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Covid Notepad 3… Plus a comment on Brexit

If there was one thing that was certain to flow from the Covid-19 pandemic, it is the volume of fascinating new research into the way people and governments react to the danger that the virus creates.

You may recall that early on in the crisis there were dire predictions of breakdown in the health systems’ ability to cope with ever-increasing numbers of infected patients. The UK government was reportedly swayed by some damning projections from the ‘Royal Epidemiologist’ at the Imperial College London using their proprietary model. The model, subsequently, was found to be full of programming bugs, poorly documented, enhanced by piecemeal and elementary in construct. Desperate times call for desperate measures but they also call for an intellectual upgrade in understanding societies’ reaction and policy options.

Here are some constructive discoveries from mathematicians and statisticians around the world…

  1. Ghader, Zhou, Lee, Zhou, Zhao and Zhang (“Observed mobility data reveals social distancing inertia” 2020) got some data on human mobility in the US from mobile phone companies on a mass, anonymised basis. They calculated the number of trips and average number of miles traveled each day by each person (i) before the onset of the epidemic, (ii) immediately after it became news but before government lockdowns etc were ordered and (iii) after lockdown. They find that not only did the population cut their trips leaving home by 50% when the emergency became news in March 2020, this voluntary ‘social distancing’ took place before any government regulations were imposed. They further find that the voluntary distancing reached a new average level after 2 weeks and subsequent attempts by government to further limit movement proved futile. The bottom line is that individuals reacted faster and voluntarily to the Covid epidemic, while policy makers were late and ineffectual

  2. Elie, Hubert and Turinici (“Contact rate epidemic control of Covid19: an equilibrium view” 2020) build on these observations, delivering an elegant upgrade to the standard SEIR model used by the likes of Imperial College. They posture the common externality where individual action has no marginal effect on virus transmission whereas collectively it does. That is, if I lock myself in a room I dont get sick, I bear a lot of cost BUT the virus rages on outside without me. However, if everyone locks themselves in a room, we all avoid sickness and suffer costs BUT the virus is eradicated. In their framework, there is an incentive to self distance voluntarily to not get sick and this naturally spills over to the aggregate endogenously, thereby reducing the spread of the virus. Their numerical simulations suggest that the probability of infection falls to 62% from 80% in the standard model. They go on to introduce a powerful government to stamp out the virus. This imposes almost double the social costs on society. The bottom line is that social distancing is a logical response to an epidemic thereby attenuating the viral spread while government restrictions are not very well appreciated by the population.

…a comment on Brexit

Governance, dispute resolution and fisheries, we are told, are the 3 issues impeding a cooperative Brexit. Lets deal with each issue simply and realistically.

Governance refers to who controls the quality standards applying to the exchange of goods and services. The EU wants the UK to follow their standards. The UK, on the other hand, wants to set their own standards, be they higher or lower than the EU. It is hard to imagine a compromise on this question since this is the whole point of leaving the EU!

Dispute resolution refers to the jurisdiction that has authority to mediate a dispute. The European Union wants the European courts to have jurisdiction while the UK wants UK law to apply. It is hard to imagine a compromise on this question since legal sovereignty, again, is the whole point of leaving EU!

Fish. British waters are home to fisheries that the EU want access to FOR FREE. Again, the whole point of leaving the EU is to regain ownership and control of your resources. The obvious compromise in this disagreement is for the UK to charge the EU for access to British fishing grounds.

Put simply, Governance and Dispute Resolution are the two ‘biggies’ that have no other solution than abandoning the Brexit idea altogether. The EU and the UK should just accept this and let competitive forces determine the outcome. The market mechanism has its own way of deciding on quality standards (the economics of price and cost) and dispute resolution (contracts specify the jurisdiction that will apply in the event of a dispute). After 4 years of ineffective government attempts to fulfill the UK’s decision to leave the EU, finally the market is set to take over. The market mechanism will quickly and efficiently find a way.

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