Since few people seem to want to say it, I’ll say it. Our government is committing the greatest economic blunder in US history. This is not about 5,000 potential Corona virus deaths. This is not about ‘flattening the curve.’ This is not about ‘the moral thing.’ This is not even a medical “thing” any longer.
It is, however, political. And it is an epic failure of U.S. political and corporate leadership.
A Hard Lesson
Here is a hard lesson some have forgotten, or perhaps have to have learn – when you lead you sometimes have to make decisions that are hard. The higher you go up the ladder, the likelier it is you will encounter this unpleasant fact. Some, never having led in tough times, are about to learn this lesson the hard way. And the people they lead will suffer for it.
The leader’s choice should benefit the larger good. That by definition means you try to hurt the fewest people; you sometimes have to sacrifice one good for a larger one. And you almost never get to have it both ways. If it was that easy, someone else further down the ladder would have picked off the chance to solve the problem earlier.
This does not happen by making decisions that are soft, run with the herd and seem compassionate. You don’t go to war by being compassionate, and you don’t win it with compassion. You go to war on a hard decision, one aimed at securing the larger good, one which will result in casualties and one the people on main street are counting on you to make. They are depending on you to make it. You have have obligation to see what others can’t or won’t see, and do what others can’t or won’t decide to do. This is the burden of leadership.
Cold Hard Numbers
China has about 82,000 Corona virus cases. Approximately 3,000 deaths. China population about 1.4 billion.
Italy has about 54,000 Corona virus cases. Approximately 5,000 deaths. Italy population about 60 million.
Iran has about 21,000 Corona virus cases. Approximately 1,500 deaths. Iran population about 80 million.
Spain has about 25,000 Corona virus cases. Approximately 1,500 deaths. Spain population about 46 million.
United States has about 24,000 Corona virus cases. Approximately 300 deaths. US population about 330 million.
Worldwide there are about 300,000 Corona virus cases. Approximately 7.8 billion.
Do the math.
US: .00007% (that is 700,000ths of one percent)
The truth is the overwhelming majority of people who contract the Corona virus will recover, just as they do with the flu. Many who will get infected likely won’t even realize what it is. They will simply feel better and move on.
Political and Media Narratives
Overwhelming the Health Care System
Overwhelm the health care system in the United States? Cannot the best healthcare system in the world figure out how to triage and contend with the impact? Sorry, but sometimes you get dealt a really bad hand. That doesn’t mean you get to opt for the easiest path forward and pass the cost on to the public, or your shareholders.
You say you can innovate? Prove it. You say you can adapt and are agile? Prove it. Take the worst case, and run with it. Make it work. If you are not up to it, step aside and let others of us take a crack at it. Maybe out of the box, non-healthcare industry thinking is what the doctor needs to order. Pardon the pun.
An Administration Firmly in Charge
If we knew many weeks ago the Chinese were building temporary hospitals to contend with the flow of patients, why did we not at least begin to mobilize our national strategic resources in preparation for an order to act? Why were not two US Navy hospital ships, routinely dispatched around the world to help mitigate unexpected surges in needed medical help, not already in the process of provisioning and preparations for deployment? Were even these steps too abstract for the administration’s best minds? It’s usually best not to and poor form to criticize midstream, and it is always more complex from the inside. Still, the Trump administration’s handling of this has been poor. It allowed the narrative to take shape around it, and its reaction has been confusing and timid. The President’s penchant for self promotion, lack of coherent thought and loose language has poured gas on the fire.
This is Not Your Grandfather’s Flu
At the risk of using the flu analogy (no, they are not the same but there is insight in terms of scale and context):
Infected so far: 19,000,000. That’s .06%…and orders of magnitude higher than the Corona virus.
Deaths so far: 10,000. That’s .00003%…and more than twice current worst case estimates of the Corona virus.
Hospitalizations so far: at least 180,000. That’s .0005%
Some wanting to defend the decisions they are making are simply dismissing the analogy, calling it a false equivalent. I don’t think. That’s too easy.
The Government Must Act to Protect People Who May Lose Their Jobs
May? Excuse me? Several million people have already laid off, with many more to surely follow. Already we are seeing the greatest number of unemployment claims being filed that we have ever seen. Whether government ordered, or direct and predictable fallout from corporate decisions to abandon corporate facilities, the losses are already being incurred and the road back will be much longer than the road there.
And if you believe the politicians that there is cash relief just around the corner, you are wishing, not thinking. There is no history of government intervention ever producing the pace of recovery that is going to be needed to avoid self inflicted economic devastation on a scale never before seen in this country. The last two times the US government used stimulus packages like the type now being discussed were in 2008 and 2009. Think back to how fast and how much these efforts impacted the climb out of the Great Recession….short answer….not fast and not much.
Yes, eventually workers will go back to work. Many who are laid off will not go back to their current employers. They will go to work for the first company that will hire them. That means displacement of trained workers and reduced productivity once employers start hiring again. In the meantime, rents and mortgages will go unpaid. Homes will be lost. Credit scores will be decimated. Governments at all levels will suffer financial damage that will go unrepaired for years.
Many retail businesses which were already teetering because of on-line commerce giants such as Amazon and giant retailers like WalMart will simply never reopen. This will be the event which puts them over the edge. Portions of some supply chains will not recover and will have to be replaced, producing more drag on an eventual recovery. Small eateries and service providers will not make it back. And if you think the President, many governors or high profile and former Goldman Sachs types in the cabinet have any connection with you as an ordinary tax-paying citizen in this disaster, you might consider infusing some cash into your local mental health provider community.
The Role of Leadership and the Cold, Hard Truth
Rough US government valuation of a human life: $10,000,000
Do the math: Assume 5,000 deaths in the US. That’s one half the number of deaths from the flu thus far just this year. That’s a $50 billion dollar impact. Or .01% of GDP
California just took $648 billion off-line. More than 10 times the impact of 5,000 deaths. And that’s just part of the damage being done. Illinois and others are now rushing to be the latest to take the “compassionate, moral” step of shutting off the lights. Shutting off 25%, 30% or more of our GDP may be the easy answer to those who want you to think they are protecting you. But the economic impact, perhaps 3% or 4% of US GDP are going to crush many people. Looking back, we will have amputated an arm because of a hangnail. And those making the decisions, whether political or corporate surely aren’t going to suffer much.
The Governor of New York will suffer no appreciable, practical financial damage as a result of his decisions. Corporate leaders making 7 or 8 figure salaries with still more in stock options likewise will not see their retirements adversely affected in any meaningful way. If you are a 70 year old with a $250,000 401K, however, you just got run over be the bus full of politicians and corporate executives rushing to the camera or to put out the latest corporate missive urging solidarity or perhaps an economic bailout.
If this sounds like a heartless calculation, it might be. It is also the cold, hard truth that you can choose to ignore, but the effects of which you cannot run or hide from. Our leaders get paid well and need to lead in broad strokes, especially at a time like this. They can and should have compassion and empathy, but they cannot lead with those traits in the front. They cannot make decisions with those as primary drivers.
This is absolutely not an attempt to understate the impact of several thousands of deaths from the Corona virus in this nation. It is not to dismiss the impact on families. Rather, it is about balancing the benefits and costs of our decisions. Millions of people are being put out of work. Many will lose their homes. Many will lose a large percentage of their savings and not have the time left in their lives to recover that loss. That, in the end, like a decision to go war as a nation, is what leaders get paid to do. And if they screw up, it is the milliions of adversely impacted citizens who will ultimately pay the price in their day to day lives.
This is Not About Complicated
Finally, the Corona virus pandemic is complicated “thing.” But that is a red-herring. It’s a misdirection. You cannot lead by looking at 6 or 8 complicated variables. You simply cannot. You must look at 1 or 2 overarching considerations. Make your decisions. Then move to manage all those complex variables as best you can. If you fail to do this, you are trying to take cute selfies as your raft gets carried toward the rocks by the current instead of steering around them.
Yes, our leaders have a duty to protect people when possible, and to mitigate adverse impacts when able. But you can never avoid all adverse impacts. Ask a lawyer to ensure your business never gets sued. They can pretty much do that. You will also be out of business within a short-time. It is all about a net benefit calculation. THAT is what our leaders owe us. That is what we need. And if they cannot understand and take those decisions, we need new leaders, political and corporate.
You might not get it quite right. You take the mistakes along with the successes. But leaders get paid and are expected to see things others don’t or won’t. They get paid to take risks. They get paid to make decisions that are hard and are going to have some adverse impacts. Sometimes at scale.
History is Both Made and Won
There is no history to support the belief that the federal government, or government in general can work the economic miracle people are expecting. And the risk is high that much of the eventual stimulus will never actually help those most adversely impacted by the damage we are knowingly inflicting on our economy.
It is much easier to blow things up than it is to reassemble this. I’ve seen this inside government before, firsthand. We are doing massive and long-term damage to our nation’s economic future. And as politicians rush to throw money at the problems they are creating, they will overlook the adverse and long term impacts of the stimulus. At this scale there will be unintended consequences that could be huge.
We are not going to war as some claim. We are surrendering. And we are laying precedent. The next time this happens, say 5 years from now, will we do the same thing? You can only raise the white flag so many times before you become powerless to chart your own future. We can actually go to war here, but only by saying “enough is enough.” There will be casualties, perhaps even those making the hard choice. But that is part of the essence of making the choice to go to war. Sitting at home watching Netflix is not how we beat this thing. Enough is enough. To our leaders who want us to go quietly into the night, I say get out of our way, and let us get back to our lives and to winning the future.