The 2016 election represented a rejection by the American people of both parties as it chose a non-politician, reality TV host — who was not even trying that hard to win — for president.
The policy response to the COVID-19 virus reveals that the entrenched establishment failed to glean one of the most important lessons from Trump’s victory in 2016, which was that millions of Americans felt they had not participated in the Fed-fueled Bull market, had been marginalized by globalization and felt ignored by their representatives. And now, the response to a virus which spread easier due to a rise in globalization is a policy that will cripple those whose lives have been most negatively impacted by…globalization.
Placing some form of shelter-in-place at the state or federal level for three of four Americans for one (but maybe 3) months coupled with quickly providing $4 trillion (monetary) and $2 trillion (fiscal) of stimulus has been praised by just about everyone. At least, everyone on TV and photo posting sites.
The problem with the policy, however, is that we have no idea how many Americans have been infected, infected and recovered or died as a result of Covid-19. None. Meanwhile, governors nationwide are in an escalating game of one-upmanship for who can more severely strengthen lockdown measures and extend their duration. Lost in all this is that these policy measures could ultimately have economic and human repercussions far more serious than the virus itself.
The $6 trillion stimulus package presented a once-in-a-lifetime opportunity not seen since 2009, buoyed markets and helped people with market exposure to exhale. Shelter-in-place has caused differing levels of annoyance for employed professionals who had to download Zoom, re-configure their work day and carve out time for walks where those with kids ponder how teachers pull it off every day. But it has not dramatically changed their lives.
For those in the service industry, hospitality industry, what remains of the middle class and all the working poor, it represents a potential human catastrophe. And while the stimulus package is going to send them some cash too, they’ve also been told it will be at least a month, maybe three or four, before they can try to get their jobs back. If their jobs come back.
Shelter-in-place for “at least” another month will cause pockets of reflexive pain that do not appear to have been considered. It promises that the 114,000 homeless kids in New York City and at least 200,000 homeless kids in California cannot rely on the only two (school) meals they are sure to get every weekday until at least May, but maybe not until next Fall. It promises that stimulus checks would have to last months, not weeks, for the 40% of Americans with less than $400 in savings.
When considered against saving millions, or even hundreds of thousands of lives, these containment measures are acceptable, even welcomed. But what if that math is based on deeply flawed assumptions?
If the Stanford Health Policy’s letter-to-the-editor in the WSJ is anything close to accurate, a prolonged, multi-month shelter-in-place response for a virus that has likely been here since November and potentially has the same (or lower) mortality rate as the flu will crush tens of millions in order to save…it is not clear how many.
The problem is we don’t know if Stanford is right (the virus has probably already spread and with a very low mortality rate), or if Dr. Anthony Fauci is right (hundreds of thousands are going to die, best case), because we still can’t test any seemingly healthy people and are only testing really sick people (for all of March we didn’t have enough test kits to test many, many people exhibiting symptoms). We still can’t test healthy people for antibodies, which would indicate if a person has already recovered from the virus and could re-assimilate into society.
Virus containment policies – at both state and federal levels – are still being informed by a combination of political and health care specialists whose advice assumes that the COVID-19 infections and fatalities in the US did not begin in earnest until March.
The Johns Hopkins University and Medicine Center is often cited as a source for the expert predictions that said Covid-19 would take millions (initial prediction), or hundreds of thousands of lives (March 30 consensus prediction). Johns Hopkins tallies 98 total – cumulative – infection cases from January 1 to March 1, 2020. Nobody advising policy makers knows if 100 or 100 million people in the United States contracted this virus before March 1. This fact is not disputed. The virus was not being tested, much less reported, until late February.
Given the highly contagious nature of the virus, the flu-like symptoms for most who contract it and the completely asymptomatic experience for many infected, it is certainly possible the bigger, crazy number of people already infected by March 1 – 100 million – is a closer guess than the smaller number, 98. We still have no idea.
It is well documented that COVID-19 can survive on plastic and stainless steel surfaces for 72 hours, but what has not been well documented is how many thousands or hundreds of thousands of people traveled from mainland China and Western Europe, in and out of JFK, EWR, LAX, SFO, ORD, from November through February, and then took public transportation from the airport into those city centers.
No analysis has been done to delineate fatalities during that same period that were potentially wrongly classified as “flu with complications from diabetes, obesity, hypertension, cancer (or cancer survivor), or pre-existing respiratory conditions.” This is how COVID-19 is being classified today for the bulk of the virus related fatalities, with the switching out of the word “Flu” for “COVID-19.”
The initial business implications of the response are quite good because fueling our capital markets with Federal balance sheet is a skill with which America has excelled, across multiple administrations, over the last 11 years.
During the last 11 years, however, our country has not had the same success in building up the middle and lower classes. These groups remain at-risk, as is evidenced by the 3.3 million marginal workforce members who were so easily dismissed when lockdowns were implemented. States that saw a 2,000%+ increase in unemployment in March include Pennsylvania, Ohio and Michigan, while Wisconsin and Nevada all saw a 1,200%+ increase. With the exception of Nevada, where the virus response has been uniquely damaging, each of these states shockingly or overwhelmingly voted against both established parties in 2016.
The president’s “back to work by Easter” declaration last week enraged all but one cable news channel, virtually every media publication and all the medical experts (even his own) who seem to be solely focused on preventing the spread of COVID-19 and less so on the broader implications of the policy response. But 3.3 million people heard him talking to them. Those baffled by the president’s recent increase in approval ratings – the highest of his presidency – seem to be the same ones who can’t understand why he won in 2016.
The rage over “back to work” was because it would undo all the good that shelter-in-place had done to flatten the curve. But we don’t really know if that is true, because we don’t really know how many have had the virus, or recovered from it, or died from it.
Current policies all still rest on a foundation that offers no credible guess as to the actual infection or casualty count of Covid-19 in America since the start of 2020. In the end, the long term economic and human implications of this error, much like the virus itself, may be recognized too late to prevent the severe damage they cause.
Joe Voboril is the co-founder and managing partner of Farvahar Partners.