to future taxpayers. The problem for many Western governments is that they are already overextended in terms of government debt and these events are just going to make the situation worse. Countries like the United States will be counting on the fact that they will quickly recover to their recent levels of strong economic growth, but while New Zealand is in comparatively good shape in terms of the government's balance sheet, no one can have a great deal of confidence that we are going to grow our way out of the hole we are digging for ourselves (the US GDP per capita growth rate has hit nearly 4% in recent years compared to New Zealand at less than 2%).

The reality of Covid-19 hasn't really hit the global economy yet. The recent falls in stock markets around the world have only taken us back to where markets were about three years ago. Once companies begin to announce the expected impact of Covid-19 on their earnings, I believe we will see significantly greater drops. The property market hasn't really shown any impact yet (other than a pause in sales), but given that some commercial tenants are simply refusing to pay rent during the lock down, we can expect a significant down turn in prices to reflect lower earnings in this sector as well. The reductions in earnings will mean more layoffs of employees, greater losses to investors, and even lower taxes to fund the government splurge. We will be in a race against time to recover from Covid-19 before we lock in the greatest economic downturn since the Great Depression.

I have written before about how complacent New Zealanders have been in recent years. I have been pessimistically confident that a significant economic downturn was coming, and although I didn't predict it would be due to a pandemic, I was expecting it to come this year. Now that it is here, I think we lack the political leadership in New Zealand and in many other countries to respond effectively. But that topic is probably best left to another post.