August 4, 2020, first written
December 21, 2020 update. Quite a few people have posted comments on this essay, just during the past several weeks. As a consequence, I felt I owed the readers an update, at least to assure myself that the perspective offered is still accurate. Further, to make it easy for anyone who has already read the August essay, I have elected to make updates in italics.
Warmest regards to all of you.
I promised those who provided direct support to www.covid.4thqtr.com that I would update you on the progress with this effort and, more generally, on how we see the current state of affairs. I am a professional listener having consulted for a great number of companies, in a wide range of industries, in fourteen different countries for over forty years.
We have learned a lot these past months and want to pass it on to you and your families. This note is not short. But then, the subject may only be the most powerful subject of your life. It deserves serious treatment.
I try hard to stay out of the political arena on this subject and I will continue that effort here. If I run into that space it is because it is unavoidable.
Resetting the Table
When I started building www.covid.4thqtr.com in late February, I had made one central assumption: we would all need to go back to work and the challenge was going to be how we do that with the greatest safety, and still get the job done. At the time, much of the Country was closing down. So, we were in fact focused on where the puck was heading, not where it was. Regardless of your ideology, it is still heading there. We have always been in the middle of this debate: get back to work. But get back safely.
At the center of this was a core principle: focus on everyone’s circle of influence, as Stephen Covey would say. Focus on what we can control. In a crisis, there is no better advice.
From the beginning, the experts drawn from medicine and science were very consistent about a few things: this was new, and they did not fundamentally understand it so their specific advice would evolve. They would stick to the science and expect the political leadership to decide how to apply it. They knew how it transmitted – human to human – but it took a few months before they fully understood asymptomatic transmission, and even on that they knew the possibility, they just were not sure. Now they are sure. They said, keep your distance from everyone who isn’t living under your roof. They recommended masks immediately, if only to keep you from touching your face. Now their recommendation is more comprehensive, and there is a greater supply of masks. They said, be mindful at all times where you put your hands, what you touch. Cleanse them regularly. (There are cases on the site from Germany, March/April time frame, about the methods used for opening doors in German factories.) In short, they focused on the things that we control and pretty much said that these actions were the only defense against the virus for a very long time to come. Nothing has changed.
I have heard people say, both friends and people on TV, that the CDC and the experts have been all over the place with their guidance. I sincerely believe that this view is a bunch of crap. I have put postings on the site derived from NYC emergency doctors in March, from Dr. David Katz, twice, discussed both times in Tom Friedman columns, from Dr. Michael Osterholm, University of Minnesota – and from other groups defining what we control – from local case studies to German factories, even to the Swedish model and the messages are 98% consistent. Katz even provided us a two-dimensional matrix that showed a different set of recommendations for re-entering the work force as a function of age, health condition, and so forth. (Both of Katz’s interviews are on the site). I have never heard a word from Dr. Tony Fauci or even Dr. Birx that I regarded as fundamentally inconsistent with any of the advice coming from other experts with regard to what science can tell us.
The shock for me has been the enormous push back, in both words and deeds, about the processes and behaviors that we control. Why has this been so? More on that in a moment. The shock is that, overwhelmingly, people are getting infected by carrying on in their lifestyle as if nothing was happening. Keeping distance between yourself and any other not living under your roof? This is not complicated stuff. So, when you see crowds at play, in bars, in auditoriums, at rallies, crowded into restaurants, walking the strand shoulder to shoulder by the beach, singing in Churches you just need to admit that many Americans are in complete denial. The other obvious explanation is that when governments started to re-open, they almost completely neglected to explain, reinforce, teach, market the theme that this was not going back to normal. This was a new model. This was re-opening within the rules of what we have come to call, as a shorthand, social distancing.
We now know that over 70% of the virus is being transmitted to friends and family members gathered in small groups within a single household. The biggest danger is being in-doors, with inadequate air circulation, for an extended period of time, with people with whom you do not live. We also know that this disease stratifies economic groupings. People who must work, people who must live in multi-generational households, people who are just economically disadvantaged are much more likely to get the virus than otherwise would be the case.
In late July, the WSJ reported Europe’s overall seven-day average new cases are 4700, a fraction of the new cases in the United States, 66,000. (The population of Europe is 2 ¼ times more than the US.) The WSJ tried to explain the disparity in new cases: ”This is largely because of marked changes in social behavior across much of Europe, following widespread efforts by policy makers to drill the public to follow a simple, three-pronged approach: Keep a distance when possible, enhance hygiene and wear a mask when necessary. Older people, who are more vulnerable, are especially careful.
“People in Europe understood what they need to do. They take it seriously,” says Ilaria Capua, an Italian virologist at the University of Florida. “The crisis has been handled differently in different countries, but nobody in Europe is saying this is a nothing crisis.”
So, the two big questions are why did Americans behave this way and why did American governments: Federal, State, Municipalities not fix this? We should walk up to these questions because this is far from over and we may each have opportunities to set people right.
Reason Number One: Many doubt the Seriousness of COVID-19 –
Suppose you only measure it by deaths. In Arizona, 1.9% of confirmed cases have resulted in death. In California, about 2.2%. It has been said that the common flu is .1%. If you stopped there, COVID would be much more deadly than the flu.
But the Director of the CDC, Robert Redford, June 25, says that many more people have likely contracted the virus than have been positively tested for it, at least 10X as many. If so, AZ’s percentage of deaths drops to .19%, and CA’s to .22%. For the entire US, the numbers are 3.7% of confirmed cases, and using again the 10X multiplier for suspected overall cases, .37%, or about twice that of Arizona, and about 4X the flu. The US number is heavily weighted by New York and New Jersey.
Then, on July 21, the WSJ reported new numbers that are even more deadly than those we extracted from public data. These estimates include the CDC’s 10X adjustment from known positive cases to actual infections. The CDC is now using a fatality rate of .65% of all of those infected by the disease. The global numbers show a range from .3% to 1.5%, and an overall estimate of .68%, about equal to the CDC’s current fatality estimate. The same report put China at .66%. Overall, the various studies showed an average fatality rate for people over age 65 of 5.6%.
The CDC number of .65% is 6.5X more severe than the flu. The range of .3% to 1.5% is 3X to 15X more deadly than the flu. 4.2% of confirmed COVID cases globally have resulted in death, which is close to 42X the flu.
Does this number, .65%, get your attention? Supposedly, if you are younger, the percentage is even smaller in your demographic segment. Many are saying, hey, this virus is not nearly as deadly as the media are saying. Based on what? Think about this. During the Vietnam War, .8% of all active military people died during that war. That seemed to get everybody’s attention! Many were in panic mode about their draft number.
Dr. Michael Osterholm, a renowned expert, University of Minnesota, forecasts that the likely deaths from COVID-19 are between 800,000 and 1,500,000 over the first 18 months. (The article about his thinking is on the Coronavirus Diary forum, in www.4thqtr.com. He and Mark Olshaker just published another article in the current issue of Foreign Affairs. That one chronicles the American and global response, and what comes next.) Osterholm does not see much stopping this except a vaccine or some form of societal herd immunity, after 65-70% get infected. (We are told that science cannot yet confirm that humans will develop a herd immunity from this coronavirus.) If it took a 70% infection rate to get to herd immunity. for 330 million Americans. with a fatality rate of .65%, the death count would be 1,501,500 according to the new WSJ estimates.
While other diseases, for example, Ebola, have had higher rates of fatality, “it’s the combination of the fatality rate and the infectiousness that makes this such a dangerous disease,” according to experts from Johns Hopkins.
I suppose it is fair to speculate that it could just burn out after a time, years perhaps. (It seems that few experts actually understood why the 1917-18 flu burned out in the middle of its third wave after taking about 650,000 lives in the US.) Yes, therapeutics are helping, as Fauci predicted four months ago they would. Treatment is better. Remdesivir and Steroids are helping. Anti-body IV injections are helping. Perhaps even older malaria and lupus drugs. Other new medicines will help prevent death. Very likely, when this specific pandemic ends, the percentage of fatalities in the last 1/3 of this pandemic will be much lower than the first third. But, how much will all of that push back on Osterholm’s forecast? Today, August 4, we have about 156,000 US death, and for the past two weeks, we are averaging well over 1000 deaths per day. We could easily have 225,000 – 250,000 by election day. (The current models forecast the higher number.) Are we ok with that? How about 300,000 deaths by this time next year? 400,000? What’s your number?
I have no material changes to make to the estimates shown above. By election day we actually were at the upper end of estimated deaths. As everyone knows, new daily infections right now are three times as high as they were before. Daily deaths are exceeding 3000 per day in the United States. The total death count is about 320,000 with a forecast that it will be between 400,000 and 500,000 in February. These numbers would have seemed astonishing last March. Now, they are accepted with resignation.
Moreover, we are now more certain that this disease is truly devastating for older people, 65 years and up. In fact, over one-third of all deaths in the U. S. have been reported from extended care facilities, of one form or another. Dr. Jay Bhattacharya, a Standford University doctor, stated on Michael Smerconish’s Saturday CNN broadcast, December 19, that the death rate for infected older people could be as high as 5%; while the rate for all other people could be as low as .05%. I think the logical conclusion is that you do not want to get this disease and you really do not want your grandparents to get it.
What can a discerning person conclude? As Alan Alda says, “there are pockets of people who still think science is just another opinion.” As quoted above, “nobody in Europe is saying this is a nothing crisis.” This idea is only made in America, or maybe Brazil.
At this point, let’s take a deep pause. I am not part of the full-time quarantine lobby and never have been. We must always ask the question, what are we relating the death statistic to? There are other costs related to keeping the death count between .20% and .40% while the pandemic is active. If you were to shut down the economy for six months to a year you might reduce the death percentage to the flu number. But, at what cost?
I specifically recommend that you consider the points made by Dr. Scott Atlas, of the Hoover Institute at Stanford, in an interview conducted June 23. As he outlines it, these collateral costs could be enormous, both in direct lives lost and in economic damage which, over the long run, will cause additional loss of life. There are very cogent arguments about spillover costs – that the cure may rival the disease. For example, in the month of June, Arizona had 13% more overall deaths than last June, even after subtracting COVID-19 deaths.
Dr. Atlas ended up on the White House advisory team and was showcased at a number of press conferences. While I know nothing more about him than do you, I believe he was quickly boxed in as a virus denier. I do not think that was ever his position. The points made by Dr. Bhattacharya, who is associated with Stanford, which is associated with the Hoover Institute, are very similar to those made by Dr. Atlas, with one huge caveat – the vaccine. Strategies can now be much more targeted and risk assessment can be much more segmented. More or this below.
Way too frequently the arguments discussed to this point end up at opposite lobbying extremes that (1) the virus is exaggerated or (2) that the economy should stay shut down for an indefinite period. Sadly, this continued right through the election and even exists for too many people to this day. The Europeans do not seem to be playing at either of these extremes. Worse, our political leaders have tended more to pick a side rather than to guide us toward a middle position that uses the science to help us find a way to adapt to a COVID-19 world. This is a world within which we will take more personal health risks in order to lessen the personal risks we must take with so many other areas of our lives, including with other diseases, with economic ruin, and with the broad-based community wide spillover costs of extensive lockdown.
So yes, I believe there is ample evidence that COVID-19 is an extremely dangerous disease and has the potential of killing millions of people if not intelligently addressed. Further, I think we have learned more about how to address it, to constrain it from full force. Further, I think most of us realize that we cannot implement a nationwide strategy that minimizes the loss of life to COVID-19 at all costs. The costs would be staggeringly too high.
Beyond the death count, it will be many years before we know the full medical consequences for people who get infected, get sick, and survive.
Reason Number Two: Self Interest – all facets of our economy are not being affected the same way. If you own a bar or an in-dining restaurant, if you own convention centers, auditoriums, hotels, airlines, amusement parks, cruise ships, etc., your very livelihood is threatened. In some cases, the business just cannot re-design itself around the CDC rules, as summarized above, and survive. Some airlines may not survive. Other businesses can survive but with a significant loss of productivity. Yet other businesses can survive and perhaps even thrive if they put the effort into process redesign and re-engineering. (The site contains an article on process-reengineering.)
The tragedy is that we now live in a period where collective benefits and costs will determine what needs to be done more than individual benefits and costs. The only way you sell that theme in America is with political leadership. Frankly, most politicians are not even trying to do so. Sadly, there seems to be little doubt that some political leaders relaxed their guidelines because many of their financial supporters had interests in businesses that were disproportionately affected by the virus.
the political leadership under Joe Biden is surely different. Moreover, Biden is not calling for a shutdown of the economy, that is, he seems thus far to be playing this from the middle. I think this is the wise course of action.
We all know that the virus has come roaring back in Europe, including Germany and even in New York City. I have read that Sweden has backed away from its approximate herd immunity model because its numbers have been comparatively bad. But I also read how during the summer the Germans were getting back on airplanes for vacation travel, etc. and feeling a bit smug about it. I think that COVID fatigue is a very real thing. Many people simply must work. Many people simply must congregate more than is safe. Many people mitigate 80% of the time but then relax 20% of the time. By now, we have all personally experienced this.
Reason Number Three: Confusion – many people want to do the right thing but are confused about what that is. Unfortunately, the most important voice in our country during crisis is that of the President. In this case, the elected leader is pushing back on the advice rendered by people who are part of his government. (White House Staff are currently running a smear campaign on Fauci.) This past Sunday, Dr.Birx expressed grave concern that the virus was reaching into every corner of the Country. Yesterday, Trump said her report was “pathetic”. The Federal Government is not speaking with one voice. When that happens, it drips down to the States and their elected leaders do not speak with one voice. Then, in time, everything becomes political and this is where we are.
How I wish I could write that this improved. At the Federal level, it never did. The U.S. President could never consistently support mitigation principles. The mask became a ridiculous political symbol for him, and for many of his supporters. At the same time, he threw the full weight of the government behind vaccine development and history may remember him well for this. But, overall, his failure to work his way through the COVID-19 disaster, to develop consistent and sound messaging, to truly lead the Country must surely have caused him the presidency.
Reason Number Four: Willful Resistance – some people never pay attention.
We do possess a cultural independence gene. We adore movie stars and athletes in our Country and we really dislike our political leaders. We always have, going back to the start, even with George Washington. It actually goes to our political DNA. Political leaders can hurt us! Celebrities cannot. So, ripping politicians is a national sport.
Reason Number Five: Frustration with Processes and Methods – Some people want to change their business processes, or push their employer to change processes, but they are unsure about how to do this. These people are really the target audience for www.covid.4thqtr.com.
Reason Number Six: Pure ignorance– There are people who simply live on a different planet, especially people who resist authority, per se. About all that can be done is to protect the community from these types of people.
What is the current state?
Without doubt, COVID-19 is the most serious macro-economic event of my lifetime. For the 12 months ending in June the federal deficit will be about $3 trillion, or 14% of GDP, the highest since WW II, more than 75 years ago. By September 30, 2020, the end of our fiscal year, we will be lucky if the deficit is only $4 trillion, the current projection, and it could easily be closer to $10 trillion. (In June, the monthly deficit was $864 billion. Today, the Democrats and Republicans are trying to negotiate between a $1 trillion and $3.5 trillion new aid package.) In short, this is a lot of debt. Added to this is the enormous liquidity that the Fed has created, a different kind of forward-looking obligation. As Irving Fisher, the author of the classic economics treatise “The Theory of Interest” might have said, our preference for current consumption over future consumption is about infinite.
If anything, the economic numbers are thus far better than anticipated. CBO projects the federal budget deficit of $3.3 trillion in 2020, which is triple that recorded in 2019, at 16% of GDP, and the largest since 1945. However, Congress did not pass another stimulus bill in FY 2020, which ended September 30, 2020. This morning, it is reported that Congress has agreed to throw another $900 billion at COVID relief.
Most agree with these macro-economic fiscal and monetary policies. But none of us really understands what price we will pay for this rescue in the months and years ahead.
Goldman Sacks forecasts the US economy will decline by less than 5% for 2020. Maybe so. That would be terrific!! However, it fell 4.8% in Q1 and about 34% in Q2, and this with at least a couple of trillion dollars thrown against the economy by the Federal Government. Goldman now forecasts that the US economy will grow only by 25% in Q3. Given that the government stimulus is counted in consumer expenditures, I am not sure what this tells us.
Current estimates for GDP decline in 2020 seem to be aligned with Goldman’s forecast if not even somewhat below their number. In a very real sense, this is remarkable.
At the same time, this is the reality we live in. Both good and bad things will happen to our economy. We may see five years-worth of constructive disruption in the next year. The Coronavirus Diary forum in www.4thqtr.com contains a long-term outlook piece that a handful us put together a couple of months ago. It may already be out of date.
Until now, the stock markets, the most well understood sector of our capital markets, are sending a message that the underlying fundamentals of our economy will start to recover as we move into 2021 and that the COVID-19 aggregate economic effects may not be long lasting. Good news beats bad news. Maybe the collective group that assigns value in our equity markets will in fact view the year 2020 as a year of business survival. That is, performance guidance for 2020 is irrelevant and mere business survival may be the only logical measure. Time will tell whether our capital markets have this kind of intestinal fortitude. Uncertainty is our most reliable reality, as Charlie Munger said a few months ago.
Right now, it appears that COVID-19 will be the most serious public health catastrophe since the so-called Spanish flu, which hit the country in three stages in 1917-1918. If fatalities from COVID-19 were to equal the flu, pro-rata population, we would end up with 1.8 million fatalities. We are currently at 320,000. Aside from fatalities, the stress on our people, on our health care system, on our business environment, and on our governments must also be the greatest since WW II. This is a big deal.
Because so much is politicized, people will argue about the performance of the current Administration. I am sad to share my belief that we are seeing the most material failure in organizational performance and execution of my lifetime. Decisive strategy, decisive choices, decisive leadership, decisive delegation, and decisive execution would grade out at a very low level. To fully take charge you have to be fearless about the consequences of failure. This fearlessness seems not to exist at the highest federal level. As Truman knew, the buck does stop at the President’s desk. This must improve, but will it? Bad management of anything rarely improves with the same principals. Can you think of even one exception?
With most things in life, one size doesn’t fit all. I think we have already learned, more or less, that in fighting this virus – that is, the means of protecting ourselves – one size does fit all. Two weeks ago, we saw an example of this problem. Two news reports: the first, a WSJ editorial on opening up schools. Second, the LA Times report on Orange County’s prescriptions for school opening. The Journal presents a logical argument for opening based on hard statistics and the experiences of a handful of other countries to calculate the health risk. Then it focuses on how you conform to CDC guidelines in schools, with full support of those guidelines. Orange County announces, in direct contrast to LA Unified, that schools will open on premise, and that masks will not be required. In short, Orange County chooses an approximate support of CDC guidelines at best.
Now you can argue all day long about whether little kids are going to consistently wear masks and avoid shoulder to shoulder mingling. But they are kids. How can the adults be in such disagreement? Why, after almost six months, are we unable to agree on a right course for elementary education in the Fall. My God, we have had six months. Mistakes here will cost lives. Mistakes here will further cripple economies. Where is the leadership?
The most concrete belief for setting up www.covid.4thqtr.com was that there would be an agreed set of guidelines about how to protect our people and that the monumental challenge would be how to conduct business within those guidelines.
Another premise was that people would quickly understand that the effectiveness performance measures pre-COVID-19 simply could not apply to our personal and business/government environments during a pandemic. The virus was going to act as a huge constraint! While it was going to be very difficult for individual leaders to emotionally accept that constraint, many of our institutions – governments, responsible politicians, banking, the capital markets world, Church leaders, business CEOs – would be in the lead helping entity leaders live within the constraint; helping them think out new performance measures. In effect, we wrote in March that this year was going to be about business and personal survival and that survival might be good enough. I never imagined that we would be sitting here in July arguing about personal safety guidelines. I thought the objectives would be clear and the discussion would be about effective performance.
Which countries or areas are regularly named as the icons of best practice against COVID-19? A good list would be Taiwan, South Korea, Singapore, New York State after the fall, Australia, New Zealand, Germany, and even China? No one on this list deviated from what we call the CDC guidelines. Yes, most of these are smaller states. Yes, many have governments which more easily control their citizens. But this is not the point. The point is that the guidelines worked.
Why in the US are we still arguing about the damn guidelines. Why are we not worrying about how to perform within the guidelines instead of wasting time disputing the guidelines? Why do we not see TV ads all day long about the importance of the guidelines – drilled, drilled, drilled? Why, instead of looking at death counts all day long and listening to political squabbles on TV, are we not seeing story after story, with concrete details, about how to correctly protect ourselves, while continuing to function – at home, in our work, recreating outdoors, and in our schools? In this sense, one size does not fit all. The guidelines will be applied somewhat differently to align with the details of the work and the circumstances of the external environment.
And finally, why has the greatest Country in the world, with supposedly the greatest organization and management skills, not been able to get its arms around the methods and processes of testing? Every single expert says that you cannot get a handle on this virus unless you have a pretty good idea of who is carrying it, and where they have been, so you can take control. Test, identify quickly (Bill Gates says, within a day or two, or it does not matter), trace, and confine. What is needed: the exact performance parameters that must be met by your testing program?
Now, again, let’s pause to ensure fairness. Robert Robb, an Arizona Republic columnist who is loaded with common sense, pushes back on much of today’s commentary on testing and offers that the real problem is we never selected a testing strategy that would work in the United States. Recall these statements since the end of April:
“Everyone will need to get tested, probably multiple times.”
“We will need over a million people to do testing, tracing and confinement.”
“You should not get tested until you are really sick because there isn’t much medicine can do for you if your case is moderate.”
“People are waiting in lines for twelve hours to get a test.
“Everybody can get a test.”
Does this tell you something is seriously wrong? Does this tell you that government was burdened with great uncertainty about how the US should test, and use testing? And now we have professional athletes pushing back on going to work unless they are tested with great frequency, perhaps more than once a week. (Gauging the public’s reaction to that will tell us a lot about how much importance they attach to watching basketball, baseball, and football. It may not be as much as the sport’s world thinks.)
In my opinion, the government needs a national strategy and, from what I read, most states would welcome one. Perhaps the strategy is based on a hierarchy of testing need: first, front line health care workers. Then, people housed in confined living, maybe not just older people in group living facilities, but maybe even poorer people, with multi-generations sharing the same housing. Then, testing people who are fully symptomatic for COVID-19.
Maybe the strategy excludes testing young children or even young adults unless of course they are fully symptomatic.
Building a testing strategy around people who are asymptomatic is simply an admission that our people are unable to take this seriously. Asymptomatic people following CDC guidelines are unlikely to transmit the virus. And if getting a negative test is just a signal not to follow CDC guidelines, testing can actually hurt us.
These are the obvious questions that a discerning lay person could identify. The Federal Government, fully knowing these questions and others, should have developed an exact testing strategy that could be effective in a country of 330 million independent souls, found in 50 states, and countless large municipalities. They did not.
If they had, then they could have established an agreed method, an agreed set of processes, an exact definition of the required people and non-people resources required to implement the processes, a process for acquiring the resources, a team with a leader to hands-on manage all of this, a set of performance parameters so we’ll know where we need to adjust, and a concrete definition of government roles, including who pays for what. Also, every company has a CEO. So, may I add, who’s the CEO? Are the Countries listed above just better than us? Do they simply have their shit together better than do we? Is it that simple?
Now, at the end of 2020, testing is no longer the hot topic. The vaccine is. I think that the consensus among the experts is that testing is most critical during the immediate and early stages of a possible pandemic. After that, as the virus spreads widely, the ability of testing, identifying, and tracing to stop disease spread in its tracks diminishes. TestIng will always have value. Shortly, we will have testing kits that can be used in your home. Moreover, we have learned things that may help us the next time.
In the final analysis, the federal government, under Donald Trump, made a decision to guide the Country, but not command it. The Trump Presidency wanted to leave some arms length between itself and the pandemic. Too many truly important choices were intentionally left to the states to figure out. But the states did not have the resources to effectively do that. The energy and resources should have been concentrated in one place to bring economies of scale to the definition of strategy, tactics and processes.
What have we learned and what can we do?
We need our government to speak with one voice. With respect to how we protect ourselves, more or less, one size fits all. The experts told us this. Science is not just another opinion. They said the virus knew no boundaries. In time, the experts relaxed because we couldn’t stand their advice and said that some areas may be less intense than others. BUT THEY ALWAYS SAID, FOLLOW THE CDC GUIDELEINES, and we couldn’t be bothered. We screwed up, not them. Our President screwed up, not them.
We need to put all of our effort into getting fully back engaged within the guidelines, or getting used to not having that function, process, or business in a COVID-19 world. We need an integrated solution for health and our economic/social environment. As many are saying, deciding between the two is a false narrative. In this sense, there may be many variations with regard to “back to work” models. We know how to protect ourselves, and how to protect our customers. But how we apply these guidelines may vary as a function of our specific kind of enterprise, and also how the virus is behaving in our specific community.
We need to be willing to accept a higher level of personal risk than most of us have ever been asked to assume. This is a balancing act. As written above, the notion that we get a choice between the economy and our safety is a false narrative. But our leaders – politicians, business, education, public administrators – need to define the risks they want us to take and lead us. And the risks we take should be the absolute minimum consistent with taking all preventative measures.
We need people in charge!! – hopefully, smart people. You fight a war with generals, lots of them. They have real authority. They lead. They die in combat. The public has a right to know who is in the lead. The White House Task Force never leaves me satisfied that I know who is leading. (When five leaders come to the podium, deferentially salute the “great leader” and essentially repeat what the other four said, I am not comfortable.) This pandemic may just be getting started. We may be in the top half of the first inning and already down 5-0.
We need governments at all levels to sell their programs. Our governments need to be leading, not asking permission. Like Churchill after WW II, or H. W. Bush after Gulf War I, they may all get voted out of office. For now, we need to get all the virus deniers, the most threatened businesses, the people waiting for consistent instructions, all working in harmony on the detailed methods for protecting themselves.
We need effective and comprehensive testing. I think it is charming that Joe Biden has made speeches about multi-trillion-dollar business programs, infrastructure programs, and sustainability technologies. What, does he think if he gets elected that this will be over? How about a concrete strategy for testing that fits the motif of the United states, and some sense of what that might cost? Money is clearly a part of why we can’t get our arms around this.
President Elect Biden is no longer focused on infrastructure programs. He is fully focused on COVID-19. It would appear that he expects his team to command and control the national strategy going forward. There will be much stronger federal leadership. the number one focus will be manufacturing and distribution of the vaccines and of course, vaccinations. There is likely to be increased discussion of testing and contact tracing if only to enable people who have tested positive to self quarantine. And of course, there will be more focus on economic support.
In the long run, will it matter? It is possible that we have lost control of the virus and it is simply going to run out in full force, stopped only by a vaccine, or exhaustion. I would argue that this is pretty much the course. It is now a race between the vaccine and the virus, and the virus is way in front at this point. This would be devastating. We may learn, even with the best response, that man’s ability to stop this thing is very limited. (We are seeing resurgence of the virus in areas that were doing a good job of controlling it.) But the scientific history with pandemics tells us that it will eventually run its course. The Spanish Flu eventually ran out of gas.
Also, we may get lucky and get a vaccine into play faster than ever before. So, our only strategy is to limit the number of people who contract the virus as best we can while continuing to function as effectively as possible, and the only way we know to do this is to stay away from people who may have it and follow all of the other practices we have been told to follow. This isn’t complicated. It just requires grown-ups.
Right now there is a great deal of optimism about vaccines. As you know, two vaccines have already been approved in the U.S. and we are into our second week of vaccinations. The virus statistics right now are pretty awful but there is also genuine hope and optimism for the first time. (More comments at the end.)
A final, very non-scientific, thought
A guy asked me yesterday, re COVID, where is this all heading? I said, while the US until now has been playing this from two extreme lobbying positions – isolation and fully open – and doing so has cost us a lot of time, probably allowed more deaths than needed and been caused by our politics more than our science, we are now, finally, merging toward the middle. (How prescient was Churchill: “Americans can always be counted on to do the right thing – after they have exhausted all other possibilities.” Note: Churchill may not actually have said this, but it is true!!)
Once we get fully to the middle and decide to act like adults with regard to protecting ourselves, we’ll see things calm down. (In this sense, the middle has become: social distancing, wearing a mask, especially if you are indoors anywhere but your own home, and cleansing your hands throughout the day, especially if you have been outside your home. And stay out of crowed places, inside or outside. Last week, and until this week, President Donald J. Trump decided to endorse these principles as if he had invented them. This week he seems to be going in the other direction. Frankly, his words are irrelevant.)
After that it will be all about: conducting as much commerce as possible, the entrepreneur’s spirit, discovering, finding a way to keep educating everyone, finding new ways to spend time, adding more and more new therapeutics to our treatment of cCOVID-19. Who knows, the vaccine research will probably start producing collateral medicines that will push back on the disease, and perhaps we’ll get a 30% effective vaccine by early next year, perhaps as a kind of therapeutic. It now appears as if world developments have greatly exceeded these forecasts. Both of the vaccines currently approved have efficacy rates in the mid 90 percentile. And most importantly, they are approved and vaccinations are taking place. We need to reclaim our leadership position in the world because we are needed. Our new president seems to fully buy in to this belief. When all of the dust settles the US likely will be, relatively speaking, as strong as it ever was. Yes, it will be a new normal. But, objectively speaking, my gut feel is that the US will come out of this stronger than any other major State.
Not because of the people. Because of our system. We allow things to break. Frankly, to damn near fully break.
The strength of the Country is shown when things break and move from the hands of small group human control into the hands of individual people, millions of them, who are just forced to find a way to adjust, within the construct of our constitution and market structure. It is not an automatic adjustment mechanism, and it surely is not just about economic adjustment, but it is an adjustment that takes place because no one can stop it – and it shouldn’t be stopped. And in this sense, the US has no rival. Businesses close, capital moves, inventions overcome constraints. In the end, the relatively freer cowboys will prevail, not because of the federal government or the leadership of a single leader, but relatively independent of these factors. I do not know this to be the case but after spending so much time on this, it has just occurred to me that this is the way it may end. More people will die of COVID-19 in the US than if we had been less obstinate. But, over the long run, many more will live. Just a speculative thought, which should be received as such.
Where are we going from here?
The best data comes from the U.S., Europe and Japan and the U.S. does not especially stand out when compared to Europe, worse than some, better than others. The rest of the world does not collect data as reliably as that coming from Europe, U.S. and Japan.
I have felt from March that the tendency in U.S. to play this at the two extremes was not helpful. Further, I hold the political establishment responsible for this messaging. The scientific and medical community were always much more gray about how this needed to be played – that is they knew we needed to learn how to protect ourselves because they knew life could not shut down. I have pointed to many such sources, even in this essay.
For example, my site, www.covid.4thqtr.com which I started developing in March, had a simple goal: show people how to create safe working environments because I knew folks would need to go back to work.
The idea was, don’t just tell people what to do – mitigation principles- -but show them how to do it. Be precise. There is a case on my site which shows how German factories were rigging doors in February so folks would not need to touch them to go in and out. I think we are going to be living with this virus for months to come and I still believe our leaders should be spending much more time showing us how to protect ourselves – specifics – in our workplaces, homes, schools, etc. We have this information but we are not spending enough effort getting it out there.
Now we are working on a strategy for vaccine distribution and vaccinations. I think that this is extremely important because we have a world to get vaccinated, not just a country. Therefore, we need to think very carefully about how we do this. I referenced above Dr. Bhattacharya, the Stanford University medical doctor, who I listened to on Michael Smercomish CNN interview a few days ago. He argued that a very small percentage of people under 65 are dying from the virus, that mortality is even less than the .66% number I had been using for the masses, about a tenth. He says, we must target the vaccine to people over 65. We should not give it to anyone who has already had COVID because they are essentially now immune for a material period of time. We can target health care workers and other essential workers and we should get this done by end of January. Then, he argues, we can let the Country completely open up. His argument, parallels that of Scott Atlas, namely, the physical and economic damage to people under 65 from being closed up is worse than the risk of death for that group. Smercomish wasn’t having much of it. However, I think the doctor has a point.
This is my humble read:
First, quit playing at the extremes.
Second, create a precise strategy about how the vaccine is going to be used, explain it to the public and then follow it with as little deviation as possible. (I doubt this will be done. Politics will enter.) Vaccinate people over 65 years old. Vaccinate people who have morbidity factors. Don’t waste the vaccine on people who have had COVID until the very end of full vaccinations.
Third, I would not support fully opening the economy as these doctors argue but I would sneak up on it. It makes little sense to me to stop practicing mitigation to the largest extent possible, that is, which still allows us to function in whatever we need and want to do. Inconvenience should not be a reason to relax. Nor should discomfort. Indoor gatherings with strangers will not make sense for a long time to come.
But, fourth, I would say if your 75 year old friends and family members have been vaccinated you can start visiting them again, whether or not you have been vaccinated. Yes, there would be a risk. And, yes, each person would need to calculate it. Vaccinated older people might be able to transmit the virus to young people. Same principle applies to those who have had COVID.
I would say, go back to work for sure, but don’t let in any older workers unless they have been vaccinated. Also, practice mitigation.
Fifth, regarding restaurants and bars, I would point out that they are high risk. I would continue to under populate those areas, and I would advise against anyone over 65 going there until they have been vaccinated. I would also target economic aid to these types of businesses.
Sixth, I would obviously put all teachers over 65 at the head of the line. After that, all teachers. I would do this for all levels of schooling. In this way, all schooling could be fully open by end of February if we stayed disciplined. During the past month or so, Dr. Fauci has strongly recommended that we get kids back to school.
A Look to the Future
Listed below are some of the things I did not factor into my thinking in August and seem worth sharing. I offer these as educated opinions and nothing more solid than that.
- The US population seems to be weathering the COVID-19 catastrophe in ways that surprise me. Perhaps this is because in a nation of 320 some odd million, a thousand deaths here and a thousand there don’t get the kind of attention as, for example, 300 military deaths in a Vietnam battle got in 1968. One reason is that most folks are more likely to know someone who got COVID and came through it without major long term disruption, rather than someone who died. (The statistics argue this.) Another reason, sadly, is that this has been a catastrophe for some economic groups but not for others.
- Someday we will see a statistic that reports how many people over the age of 65 will have died during the worst period of COVID-19. Generally, about 960,000 a year die in this age group. Will that data show that many, many more died this year? We don’t know. My guess is that it will be up but maybe not by as much as one might think.
- No one knows what the long term medical affects are going to be from COVID-19, so no one is factoring that into economic assessments. It will probably be quite a while before that happens and by then economic adjustments will have been taken.
- An entire new industry – protection and readiness for the next pandemic, will be born.
- The vaccine. We have already discussed this. There are two remarkable things here. First, the speed with which the world’s pharmaceutical industry built the application on top of the infrastructure built for SARS and MIRS and other coronaviruses. Bill Gates discussed this in April. But the fact that that infrastructure worked so seamlessly has to have been a surprise. The second is the efficacy of the approved vaccines so far. No one expected 90% numbers. So, it seems that the scientific hurdle has been overcome. Now it is all about manufacturing, raw materials, distribution, and vaccinations. This is management and execution. For the U.S., with the incoming Biden Administration, this will be much better than it would have been. There will be a national plan.
- Virus mutations and the efficacy of vaccines to placate them? The scientific community does not seem overly stressed by this issue. Time will tell. It is certainly an element of uncertainty that pushes back on optimism.
- Biden’s election and his first month as President Elect. I am encouraged by the skill he has shown during this first month. The transparency of his thinking, the transparency of his appointments to office, the quality of his appointments – smart, experienced, professional. Exactly what we need right now, especially to fight the pandemic.
- It seems that the economy is likely to do remarkably better in 2020 than any of us may have thought back in April. As I wrote above, I read a forecast recently that said U.S. GDP would drop in the mid 3s this year. Who would not have taken that last May? Today’s pundits write about a 7+% unemployment rate as if this is earthshaking. Well, it may not be good but we must remember that in the 1960’s, 5% unemployment rate was considered full employment by most respected economists.
- Vaccine optimism, a good and bad problem. The bad is that many people will act as if it is all over and relax mitigation and this will lead to another 200,000 deaths in the U.S. And those deaths will just happen. It will not rattle the financial markets. The good is that people now have HOPE. Hope drives you. Hope is frequently more important than factual analysis or forecasting. It is the small business deal you do when you are on your backside, which is not enough to save you, but feels like it is and makes you work harder and with more energy.
- Global reengagement. Absolutely necessary and fully on the new President’s radar screen.
The other big surprise about all of this is the general lack of concern about the long term effects of an incredible rise in government spending. Right now, no one cares about deficits. Right now, everyone is acting as if borrowed money is free. Think about it, when Obama came into office the U.S. national debt was loosely about $7T. By the end of this year or a few quarters into 2021, also loosely, it will be about $24-25T. If interest rates ever hit levels I have experienced during my adult life – I was crushed by a prime rate at about 21% in 1980 – the cost of funding the U.S. debt would exceed imagination. At 7% it would cost $1.7 T a year to service the U.S. debt. The Simpson Bowles Commission Report on Deficits, etc. , published two years into the Obama Administration, suggested for shock purposes that if we did not get deficit spending under control we could be spending $800 billion on interest expense, by about now. In fact, the 2020 Federal Budget estimated interest expense at about $380 billion, largely because of historically low interest rates. These low rates are almost beyond imagination and it is even harder to imagine they will continue this low for decades. But, for the time being, all I can assume is that debt is now viewed as the next generation’s problem, or something crazy like that.
In any case, the goal now, overwhelmingly, is to survive the pandemic, medically and physically. Everything else will need to wait. Good luck with that!
