Category Archives: Financial Implications

We Need to Change Our COVID-19 Strategy

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We would like to think that we can eliminate COVID-19, but doing so is far from certain. The medical system has not been successful in eliminating HIV/AIDS or influenza; the situation with COVID-19 may be similar.

We are discovering that people with COVID-19 are extremely hard to identify because a significant share of infections are very mild or completely without symptoms. Testing everyone to find the huge number of hidden cases cannot possibly work worldwide. As long as there is hidden COVID-19 elsewhere in the world, the benefit of identifying everyone with the illness in a particular area is limited. The disease simply bounces back, as soon as there is a reduction in containment efforts.

Figure 1. One-week average new confirmed COVID-19 cases in Israel, Spain, Belgium and Netherlands. Chart made using data as of August 8, 2020 using an Interactive Visualization available at https://91-divoc.com/pages/covid-visualization/ based on Johns Hopkins University CSSE database.

We are also discovering that efforts to contain what is essentially a hidden illness are very damaging to the world economy. Shutdowns in particular lead to many unemployed people and riots. Social distancing requirements can make investments unprofitable. Cutting off air flights leads to a huge loss of tourism and leaves farmers with the problem of how to get their fruit and vegetable crops picked without migrant workers. If COVID-19 is very widespread, contact tracing simply becomes an exercise in frustration.

Trying to identify the many asymptomatic carriers of COVID-19 is surprisingly difficult. The cost is far higher than the cost of the testing devices.

At some point, we need to start lowering expectations regarding what can be done. The economy can protect a few members, but not everyone. Instead, emphasis should be on strengthening people’s immune systems. Surprisingly, there seems to be quite a bit that can be done. Higher vitamin D levels seem to be associated with fewer and less severe cases. Better diet, with more fruits and vegetables, is also likely to be helpful from an immunity point of view. Strangely enough, more close social contacts may also be helpful.

In the remainder of this post, I will explain a few pieces of the COVID-19 problem, together with my ideas for modifications to our current strategy.

Recent News About COVID-19 Has Been Disturbingly Bad

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COVID-19 and the economy: Where do we go from here?

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The COVID-19 story keeps developing. At first, everyone listened to epidemiologists telling us that a great deal of social distancing, and even the closing down of economies, would be helpful. After trying these things, we ended up with a huge number of people out of work and protests everywhere. We discovered the models that were provided were not very predictive. We are also finding that a V-shaped recovery is not possible.

Now, we need to figure out what actions to take next. How vigorously should we be fighting COVID-19? The story is more complex than most people understand. These are some of the issues I see:

[1] The share of COVID-19 cases that can be expected to end in death seems to be much lower than most people expect. Continue reading →

Increased Violence Reflects an Energy Problem

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Why are we seeing so much violence recently? One explanation is that people are sympathizing with those in the Minneapolis area who are upset at the death of George Floyd. They believe that a white cop used excessive force in subduing Floyd, leading to his death.

I believe that there is a much deeper story involved. As I wrote in my recent post, Understanding Our Pandemic – Economy Predicament, the problem we are facing is too many people relative to resources, particularly energy resources. This leads to a condition sometimes referred to as “overshoot and collapse.” The economy grows for a while, may stabilize for a time, and then heads in a downward direction, essentially because energy consumption per capita falls too low.

Strangely enough, this energy crisis looks like a crisis of affordability. The young and the poor, especially, cannot afford to buy goods and services that they need, such as a home in which to raise their children and a vehicle to drive. Trying to do so leaves them with excessive debt. If the affordability problem changes for the worse, the young and the poor are likely to protest. In fact, these protests may become violent. 

The pandemic tends to make the affordability problem worse for minorities and young people because they are disproportionately affected by job losses associated with lockdowns. In many cases, the poor catch COVID-19 more frequently because they live and/or work in crowded conditions where the disease spreads easily. In the US, blacks seem to be especially hard hit, both by COVID-19 and through the loss of jobs. These issues, plus the availability of guns, makes the situation particularly explosive in the US.

Let me explain these issues further.

[1] Energy is required for all aspects of the economy.

Continue reading →

Understanding Our Pandemic – Economy Predicament

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The world’s number one problem today is that the world’s population is too large for its resource base. Some people have called this situation overshoot. The world economy is ripe for a major change, such as the current pandemic, to bring the situation into balance. The change doesn’t necessarily come from the coronavirus itself. Instead, it is likely to come from the whole chain reaction that has been started by the coronavirus and the response of governments around the world to the coronavirus.

Let me explain more about what is happening.

[1] The world economy is reaching Limits to Growth, as described in the book with a similar title.

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COVID-19 and oil at $1: Is there a way forward?

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Many people are concerned today with the low price of oil. Others are concerned about slowing or stopping COVID-19. Is there any way forward?

I gave a few hints regarding what is ahead in my last post, Economies won’t be able to recover after shutdowns. We live in a world with a self-organizing economy, made up of components such as businesses, customers, governments and interest rates. Our basic problem is a finite world problem. World population has outgrown its resource base.

Some sort of economy might work with the current resource base, but not the present economy. The COVID-19 crisis and the lockdowns used to try to contain the crisis push the economy farther along the route toward collapse. In this post, I suggest the possibility that some core parts of the world economy might temporarily be saved if they can be made to operate fairly independently of each other.

Let’s look at some parts of the problem:

[1] The world economy works like a pump. Continue reading →