COVID-19: An Existential Wakeup Call

I sit on my couch, amazed and slightly terrified. Two months ago I started tracking a small but exponentially growing outbreak in Wuhan China. One month ago – as the spread continued and experts warned that global spread was inexorable – I sold what stock I owned in preparation for the coming stock market collapse. Today my fever reads 100 degrees, my joints ache and I have a dry, painful cough. After years of going unvaccinated for the flu, I did the responsible thing this year and was vaccinated… these symptoms must be caused by something novel.

Tomorrow I’ll call the local hospital and enquire about a COVID-19 test. I know two other people who are showing symptoms much worse than my own. Both of them have already been denied a test on account of not having a high enough fever or severe enough symptoms. One of them is back at the office, working alongside my partner, coughing sporadically and hoping for the best. The other is a self quarantined coworker and friend, fortunately for all of us we can both work remotely. Given their experience I’m not optimistic that I’ll get a test kit. Given my mild-ish symptoms and the shortage of test kits in the US, maybe that’s for the best.

I gaze numbly as pundits debate the impact of the virus on CNBC. Yesterday President Trump announced a stimulus proposal including eliminating the payroll tax. Markets rallied nearly 5% on the news – I bought puts. I’ve repeatedly watch the President downplay the severity of this disease, overstate the confidence of containment in the US and reject or avoid the suggestion that we need increased testing. When asked about whether he would allow a cruise ship containing potentially infected US citizens to doc in California the President responded haltingly “I like our numbers where they are – and if they are allowed to dock – those numbers will go up.” He’s treating epidemiology like a popularity contest… I bought puts.

Markets are down roughly 16% from their highs just weeks ago. COVID-19 has eviscerated something like $10 trillion dollars in accumulated wealth in just 22 days. If you believe the experts, the worst of the damage from this virus is almost certainly yet to come. What will the markets look like when we actually start testing at scale and the US announces 1,000 new cases every day? Will I be the unlucky estimated 0.6% of my age demographic who doesn’t survive long enough to find out? Then again, these are only relevant questions if you believe the experts.

That’s a huge part of my frustration. We are a nation of experts. I’m a data scientist – an expert at understanding data and using it to make predictions about the world. My auto mechanic is an expert at fixing cars. My partner works at a biomedical firm where they are experts at designing implanted medical devices. We have cardiologists, investment bankers, pilots, dog trainers, actors, authors, video game designers, viral marketing specialists, etc., etc. The United States at this very moment may be the greatest conglomeration of experts in the history of humankind.

At the top of our pyramid of expertise sits one symbolic figure: the President of the United States of America. This is our nation’s de facto ‘Leadership Expert’. This person is the gatekeeper to all the collected expertise the US has at its disposal; a monumentally important and powerful position. The President and their staff decide when we collectively need to consult with subject matter experts, which experts we ought to trust and on which topics, whether or not the expert’s solutions should receive government funding or support, and the messaging to pass back from the experts to the American people.

This leadership expert role can work remarkably well when the President is reasoned and steady; even better when they are objectively wise and/or humble. The old adage “know what you don’t know” rings true: a good leader knows when the studied opinion of an expert is more appropriate than their own gut feel or intuition. I think about our current ‘Leadership Expert’ and let out a tired laugh – a dry cackle that quickly escalates into a painful hacking fit.

By any account, the US response to COVID-19 has been embarrassing. I’ve been told by our President in press conferences and planned announcements to “get back to work” and “keep traveling”. The ex-TV pundit he appointed Director of the United States National Economic Council Larry Kudlow suggested I buy stocks prior to the largest single-day point drop in the Dow Jones Industrial Average in the history of the stock market. I’ve been repeatedly told by the President that “the virus is contained” and “we are beating the virus” and “the risk is low”. Yesterday he ensured me that “a vaccine will come within the year” and “this is just a bad flu” and “it won’t survive the summer”. Amazingly, at one point I was also chastised for even believing COVID-19 was real – our premier expert tweeted out his reassurance that the entire situation was ‘Fake News’. All the while I’ve watched an actual expert on infectious diseases and pandemics, Dr. Anthony Fauchi, take a much less sanguine and more sober tone.

“The virus is contained – numbers are going down in fact!” Says Trump

“We haven’t been able to measure the spread because we haven’t had the necessary test kits until now. We are getting the test results back and the case counts have increased quite a bit. Be aware, as more tests results come back the case counts will continue to increase tomorrow, and the days after that…” Says Dr. Fauchi

A growing number of us don’t need the expertise of Dr. Fauchi to know what our labored breathing and aching joints have already made obvious: COVID-19 has been horribly mishandled. As a result, many Americans will likely die in the days to come. It didn’t have to be this way.

And COVID-19 isn’t even the largest threat to our continued prosperity. It’s just the most recent, the most poignant. By now we’re all painfully aware of climate change and the effects it’s having and projected to have on the only inhabitable ecosystem we have. All the experts have told us exactly how devastating its longer-term effects will be. The amount of accumulated wealth destroyed by climate change in the next 50 or 100 years is expected to make COVID-19 look forgettable by comparison. That is if you believe the experts.

Similarly, the pandemic of income inequality continues to rage in the United States. Experts of human economic history have made it clear how inequality of this magnitude tends to correct itself: revolution, war, destruction, and a leveling of those who currently sit atop the socioeconomic order.

Rationally self-interested holders of wealth today would do well to at least consider making an honest effort at understanding and addressing these long-term existential threats to our way of life. If not for concern of their fellow citizen then at least for their own self preservation.

Consider that these two existential threats are clear and obvious right now and have been for years. These dangers are at least as transparent as the threat of COVID-19, if slower moving. Yet, in the context of these looming concerns, the major policy moves of this President have included cutting taxes on corporations, expanding military and other non-social federal spending, reducing safety and environmental regulations across the country and exiting long-standing global trade agreements while disenfranchising longstanding allies. As a result we’ve seen an unprecedented stock market run, excellent job growth and a bountiful economic expansion… and now, 22 days into dealing with his first existential threat, almost all of the bounty that was accelerated by Trump’s extremely short-term approach to policy has spontaneously vaporized. Easy come, easy go.

Prior to Trump, Obama faced his own existential threat. The excesses in lending and housing markets that accumulated under Greenspans perpetual low-rate environment and financial deregulation eventually boiled over into the greatest financial shock of the last 80 years. The global banking system was on the verge of collapse. The complexity of the instruments involved in that period and, in many ways, the size of the threat they faced make the spread of COVID-19 look trivial. Obama did what expert leaders do – he deferred to his best people, his experts. He then went about supporting them in any way possible in order to bring about the best possible outcome for the American people over the longer term. TARP, the GM bailout, quantitative easing – none of these were easy ideas to stomach at the time. Obama’s respect for expertise in that moment almost certainly saved the United States and potentially the world from a prolonged and painful depression.

After the crisis had abated, America started growing again. But that growth was slow. The stock market did eventually make new all-time highs, but it took 5 long years. Industry leaders complained of over-regulation, hypersensitivity to environmental concerns slowing progress. Much of the growth came by way of increased globalization, technological advancement and industrialization, and at the cost of a dislocated rust-belt and an alienated electorate.

Then – still in the middle of an ongoing expansion – Trump took the reins of our country. He immediately defied the conventional wisdom. He slashed through trade agreements. He started trade wars, claiming they were “good and easy to win”. He praised dictators and autocrats and disparaged our longstanding allies. He made unprecedented mandates of the Federal Reserve for more expansionary policy to juice our national growth. He tweeted crazy nonsense, relentlessly, every single day. He trolled the left like a vindictive teenager and his supporters loved him for it. Despite record budget deficits Trump accosted the conservative mantle and perverted it. He simultaneously increased government spending and pushed through massive tax cuts, promising the short term boom would ultimately pay off. He was exactly what we all expected of him, including his supporters. He was reckless.

The economy indeed accelerated. Not nearly as interested in existential long-term threats like climate change as Obama, Trump made moves that unambiguously juiced our short-term growth. He slashed corporate taxes, wiped clean environmental regulations, removed the United States from the Paris Climate accord, cut or proposed to cut the budgets of other longer-term government projects – not the least of which was the Center for Disease Control, the department responsible for pandemic preparedness.

Maybe it worked? Instead of growing at 1-2% in Obama’s “weak” recovery, Trump’s economy grew at 2-4%. His supporters praised this as a clear testament to the efficacy of his strange mixture of nationalism and deficit spending with a very small and selective dash of laissez-faire policy. It grew 2-4%… until, of course, it didn’t. With the COVID-19 uncertainty hanging over the economy it’s unclear what sort of eventual growth rate the US economy will realize under Trump’s watch. I’m sure if you asked the President today he’d tell you GDP is going to be “beautiful”. But it is painfully clear to anyone who has been paying attention that a dash of preparedness and humility could have made whatever the numbers will ultimately be much, much better (or less bad). There’s no reason this crisis should be so out of hand in the greatest country on Earth. More important than the impact on American GDP – the arrogance and shortsightedness of this President is going to cost many unnecessary American lives.

It’s a valid question to ask – what amount of preparedness spending would have it have taken to prevent, say, 95% of the deaths we are going to see in the coming days and weeks? This crisis has made one truth painfully obvious: any one of these worst-case existential threats has the potential to undo decades of wealth accumulation. If COVID-19 cuts your wealth in half, what will be the economic impact of full-scale social upheaval and revolution? How about widespread rolling environmental catastrophe? Wouldn’t rationally interested investors today be wise to accept a more steady and maintainable growth rate, while allotting a bit more of our resources to the problems being identified by our experts? One thing is certain – slightly more progressive tax structure or more effectual social safety net is not going to kill 10’s of thousands of Americans. More stringent rules around carbon emissions aren’t going to destroy the very fabric of our country and end our way of life. If left unaddressed, unprecedented social inequality and man made climate change might.

Is Trump to blame for coronavirus outbreak? Absolutely not. On every count this was a Black Swan – the externality that catches everyone off-guard. Did he do some things right during this outbreak? I think so, yes. Grounding all flights as early as he did was against the advice of his closest advisors. The President’s early bans may have bought the United States another few weeks before the widespread contagion took hold. But nearly every decision and statement since that flight ban has been to the detriment of this country. Put simply – Trump never took the health and safety the average US citizen seriously until he realized it would affect his own barometer of self-worth: the stock market. By then it was already too late.

If nothing else, COVID-19 is a trial run. I’ve never enjoyed Trump’s childish antics and lack of civility – in my opinion that’s not how the most powerful person on the planet should act. But this time, it’s different. This time Trump’s incompetence has directly threatened my life and the lives of those I love. I truly believe that America is the greatest nation on Earth… so why does South Korea have drive-through coronavirus testing free for anyone, while my sick friends and I are being turned away from hospitals? All the while the President is re-affirming us with outright lies: “Everyone who wants to be tested can be tested.” I know people for whom this absolutely is not the case. My lungs are not ‘Fake News’. It’s patronizing. It’s infuriating. It’s dangerous.

The apparent fatality rate of this virus for a given nation is dramatically impacted by the number of tests: deaths are easier to spot than the milder cases require widespread testing to catch. In South Korea, perhaps the most advanced nation in terms of testing, they’ve detected 7,755 cases and have 60 deaths a fatality rate around 0.7%. I watched Trump boast about how contained the virus is when we had “only” had a few hundred cases and a few dozen deaths. What he failed to mention is that our realized fatality rate has been the highest in the world at almost 4%. The reason for this terrifying fatality rate is clear: we aren’t testing mild or asymptomatic cases. We are being out-classed by South Korea. In the US today your most reliable way to have your COVID-19 case included in the official government counts is to get extremely sick or die. It didn’t have to be this way.

The estimate as of this writing is that there are 1,010 cases in the United States and 30 confirmed deaths. My painful cracking cough suggests the true numbers are much, much higher.