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Public Interventions For Coronavirus

I’m collecting resources and guideline that could serve member of authorities to organize financial and other interventions to respond to the coronavirus crisis. I’m focusing not on the specific measures but on how urgent decisions can be better organized and the effectiveness can be improved.

Foreword

I have studied the authoritie's response to the September 11 attacks in 2001, to the Swissair grounding in 2002, to the financial crisis of 2008 and I have followed and analyzed the outcomes. I have noticed that, due to the urgency and magnitude of the problems, the measures that have been taken to alleviate the different crisis, in some case have not played out as expected and have also created imbalances. These big urgent interventions have a similar pattern of producing side inefficiencies, that can be mitigated with some improvements.
The coronavirus is unprecedented. There is not a receipt that can be applied, but nonetheless it is possible to highlight some elements that can improve the effectiveness of measures and help preserve other important elements of our society and economy.

The content is aimed at people with an understanding of the political system and on the current situation. I will therefore remain synthetic and try to concentrate on few topics that can add some values. I’m planning to proceed progressively without the aim to provide an exhaustive and scientific information.  

Governments interventions

The pandemic coronavirus is having a big impact on the society and economy. Many enterprises have shut down their activities and do not have revenues. They lay off their employees and these without salary are not able to pay rent and bills.

Governments intervene financially to sustain the economy with the aim to prevent an economic collapse and once the emergency is over to easily recover. These interventions are very challenging in at least three aspects:

  • Select and implement the best measures.
  • Finance the huge amount of money that the interventions require.
  • Important decisions need to be taken very fast and with a lot of incertitude on how the situation will evolve.

Decision process

The quality of the measure depends on the decision process. There is no other way, but it is evident that the limit on time and on information, is a huge problem when taking important decisions. In these situations, the opinion of many important stakeholders cannot always be considered. That can easily cause retards in adoption, damages, critics and a legitimacy problem.

I think that there is a way to improve the quality of the decisions while assuring a fast response time. I’m going to be concrete and focus on the decision process of Switzerland. The challenges are the same for other countries.

I will start with a typical example of a disfunction that has just impacted our company and that is typical of decision taken with urgency. The 19. of March, Saint Josef, is a festivity in Ticino. This year it was on Thursday, so our government has ordered, to mitigate the spread of the coronavirus to all enterprises and commerce to remain closed on Friday, except for the essential ones. It was a smart decision, but unfortunately there was not an exception for people working from home. All employee where confined at home, but without the possibility to work. It was a mistake in the formulation of the decision that in normal times gets corrected with a judiciary recourse, but due the urgency and sanitary motivation, this measure was not available. There was no intention from the authority to prevent people to work and in some case earn a salary. This example makes clear that in special time, we need alternative ways to correct legal errors and possibly improve the quality of the decision, that do not impede the authorities to move fast.

In Switzerland, like in other countries, we are currently in an “Legally Exceptional Situation”. The normal political process is suspended, and the Federal Council can take appropriate actions on its own. If the Federal Council is unable to wait for the Federal Assembly, it may decide to grant credit itself with the consent of the Finance Delegation, that comprises three members from the National Council and three from the Council of States. They are in the process of approving a set of measure to sustain the economy of CHF 42 billion (approximately USD 42 billions). This amount is almost half of the total yearly budget of CHF 74 billions and will therefore have a huge impact on the financial situation. The States get the money through taxes, therefore at some time in the future individuals and companies will receive the big bill.

The Swiss population has confidence in the authorities and their ability to act in the best interest of the country. We assume that the Federal Council has learned from the past urgent interventions and has improved the organization for time or crisis. The measures are surely being studied by smart people working in the administration and in coordination with selected representant of the cantons, politics, economy, social partners, financial sector and from the Swiss Central Bank. But they also need to keep the measure very confidential for the fact that they could have a big impact on the stock market, people and enterprises. Everyone can have their own “better” idea, but I think there is no one that is better positioned to make such decisions. We can therefore be consciously confident that they are doing their best to assess an unprecedented, very difficult situation and elaborate in a short time the necessary measures. Lack of action will bring a lot of insecurity and make the situation instable and also possibly dangerous.

We don’t know exactly how the decision process is working and what is going on. But apart from what is being decided I think it is possible to elaborate on how it would be possible to improve the process. The following reasonings will be of general nature. I will use the current situation to help making explanations easier to understand. However, they should not be considered as critics to what is going on. What is following is just theoretical, I’m fully in line with the fact that in such times, it is up to the delegated authority to assess and decide.

Introduce flexibility

Authorities and civil servants are not well prepared for urgency times. During normal times, within the public machine, flexibility and creativity is not considered a value. In order to avoid problems and complaints, they tend to use a very strict vocabulary and list all cases. In crisis time, when decision become immediately applicable, a different attitude and mechanisms are necessary in order to avoid errors and improve the quality of decisions. It is not that difficult.
In the cited situation of the order given to the enterprises to close on Friday, it would have been sufficient to complete the decision with the provision that a delegated office could allow more exception to the order of closure in case where the non-contamination of individuals is guaranteed.
Our company could have complained and once established that it was not the intention of the authority to block the work from home, the delegated office could have introduced an exception in a short time.

Decisions that are immediately applicable and limit the right of persons should also possibly contain a provision that allow some authority to easily exclude people from the limitation provided that some principle of the decisions are given. It is obvious that is up to the one that takes the decision also to asses if flexibility is necessary, with what level and which authority should be responsible to allow exceptions or changes. It is also possible for the council to take the decision to reassess the situation and adapt the rules, within a certain extend. It can combine the needs of creating legal certainty, with the one of easily adapt to a changing environment.

The Ticino authorities on the 20. of March 2020 have decreed that all non-essential economic activities should be closed down. The Federal Department of Justice has then complained that it was only the Central governments that could decide such a measure. Some more flexibility at the Federal level, in this case a provision that let Cantons intervene more drastically in motivated cases, could have helped avoid these conflicts among authorities that create insecurity in the public opinion.

Consultation procedures

In normal times the Federal Council invites all interested to give feedback regarding changes to the legislation. The consultation procedures are very effective. It allows to assess how well a proposition is going to be accepted and supported and to anticipate possible problems and adopt corrections before the norms become effective. Public consultation procedures takes time, are useful to prevent political frictions and damages, but are not an option for urgent or confidential measures.

But public consultations do not need to be anticipated, they can also come after the decision has been taken. Nothing prevent the Federal Council to open a consultation regarding the measures that will be adopted regarding the package of CHF 42 billion. Doing a public consultation at posteriori is not without risks, but could strength the position of the authority, give them more legitimacy, help improve the measures and give precious information for other interventions.

It is obvious that a consultation makes more sense when there is still a chance that the measure can be adapted. The Federal Council could build some flexibility to adapt the measures easily and postpone some technical implementation measures, not so urgent, after the consultation. It can be worth to provide some flexibility in the law, that allow offices to adapt the implementation.

In Switzerland at all levels, public consultations are a consolidated tradition and effective tools. In this difficult times the instrument can continue to serve well even for urgent decision, by introducing consultations at posteriori and a little bit of flexibility in the decisions. They can be made less formal, it may be enough to provide and email for feedbacks.

Measure the effectiveness

During crisis time it is difficult to assess what be the evolution of the situation and the effectiveness of the measures taken. It is sometime very difficult to know in advance what element could help evaluate the impact of the decision, so usually in this case the authority does provide only a limited verification or no verification at all. It is important that the decision state what data need to be collected for evaluation.
It is not necessary to decide immediately how the measure will be evaluated, the decision can be easily postponed and delegated. In any case the decision should include a provision that require that the measures need to be regularly evaluated and adapted with a well know project management methodology Plan-Execute-Control.

Higher goals

In normal time the political system works toward making sure that the government activity considers all part of the society. In the urgency the focus on the pressing priorities and other considerations are usually put aside. This is especially true with the coronavirus where health of a whole population is at risk and huge parts of the public offices are closed. Pretending that the authorities continue to consider many other elements, will impede their possibility to respond quickly and effectively to the emergence. But in my observations I have seen that governments concentrate mostly on emergency measure not just because they do not have time or energy, but more due to the fact that they have not a list of major priorities that could help guide the implementation of the measures.
There are some high priorities that in these emergencies and with huge state interventions can get easily disrupted without a specific consideration and planning. Sorting out some higher goals that should be preserved will help authorities move the ship in the right direction. Following some higher goals also help assure that the different measures are not in conflict and can bring the expected results.

The choice of any goals depends on the specific situation of a country, on personal values and opportunities. Governments can quite easily identify what priorities to pay particularly attention. Each country depending on their situation, will obviously have different ones. I did not elaborate too much, something that could comes for Switzerland would be:

  • Maintaining the stability of the system. Guaranteeing the order, security, trust of the people on the system and the ability of the institutions to return to normality.
  • Making sure that the economic burden is shared among all population and that the gap between poor and rich get wider.
  • Making sure that environment is not further compromised.

I did not include the financial stability and health goals that is where the emergency measure are focused on. These higher goals should be considered when organizing intervention, taking measures and financing them.

Measures Selection

  • Good GDP and Bad GDP grow rate.
    After the coronavirus lock down we will see a lot of public economic stimulus packages, and having a better metric for investing in positive grow will be very important.
  • Rules for Global Systemic Corporations.
    Particularly in this time it is necessary that Global Systemic Corporations comply with uniform global rules.

Financing Fininacial Interventions

Will be elaborated later.