Covid: an endgame taking shape?

Things are moving fast on Covid, perhaps faster than we realise.  But as Europe painfully grinds its way through a second lockdown, it’s easy to miss this.

First of all, it’s more of a lockdown-lite this time.  Policy is more nuanced and – although most people are too polite to say – has more or less converged on a Swedish approach.

Secondly, the second wave so far looks less deadly. Excess mortality is considerably below the levels of earlier in the year. And while the institutional response hardly rates as an exemplar, there are plenty of signs of successful adaptation, of government policy certainly and, perhaps more importantly, of individual and business behaviour.

Naturally, the better news tends to be overshadowed by the general gloom and the fact that in most places the government response has fallen titanically short of expectations.  So it’s perhaps too early to discern the longer-term social and political implications. 

The young – who have borne much of the impact of lockdown – might be attracted by the argument that it was yet again the fault of the wrong policies from the wrong people; older people might reflect more on the limitations of collective action; while realists might note the importance of being first in the queue for media coverage and government solace.  There are few signs yet of who voters want to punish or whether there is any traction for the view that total protection might have been unrealistic from the off.

But these debates are likely to get louder soon, because the vaccine does look like a game changer.

Indeed, the most astonishing event in the entire crisis may turn out to be the invention, testing and (fingers crossed) successful roll out of multiple mass vaccines in less than 12 months.  Such a thing would have seemed inconceivable even a few years ago. One wonders if big pharma will be given due credit.

But the success of the vaccine may rest as much on the extent to which it frees the mind, as well as the body, of the burden of risk.  If it gains widespread acceptance, it opens the door to positive, as opposed to reactive, decision-making, and a return to independence of action, perhaps as early as the first quarter of next year.  

Already one senses two competing narratives emerging.  Some will regard a vaccine roll out as confirmatory evidence of the extraordinary powers of private-sector innovation in a free market.  Others will argue it demonstrates the need for more detailed government direction and conformity.

A key test will surely be the recovery.  Market-led, innovation-driven economies which open up ought to respond quickly; those which put the weight on government programmes to control a precautionary transition may be somewhat slower.

If so, the epidemic and its aftermath would reinforce existing differences in growth potential.  It would be ironic if – in an echo of the post financial-crisis experience – we find ourselves thinking in a year’s time how obvious it was that Covid would showcase the resilience and technical leadership of the US.

The time to be thinking about all of this is now.  And one has to wonder if, having dodged the virus, NZ and its policymakers have the urgency infusing their European and American counterparts.

Should NZ fail to act at the same rate as Europe and the US,  in vaccinating, opening borders, moving to encourage economic adjustment, it will send a signal about how the government prioritises recovery and growth, and the country’s standing as a place to innovate and do business. 

In a couple of years, the most prominent economic legacy of Covid might just be the way in which it embedded particular policy settings – for better or for worse – in different countries.

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