COVID-19

Ruin and Recovery

by

A brokerage note I received recently included the following quote:

What has so often excited wonder, is the great rapidity with which countries recover from a state of devastation, the disappearance in a short time, of all traces of mischief done by earthquakes, floods, hurricanes, and the ravages of war. An enemy lays waste a country by fire and sword, and destroys or carries away nearly all the moveable wealth existing in it: all the inhabitants are ruined, and yet in a few years after, everything is much as it was before.

John Stuart Mill, Principles of Political Economy, 1848

Questions for discussion:

–How well has Mill’s assertion held up over the 170 years since he wrote the above?

–Will American recovery from the Coronavirus follow Mill’s pattern, or is there reason to think that it will be different this time, and not in a good way?

It is time to start the economy again.

by

I have previously described the COVID 19 virus, which is also referred to as Wuhan virus, to the annoyance of the China friendly US Media. The consequences for the US economy have been severe. The most affected states, New York, California, Illinois and Washington, have virtually shut down their population. Arizona is less affected with 78 positives cases as of today, and no deaths.

Italy and China have had the most deaths. There are a number of factors that probably affect these cases. China is notorious for air pollution and smoking, especially men smoking. There has been a dearth, so far, of listing comorbidities but age has been a major one.

One study lists mortality at age 80+ at 15%. The overall death rate in China was listed at 2.3%, which may reflect smoking and air pollution. South Korea, which has had a big spike as testing progressed much more rapidly than in the US, has a case mortality of less than 1%

South Korea has the dubious distinction of suffering the second-highest number of Covid-19 infections after China – but can also boast the lowest death ratio among countries with significant numbers of cases.

According to the WHO on March 6, the crude mortality ratio for Covid-19 – that is, the number of reported deaths divided by the number of reported cases – is between 3-4%. In Korea, as of March 9, that figure was a mere 0.7%.

AS US testing finally gets going, after the FDA and CDC delayed matters for a month, we will see a big spike in number of cases but, I am convinced, a big drop in mortality rate.

Telephone consulting services, drive-through test centers and thermal cameras – which, set up in buildings and public places to detect fever, swiftly came online. South Korea has undertaken approximately 190,000 tests thus far, according to KCDC Deputy Director General Kwon Jun-wook, and has the capacity to undertake 20,000 per day. Turnaround times are six-24 hours.

Tests are highly affordable. “The test kit is about $130, and about half is covered by insurance the other half by individual,” Kwon said. Those who test positive get the test free, “So there is no reason for suspected cases to hide their symptoms,” he said.

We should be doing the same.

At the same time, we are risking severe economic damage to the country by shutting down business activity. I believe that much of the drastic steps taken by governors, especially in New York and California, is unnecessary. High density cities like New York City and Chicago may have more reason to fear spread of the virus. Most of the country, a source of annoyance to left wing politicians, is of low population density.

Read more

The Far Limit

by

With an effort, I wrench my attention from contemplating local fall-out from the Wuhan coronavirus, or as an unknown wit called it the ‘Kung Flu’. The grocery stores we favor are pretty well picked over by mid-day, in spite of closing from 8 PM to 8AM to restock, the gym has closed, gatherings of more than ten are strongly advised against, and just about every local market or book festival that we had considered participating in has been cancelled or postponed until summer or even later – when, presumably, either the medical wizards will have a handle on the Kung Flu, or people will stop panicking over it.

Read more

The Media-Focus Problem

by

It’s well understood that media entities like to focus on the negative–‘if it bleeds, it leads.’  But there’s also another media behavior problem worth noticing…

Cable TV networks, especially, tend to focus obsessively on whatever the hottest issue is at the moment, and absolutely beat it to death to the exclusion of any attention to *other* important things going on…until one of those other things get so important and so bad that it displaces the previous obsession and the cycle repeats.  To borrow a term from the field of computer operating systems, you could think of it is a single-thread way to approach the world. And in the field of combat aviation, there is a phrase, Target Fixation, to describe the situation where a pilot is so focused on his target that he flies into a mountain or does something equally disastrous.

How to fix US empty store shelves in 48 hours

by

It’s never a pleasant thing to stand up, alone, in the face of a national mania and provide an unpleasant solution. I’ve been putting it off for some time.

Finally, I’ve had it. Nobody who does this for a living seems to be willing to step up to the plate so I guess I’m stuck doing the job. The free-market solution to excess demand over supply is to raise prices. We are not raising prices to end the empty shelves because the government in various jurisdictions has made it illegal to raise prices in the face of an emergency.

Nobody has had the courage to say this. Everyone who has taken a basic economics course in the US knows this. This lack of even discussion on how to fix the empty shelf problem is deeply weird and nobody is talking about the odd silence either.

Update: Kudos to John Stossel who did address this issue (from a different perspective) a few hours prior to my publishing this. His article is here.