I spent the past two weeks worrying aloud that I thought literally slamming the door on the US economic engine was nearsighted, silly and an idiotic move. Sadly, the economic news over the last 72 hours exceeded even my worst projections – along with those of almost every economist. Most figured the US economy would teeter at around 6 or 6.5% unemployment through April, with growth shrinking by about 10% for Q2 after zero growth in Q1. Instead, we now know that we’ve already bled almost 10 million jobs and the unemployment rate has already zoomed to 9.5 or 10%. We also know the economy contracted by about 0.8% in Q1. Along with those (now rosy) projections about how the economy was doing in March, we can also expect the similarly anticipated “V-shaped” recession is about as unattainable as the Ark of the Covenant.
I could sit here and angrily type my frustration that the government decided to shut everything down in the middle of the best economy I had experienced since I was in my mid-20s. (Trust me, I’m tempted!) But as my grandmother loved to say, “There’s no sense crying about the spilled milk. Better to get a mop and clean it up.” So how do we clean up the mess we created?
When I first started writing this yesterday, I planned on including lots of charts and tables, relying on data to drive my points home. But nothing seemed to grab my attention. Then I remembered something when I first started in sales all those decades ago. People rarely make decisions based on data. Oh, we all love to pretend we do. We convince ourselves that we are supremely rational beings. Reality is different: we are emotional creatures first and foremost. When confronted with a decision, even the most clear and concise arguments will get overwhelmed by our strongest emotions: love, hate and fear.
Last week, I wrote “How many people will end up dying from COVID-19 vs. how many people will die from starvation and other diseases of poverty if the economy slips into another massive depression?” That is still the question we should be focused on. People are afraid. They’re afraid of dying. They’re afraid of their parents dying, they’re afraid of their children dying, they’re afraid of their spouses dying. But the narrative spun by both the media and the punditry is that because of COVID-19, the deaths we fear are more immediate. They’ve taken everyone’s fear of death and added the element of immediacy, and then told us the only way to eliminate the immediacy is to wall ourselves off in our homes.
This is as much a political crisis as it is a medical and economic one. As much as the media is distrusted these days (and for good reason), it’s important to note that they are getting their cues from the political class. When the governor of New York is on television daily, declaring he needs tens of thousands of non-existent ventilators or else people are going to start dying in the streets, we sit up and take notice. When the governor of Pennsylvania takes to the airwaves to declare that this is the gravest crisis we have ever faced, people heed his words. When the President of the United States begins a daily briefing by reciting the litany of the dead, we are left with the impression that our lives are about to be snuffed out.
Now, imagine if our political leaders were to go back to the original premise of “which is worse: the deaths that will result from an economic depression plus COVID-19, or just the deaths from COVID-19?” Well, then we still understand the immediate effects of COVID-19, but we’re also asked to consider the long-term effects. Why? Because unless we’re completely irrational our psyche is now forced to realize this is a life-and-death decision no matter which way we decide. People, maybe even people we love, maybe even ourselves, will die. The only question then becomes how to balance the equation so that as few people die as possible.
It’s rare that a moral question can be summed up with an equation, but this one can:
Cnm ⸫ Cm+D
Where C stands for deaths from COVID-19, D for deaths from an economic depression, and m for mediation. What is the relation between those three factors? How do we mitigate the number of deaths in each scenario, and at what point does Cm+D cross to become less than Cnm?
(Sorry. The old data guy couldn’t resist throwing mathematics into the pot.)
We know our current approach is definitely going to result in D, and we also know the human toll of D – in famine, malnutrition, abuse, and exposure – will be dreadful. Here’s what else we’re finding out: countries that shut down even further than the US and then tried to “return to normal” – like China, South Korea and Singapore – have had recurrences of COVID-19 that are even worse than their initial outbreaks. So does that combination mean we’re just screwed? We can’t restart and try to to return to normal without killing more people, and we can’t stay in our current stance without killing more people?
No. Not at all.
The key is we can reopen our businesses, pray they return to solvency and that replacements for those that disappeared come alive quickly, but with a couple of caveats.
- First, we need to understand that normal has changed. Medical science has shown that coronaviruses are, in general, highly mutable: that is, they make up for the fact they are not difficult to destroy by mutating, often quickly, meaning most treatments are not terribly effective. It’s why the “flu shot” is rarely more than 50% effective, and why nobody has yet come up with a cure for the common cold. The mediation efforts we put in place now are likely to remain with us for a long, long time.
- Second, those most at risk from COVID-19 should be isolated from the rest of the population as much as practicable. If you have bad lungs or a compromised immune system, you should stay at home as much as possible. When they fall ill and require hospitalization, they should be moved to separate wards from the remainder of the population.
- Third, the nature of white-collar work should change. I understand many jobs require you to be onsite in order to perform your tasks. Most white-collar work does not. I never understood the resistance to telecommuting; I was doing it 15 years ago and hardly ever “went to the office” for the last 6 years of my career. I think most companies are now realizing that the phobias they had about telecommuting were not well founded and having already put in place the systems that allow remote work, will stick with the model going forward.
- Fourth, the nature of school should change. Just as white-collar workers don’t need to be in a cubicle to do their job, students needn’t be tied to a desk in a building to successfully learn. Yes, there are details that would need to be worked out so far as socialization goes. Yes, it might impose a secondary hardship on families that think both parents need to work. But in an era when school districts across the country are spending billions on trying to maintain crumbling school buildings, buildings often inadequate to meet current needs, continuing with teleschool only makes sense.
Finally, our society needs to accept that some portion of the population will contract the COVID-19 disease each year. It is the nature of the virus. Every time I hear a politician, doctor or commentator talk about “defeating coronavirus,” I cringe. It’s not that eradicating the virus isn’t a worthy goal. It is, however, ridiculous to set that condition as a benchmark for returning to living.
This will probably be the hardest adaptation for our society to make. After all the hype, the shutdowns, and the panic, the idea that this is a new reality – one with yet another dangerous disease – in our midst will be difficult for many to accept. We like to think man is invincible and master of his environment. The idea that nature sometimes refuses to be tamed is a concept that we haven’t truly dealt with for nearly a century.
But if we don’t, we will have destroyed the economy that powers modern civilization. And we will have forgotten that most important of American traits: liberty. A free people do not willingly chain themselves and they are not willingly chained. It’s time we remembered that which makes us strongest and unique, and put those principles into action.
Isn’t that a refreshing scene? There’s nothing quite so calming as a tropical island, with gentle surf caressing a sun swept beach while warm breezes sway the palm fronds in a relaxing rhythm. If you squint carefully, you can almost see the natives roasting a swordfish over a crackling fire and smell the heady aroma of fresh island vegetables.
The island also represents what the medical community wants for America. They want us all to hunker down in our homes in hopes of extinguishing the Wuhan Flu, much as we would be isolated and alone on a South Pacific isle. Numerous government leaders have taken them up on this advice. Sadly, they haven’t given each of us our own tropical paradise. While they aren’t actually calling it an enforced quarantine, the lack of the correct verbiage doesn’t make it any less so. If you think otherwise, try leaving your house after 8pm.
Of course, we’re just starting to deal with the fearmongering that resulted in mass panic, and nearly mass hysteria. The national economy is virtually shut down. The stock market almost collapsed,with losses not seen in nearly a half century. Nobody is certain of the damage done, but estimates range as high as perhaps a 40% reduction in GDP and 30% unemployment, numbers not seen since the Great Depression. Social structures have been irrevocably altered, in ways we cannot begin to understand. The very nature of work has been altered, with more white-collar employees working remotely than ever before. When we do get back to work, to school; when the centers of culture and learning do reopen, we have no idea how the changes that were suddenly thrust upon us will reverberate in the future.
The biggest problem with all of this is that the data about this disease is profoundly unreliable. It has been said there are lies, damned lies and statistics and no common experience drives home that truism more than the current situation. From the beginning, statisticians and epidemiologists were dealing with incomplete (and even falsified) data from China, India, Italy and South Korea. As a result, modeling – which government leaders relied on to predict how deadly the COVID-19 pandemic would be to the general population – has been terribly inaccurate. The noted epidemiologist John Ioannidis recently remarked that “the fatality rate could plausibly lie between one in 100 and one in 2,000 cases.” Mind you, he is merely referring to death rate for those who are infected. Nobody has yet put forward a reliable model for the infection rate, because the data simply doesn’t exist. This is a problem that was anticipated. On March 17, Ioannidis wrote, “we lack reliable evidence on how many people have been infected with SARS-CoV-2 or who continue to become infected. Better information is needed to guide decisions and actions of monumental significance and to monitor their impact.“
“But,” you say, “what about the rapid rise in cases in the United States I keep seeing on the evening news?” Ah, a fair question. Consider: since the United States started testing, it took us 17 days to administer the first 100,000 tests. It took another 11 days to administer the next 100,000. It has taken only 5 days to administer the last 320,000 tests. At current rates, the United States will be testing over 1 million people per week by mid-April. As the number of tests administered increases exponentially, the number of confirmed cases will also increase exponentially. The key evidence to look at is whether the number of positive cases is increasing at the same rate as the number of tests – and that answer is a resounding no. While tests have increased at a logarithmic rate, the increase in positive tests has followed a gentler curve, suggesting that the infection and lethality rates are lower than first anticipated.
One other note on testing: we have only been testing people showing symptoms. Yet the positive test rate is only about 15% of those tested for COVID-19. This is because what the media refers to as the “coronavirus” is actually a mutated form of the same virus that causes the common cold, multiple strains of influenza, SARS and MERS. Those are all corona viruses. As a result, the symptoms of COVID-19 fall into the same generalities as those other diseases: cough, fever, fatigue. That only feeds into the panic, especially as those are also symptoms of hay fever – and large swaths of the nation are entering spring allergy season.
For a doctor, the choice facing the nation is an easy one. They are worried about immediacy, and their immediate concern is to keep everyone alive and healthy. So recommending that everyone stay hunkered down in our houses and apartments is an easy choice. But for the rest of us, the choice is far from being simple. The president, and all 50 governors, have to weigh the importance of preserving lives now vs. the effects of leaving the economy in a downward spiral. How many people will end up dying from COVID-19 vs. how many people will die from starvation and other diseases of poverty if the economy slips into another massive depression? We can roughly extrapolate from available data that around 130,000 people will die from this disease. We cannot make even a haphazard guess about what the death toll from an economic depression that last months or even years might be, because while we know one is inevitable on our current course, we don’t know any of the particulars. We can’t. We’re not fortune tellers.
Without solid data, it is an impossible question to answer. Yet we’re all answering it, from the President to loudmouth Joey you normally meet at the corner tavern. The problem is, both of them – and everyone else – doesn’t really know, no matter what they tell you.
Will this virus be bad for the country? It already is. Will a deflated economy be bad for the country? It already is. But making everything worse is fear and panic. We can’t keep ourselves walled off forever, living in fear of everyone who sneezes. The federal government, between emergency fiscal expenditures and monetary expansion from the Federal Reserve, has already expanded national debt by nearly $8 trillion. That’s about 40% of last year’s GDP, and perhaps 65% of this year’s GDP. In short, that is an unsustainable degree of expenditure. We cannot afford to allow fear to panic us into cowardice, and we cannot afford to to allow fear to bankrupt the nation.
FDR once said “we have nothing to fear but fear itself.” It’s time for the panic to end, and for America to prove that FDR knew what he was talking about.