A market guide to whom it may concern
Clearly each country and region has their unique set of requirements and challenges facing the current pandemic. The argument is, there is a core set of ideas which are relevant throughout the board. A set of common denominators. This article will explore some of those market and economic aspects.
Important note, medical advise by leading institutions should be followed. Here is a link to the CDC website: https://www.cdc.gov/coronavirus/2019-ncov/index.html
It is important to assume all presented work here be in accordance with those indications. Once experts set certain parameters, we can use them to infer and construct. I demonstrate bellow. First things first,
The Elephant in the Room
Every catastrophe opens up political possibilities unthinkable in ‘normal’ times. This opens a ‘box of chocolates' for interest groups throughout. This is a key theme that must be kept in context. Note, making any specific conclusions absurd. There is too much variability around the globe. Each region requires a separate study. We explore the more general case.
In my lifetime, I have not seen nor read of any situation quite like this. Crises are overwhelmingly geographically contained. There is some separation from it to the rest of the world. Usually the effects are contained to a few states. Rarely more.
This time crisis encompass the entire world, at the same time. There is a collection of crises all happening at once. Dynamics between states occur as each of them faces the same foe in a different way. A popular theme in fiction, not history.
Furthermore, this pandemic has already had an effect of pausing economies and isolating entire societies. This is uncharted territory. The need for this kind of analysis is obligatory.
The global economic powers are put (regardless of our political, ideological or economic aspects) in a cutthroat situation in which they can either maintain, lose or gain. Expect the stakes and environment to match this.
As in actuarial fashion, the loss of life and economic impact can be minimized. This is the goal. The economic prime directive is to maintain and if possible increase the productive capacity of the impacted economy.
No situational assessment can be done without taking into account,
To be brief, the media has played a nefarious role, giving a distorted view of events in one way or the other, all amidst the wake of unseen global hardship and in accordance to their normal agenda. Otherwise put, business as usual. The health hazard was either downplayed as a minor flu or hyped as a potential end all disease. This in turn fueled the already discredited veracity and credibility. The media’s usual sense of alarm has not created consciousness to collectively take measures. In some cases their message has been nothing short of criminal. In others cases instrumental depending on the perspective taken to determine their goal.
Despite mass media’s take on the situation, conclusions must be based on select expert’s assessment and indications. Specially given spectacularly incorrect takes by major media sources.
Butchering epidemiology with the blunt tool of necessity; We understand the virus has an infectious incubation period of 2+ weeks. Following that, there is a time period where symptoms are manifested. After that a 2+ week period follows where the patient can, after recovery, still spread this virus. Making isolation theoretically effective when the period is two weeks. In practice this is much longer.
The infection rate seems to be very high; it is easily spread. Few activities can continue to function without endangering workers or society. Most notably logistics. What I want to explore is to what extent these activities can be pursued and how. In order to do that, we must first understand the mechanisms of how the virus spreads.
The eyes, nose and mouth are the most vulnerable sites of infection, although any open wound will suffice. We have learned how much interaction our hands have with our faces making both getting and spreading the virus very easy. Once there is contact with the liquids in our eyes, nose and mouth infection can occur.
We have also learned we are walking spray bottles, not only when we sneeze but in everyday speech when certain sounds are made, a spray of saliva shoots out off our mouths and droplets capable of traveling an enclosed place with ease. The closer you are to that person, the more exposed you are to that droplet cloud generated by that person.
Once you are in contact with the virus, if one rubs the nose with the hands, those hands become a disease agent. Any object it touches it can spread the virus, therefore anyone who comes in contact with these objects and rubs their eyes, nose, touch, or breathes it is in risk of infection. Furthermore, the virus can have a lifetime outside a host of upwards to 2 days depending on the surface it is, making its spread very hard to contain.
Assuming this, the next step is damage control.
The short term.
Situation is out of control and the proverbial bleeding must be stopped. There is absolutely no reason for productivity to be fully halted. This is done because it caught us off guard. Safety measures and protocols could easily maintain a safe working environment for most economic activities.
It is no use to stomp on a dead horse. Call to action:
Information campaigns must be pushed by states to educate the population. Much better articulated distillates of the ideas presented above must be figuratively shouted out the windows. Private businesses should be incentivized to do, in accordance to predefined parameters to avoid contradicting messages and misinformation.
Information is key, and it has been managed precariously. The main transmission mechanism are aerosolized droplets. The most logical conclusion, mandatory masks is the very lowest hanging fruit. Contrary to intuition, the desired effect is not for the user to avoid being infected, but for the user not to infect other people. This cuts the infection rate dramatically.
Technically, there are two kinds of masks. Those that protect its users from both infecting and getting infected by filtering the air breathed in. And those that only prevent the user from spreading the virus by blocking the path of mystified dropplets. Both mask’s have their use in specific situations. Questions like, how to sterilize a mask, what are the effects of open vs enclosed spaces, and the likelihood of the adoption of measures should be addressed. This information must be distributed and broadcast massively. Under the same mechanics as propaganda.
Filtering masks must be used by critical personnel. Apparently there are not enough to go around. The market has a considerable amount in stockpile which have been available to the public at significant mark-up. A testament to the nature of free markets. This is an appropriate moment to succumb to authoritarian measures and seize them to distribute them to doctors, nurses and health workers first. Support those in the front lines. Assure them we have their back. The current situation screams otherwise. We are sorry healthcare workers, we let you down. Secondly, to cashiers, drivers and any other personnel critical for society to continue to function in semblance of normality, who also have a high rate of contact with other individuals.
A simple population-wide enforcement policy of public mask use is a relatively mild coercive technique that would yield massive beneficial results lowering the spread. There is a social stigma that a nation-wide act would instantly dispel. Clearly there is a shortage of masks. Asking everyone to use them seems to be conflicting. It is not. A savvy statesman who knows in times of trouble, creative measures can be taken to remedy complicated situations. Given these masks need not be filtering but merely stopping those droplets and avoiding self-contact with those areas. Instructions can be given to the population at large to produce them. Not all efforts must be centrally conducted. Some of them can be delegated to the general population. They are more than capable and happy to take these kinds of tasks on. This is the perfect time for such leadership.
Another low hanging fruit is washing hands. This has been done successfully, I believe. I hope. This puts the ad campaigns taught to children into perspective. Wash your hands, I can hear my mother tell me so. Wash your hands. The active and continuous practice of hand washing can cut the spread of disease massively. Mandated communication campaigns is a mild action with great results.
Delving into the more intrusive measures, delivery services can be incentivized and partially enforced. By limiting the movement and gathering of groups, the distribution of goods can still happen, although at a limited capacity. Using and bolstering the already established networks of distribution, goods can reach the consumer. This network can be more easily managed and trained in best practices compared to the general population, so the end user is not exposed. This has been successfully achieved in some manner in China and is currently happening in the USA and many other countries.
Delivery services can be both incentivized and enforced. Meaning, there is much space for the government to foot the bill on some of the costs of any measures taken and coordinate economy wide efforts and take to punitive means to ensure its proper use.
Walking into draconian territory, certain activities must be banned. Not only conglomeration of individuals but entire activities as well. Close contact sports, tattoos, massages, concerts, services and activities of any sort that have a high rate of transmission and are not crucial for the functioning of society. These have to be suspended for at least an economic cycle of viral spread at the discretion of experts. A hard pill to swallow specially given an unknown quantity of time. Many of these activities have wisely turned to digital substitutions or alternatives. The market will find a way.
Strong market interventions are not desired but sometimes necessary. Internet access becomes a crucial element in the distribution of information and teleworking efforts. I have been surprised at how robust the infrastructure has been. It is important to ensure the most efficient deployment of it to the entire populace.
Once these policies are in effect we can explore the viability of business practices in a scientific manner. If people wear filtering masks and eye wear. Follow strict protocol, almost any sensible economic activity can be performed.
The net effects
There will be a purge in the market players. An amount of small and unstable entities will cease to operate. This is the second distant most lamentable victim. The market will be reshaped to some extent once this is over. How much, it is yet to be seen. I expect massive changes.
The market will consolidate further. This is of enormous importance. It is hard to understand the impact of this situation. It is strongly intuitive to conclude the impact will be profound and mostly negative. This is the most somber aspect of my forecast.
There will be a push for digitization. Regardless of measures taken, there is a large swath of the population at large confined to their homes with an internet connection. Consumers and workers will get a forced introduction to new digital ecosystems
Life as we know it will change. Much like that fateful day in September, 2001 which marked American history and changed what air travel was. Much like that the world will be scarred, bruised and frightened from this situation.
The long game
We have no certainty of how long this will last. Technically, the economic impact lies in the inability to congregate. This stops society dead in it’s tracks. It could be 3 months, it could be 3 years. We just don’t know. Therefore, our decisions must reflect that, contingency plans must be made and executed today. A digital strategy is a welcome addition to any economy. The tendency is clear and digitization will sweep across all eventually, making it the norm and otherwise activities the exception. This of course applies to a lesser degree to highly digital societies today.
It is common practice to downplay ‘teaching people how to code’ talking point of the downsides of technical education. It is a narrow take into an inclusion effort of nothing short of dire reality. This situation will prove how important and feasible this is. Work can be abstracted and productivity can be reinvented. Billions of people are forced to increase their interaction with the internet. It is time to leverage from it.
Whichever scenario plays out, a massive coordinated development program to transform or introduce job markets to new economic activities and practices is just smart. This is the moment for massive digital economy incorporation programs to be pushed by both the public and private sectors. The private sector is leading the way at the moment. This is is accordance with a clear trend that shows no sign of stopping. Online processes are usually more efficient.
Developing industries, practices and protocols to be able to sustain productivity in the effect of such biological conditions is a new norm conservative and robust states should pursue. It is not farfetched a virus could develop a more effective mutation given the widespread contagion we in part allowed to happen. Therefore placing us back to square one. This strategy would remedy that.
The economy being victim of the times is highly correlated with the incompetent decision making of world’s and institution’s leaders. Perhaps some layman common sense could serve them useful. But what do we know, right?
Reading this 3 months later is an eerie experience.