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The UK government is flying blind, introducing policies without proper prior assessment of their likely impact on the epidemic or the economy. This is now completely clear. Below I'll go through what we now know.
#EconTwitter #lockdown 1/15
#EconTwitter #lockdown 1/15
On Oct 18, I wrote a long thread about the misalignment between disease control advice received by the government from SAGE and the economic advice received by the Treasury. 2/15 https://twitter.com/toxvaerd1/status/1317960686216032256?s=20
I pointed out that disjointed advice was just not useful and that integrated economic-epidemiological analysis was badly needed. These are very complicated issues and we cannot afford to wing it and hope for the best. 3/15
According to minutes of SAGE meeting on Sep 21 "Policy makers will need to consider analysis of economic impacts and the associated harms alongside this epidemiological assessment. This work is underway under the auspices of the Chief Economist" 4/15 https://gov.uk/government/publications/fifty-eighth-sage-meeting-on-covid-19-21-september-2020
While siloing of expertise will lead to avoidable mistakes, disjointed advice is surely better than nothing. But on Nov 5, we learn from the Chancellor that "There does not exist a specific prediction or forecasts" 5/15 https://twitter.com/toxvaerd1/status/1324352627958812673?s=20
At the Nov 11 meeting of the Treasury Committee, the Chief Economist was pressed hard to explain exactly what analysis was and was not carried out on the impact of specific measures, such as the closing down of specific sectors. 6/15
We learned that the Treasury does in fact *not* consider any likely impacts of measures on either the epidemic or on the economy 7/15
https://www.parliamentlive.tv/Event/Index/9a14c6a5-8a79-468a-a4e4-630c8ce2abd8
https://www.parliamentlive.tv/Event/Index/9a14c6a5-8a79-468a-a4e4-630c8ce2abd8
Instead the Treasury seems to passively track the economy, noting the effects that previous measures have had. So no impact studies. Policies are introduced and then the effects are noted. 8/15
According to the Chief Economist, the Treasury doesn’t model potential impact of policies because it’s hard and not the kind of analysis they are used to doing. But we are assured that all social, health and economic considerations are taken into account by policy makers. 9/15
The OBR’s modelling of the disease’s impact on the economy feeds into the Treasury’s analysis, we were told. Unfortunately, it only considers the impact of disease on the public finances and not much more. 10/15
The OBR's modeling is epidemiologically too simplistic to be useful for integrated economic-epidemiological policy making, assuming a return to normality over 3 months after the 3 month lockdown. 11/15
file:///C:/Users/toxva/Downloads/The_OBRs_coronavirus_analysis.pdf
file:///C:/Users/toxva/Downloads/The_OBRs_coronavirus_analysis.pdf
None of this is reassuring. The interaction between the economy and the epidemic is extremely complex. Politicians cannot be expected to balance all these considerations without the benefit of carefully considered advice. It’s just not realistic. 12/15
Having SAGE think about the disease side of things through SPI-M & SPI-B and the Treasury about the economics, without proper integration, leaves politicians with the impossible task of performing their own complicated interdisciplinary analysis. This is asking too much. 13/15
Policy mistakes have been made. Going forward, we can only hope that the different sets of advisors and the relevant government departments step up and make broadly informed analysis. 14/15
Policy proposals must be formulated on the basis of an integrated view of the social, economic and health consequences of different measures. Not on each of these in separation. 15/15
