Implementing TReDS

The Trade Receivables electronic Discounting System (TReDS) is a good example of an initiative, whose establishment counts for little, unless supported by a long period of detailed focus on implementation. For the TREDS to work, at least the following are required

1. The large buyers, especially public sector ones, are registered on the TReDS.

2. The small SME suppliers can easily access TReDS – there should be limited or no access barriers.

3. The financing agencies are also registered on TReDS.

4. The financiers have the enabling incentives, especially by way of regulatory requirements, to lend actively on this platform.

5. The documentation requirements for factoring receivables are standardised and in place.

6. The process of transactions should be simple and hassle-free for all parties concerned. 

What are the policy levers available to encourage all the three sides – large buyers, small suppliers/traders, and financiers – to embrace this platform? How can the GSTN, for example, be leveraged to support this? How can this platform be better integrated with the core-banking network and other formal financial intermediation channels? How can the good performers, on both the large buyers and financiers’ sides, be incentivised? What can be done to lower the regulatory barriers for each of banks, DFIs, NBFCs, and fintech providers to factor receivables? How can the TReDS be integrated with GEMS, the government e-marketplace?

This too like eNAM and MUDRA 2.0, about which I blogged here and here respectively, demands implementation focus.

The ongoing Covid 19 pandemic may be a good opportunity to accelerate the implementation of TReDS. Businesses of all kinds are struggling with their working capitals locked up in receivables. An active role of TReDS in the circumstances can be a useful distress mitigating intervention. TK Arun has a good article here.

The path to disaster is paved by experts - a Covid 19 narrative

The response of governments across developing countries to Covid 19 should count as an example of triumph of theoretical knowledge over practical wisdom. It looks likely to be a triumph of experts at a colossal human cost. 

A few observations about the sequence of events that have brought us here. 

1. The horrifying initial unfolding of events from China and Italy framed a narrative on the SARS-CoV-2 virus. The devastation would play itself out everywhere without immediate and complete lockdown. Experts and their models outbid each other to paint alarming pictures. Some flipped back and forth, and the governments too followed suit. The narrative got globalised.

2. Without questioning whether these models and associated prescriptions were appropriate for developing country contexts, local experts borrowed and extrapolated these models. If the best health system in Europe could not handle the pandemic, the broken health care systems in developing countries would stand no chance. India and Africa would be swamped.

Social media and talking heads in television amplified and disseminated these doomsday prophecies.  This is a representative sample of such alarming tales. Even the more perceptive experts who waste no time to caution against one-size-fits-all approaches in public policy began to sing from the same hymn sheet.

This narrative was further shaped by the democratic nature of the virus itself. In fact, atleast initially, the jet-setting well-off within developing countries were more vulnerable. Being more inclined to trust the experts, their support strengthened the narrative.

3. Governments had no time to react and set their agenda. They therefore had no choice but to act on the forced narrative. To their credit, given the narrative and all the uncertainties and stakes involved, most developing country governments acted with alacrity, though with varying degrees of effectiveness. 

4. What about those models? A model is only as good as the parameters selected and assumptions made. The canonical SIR epidemiological models are extremely limited and does not account for variations across regions and population groups (except for demographics). Take the R0. How does it vary across asymptomatic, pre-symptomatic, and symptomatic cases, across geographies, age groups, racial groups, and so on? Then there is the sample data from which it is developed. In this case, it is mostly from the narrow sample of initial stages in China, South Korea and Italy. 

In these circumstances of uncertainty, sample this, this, and this about the impossibility of reliable modelling. The world of epidemiological modelling was taken over by mathematicians, physicians, and economists and their neat but alarming models zipped around in social media.

5. Experts acknowledge that with infectious diseases "context matters" and they do not "spread the same way everywhere" and across seasons. So what is the conceptual basis for the belief that the infection (and more importantly death) rates are likely to be uniform across the world? 

6. Buttressing the above is the only evidence for now, that of observed emerging reality. And this tells a very different story. A story of two distinct and diverging trajectories of progression of Covid 19 as far as deaths are concerned. One for countries in a latitude band in the northern hemisphere, and another for the rest of the world. Evidence-based policy making dictated the case for a differentiated narrative.

7. Further, the only reliable statistic is the number of deaths. The number of cases are perhaps off by several orders of magnitude. But even governments narratives are being driven by the linear graph of ever-rising number of cases. Never mind that cases have only one way up, and exponentially at that, given greater surveillance and increased testing.

8. Governments are now stuck with lockdowns and a manic popular narrative. Any suggestion of a roll-back can be politically suicidal, given the "exponentially growing" cases. Ask Donald Trump. But the costs of a lockdown are spiralling towards unacceptable levels, as to make an exit in the immediate future inevitable. What are be the exit strategy options to the lockdown chakravyuha? 

9. But the experts and their amplifiers have been doubling down on lockdowns. They uniformly argue in favour of maintaining lockdowns and then following the trace, test, isolate, and treat strategy. Follow the South Korean model. Anything else will be suicidal. 

Even among the experts, the rare exception who tries to buck the dominant narrative gets excoriated by peers. Lockdown and testing has become the dogmatic party line among experts. Even experts have cast off evidence and objectivity and become captives to technical models and fear. 

10. But what is the exit strategy with this expert advice? Never mind the cases, it is a fair assumption that at least a month since the detection of the first case, we are well into community transmission in many developing countries. In the circumstances, what if you test elaborately over the coming few weeks and find that 10 million people are infected? First, do these countries have the resources and state capacity to conduct even anything remotely close to the PCR tests required to validate positive cases (the antibody tests will only validate those infected and cured)? Also what about the reliability (false negatives) of these tests, their interpretation, and challenges with related patient management protocols? If validated, do they have anything even remotely close to the capacity within the health system to keep them isolated? Or is it at all even practical to have them isolated at their homes, with all the social stigma and other associated problems? Imagine the social and communal problems that are likely with having home isolation cases scattered across the country. 

The need of the hour is prudence. One which uses a practical combination of social distancing, multi-pronged testing and isolation strategy, and targeted but limited lockdowns. What are the alternative strategies? Instead of harping on an impractical lockdown-testing strategy, the experts and public intellectuals need to step up to give governments the political cover to pursue a practical exit strategy. Faced with an overwhelming narrative, politicians need this cover now more than ever. Unfortunately, collective prudence is as rare as black swans. 

Granted politicians and bureaucrats do not generally cover themselves with glory. They deserve most of the blame they get. But do we deny that public policy choices in conditions of extreme uncertainty and involving existential considerations are by definition exercise of political judgement, even if informed by science and facts? Or do we want to reduce such decisions to an algorithmic exercise of technocratic thinking? This is a teachable moment.

The choice for capitalism - facing up to the reality of unearned windfalls!

I have posted several times about the smugness associated with the so-called meritocratic arguments. From the belief that the millennial deserves his or her high-flying career and the Chief Executive deserves the obscene salary differential from the workers. These are all seen as just desserts. 

As Covid 19 looms large on the world, Janan Ganesh in FT has a terrific article that posits the choice faced by capitalism in terms of the contrasting worldviews of Charles Dickens and George Orwell.

He sets the stage,

If only Murdstone were kinder to David Copperfield. If only all bosses were as nice as Fezziwig. That no one should have such awesome power over others in the first place goes unsaid by Dickens, and presumably unthought. And so his worldview, says Orwell, is “almost exclusively moral”. Dickens wants a “change of spirit rather than a change of structure”. He has no sense that a free market is “wrong as a system”. The French Revolution could have been averted had the Second Estate just “turned over a new leaf, like Scrooge”. And so we have “that recurrent Dickens figure, the Good Rich Man”, whose arbitrary might is used to help out the odd grateful urchin or debtor. What we do not have is the Good Trade Unionist pushing for structural change. What we do not have is the Good Finance Minister redistributing wealth. There is something feudal about Dickens. The rich man in his castle should be nicer to the poor man at his gate, but each is in his rightful station. You need not share Orwell’s ascetic socialism to see his point. And to see that it applies just as much to today’s economy. Some companies are open to any and all options to serve the general good — except higher taxes and regulation. “I feel like I’m at a firefighters’ conference,” said the writer Rutger Bregman, at a Davos event about inequality that did not mention tax. “And no one is allowed to speak about water.”

And then gets to the point, 

What Orwell would hate about Stakeholder Capitalism is not just that it might achieve patchier results than the universal state. It is not even that it accords the powerful yet more power — at times, as we are seeing, over life and death. Under-resourced governments counting on private whim for basic things: it is a spectacle that should both warm the heart and utterly chill it. No, what Orwell would resent, I think, is the unearned smugness. The halo of “conscience”, when more systemic answers are available via government. The halo that Dickens still wears. You can see it in the world of philanthropy summits and impact investment funds. The double-anniversary of England’s most famous writers since Shakespeare... serve as a neat contrast of worldviews. Dickens would look at the crisis and shame the corporates who fail to tap into their inner Fezziwig. Orwell would wonder how on earth it is left to their caprice in the first place. The difference matters because, when all this is over, there is likely to be a new social contract. The mystery is whether it will be more Dickensian (in the best sense) or Orwellian (also in the best sense). That is, will it pressure the rich to give more to the commons or will it absolutely oblige them?

In this context, I am struck by the story of Gifford Pinchot, who is widely credited with having established the US Forest Service at the turn of the twentieth century into one of the most successful US bureaucracies. This extract from Samuel Huntington's Political Order in Changing Societies (which I now happen to be re-reading),

He was, for all his privilege, incredibly motivated to make something more of his life... Religion played an important role in sharing his character... Pinchot in many ways embodied Max Weber's Protestant work ethic, observing that "my own money came from unearned increment on land in New York held by my grandfather, who willed the money, not to the land, but to me. Having got my wages in advance in that way, I am now trying to work them out".

How many people today who benefit from the Ovarian lottery think this way? Education, with its reductionist approach, does its best to gloss over the underlying contributors to one's success and highlight some faux meritocracy. 

Much of the just desserts are simply unearned windfall in a system whose rules are rigged to accentuate the Matthew Effect arising from initial endowments. The pendulum has swung so much to the other extreme that a correction is imminent. 

A cautious case for reconsidering the Covid 19 response narrative

In the fight against the Covid 19 pandemic, most countries have gone down the lockdown route, with varying intensities of enforcement. The alternative path of herd immunity or even calibrated spread has fallen by the side, except in some exceptions like Brazil, Sweden, and Netherlands.

Given the overwhelming expert opinion consensus in favour of lockdowns, blanket ones at that, governments in developing countries cannot be faulted at all for having walked the course. Indeed, lockdowns have been the only politically acceptable choice before them.

But it needs to be borne in mind that right now, developing countries are unquestioningly applying a narrative generated from the spread of Covid 19 in developed countries. However, granted that lockdowns may be the only alternative available for Europe and US, is it the wisest option for developing countries like India?

Though I have been sympathetic to an alternative view, it has taken couple of conversations with people who know better to make me confident enough to bite the bullet on this.

From the perspective of developing countries, what do the facts inform? Three in particular deserve attention.

1. The number infected is completely unknown and will remain so for the foreseeable future. It will be all the more so for developing countries. Given resource and state capacity constraints, and practical problems, there are only so many you can test when it comes to these countries. At best, with testing, we can get higher numbers of those identified as positive, but cannot come anywhere close with the actual infected. The denominator in the infection rate calculation will therefore remain heavily suppressed and unknown.

But we do know the numerator, or the deaths, with reasonable certainty. Respiratory infection deaths are very painful and easily observed, and it is impossible for even small outbreaks to go undetected for long in any country.

This means that the graphs of the detected cases that feature in all the several Covid 19 trackers are conveying almost nothing. In fact, they are deeply misleading. Instead, a more relevant decision-support and informative graphic should be one that tracks the progression of deaths from the date of the first death. This generated from here by a friend is what Covid 19 trackers should be reporting.

In my limited searches, I have not been able to see any graphic that assesses the pandemic from this perspective. Actually, even this is deceptive since it does not discount for the higher natural mortality rates in developing compared to developed countries. So death cases are, as of now, perhaps the only reliable metric for assessment of the definitive medical cost of Covid 19. 

2. What do the absolute numbers tell us?  

One can scan the numerous Dashboards around and easily come to the conclusion that the vast majority of cases appear to be concentrated in a band of 35 to 50 degree North latitudes. Something like over 90% of the cases come from this band. Actually, someone could do an analysis of the Pandemic based on the latitudes, and likely find that the vast majority of cases are concentrated within an even smaller latitude band.

Take the most vulnerable Greater China area. The progress of the epidemic, especially in terms of the deaths reported, in countries like Taiwan, Vietnam, Philippines, Indonesia, Thailand, Malaysia etc which routinely receive large pool of Chinese visitors have been strikingly small relative to the  countries like Italy. It is most certain that many of these countries have received more visitors from Wuhan and other affected places in China during the same period, perhaps by orders of magnitude, than either Italy or Spain. Further, the conditions in terms of population density, medical facilities etc in these countries make them far more vulnerable to the spread of a disease than Italy or Spain. Much the same applies to the countries bordering Iran, especially those like Pakistan.  

On the other hand, in case of countries within the latitude band, unlike China and South East Asia, the spread of the disease across neighbouring countries has been consistent. The spread from Italy to Switzerland, which too has similar flow of people, is an illustrative example. In fact, even the small city-states like Luxembourg, San Marino, Andorra etc have not been spared. Even a cursory glance at the data here (say, deaths per million) reveal the point.

Even in Canada, the cases have been in the southern provinces bordering the US. Russia and Scandinavia too have a disproportionately smaller number of cases. 

Take Africa. Thanks to the Belt and Road Initiative, many African countries have large Chinese populations and also receive large numbers of Chinese business visitors. And in terms of physical conditions for the spread of the virus, these countries are among the most hospitable. Besides, all these countries even started taking the problem seriously since only the last few days, leaving enough unfettered runway for the spread of the virus. But we do not have even one example of an eruption comparable (not in absolute terms, but in proportionate terms) to that happening in any country within the band. 

In all the countries outside the band, the overwhelming majority of cases are those who have either themselves returned from the hotspots or are relatives or close contacts of the former. Also, the death cases are predominantly the old and with multiple medical conditions. Preliminary evidence on virulence is encouraging. In fact, this has been very pronounced in the band countries. Less than 4% of the Italian deaths have been below 60 years and the median age has been over 80, and 99.2% of cases had prior illness.

It's just that the data points are so overwhelming in pointing towards a very significant location bias for the virus' infectiousness and virulence. In fact, if you throw data on deaths from all the countries into a graph, it will most likely reveal a clearly diverging group of two trends.

3. If these are the absolute numbers, what about the trends, or the deltas? Unlike couple of weeks back, most countries, including India, are today at a steady state in the pipeline of infections and mortalities. But even with the low baseline flow of cases (there are most certainly far more symptomatic and asymptomatic cases), we are not seeing anything close to a proportionate rate of  consequent fatalities as elsewhere.

Further, even in the many countries outside the band where the first cases were detected as early as late January, the progression has been remarkably muted. Again, in contrast, in many European countries, despite the cases beginning to be detected only in late February, the progression has been exponential. Of course, all this despite the living conditions for spread being more favourable in the former than the latter. 

Furthermore, in countries like India, there has been no perceptible increases in patient load, much less those with respiratory problems, into hospitals. Nor has there been any anecdotal observations about significant rise in such cases. It is very reasonable to argue that, atleast for now, the novel coronavirus has been far less infectious in countries outside the band. 

All these above are stark facts (atleast for now). They stand alongside the models which use data from the countries within the band and form the basis for policy choices by developing countries.

This post will confine to the headline emerging data, and will not go deep into the scientific evidence or economic considerations. For reference, this, this, this, this, this, this, and this are scientific papers which point to a correlation with temperatures of 7-15 degree centigrade and latitude above 30 degrees North. They also point to coronaviruses as a family always exhibiting seasonality, mainly December-March, and falling after April as temperatures exceed 15 degree centigrade. In the mainstream media, the scientific case has been been covered by the likes of Eran Bendavid and Jay Bhattacharya and Vikram Patel. On the economic costs, please do read this analysis from Pensford Financial (HT: Ananth). This is even more relevant to the developing countries. 

Finally, what's the end-game to a lockdown?

Developed countries will always have end-games. Given the pace at which the transmission has been happening, the virus too will play itself out in the not so distant future. Also, they would have tested enough and identified existing and potential cases, and would also be in a position to isolate them and get on with life, and also do 'whatever it takes' to restore economic normalcy. But this strategy is impossible for developing countries to even think of executing. Not to speak of bearing the exorbitant fiscal costs of relief and recovery.

If we are driven by the risk of uncontrolled community transmission, it is hard to believe that in three weeks or even couple of months countries will be in a position to be able to make a definitive technical choice on this issue. But by then the economic costs and human suffering from a lockdown will start to far outstrip the medical costs. Discontent would have erupted. People will start to feel that it may be better to die of Covid 19 than starvation. That will perhaps finally force the delayed political choice.

It is easy for experts to suggest these measures, which by the way is a staple feed for every bureaucrat worth their salt, but to implement them effectively for several weeks at a national scale is too daunting a challenge in most contexts.

The most likely scenario is that 3-4 weeks into the lockdown, governments in developing countries will find that the trends on infection and death are far smaller than those in the likes of Italy and US. This will be used to phase out the lockdown. But, as the aforementioned analysis shows, this assessment could be made with more or less the same level of confidence/objectivity right now or over the coming week itself. 

This brings to the point of this post. At the outset, the objective is not to dismiss scientific concerns and argue against the lockdown. It is only to highlight that there is atleast as much an objective rationale to argue in favour of alternatives. And it should be a consideration going forward.

The poverty of thought among the so-called experts and opinion makers has been laid bare in this crisis. This is not to blame the scientists and epidemiologists. They are supposed to be scientific and only provide the inputs for decision-makers (like the now famous Dr Anthony Fauci). But even they should take some of the blame for presenting narrow models based on very skewed data as universally applicable models of infection and mortality. But their interpreters (opinion makers and thought leaders) cannot be given any benefit of doubt for mindlessly disseminating information from these models.

Note that this criticism is relevant only for modellers and experts focused on developing countries. The models may hold with a fair degree of accuracy for the countries within the latitude band.

The entire narrative has been constructed on the course that the pandemic has taken in North East Asia, Europe, and US. In the absence of data from elsewhere, the models naturally extrapolate from the trends from these areas. Also this debate in developing countries is being framed narrowly in terms of medical costs, and that too from models with evidence drawn from an arguably different context.

Never mind, even within the band, the example of the Imperial College study illustrates the folly of relying on such models with several limitations to in critical national policy decisions. In fact, today there are so many models that one can find atleast a model to fit any kind of priors you have about the infectiousness of Covid 19. Even mathematicians and physicists have their share of models. Therefore, how is this line of limited models-based reasoning any more objective or scientific than that outlined above making the case for exploring alternative options?

Unfortunately domestic opinion makers and their amplifiers in the media have been co-opted into blindly following the prescriptions of experts and their counterparts from the developed countries. It needs to be borne in mind that for countries in the latitude band, who originate most of the research, the lockdown choice is less under dispute. As with any such public issue nowadays, television talking heads, WhatsApp messages and social media posts have exacerbated the problem. Political leaders have been frightened into submission with dire predictions. The space for weighing the facts and exercising judgement, how decisions of all kinds get made, has almost disappeared. 

If the trends outlined persist by the end of this week, developing countries should consider a recalibration of their response. But, in this environment of fear and universal scaremongering,  amplified by expert opinion, coupled of course with the nightmare scenario of uncontrolled community transmission, governments will be loath to change course on their own. Opinion makers and thought leaders will have to contribute to triggering a debate which engages with these emergent facts and associated questions, thereby creating the conditions for governments to consider making alternative choices. This will help politicians take a call on how much evidence is enough to pivot away from the lockdown approach currently being followed.

To conclude. For now, developing countries have decided on a course, and let's focus on it. But let's also keep track of the trends and reasoning as discussed above. Let opinion makers and thought leaders engage on the issue to bring a greater balance into the mainstream debates on responding to the pandemic so that governments are in a position to take a more objective view and not be dictated by the narratives from developed countries. Given the stakes involved, it is important for governments across developing countries to be ready to revise their priors based on emerging trends from their own contexts.

Update 1 (31.03.2020)

Highlighting the unreliability of the infected numbers, 

John Ioannidis, a professor of epidemiology at Stanford University, has branded the data we have about the epidemic “utterly unreliable”. “We don’t know if we are failing to capture infections by a factor of three or 300,” he wrote last week. If thousands more people are surviving than we know about, then current mortality rate estimates are too high — perhaps by a large margin.

Similar problems exist with death numbers too,

In the UK, about 150,000 people die every year between January and March. To date, the vast majority of those who have died from Covid-19 in Britain have been aged 70 or older or had serious pre-existing health conditions. What is not clear is how many of those deaths would have occurred anyway if the patients had not contracted Covid-19... Professor Neil Ferguson, director of the MRC Centre for Global Infectious Disease Analysis at Imperial College London, said it was not yet clear how many “excess deaths” caused by coronavirus there would be in the UK. However, he said the proportion of Covid-19 victims who would have died anyway could be “as many as half or two-thirds”.

Sweden and Brazil are two good outlier examples among countries outside the latitude band who have been largely doing business as usual. However, compared to the countries in the band, despite their business as usual approach, their death numbers have been very small. Although when compared to their neighbours Norway, Finland etc and Argentina, Mexico etc respectively, who all have lockdowns or some form of stricter enforcement, they have higher deaths (even if not significantly high). This also means that some form of social distancing (not lockdown) is perhaps appropriate. 

Covid 19 pandemic weekend link fest

1. Glen Weyl and Jaron Lanier highlights the success of Taiwan, a mix of technology and democracy,

Taiwan’s success has rested on a fusion of technology, activism, and civic participation... This culture of civic technology has proved to be the country’s strongest immune response to the new coronavirus... Bottom-up information sharing, public-private partnerships, “hacktivism” (activism through the building of quick-and-dirty but effective proofs of concept for online public services), and participatory collective action have been central to the country’s success in coordinating a consensual and transparent set of responses to the coronavirus. A recent report from the Stanford University School of Medicine documents 124 distinct interventions that Taiwan implemented with remarkable speed. Many of these interventions bubbled into the public sector through community initiatives, hackathons, and digital deliberation on the vTaiwan digital democracy platform, on which almost half the country’s population participates. (The platform enables large-scale hacktivism, civic deliberation, and scaling up of initiatives in an orderly and largely consensual manner.) A decentralized community of participants used tools such as Slack and HackMD to refine successful projects.

Taiwan's is an impressive achievement. One can never say how much these technology innovations contributed, if at all, to Taiwan's success till now. Even if it did, how much of it was built on the foundations of culture and latent conformism of its democracy.

As a comparator, Singapore's success revolved around good old (and super efficient) physical contact tracing involving detective work by police, officials, and even armed forces. 

2. Good FT article on how Singapore managed to control coronavirus,

The city’s success in dealing with the outbreak is attributed to the government’s speed in imposing border controls soon after the disease first erupted in China, meticulous tracing of known carriers, aggressive testing, a clear public communication strategy and a bit of luck... As soon as information about the disease emerged from Wuhan, the city at the centre of China’s outbreak, Singapore began preparing by ramping up laboratory capacity for mass testing and developing its own test kits. This was seen as instrumental to containing infections and not overwhelming hospitals, a problem faced by countries such as Italy... The country’s business community also moved quickly. Soon after Singapore reported its first cases, banks divided their teams between offices, home working and emergency trading floors, many of which were in an outlying industrial area near the city’s Changi airport... It also learnt from its experience of Sars in 2003, which forced it to strengthen its healthcare system.

But several features, apart from its small size, also make it difficult to replicate elsewhere,

Surveillance cameras, police officers and contact-tracing teams have helped the government find 7,957 close contacts of confirmed cases, who have all been quarantined. The government on Friday launched TraceTogether, an app that uses bluetooth to record distance between users and the duration of their encounters. People consent to give the information, which is encrypted and deleted after 21 days, to the health ministry. The department can contact users in case of “probable contact” with an infected individual. “There’s a higher degree of acceptance of being monitored by the state,” said Chong Ja Ian, associate professor of political science at the NUS. “That makes some of the more invasive methods for contact tracing easier.”

3. Underlining this, this article in Wired talks about the privacy and related challenges with using mobile phones for digital tracking and detection of corona affected.

4. NYT has more modelling of different outbreak scenarios based on a study by researchers at Columbia University.

5. Talking of models here is a list. This is a model from researchers at Oxford. Graphics on the value of early quarantine, infection and mortality rates in US modelled for corona compared to other diseases, modelling in WaPo of the spread of corona under various conditions of quarantine or social distancing, another model in NYT of the spread of the virus under different conditions of response. This models Covid 19 based on the classical infectious disease model.

This is a repository of all models and research related to Covid 19. Btw, there are so many models now, with such varying findings, that you can pick your choice to justify your priors on the strategy to be followed. 

I don't know how many of these modellers have even thought of the unknown unknowns - the role of temperature and humidity, genetic or racial characteristics, pre-exisiting immunities, cultural practices and so on. The one thing to remember is that nobody has a clue about the unknown unknowns in this predictions race. 

On models itself, Mark Buchanan has a cautionary note,

Models of this kind depend on parameters for such things as the incubation period of the virus and when people either with or without symptoms can pass it on to others. The values of these parameters are uncertain. The early U.K. policy was based on the belief that one key parameter — the fraction of hospitalized people needing intensive care — was lower than it turned out to be. Indeed, the actual number seems to be roughly twice as large as initially expected, rendering the earlier modeling results irrelevant... It's particularly easy for policy makers to misuse complicated models. “Modeling — especially complex modeling — can promote something of a fairy-tale state of mind,” says Erica Thompson of the London School of Economics and the London Mathematical Laboratory. “People come to believe that optimal outcomes in a simulation invariably reflect desirable pathways in the real world. But things get lost in the move back to reality.” As a result, she says, much simpler models can be more stable and trustworthy for use in policy making, because it is clearer that they are “only models” and don’t invite misplaced confidence in the details. There's little question that most of the other nations that took more aggressive action against coronavirus also had access to complicated computer models to simulate epidemics. But they seem to have fashioned their policies on the basis of a simpler insight: that epidemics grow exponentially, at least in the early stages following an outbreak, and get harder to control as time goes on.

The example of the Imperial College's model is illuminating. This initial model contributed to the UK's herd immunity approach. Its revision contributed to the reversal of the government's policy. But it now emerges that this revision in turn many have erred excessively on the side of alarm.

6. On an optimistic note, Michael Levitt, the 2013 Nobel laureate and Stanford biophysicist, argues that we may be over-reacting and the toll from the novel coronavirus may not be as large. He bases his assumption on the trends from China where the peaking of the growth rate of the virus happened quickly. He therefore argues that the same could be the case with US and elsewhere.

7. In India, the Kerala government has received much praise for its response with its transparency, constant communication, and painstaking field work. Sample this,

... state's decentralised community-level task force, devised to lend a helping hand for those who are quarantined. Kerala has structured a three-member team in each village, comprising a village's elected representative, a public health worker and a police officer, for monitoring and assisting any need for those in home quarantine.

This is a good description of its economic rescue package. This article highlights how the state has mobilised Kudumbashree women's self help groups to run community kitchens to prepare food for the poor.

This interview of the Kerala Chief Minister is as statesmanly an interview as any. It also clearly indicates the reasons for Kerala's success - being transparent with details, and doing the simple things right. This is another good description of the Kerala response. This describes the state's community kitchens and home delivery which have now been established across all villages and towns.

8. This is a good Covid 19 country status monitoring tool. This is the FT's updated corona tracker report. Fascinating graphical illustration here of how the virus spread in South Korea.

9. Politico lists out 34 different ways in which the novel coronavirus outbreak will change the world permanently.

10 Yuval Noah Harari points to two choices faced by the world in the aftermath of the Pandemic,

The first is between totalitarian surveillance and citizen empowerment. The second is between nationalist isolation and global solidarity.

11. Sweden going its own way with herd immunity type approach.

12. China scrambling to recover lost pride with its own corona support diplomacy, "health silk road".

13. Even as countries go the lockdown way, as they perhaps should, Vikram Patel strikes an important cautionary note.

But the one lesson every infectious disease epidemic has taught us is that context matters. Simply put, bugs do not spread the same way everywhere. I vividly recall the hyped pandemic of HIV/AIDS which was predicted to overwhelm India in the late 1990s.

To be fair to governments, especially in countries like India, the possibility of uncontrollable community transmission from not locking down may have been too much to even imagine. And the aggressive public and social media may have forced their hands.

14. Meanwhile the search for Covid 19 drugs goes into top speed.

Scientists are investigating three main types of drugs. The first are antivirals to stop the virus from replicating. Treatment guidelines compiled by the Chinese government during the outbreak include HIV drug combination Kaletra, which US biotech AbbVie recently waived its patents on so it can be made available as a generic; antimalarials such as chloroquine, which generic drugmakers are gearing up to manufacture at scale; and favipiravir, an anti-flu drug from Japan’s Fujifilm... Analysts are eagerly awaiting data from early trials into remdesivir, an antiviral drug that the California-based biotech group developed for Ebola... The second category is anti-inflammatories that treat the lungs after the immune system is overwhelmed. Regeneron and Sanofi have partnered on Kevzara, while Roche has started a trial on Actemra, approved for use on rheumatoid arthritis in 100 countries. The third group are antibody-based treatments, derived either from recovered Covid-19 patients or developed in labs, to be given to the seriously ill or as a temporary prophylactic for healthcare workers. Eli Lilly has paired up with Canadian start-up AbCellera to work on antibodies developed from one of the first US Covid-19 patients, while Japan’s Takeda is developing a new drug derived from the blood plasma of others who have survived the virus.

15. Angela Merkel returns to fight Covid 19.

16. Stanford Medical professors Eran Bendavid and Jay Bhattacharya point to the selection bias introduced by testing and argue that "the true fatality rate is the portion of those infected who die, not the deaths from identified positive cases". Using some available data from China, Italy and Iceland, they argue that the true Covid 19 fatality rate may be lower than 0.1 per cent, that for common flu.

On the same lines, Vikram Patel writes,

the one lesson every infectious disease epidemic has taught us is that context matters. Simply put, bugs do not spread the same way everywhere. I vividly recall the hyped pandemic of HIV/AIDS which was predicted to overwhelm India in the late 1990s.

This interview of Vikram Patel is worth watching.

17. While governments cannot be faulted at all for having resorted to such blanket lockdowns, it is important for the experts and opinion makers to be more careful with their diagnosis and prescriptions.

Right now, we are seeing the application of a narrative generated from the spread of the disease in developed countries to developing countries too. Only time will tell whether this was the right approach or not, not in the idea itself but the degree to which it has been adopted. But for now, given the dominant narrative, governments have no choice. But it is also important for governments in India and elsewhere in developing countries to be ready to revise their priors based on emerging trends from their own contexts.

There is a non-trivial risk that the economic costs from lockdowns can turn out to be higher than the medical costs from business as usual.

18. Finally, this Covid 19 Dashboard of Microsoft is very informative.

Universities and Covid 19 relief - an illustration of elitism

Marginal Revolution is among the best places on the Net to access links on the latest research and debates in economics. It is also among the best places for a particular world-view and ideology. In sum, it's a great place for information and knowledge. But as a place for practical wisdom of relevance to the real world, it is not. 

Tyler Cowen cautions against the likes of Harvard using its endowment in Covid relief by paying the wages for its hourly workers and providing housing security to its (less well-off) students. 

I support a radical vision of the university as an institution devoted to learning and innovation above all. If a school is successful and fortunate enough to have a significant endowment, I am happy to see that school invest it at (one hopes) high rates of return.

Note what is missing - culture, attitudes, civic-spiritedness, and so on. In sum, what it takes to be a sensitive and productive citizen. I thought universities were supposed to be an immersion in education. And not some instrumental delivery of "learning and innovation".

In fact, on reading the oped, one comes out with a sweepingly reductionist message - universities should focus on imparting knowledge and stay away from charity! 

As we go down the article, even pretensions drop off,

The real contributions of Harvard, MIT and Stanford to the world are not the food-service workers they hire. They are the ideas and innovations produced by its researchers, plus the talented students they educate. Less successful universities also contribute those same broader benefits, even if at a lower scale of effectiveness.

The oped is a digression from the simple issue (that the students etc are agitating for) of engaging in a very specific and limited manner in favour of those unfortunate few affected by a once in a century (or more) event, interventions which would have been in the best traditions of conveying the ethos that these institutions claim to impart to its students, and one which would, even in the most extremely generous case, have been a chump change for the endowments of these Ivy universities. It is a good example of the unwittingly revealed preferences and attitudes of the elites. 

And this is the clincher, one of the best illustrations of the social challenge that US and other developed countries, as well as the rich elsewhere, have today. 

I am saying that their moral obligation to extend charity to those workers is not very strong. Had such charity been prioritized in the past, the U.S. never would have developed and maintained top universities. Part of America’s greatness as a nation, and as an innovator, is its unwillingness to ask anew every day whether its elite accumulations of wealth should be torn down and rededicated to everyday purposes of a supposedly greater benevolence.

This is pure polemic. I don't think it is anybody's cause for an every day introspection about tearing down elite accumulation of wealth. But such reductionist thinking and its dissemination to unsuspecting and impressible students in universities is preventing them from at least enquiring into the forces that are driving today's elite accumulation of wealth, their own role in those forces, its consequences, and how it is coming in the way of equality in access to opportunities itself. If in the process of such introspection, they collectively and on their own volition come to the view that elite accumulation of wealth should be torn down, then so be it. Unfortunately, the problem is that such reductionist teaching is gatekeeping students away from meaningfully engaging with the world at large, except in a narrow technical way in their limited worlds.

Chris Arnade responds to Tyler in a tweet, 

Leave it to an Economist to not see influence of organizations is not just raw sum of their decisions but the culture those decisions reflect Harvard's power isn't just the Profs & students but the culture it steeps them in & advocates for. Such as accepting elitism & inequality.

In the context of economists, see this old tweet by Kaushik Basu,

In an economic crisis to be told that political leaders, instead of professionals with expertise, are taking charge is about as comforting as during a turbulent flight seeing the minister of tourism step out of the cockpit to assure passengers that he is taking over the flying.

Nassim Nicholas Taleb, who himself is not immune from some of the same disease, has a very good counter tweet here.

Another example of the arrogance of an unaccountable economist elite is this. I had written earlier about how India's pre-corona economic problems were made in orthodoxy and a legacy of experts.

When we have teachers like these...

Burn the old playbooks - Corona response proposal

Ananth and me have an article in Swarajya about an economic response plan to the Covid 19 pandemic.

The idea is to get ahead of the curve with measures, many of which we are most likely to anyways end up doing as the lockdown prolongs, but with diminished effect.

Consider the context.

Governments face unprecedented economic challenges on multiple fronts. Businesses cannot operate and workers have to isolate themselves at home. But businesses have to be kept solvent, and workers within the labour force. Further, purchasing power for basic necessities has to be supported, and their supply ensured. Furthermore, debtors have to be kept afloat without compromising on the interests of creditors.

The pandemic is a force majeure shock, triggered by non-business or non-economic decisions. Fundamentally, the costs of such shocks cannot be borne by private actors. Only governments can bear them. This is the critical difference between this, and earlier crises induced by economic shocks.

Liquidity support measures, either direct (credit window) or indirect (forbearance), cannot make up for the loss in output and wages due to the pandemic. Someone has to pick up that tab. They will have to be compensated, at least to a reasonable degree, failing which businesses have to close and workers starve. This is the fundamental reality. 

The Big Bazooka cannot be confined to financial market measures. Main Street needs to be bailed out, on both the supply and demand sides simultaneously.

Consider how the Pandemic has upended the normal rules of the game.

In the current circumstances, the lines between business solvency and liquidity have been blurred beyond distinction. After all, if a business shuts down for a couple of weeks, its liquidity dries up and can quickly turn insolvent. 

At a time when economic activities have come to a standstill, merely giving money to people is insufficient. For a start, business activity is facing a lockdown. Consumption decisions have been postponed indefinitely. New projects and investments are frozen not only for now, but for the foreseeable future too. As businesses are closed and people are confined to their houses, and economic activities come to a standstill, the velocity of circulation of money will crumble. 

Measures like tax breaks are unlikely to be effective, besides being a waste of scarce public resources. The beneficiaries of tax breaks are unlikely to be those badly affected, have lower elasticity of consumption, and are in any case unlikely to spend their disposable incomes in these uncertain times. 

And there are likely permanent damages. As businesses close down in large scale, they take down with it a vast associated economic eco-system. Workers exit the labour market and re-entry cannot always be assured. Entrenched economic relationships would have been deeply unsettled, even destroyed. Recovery from this can be very long drawn and painful since re-adjustments can be sticky. 

Even the assessments of the human cognitive biases that underpin financial market transactions have to undergo change. Moral hazard concerns may have to be placed under suspended animation for some time. In case of measures aimed at directly supporting the Main Street, this is not the time to fuss excessively about incentive distortions.

Update 1 (26.03.2020)

More detailed proposals from Vijay Mahajan here, Vivek Kaul here.