Currently there’s been 300,000 cases of coronavirus reported world-wide.
Now that every country is to varying degrees emulating China’s successful close-down strategy, the rate of new infections will soon begin to slow.
But let’s say the number actually rises as high as one million before, as in China, being successfully killed off by an absence of hosts.
One million means roughly one person out of every 8 thousand cops it.
And of those, 96% will sail through it in 3 to 6 days unscathed. Old and impaired people who catch it will mostly die.
The odds of copping coronavirus are thus highly remote, all the more so given the world-wide close-down preventing contagion and the virus’s survival. More to the point, the odds of dying from it are roughly one chance in 200,000 of the population.
In New Zealand’s case that’s about 25 fatalities, or, 5% of the annual flu deaths and roughly a twelfth of the annual drowning and road fatalities. To the ire of the Police we take those risks with a grain of salt.
What’s fascinating is weighing the public’s reaction to these remote chances against their response to the recent record $30 million or thereabouts Lotto prize.
In the days leading up to the draw stores selling Lotto tickets were mobbed. Yet the chance of winning were so remote as to defy even an atom of common sense, so the hysteria over the virus, despite the extreme odds, becomes explicable – namely illogical fear contagion.
ECONOMIC IMPACT
This is the serious destructive stuff which will adversely affect a huge number of our population.
Numerous small and a considerable number of larger businesses, will go broke.
The unemployment figures will surge. The business category most affected will be retailers and so-called hospitality, that is bars, hotels, the travel industry, cafes and the like.
With bank and state assistance most will climb off the canvas and within a year, have put it behind them. By mid 2021 we will be back with labour shortages and tourism will be recovering.
Most Western world governments say they will pick up a fair amount of the business losses which in New Zealand’s case will total billions.
Our government debt level is one of the lowest in the world thus its impact will be slight.
But there’s simply not enough money in the world to accommodate these global debt-raising intentions, thus a repeat of post 2008 beckons Quantitative easing, a euphemism for the printing press will re-emerge.
If normal economics apply such a flood of cash should ultimately lead to inflation and in its wake, soaring interest rates.
But it won’t, rather as before, after about 4-5 years there will be a shortage of sensible investment options, ergo soaring and irrational share-markets.
To all of this I would remind folk how bloody boring life would be without such turbulence. It’s why Germany has a fairly small tourist industry, it alone having achieved such a nirvana of prosperous common-sense daily life tedium.
But I’ll wager, within a year, the current copy-cat global reaction will be seen as a ridiculous and enormously costly gross over-reaction.
16 Comments
With respect, there is both sense and nonsense to untangle here.
This situation is one where doing nothing makes things worse and worse. A simplistic analogy would be driving straight towards a tree.
Our not hitting the brakes sooner has increased the cost in both lives and economic impact than it ever might have otherwise.
When we don’t hit the tree – anyone that says hitting the brakes was an ‘overreaction’ displays their abject non-reasoning.
You are correct about the Lotto odds, but the flaws in your comparisons are manifold, the asymmetry of outcome being the primary one for Lotto, and that singular risks can never be compared with systemic ones with two of the others.
An individual doesn’t make a tornado itself worse, nor do more and more people. A virus is different.
Standard Libertarians often don’t get how threats scale differently than how most think they do. A threat to an individual is often not a threat to the system (even though it can be useful to treat it like one), while what’s often not a threat to the individual may be a threat to the system (then becoming a threat to the individual). The transformation isn’t necessarily linear.
It’s a severe disease in that it seems to lie in a sweet spot of spreadability and lethality, but not so much as to be (for some) initially conspicuous.
Left to it’s own devices, the death toll is still enough at scale to make all the deaths in the world wars seem minor. Further waves also remain a possibility.
All that said – your analysis of economic depression strikes as valid (probably).
Also I’m not sure anyone would look at Germany over say the past 100 years and call it stable.
Switzerland on the other hand…
Sanity you say? Pearls before swine. All the Politicians are just listening to other politicians about “more control” Welcome to the democratic peoples republics of Australasia
I would be interested to hear your personal opinion of the effects of more future money printing and low interest rates. Surely there must be a point where there is a deflation of asset prices, in particular property.
On a bad day if 90% of the population contract Covid-19, the stats will look like this. Assume population of 4.5million, 90% means 4.05million get it. 80% of the population will be okay. 14% will be in bed for a couple of weeks and 5% die. The 5% will be those with troubled immune systems, i.e the over 70s (watch out Bob). This means 202,500 dead and this won’t happen imho. All that’s needed is to look after those with troubled immune systems. So why have opted to ‘kill the economy’. Our government has contracted Henny Penny Disease and we willing follow along. LONG LIVE THE ELDERLY and the very young and those with asthma – simply look after those with weak immune systems.
Having grossly failed to protect the borders and while continuing to do so the government is now on a crazed path to stop everything possible irrespective of risk.
This is bringing out the worst in some people and in government.
Without lockdown every western country is at best 1-3 weeks away from overwhelmed hospitals, after which 2-3% of 20-45’s die and 8-12% of over 60’s. Worse than Spanish Flu. The recession/depression will be dire, but likely less damaging than letting epidemic rage uncontrolled – with long term damage to economy through loss of 3-4 % of workforce (perhaps worse with widows/widowers having to stop working to look after kids)
No one knows what the true fatality rates are because the extent of infections is unknown with all the uncertainty on the upside of the infections and the downside of the fatality rates. Controlling borders properly and tracing and isolating contacts has been an opportunity missed and without it and changes of policy we are doomed to a long, devastating and futile lockdown.
Under uncertainty it pays evolutionarily to act in a decisive paranoid or conservative fashion. Never risk ruin (the Kelly criterion). New viruses are an exemplary case of this, which we know will continue to be an issue for the forseeable future, more so than ever under globalisation. This makes localised sovereignty of borders at multiple scales even more significant.
https://www.theguardian.com/commentisfree/2020/mar/25/uk-coronavirus-policy-scientific-dominic-cummings?CMP=share_btn_tw
The article ignores the likelihood that collapsing the economy will cost some. perhaps many,.people’s lives. It also ignores the fact that uncertainty changes and reduces with time and resources available increase if prompt action is taken. The real life options are much more complex than portrayed which is ironic given their claimed expertise.
Also the proposal has long been to lockdown for at most 5 weeks. It does require testing to ramp up drastically etc. and perhaps even repetition. But that poses the best balance of saving as much as possible, and buying time for better measures to develop, (like even widespread mask wearing). It’s always been best if we don’t wait for the government on things as by then it’s too late. Smaller scale autonomy is better.
Prompt action to minimise damage was always the call from the start, and more pertinent the less we knew. If you don’t know if a plant is poisonous, do you eat it? No. Do you eat it if you are dying of starvation? Maybe – at some point the answer becomes yes as the risk calculus changes. Perhaps you die either way by waiting too long?
Does damaging the economy by pausing it cause ‘perhaps’ more people to die than letting a virus spread to the degree it crushes the infrastructure and kills many people anyway? We all seem to agree – the earlier we acted the earlier we could have prevented both. Can we know picking the economy causes perhaps less death? Which is more important to us? Which is the raison d’etre of the state? Can you choose for someone else and make the spread worse so they might get sick? A healthy person wants many things, a sick person only one.
Another question a would be: why is society/the economy so fragile as to not have life saving redundancy built in case of emergency? Could it be different?
Everything becomes complex to the point of unknowability the longer we ponder the infinite dimensionality of it all. In practice one must make a decision under incomplete information which has been done.
You could always make the creative destruction argument.
Still, we are lucky this pandemic isn’t worse. ‘God’ forbid prions spread significantly to humans or equivalent.
Finally the author’s track records speak for themselves.
(Please ignore the double post)
I agree. The only country that could give an accurate indication is South Korea, who have kept the country open, but tested, tested, tested.
Also when have a government organised anything properly?
Do any of you guys who’ve commented here have any expertise in the areas Bob briefly covers off. For one, I don’t and I comment nonetheless so, if you wish, take my comments with a pinch of salt. The salt will be more valuable.
Try not to let ‘expertise’ bedazzle you. Stay humble, but always be learning. Try to come to your own conclusions from first principles and common sense.
Everyone seems to forget about Taiwans excellent performance in the Coronnavirus control.
Maybe its because of political reasons Taiwan is not a member of the UN (and by default WHO).
So their profile is hidden.
For your information. Taiwan’s response makes South Korean response look pitiful (IMHO)
Yes, it’s also one of the strongest evidence points in favour of mask wearing, which is nigh universal there.