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  • rmacculloch

"Definitely the right approach?" The jury is still out.

The Finance Minister, Grant Robertson, in response to a question regarding the economic impact of putting Auckland into Level 3 "lock-down lite" told the NZ Herald: "Nothing has changed for me. Our experience is that the best economic response is moving fast and early with a public health response ... this is definitely the right approach and if we're able to get ourselves back to some normality relatively quickly business will be able to get through".

However, no-one yet knows whether a strong economy and a "go-hard, go-early" virus elimination strategy are aligned, or whether instead there is a trade-off. It is still very early days and way more data are needed to make comparisons.

Two of NZ's best economists are tentatively arguing that there is a trade-off. First, John Gibson, who won the "distinguished fellow" award of the NZ Association of Economists argues in a recent article that "the ineffectiveness of lock-downs implies NZ suffered large economic costs for little benefit in terms of lives saved".

Second, Ananish Chaudhiri, former Head of the Economics Department at the University of Auckland, said in an interview for this blog that “There didn’t seem to be a lot of consideration of the costs and benefits … So very often, we get excessively focused on preventing deaths that are right in front of our eyes but in doing so we completely ignored the fact that that action may be creating more havoc elsewhere ... The government seemed to be taking a lot of advice from the epidemiologists whose view seemed to be that we are going to prevent COVID deaths no matter what. But in doing so they were completely ignoring the fact that their policies would lead to massive loss of lives, livelihoods, etc, in other areas”.


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