At the weekend, former assistant to Prime Minister Tony Abbott and current host on Sky News, Peta Credlin, hosted a program which was supposed to be revelatory with regards what it tried to prosecute as Victorian Premier Dan Andrews' 'shocking' handling of the pandemic. This is despite the fact that currently there is a streak of zero community transmission cases of coronavirus and a streak of several days of zero deaths.
The program looked into the use of private security firms and tried to paint a portrait of incompetence, even though the policies in Victoria were more or less identical to that used in both New South Wales and South Australia. Victoria's 800+ deaths appears to be a case of bad luck more than anything else; due to the fact that a virus is an unseen enemy and that because it is a novel virus, no measures are going to be absolutely effective.
News Corp generally has tried to paint the Labor Premiers as being the embodiment of The Devil himself and their treatment of Labor Premiers across print and television has been vastly different than their coverage of Liberal Party Premiers; which is naturally to be expected. The rather boring truth is that all of the Premiers and indeed the Prime Minister at Federal level, have all done a rather excellent job in handling the coronavirus through reasonable policy based on whatever information was currently available at the time. Unfortunately, boring competence doesn't sell advertising space.
To use the analogy which has been oft repeated throughout this pandemic, I think that the Premiers and the Prime Minister have generally played with the hand that they have been dealt quite well. To take this analogy beyond the point of sensibility, this post is about looking at what all of those cards are.
6♦ - Insurance
Insurance is a collective pooled risk sharing arrangement. That is that people who pay into the pooled fund, do so as a kind of hedged bet against a bad thing from happening which they will suffer some kind of monetary loss from. When that bad thing happens, they expect that the collective fund will cover the cost of the loss for the thing insured.
On the other side of the insurance contract, the insurance company is making a bet that the chance of a bad thing happening can be calculated and that as a result of them calculating the chances of that bad thing happening, they can charge just a little bit more across the entire population of things being insured and keep the remainder as profit.
Probably the purest form of insurance is motor insurance because the data collected for all of the bad things happening can be sorted by age, sex, car type etc. and because the value of the things being insured (cars) is either known or agreed upon, then the known chance of a bad thing happening to someone's car plus profit practically becomes the price of the insurance contract.
6♠ - Negative Self-selection
The unavoidable problem with insurance is that the people who want it the most are also the ones who are the most likely to want to be paid out.
Healthcare as an insurance question demonstrates this perfectly because the people who are most likely to be in hospital or going to see a General Practitioner or a Specialist, are older people. The unavoidable problem with insurance and with health insurance in particular is that people generally don't get out of life alive. The Grim Reaper is not some hooded spectre of doom but something far scarier - he is a balding accountant from Kettering who perpetually walks around with the nerd voice saying "well actually, I think you'll find..." He walks around with a checklist and has never had a day of fun ever; although you might be able to negotiate with him for a bit, he will eventually collect. Health insurance always has to fight against the problem that people get old and die.
The inverse of the people who want health insurance because the Grim Reaper is walking close by, are those people for whom the Grim Reaper is far away. Young people who are otherworldly fit and well and who normally present no health issues at all, have no immediate need to draw funds from a health insurance find and quite rightly they generally don't want it because they don't see the need. When young people do require medical treatment, it is more likely to be due to physical injury and sudden catastrophe.
6♣ - Public Health As A Public Good
If we ignore the whole question of healthcare as an insurance question, and even setting aside the political question of whether or not governments should be responsible for the healthcare of their citizens, the notion of healthcare as public good only becomes apparent when it becomes catastrophic.
It took wars for people to realise that a common defence force was a good idea and this is why nation states generally replace city states. It took great fires for people to realise that public fire departments as opposed to private fire brigades are a better solution to the problem of fire because waiting until the building next door to something that you have a private insurable interest in, is both impractical and inefficient. It took general lawlessness for people to realise that centralised police forces and the judiciary are a good idea.
Public goods which are non-rivalrous tend to be a really good idea but people have to be made to pay for them through the instrument of the state or otherwise, they aren't bought. Mass literacy is something which massively benefits economies but only the state is in any position at all to force people to pay for the education of other people's children. Sewerage systems and potable water is also really desirable because people don't like dying of cholera but only the state is in any position to force people to pay for other people's well being.
2♣ - Pandemics As An Experiment
Probably the chance of a catastrophic worldwide pandemic causing mass death is about 2% in any given year. If we assume that the current COVID-19 pandemic is a once in a century event which lasts for two years (don't expect any vaccine at all before 2022) and the last pandemic happened in 1918-20, then it would make sense for economies to permanently set aside 2% of GDP in case.
Remember, Insurance is a collective pooled risk sharing arrangement where people pay into the pooled fund, do so as a kind of hedged bet against a bad thing from happening which they will suffer some kind of monetary loss from. A pandemic is a collective bad thing which happens to everyone and when that bad thing happens, it is best to be prepared as an economy, that the collective fund will cover the cost of the loss for the thing insured.
2♥ - Pandemics As A Public Good Question
Pandemics do not care about the economic circumstances of individuals. People do not get a virus but rather people become the environment for a virus. As such, fighting a pandemic is more about making sure that the environment in which we are fighting the unseen enemy, is capable of making sure we survive. The ammunition of testing for the disease, needs to be as available as possible to as many people as possible so that the disease doesn't steal territory by stealth and win.
Framed as a national defence question, health care starts to look quite a bit different. Instead of individuals fighting individual battles with their own independent economic means as the biggest criteria of whether they live or die, health care as a national defence question becomes one of mass collective endeavour.
A General fighting in a war doesn't ask the question of how much bullets and tanks cost and in a total war, nobody ever asks to surrender unless they know that they will lose. Surrendering to a pandemic has exactly the same result as throwing troops in front of the enemy's machine guns until you have no more bodies left to destroy. The coin of the battlefield is people's lives and in a pandemic, the unseen enemy will forever fight to the death of the last troop.
Defence of the realm is an abstract public good and although the actual abstract good is consumed the minute that it is produced, the general infrastructure, the maintenance, and the experience of the professionals engaged in fighting the war, of that abstract good does in fact survive from one year to the next; even if the good in the abstract does not. I think that deliberately running into retreat and letting the enemy kill people, is criminally stupid and governments who want to pursue this as a policy should expect massive amounts of deaths when a pandemic strikes; that they have deliberately not prepared for.
The Complete Hand:
You can argue about the small details of how well the hand has been played and the fact that New Zealand has practically no Coronavirus cases and a domestic landscape which has kind of approached some kind of normality, means that a similar hand can be played reasonably well; even if News Corp in Australia in Australia wants to accuse New Zealand Prime Minister Jacinda Ardern of murderous puppies.
Domestically in Australia, we've looked at the cards and although the numbers of 66622 to some might look like evil socialism and turned up to eleven twice, having healthcare as the reasonable responsibility of a reasonable government for the peace, order and good governance of the nation, means that we can stare for a very long time at the unseen enemies of pandemics. It also means that because everyone has front line access to healthcare, the entire system is cheaper because an actual universal system exactly mirrors the risk profile of the system because the entire population of insurable items is captured and very effectively subsidised by otherwise fit and well people who do not use the system very much.
6♦ 6♣ 6♠ 2♣ 2♥ is a Full House and took a long time to cultivate. When a pandemic struck, it was a very good hand to have.
"You should write about America"
Addenda:
In theory the biggest economy in the world should have the necessary resources to provide the best answer to a pandemic but it doesn't. Instead, it has repeatedly taken decisions to make terrible decisions in cultivating its hand.
America has as its base mythology, the premise that hard work and industry is all that is needed to make it big. That may have worked in an agrarian society when everyone was collecting spades and for brief periods of time, America has done great things and worked together.
The American Revolution was one such occasion where a concerted collective effort, was able to beat a largely disinterested monarchy across the waves.
J♠9♠7♠6♠4♠ vs K♣K♦Q♣Q♦7♥ - flush beat two pair.
Repeatedly though, America goes through gilded ages where the benefits of the economy go to a limited few; so that when a pandemic strikes such as in 1918-20 and 2020, although it has cultivated some highly powerful industries, those industries do not go together or work together to fight the unseen enemy of disease.
During WW2, President Roosevelt tried to start the ball rolling on universal healthcare while America still held a flush but a small portion of the population has had sufficient sway to swap out the cards in favour of their own private advantage for 76 years. That project of universal healthcare has never happened and since a pandemic doesn't care about class, privilege or private advantage, the 40 million people who had no access to healthcare were more likely to become the environment in which the coronavirus thrived. The virus is now in all 50 states and if this is framed as a war, then America has lost more lives due to coronavirus than all wars it has fought since WW2 combined.
A♠K♠4♠7♠ J♦ is not a winning hand at all.
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