Public Policy in the Time of COVID-19

The novel Coronavirus has posed a threat to the health of individuals, impacting the wellbeing of both infected and uninfected around the world. The goal of policy during this period is to prevent the spread of the virus to minimize the number of lives lost while taking the necessary steps to prevent the health care system from becoming too overwhelmed to provide care to all who are infected. There is also the objective of preventing loss of assets and a surge of homelessness that results from increased unemployment, or lost hours due to having to be home to care for children.

Safeguarding the health and lives of citizens is an economic objective in addition to being a social and health objective, as these individuals make up the workforce. Coronavirus has posed a threat to economic wellbeing through its threat to the lives of workers which necessitated a lockdown around cities in the world, and the impact of that on businesses. The virus has put a damper on global supply chains as a result of its effect on global demand and has led to businesses shutting their doors or downsizing, causing a large number of people to lose their jobs permanently. The goal for governments is to limit the job loss as much as possible, allow the continuation of economic activity to the greatest extent possible while keeping workers safe, and to ensure that the economy can have a quicker recovery post-COVID by keeping the ties between employers and their employees and reducing the number of bankruptcies to the barest minimum.

What about individual liberties?

The issue of individual freedom is not irrelevant. It is known to be a fact that governments expand during crises, and some of the liberties taken in the name of protecting citizens may continue well after the threat to lives has passed. Even at that, public health takes priority and the expectation is for citizens to be willing to give up some of their freedoms temporarily, to an extent. A lockdown produces serious issues other than loss of income that cannot be downplayed such as the rise in domestic violence cases that has been reported across the globe, or the threat to mental health, and considerations should be given to these.

The allowance given to governments certainly depend on where in the world the people are located and the freedoms they already enjoy. Hong Kong was able to use apps installed on the phones of citizens to record where they are and to enforce quarantine, and South Korea was able to use security cameras and credit card transactions for contact tracing, measures which will not be accepted in most of the developed western world. It is far easier for those governments to impose a lockdown and fine those who flout the rules, and to rely on personal reporting for contact tracing, but even these less draconian measures have received some push back.

Policy Considerations

The trade-offs the pandemic has introduced is something that we see countries around the world grappling with or struggling to grapple with based on their policy responses to COVID-19. On the one hand we have social distancing and lockdown rules, social policies which have led to lives saved. On the other hand, we have lost jobs and income, and increased unemployment. Evaluating the trade-off requires us to answer the question, what is the value of a human life? Or better yet, what is the value of each saved life?

Completely avoiding trade-offs implies that we find policy that maintains physical distancing and/or mandatory lockdown to limit the spread of the virus, while allowing economic activity to continue undisturbed. This would be possible if all economic activity could persist within social distancing rules, which we know is not the case. All we can hope for is to minimize trade-offs.  Although trade-offs exist between health policy and economic policy, there is also a level of complementarity between health and economic objectives. During a pandemic, protecting the health and lives of citizens is also an economic policy, as there is no wealth without health.

The objective of policy during the coronavirus pandemic is to minimize the number of lives lost, while also minimizing the economic contraction to as large an extent as possible. We also have to ensure that the actions taken in the short run reduce the length of time it takes for the economy to recover which also has economic and social repercussions. Because our actions rather than some invisible force or mere chance play a huge role in the number of deaths that will occur, the primary goal of government is to try to prevent as many deaths as possible.

Is there a role for government?

The most critical objective is to protect the health of citizens by limiting the spread of the virus. No other institution can be trusted to take up this mantle as some individual freedoms have to be given up temporarily to such institution. Government is also required to provide information, guidance, and leadership and to coordinate efforts to keep the society and economy churning in these uncertain times.

Data from Canada as well as other countries revealed that individuals living in overcrowded communities, low income communities, and communities with higher health disparities, most of these occurring to the same group, are more susceptible to COVID-19. Helping lower income earners and the most vulnerable members of our society is a social mandate of government.

If the market were left to its devices and governments did not intervene, individuals and businesses would not take the necessary precaution to prevent the spread of the virus, because those precautions would be at least economically costly to them, and at most both economically and socially costly in the case of individuals. The effect of not isolating on the health of third party will be completely discounted by people who are infected but physically well enough to remain in the workforce to support their family. This situation produces a market failure where the rational decision of individuals leads to a suboptimal outcome for the population. The chaos that would ensue could cause longer lasting damage. Government has a role to play in stabilizing the economy after the mandated closures have taken place by providing income to those who are affected by COVID-19 and those who have lost their jobs, and by providing support to businesses to prevent further job losses. The only other option would be to wait for the market to correct itself, which will inevitably lead to a more damaging recession, and a longer and more painful economic recovery.

In addition to this consideration, a determinant of whether or not there is a role for government is how policy to improve social and economic outcomes will be funded. Although this is less of a deterrent to government action in the face of a pandemic, the government of Canada for one has very low borrowing cost and can afford to take on debt for the benefit of its citizens. As a result of the fact that recessions have ripple effect, it bears to mention that future generations will benefit from decisive action taken by government at a time like this albeit indirectly. The prevention of industries from being crippled, action that leads to a shorter recovery time, the securing of their parents’ jobs, directly affects the standard of living of future generations. With this consideration it stands to reason that at least some of the programs that government is spending on will produce benefits that will be reaped by future generations, so it is not immoral to ask that they bear some of the costs.

Can the government make a positive difference?

Given the scale of the pandemic and the costs and support to private individuals and businesses required to get through it, government is in fact the institution capable of having the greatest impact. Government is also the only institution that would ever have the authority of citizens to put the country on lockdown, a necessary precaution to prevent the spread of the virus, as well as the institution best equipped to prevent loss of jobs. A positive difference is only possible with responsible governments that are subject to checks and balances.

The most critical requirement for government to make a positive difference is good leadership. This is the factor that differentiates countries that are recovering well from those that are not. Good examples of leadership specifically with respect to COVID-19 response are Denmark, Canada, New Zealand, China just to name a few. Government must clearly and effectively communicate its plans and intended action to the public with a degree of decisiveness even in these uncertain times. That entails both making it clear what its priorities are, and how it intends to go about achieving its goals. It also entails giving businesses an idea of when reopening will begin so that businesses, particularly small businesses which typically have less reserves to weather storms are not stuck in limbo which would result in a higher number of bankruptcies.

Given that there are a lot of unknowns, government must engage in continuous and rigorous data analysis so as to continue to broaden knowledge on the effect of the coronavirus 2019 on health as well as to determine which individuals and industries are most affected in order to create targeted policy. This would also be done to evaluate the effectiveness of policy actions.

Moreover, for government to be able to do a good job, it must be highly trusted by citizens. This is absolutely critical for government action to be accepted by citizens and for citizens to be more willing to cooperate with government plans that may temporarily encroach on individual freedom. 66% of Canadians -versus 57% of G7 citizens- somewhat or strongly approve of government’s COVID-19 response.

Another consideration is that plans of the government must be less concerned with politics, and more concerned with getting the country through the crisis. A situation such as that in the United States where politicians and leaders were seen to doubt the reality of the virus will thwart any effort to get people to cooperate with government actions. All governments must act in harmony even if they take actions specifically suited to their own state or province while prioritizing the health of citizens.

Optimal policy design

Government fixes the market failure introduced by COVID-19 by imposing restrictions that prevent the spread of the virus, going from a complete lockdown at the height of the pandemic to a partial lockdown. Government also has to increase spending to provide support to businesses and individuals which would help minimize the effect of the lockdown and prevent the excessive saving built up during the pandemic from causing the economy to shrink since businesses are not investing because of high uncertainty.

With respect to health, government must rapidly improve testing capacity, contact tracing, technological upgrades that allow virtual doctor appointments and increase spending on R&D and provide necessary support to private sector to ensure that developing a vaccine is not hindered by lack of access to funds. Government also has to coordinate with universities and private sector to develop a vaccine for greater efficiency and gear up the use of data analytics to advance knowledge of the virus’s effect. In order to continue to have access to personal protective equipment, government should provide necessary support to businesses that are able and willing to manufacture masks, sanitizers and other equipment domestically to remove any hindrance to doing so.

The free press has a significant role to play in ensuring that government makes a positive difference, by providing subject matter experts a platform to critically assess proposed policies and calling the government to account when it appears that a performative nonsensical policy is being suggested.

The goal of policy is safeguarding the health of workers while also safeguarding their income. We balance these goals out by ensuring that first and foremost, lives are safeguarded and thereafter develop a safe way for the economic activity to continue. We know that seniors are most susceptible to the virus because they are more likely to have compromised immune systems. We also know by now that people of all ages with compromised immune systems are at more risk. Knowing what we know about who is most susceptible to the virus, we take all precautions to ensure their safety.

An optimal design is one that prioritizes a complete lockdown at the start of the pandemic, allowing only essential businesses to work while supporting other businesses to continue operating virtually, possibly by removing or suspending taxes on capital equipment such as computers. Once we begin to see a drop in the number of cases, we should allow businesses which are unable to operate remotely such as restaurants, recreational clubs, to open partially possibly alternating employee schedules so that less than 50% of the workforce goes into work. Those who are at work will be required to wear personal protective equipment and be required to take all other necessary precautions. Customers would also have to practice physical distancing. Businesses that operate effectively remotely should be encouraged to remain virtual.

Having to stay home with kids may prevent some parents from returning to work, this hindrance will be even harder felt by low-income and single parent households. A potential design is to reopen K-12 and make attendance voluntary. Class sizes should be reduced, and physical distancing should continue to be practiced in schools. Kids should be placed in cohorts and allowed to interact closely only within their groups. The voluntary nature of school allows children who COVID-19 poses a higher risk to, to continue to learn virtually. This would also allow individuals to weigh their options themselves and also allow people most in need of and most unable to get costly childcare, e.g. single parents and low-income homes the ability to go back to work even if on a part time basis.

Seniors will continue to be under eased lockdown and interaction with the population should be limited. Since seniors are not part of the working population, a longer length of lockdown poses no threat to the economy and will go a long way to save many lives.

Prioritizing return to work as soon as it is possible minimizes the trade-offs between social and economic policy.

In all of this it is paramount that government maintains flexibility in its policy actions given the uncertainty. Government must remain ready to initiate a subsequent lockdown if necessary. Governments at all levels must cooperate and work together in the implementation of restrictions and lockdowns. The federal government takes the lead while allowing the provincial governments the freedom to determine when and how to ease reopening. With a population like that of Canada where most people are on the same page with regards to the prioritization of safety and de-prioritization of individual freedoms, it is easier for this to be the case. In countries such as the US, it appears that politicization of the pandemic is at a high rate and the ineffectiveness of policy is compounded by the lack of cohesive action by the different states and the federal government.

A blueprint for repayment of funds should already be in progress at the point where we have a clearer idea of how much debt the government will incur on COVID-19 response spending. We would need to come up with avenues of raising funds giving thought to who those funds serve.