Financial advisors recommend people have a six-month emergency fund. But many businesses faced bankruptcy after losing a few weeks of sales. This is less about poor preparation and more about revealing the tightrope walk of business operations.
Some of the lowest-paid workers are the most essential.
Garbage collectors, janitors, grocery store clerks, food delivery, truck drivers, farmers, daycare providers – with few exceptions (doctors) the jobs that are most vital during a pandemic are ones that got little respect before it.
The two most important economic stories are the size of the business collapse and the magnitude of the stimulus.
It’s easy to focus on the former because it’s personal and devastating while ignoring the latter because it’s political and hard to contextualize. But they are equally huge. Despite 15% unemployment, Goldman Sachs estimates household income will be higher in Q2 2020 than it was in Q2 2019, largely because of stimulus.
No business model or investing strategy is proven until it survives a calamity.
Even then, nothing’s guaranteed. I don’t think we’ll hear the words “recession proof” after this.
Done right, forecasting is a delicate balance of probabilities. But people want certainty, especially when the stakes are high.
The people who make forecasting models probably have less faith in their accuracy than those who read them, if only because things like confidence intervals are rarely discussed in the media.
Opposite outcomes currently seem equally plausible. So whatever happens to the economy it will look obvious in hindsight.
If we collapse into years-long depression people will say, “Of course we did. 20 million people lost their jobs in one month. What did you expect?” If we quickly develop a vaccine and optimism returns people will say, “Of course we figured this out. Every pharmaceutical company in the world was focused on defeating one virus. What did you expect?”
Some people intuitively grasp the dangers of leverage.
Others learn it the hard way. The cost of debt is the interest rate plus the requirement that at various points in the future (when interest payments are due and when the debt matures) you will be in control of your cash flow. The former is easy to calculate; the latter can be impossible.
There are no atheists in foxholes and no deficit hawks in meltdowns.
The $2.2 trillion CARES Act passed the senate 96-0. People suffering from sudden, unexpected catastrophe are likely to adopt views they previously thought unthinkable.
Catastrophe can be larger than you ever imagined but adaptation can be bigger than you ever considered.
Two months ago, the idea of shutting down most businesses would have seemed impossible. The idea that many could continue operating – even thrive – with every employee working from home would have sounded equally ludicrous.
History is only interesting because nothing is inevitable.
The biggest lesson from the last three months is that whatever your view of the future is, it’s probably wrong. Things change in ways people can’t imagine at times they never considered.
No-one can predict the future, other than to be sure things will change. Here are 4 developments we anticipate will occur following the disturbing government suppression to which we have been subjected during the coronavirus panic.
The majority will completely stop listening to and believing in government.
In the coronavirus pandemic crisis, we have been ill-advised and misled, and confined and suppressed and coerced and controlled. By the time the virus panic is over, millions of economic lives will have been destroyed, with collateral damage to mental and physical health, friendships, families and other relationships, institutions, and business loyalties. Our faith in many things will have been damaged. One of those things is government.
Faith is an irrational belief in the truth of a proposition irrespective of evidence to the contrary. It is not boundless or endless. The more the believer’s faith is contradicted by reality, the greater the test. Government – using the term to mean the institution, irrespective of which political party is at the helm at any point in time – has asked us to believe that they are justified in shutting down the economy on the basis of a wildly erratic interpretation of wildly erratic data. It has asked us to pledge obedience to mad scientists posing as experts. It has asked us to accept draconian limitations on our movement, our socializing, our working and earning a living and our freedoms in general. It has threatened military action and legal action.
It’s hard to discern a motive for this destruction. Probably, governments prefer greater control over a diminished system than less control over a thriving population.
But it seems rational that intelligent people will now cease to believe a single utterance that comes from government, whether the executive, legislative or judicial branch. That they could mislead so deliberately as to drive a highly productive and highly civilized populace into depression and dysfunction must be viewed as shocking. Evil is a word that’s hard to use with accuracy, but it may fit.
The consequences of a loss of faith are impossible to predict. But change in the arrangements of the society and the polity are inevitable. Loss of faith in the dominant and hegemonic Catholic Papacy centuries ago led to the Reformation and a cascade of positive, civilization-advancing changes. Perhaps we can anticipate similar breakout progress when the people sever the cord of faith binding them to government.
We’ll all stop believing in data and models.
A central feature of the pandemic phenomenon has been the prominent role of data, models, and modelers. There is an increasing modern pretense that there is no limit to the amount and type of data that can be collected to shed light on wicked problems. Once collected, the data can be processed to identify patterns and trends. Once processed, it can be plugged into so-called models, riddled with assumptions about the unknown and the unknowable, and these models then claim to predict the future.
Our faith in these models knows no bounds. We believe we can predict how many coronavirus deaths there will be 10 days from now. We believe we can predict the warming of the planet’s atmosphere 10 years from now. We believe we can predict the extinction of species and the rate of growth of the economy.
But, of course, we can’t. And the reason is well-known, albeit ignored or suppressed. The quantification principle of modeling does not apply in human behavior. Every human is different, every individual reacts differently to changes in the environment and context, everyone makes their own arrangements, every value judgment is subjective, emotional, idiosyncratic and unpredictable. Value judgments precede behavior, and so behavior is equally unpredictable. Human populations are not subject to modeling.
Exacerbating the problem, the models are voracious for data – “big data” is preferred, but not necessarily good data or relevant data or accurate data. In the coronavirus panic, we do not know how many people are infected with the disease, or how communicable it is. We do not even know the death statistics, since identifying COVID-19 as a notifiable disease results in people who died with conditions that included COVID-19 being recorded as dying of COVID-19. In every single instance, that piece of data may or may not be accurate. Or, as we used to say, truthful. The projections of the models are worthless at best, misleading at worst, and provide the fuel for government misbehavior.
The credibility of models and modelers has taken a fatal blow.
We will start to press harder for the dismantling of regulation, and reverse its hitherto unstoppable growth.
A telling observation about government behavior in the Coronavirus crisis is that, at the same time as imposing their draconian new restrictions, they are finding the need to rescind their previous draconian restrictions, those given the name of regulation. For example, it is regulation that limits the number of firms that can produce masks and ventilators. But the government’s panic pronouncements increase the demand for masks and ventilators. Government belatedly recognizes that it is its own regulatory restrictions that are causing the bottleneck, and increasing anxiety among the populace. Since the last thing they can accept is social disruption and disobedience, they quickly relax the regulations to open the bottleneck again.
This realization that regulation is anti-productive, restrictive and damaging may be enlightening, at least to the governed if not to the government bureaucrats and regulators. We can expect a surge of anti-regulation sentiment and protests, and a welling up of support for anti-regulation activists.
We’ll abandon cities.
Governments and politicians love cities: concentrated locations of regulation, control and surveillance. Housing control, wage control, zoning control, educational control, health control, and mobility control are all concentrated and exaggerated in cities.
But cities have turned out to be critical culprits in the pandemic. Close living quarters, cramped mass transit, teeming office buildings and apartment buildings, crowded sports and concert venues, and poor sanitation combine to create virological time bombs that are now exploding.
Smart people will start making better trade-offs. Perhaps more will move to the greater separation afforded by suburbs, working from home or commuting solo despite the urging of urban planners to crowd into mass transit. Perhaps apartment buildings and their crowded, virologically suspect elevators will no longer be so attractive. Perhaps more people will seek jobs – or start companies – that don’t require an urban anchor. Perhaps many will permanently abandon live sports and concerts in favor of digital remote participation that, quite possibly, will enhance the experience rather than diminish it.
Happily, we can expect the decline of the city as a prerequisite for social and economic interaction.
Andrew Cuomo, governor of New York, is moving up in the betting odds for getting the Democratic presidential nomination, even though he is not running. The reason is that binge-watching newshounds have noticed something about his comportment during this crisis. He seems just slightly struggling to know what’s true. Sometimes he is even honest.
Consider this. On Thursday March 26, Cuomo dared question the orthodoxy that has wrecked countless businesses and lives. He revealed what actual experts are saying quietly all over the world but had yet not been discussed openly in the endless public-relations spin broadcast all day and night.
“If you rethought that or had time to analyze that public health strategy, I don’t know that you would say quarantine everyone. I don’t even know that that was the best public health policy. Young people then quarantined with older people was probably not the best public health strategy because the younger people could have been exposing the older people to an infection. “
Further:
“What we did was we closed everything down. That was our public health strategy. Just close everything, all businesses, old workers, young people, old people, short people, tall people. Every school closed, everything.”
It’s true that anyone following the unfolding fiasco and the gradually emerging data behind it knows that Cuomo is right. The response has not been modern and scientific. It has been medieval and mystical. The theory behind the policy has been nothing but a panicked cry of run and hide before the noxious gas gets you. Lacking reliable data – which is the fault of the CDC and FDA – we replaced knowledge with power.
In the end, this fiasco is an epistemic crisis. As Ed Yong has written in a beautifully detailed article for The Atlantic, “The testing fiasco was the original sin of America’s pandemic failure, the single flaw that undermined every other countermeasure.” Even the wide acceptance of social distancing as a norm, however much it helps curb the spread, presumes this absence of knowledge. Stay away from everyone as much as possible: a slogan that reveals how little we know.
And yet lacking that knowledge, the politicians, cheered on by the media, acted in ways that have fundamentally wrecked life as we knew it, all in the course of a couple of weeks.
The massive knowledge gap was filled by a cascade of predictive models made possible by modern statistical packages readily available by subscription to any member of the clerisy. If this, and this, and this, and if this and this and this, then ENTER. Out pops what appears to be a precise presentation of our future under the following conditions, along with an overlay of embedded cause-and-effect assumptions about certain policies followed or not followed. Day after day we were bombarded with such predictions, and we paid close attention because we had little in the way of actual on-the-ground facts that have been available to us in previous disease panics.
It then became the perfect storm. Risk-averse politicians deciding to do something, anything, to avoid blame. Bureaucrats doing what they do best, which is telling people no, you cannot innovate, you cannot produce, you cannot distribute. Local tyrants stopping price gouging and therefore preventing the price system from working. A howling media famished for eyeballs, ears, and clicks. A public panicked about disease and death. An egregious dividing of people into essential and nonessential. Policy snares, tangles, missed opportunities all around.
The cacophony of information chaos has been palpable, unbearable.
All the while, a few knowledgeable experts have been trying their best to weigh in and get some slight attention for rationality. My heart, in particular, goes out to the esteemed Professor John Ioannidis who has been exposing fake science based on bad data his entire life and has been previously celebrated for doing so. He writes as often as he can, while still trying to be as precise and accurate as he can. Apparently such high-end people have a private email list in which they share observations and data, while doing their best to bring calm while civilization is falling apart.
At the moment, we are enacting extremely severe measures in an effort to do something. However, we have very little evidence-based data on how to guide our next steps. We really don’t know where we are, where we are heading, whether our measures are effective, or if we need to modify them. There is a possibility that many of our aggressive measures could be doing more harm than good, especially if they are to be maintained in the long term. There will be major consequences in terms of lives lost, major disruptions to the economy, to the society, and to our civilization.
At this juncture we need to act swiftly. At the same time, we need to act equally swiftly to collect unbiased data that will tell us how many people are infected, the chances that someone who is infected will have a serious outcome and die, how the epidemic is evolving in different settings and places around the world, and what difference we are making with the measures that we’re taking. This information can make a huge difference and there is a lot that can go wrong if we don’t have the right data.
This has been an acute situation. At the same time, collecting reliable data should not take time and should not halt our decision-making process. Getting information on representative samples of the population is very easy. It has been done in Iceland, where they have a cohort covering most of the national population looking at samples that have been provided. They see that they have an infection rate of 1.0 per cent, and up until now only two people have died. So, out of the 3,500 infected people in Iceland there have been two deaths, which corresponds to an infection fatality rate lower than the common flu. Of course, some people may be infected later, but nevertheless, these estimates would be very different compared with the original claims of case fatality rates of 3.4 per cent that were circulated.
At the same time, we have other pieces of evidence that the number of people who are infected is much larger compared with the number of cases we have documented. In most places, with few exceptions around the world, we are just testing people who have substantial symptoms who have come to seek health care or even to be hospitalized. These are just the tip of the iceberg. The Iceland experience and other data from Rome and Italy where entire city populations were tested shows that the vast majority of people are either completely asymptomatic or mildly symptomatic in ways that you would not be able to differentiate from the common cold or common flu. This information makes a huge difference while we are proceeding with aggressive measures of social distancing and lockdowns that may have tremendous repercussions, especially in the long term.
As the song says, stop making sense.
I write on Saturday morning March 28, and right now there are two contrary strains about to collide. On the one hand, you have scientists reducing their death-rate predictions further and further, lopping off zeros by the day. On the other hand, this is accompanied by appalling levels of despotism, even to the point of National Guard checkpoints at state borders and restrictionson what you can buy even at “essential” stores. This gigantic gap between emerging professional medical consensus and appalling policy ignorance is revealing as never before the practical impossibility of scientific public policy.
Then you have the cascade of unintentional and unexpected outcomes of the rush to coerce. It began with Trump’s disastrous block on flights from Europe that sent millions scrambling for tickets and led to an unspeakable crush of people standing shoulder-to-shoulder at our nations’ airports, contradicting the demand that people social distance just when the virus was revealing itself as highly contagious. The very opposite of intended results!
That’s just the beginning. I doubt seriously that the political class in this country, as low a regard I have it, set out to destroy all that we call civilized life, instantly generating millions of unemployed workers and bankrupt businesses all around, not to mention a pandemic of utter hopelessness on the part of vast swaths of the world’s population. Still, this is what they have managed to achieve. This is what their pretense of knowledge – as opposed to actual wisdom – has unleashed on the world, with incalculable human cost.
As for economics, are we talking recession? Depression? Those words indicate cyclical changes in business conditions. My friend Gene Epstein suggests another term for what we are going through. The Great Suppression. There will be months, years, and decades in which to more clearly observe the countless ways in which the supressors piled error upon error, blockage upon blockage, to add to the grotesquery.
What truly should inspire us all right now are the grocers, pharmacists, truck drivers, manufacturers, doctors and nurses, construction workers, restaurant workers, service station attendants, webmasters, volunteers of all sorts, philanthropists, and specialists in a huge variety of essential professions who keep life functioning more or less. And let us not forget the “unessential” people (it’s an incorrect and vicious term) who have innovated ways around the Great Suppression to continue to serve others, keep the rent being paid, and food on their tables. They are the means of salvation out of this mess.
The market, hobbled and bludgeoned, still loves you.
As for the politicians, Andrew Cuomo has admitted some of the error. In a much-welcome change, he has even deregulated medical services. There’s just a hint of humility and humanity embedded in these statements and actions. We need more of that, vastly more, if only to contribute to calming things down long enough to gain some perspective, and, hopefully, some eventual realization that in the “land of the free and the home of the brave” a virus should be regarded as a disease to mitigate and cure, not an excuse to bludgeon life on earth as we know it.
It wasn’t long ago, just in recent days, in fact, that we were being told the coronavirus was going to kill more than 2 million Americans. But some researchers are indicating the forecasts of doom were driven by faulty models.
What then, are we supposed to make of the models that have been fueling the global warming hysteria?
The forecast used to predict 2.2 million U.S. deaths and 510,00 deaths in Great Britain was produced by Imperial College in London. It is “the epidemiological modeling which has informed policymaking in the United Kingdom and other countries in recent weeks.”
OK, but is the information reliable? Epidemiologist Sunetra Gupta is doubtful.
“I am surprised that there has been such unqualified acceptance of the Imperial model,” he said in the Financial Times.
Gupta’s team of researchers at Oxford believe both the hospitalization and mortality rates are much lower than the worst estimates, and immunity is more widespread than previously thought.
The Wall Street Journal has published an op-ed from professors of medicine at Stanford who said “projections of the death toll” reaching 2 million to 4 millon “could plausibly be orders of magnitude too high.” They believe “epidemiological modelers haven’t adequately adapted their estimates to account for” a number of important factors.
We can’t say for sure which model has it right. Will deaths be in the millions? Or will coronavirus be less lethal than the seasonal flu?
But we can say that at least one of the models is wrong.
So what does this tell us about the climate models that officials keep telling us are evidence that man is overheating his only planet?
The lesson is that we shouldn’t put our full trust in the global warming alarmists’ claims. But then independent thinkers have known for some time the climate models are far from perfect:
Six years ago, Reason’s Ronald Bailey noted that “most temperature records show that since 1998 the models and observed average global temperatures have parted ways. The temperatures in the models continue to rise, while the real climate has refused to warm up much during the last 15 years.
In 2017, Bailey reported that, according to a “fascinating new study” in Nature Geoscience, “climate computer model projections of future man-made warming due to human emissions of carbon dioxide are running too hot.”
Last year, John Christy, a professor of atmospheric science and director of the Earth System Science Center at the University of Alabama in Hunstville, told the British Parliament “an early look at some of the latest generation of climate models reveals they are predicting even faster warming. This is simply not credible.”
Also last year, author Guy Sorman wrote in City Journal the models used by United Nations scientists cannot “explain why the climate suddenly cooled between 1950 and 1970, giving rise to widespread warnings about the onset of a new ice age.”
Christy’s university colleague Roy Spencer, a former NASA climate scientist, says “global warming projections have a large element of faith programmed into them” because “we have no idea how much warming” is caused by carbon dioxide, the greenhouse gas the political left has chosen to vilify.
A little more than a year ago, climate researcher Patrick J. Michaels noted the authors of a paper published in Nature Climate Change “show that the aggregate models are making huge errors in three of the places on earth that are critical to our understanding of climate.”
Despite the healthy skepticism from scientists who have been studying the climate for decades and have held prominent academic positions, the Democrat-media powered narrative never sleeps. But that’s what we expect from those who are ever searching for a crisis to take advantage of.
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