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A report just released by Professor David Miles from Imperial College London assesses the costs and benefits of COVID-19 lock-down policies. He concludes that "a policy of not easing restrictions until the point at which there is virtually no chance of a resurgence in infection rates rising is not a policy in the interests of the population". Given NZ appears to have closely adopted such a policy, the report should make waves in this country.

Especially since Professor Miles, in particular, is well respected by our own government. After all, he was the economist they hired to review the Reserve Bank of NZ's highly controversial capital requirements. Last year the Bank commented how his report supported "the direction proposed in the Capital Review".

Much as the government was happy to use Miles' earlier report to back up its new banking regulation policies, expect it not to take so much of a liking to Miles' latest report which casts doubt on NZ's COVID-19 regulation policies. The full article can be downloaded here:

  • Robert MacCulloch

The aim of our government's response to the economic crisis that began with the outbreak of Corona-virus has been to mitigate business failures and job losses occurring during - and in the immediate aftermath of - the stringent lock-down. The cost has been huge. Public debt is expected to rise from about 20% to over 50% of GDP. To the extent that the support packages have helped the weak and vulnerable, they have been a good thing. The government and opposition are now assuming that there will be an exceptionally strong rebound. The NZ Treasury estimates GDP will grow by almost 9% in 2022, which they call a "forecast", but is nothing more than a guess.

However, this past week, Nobel laureate Joseph Stiglitz argues, based on the evidence so far available, that "the post-pandemic economy is likely to be anemic, not just in countries that have failed to manage the pandemic, but even in those that have acquitted themselves well". For NZ, this means we cannot expect to quickly return to the old drivers of growth these past years, namely tourism, construction and immigration. The nation must turn its attention to the longer term horizon, where the important issues include the quality of our work-force, in terms of its skill-base, the quality of our health-care system and the dynamism of our industry, in terms of its design-flair and technological prowess.

In the election lead-up, political debate is still focused on the short-run recovery package. Little attention has been given to the question: in this new world, what's the plan to secure a high standard of living for Kiwis in the long-run?



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Robert MacCulloch