Monday, March 30, 2020

Why Flattening The Curve Is Overrated

Why Flattening the Curve is Overrated

Big Point #1 – Flattening the Curve is Overrated
Get the pitchforks out, light the torches, and come and get me…
Flatten the curve is such an easy concept, it has caught on quicker than the virus itself.  The rabid adherence to it means you are either 100% in support of it or you are ignorant and reckless and are henceforth ostracized from society.  I can’t recall another example of societal peer pressure like this since I was in 7th grade and for some inexplicable reason tucking your pants into your socks was the in thing.  My company is working remotely right now as a result of societal peer pressure, not my actual belief that working from home will save their lives.  Can I afford to be the only one that didn’t shut down and it turns out I was wrong?
But here’s the thing – social distancing provides the illusion of control, not actual control, over this virus.
There is no vaccine.  Flattening the curve simply kicks the can down the road.  It’s not like we go on lockdown for a few weeks while doctors go door to door inoculating us.
And that’s coming from someone that is actively practicing it.  Our house is on lock down.  We’re working from home.  We only leave to grab essentials and come back.  I stay six feet away from people.  My parents cancelled a visit as they drove home to PA from Florida.
Here is the question that no one has answered to my satisfaction – can you describe to me what the successful lifting of quarantine looks like?
Without a vaccine, the minute we try to resume normal living, the virus starts to spread all over again.  It takes one contagious person to emerge from quarantine to reset all those efforts.  Those of us that have not been exposed during this shut down haven’t miraculously developed an immunity to it.  We just delayed getting exposed.  Whether I am exposed now or in two weeks or in two months, the odds are good that I will be exposed at some point.  And that doesn’t even contemplate mutations of the virus, which starts the process all over again.
We are committing to be on quarantine between now and when a vaccine is developed, not just the next two weeks.  I’m not sure that has sunk in yet for those that believe isolation is the cure-all here.  My mom was sure I wasn’t following the logic.
“No, you’re not getting it,” my mom said.  “It’s not about curing the disease.  It’s about not overwhelming the health care system.”
No, I am pretty sure I get it.  If a million Americans are going to be infected, let’s spread that out over time to ensure the hospitals can handle them all.   I get it…promise…I understand it buys us time…but…

Big Point #2 – At What Cost?
If we are truly only on lockdown for the next two weeks, it’s probably a cost we are all willing to bear.  But I have some bad news for you – it won’t be two weeks.  Not with the current psychology of this disease.  We are starting with just two weeks because it makes it easier to accept.  It’s comfortable. They’re keeping us calm. Easing us into it.  The next announcement is coming.  Two weeks will become four weeks.  A month will become three months.  This could drag on the rest of the year.
The minute we lift quarantine measures, the second wave begins.  Eventually the third wave.  Or a fourth.
China is just now trying to emerge from a lockdown of more than two months.  That puts our exit around June 1.  I don’t think we can enforce a full lockdown as successfully as China can.  And that assumes no setbacks.  What if China has a second wave while we are in the middle of our quarantine?  Are we really going to lift ours in the midst of their next wave?
This leads to an exceptionally uncomfortable cost/benefit analysis.  How much economic value are we willing to lose to save a human life?
If the mortality rate was 50% and 165mm Americans would die from this virus, I suspect we would be willing to live under strict quarantine for quite some time.  We’d be willing to endure a total economic collapse because we don’t like the prospect of losing half our family.
If the mortality rate is 1%, that’s 3.3mm Americans.  That’s different.
And that assumes 100% of us get it.  Which we won’t.  Even without a quarantine.  Because that’s not how viruses work.  There is no precedent for an influenza virus spreading to 100% of the population.  Ever.
Yeah, I’m willing to endure some economic hardship to avoid losing 3mm Americans.  But how much?  And how does my calculus change over time? That’s really uncomfortable to think about.
Everyone was all about doing their part to flatten the curve when it meant working from home and doing teleconferencing.
But now that they might lose their job?  Tunes will change.  Quickly.
If 2.5 million Americans lost their job last week like Goldman Sachs is forecasting, does that change our approach to flattening the curve?  If the economy contracts by 25% in Q2, are we still willing to live under quarantine indefinitely?
Instead of 3mm Americans dying, what if it’s really more like 1mm?  Or less?  Heart disease kills 650k Americans each year – what if coronavirus kills that many instead?  Would we accept a Great Depression in order to save them?  If so, why haven’t we done so before now?
I believe flattening the curve helps, but that its benefit is overstated when we factor in economic costs.

The Great Depression had peak unemployment of 24.9% in 1933.  Today, that would be 40mm unemployment Americans.  If we extrapolate Goldman’s forecast of 2.5mm unemployed Americans last week, it would take just four months to hit 40mm unemployed.  Doesn’t seem implausible that we are under quarantine for four months, does it?

There is a growing consensus that Q2 could be the second worst economic quarter in the history of our country, only behind the worst quarter of the Great Depression.  Meanwhile, total US deaths thus far are 350.  This number will ultimately be much higher, but how high does it need to go before it justifies another Great Depression?

You want to go all-in for the next two to four weeks?  OK, I’m in.  Get the tests built.  Help out the hospitals.  But after that, the natives will be getting restless.  Maybe we un-quarantine in a scheduled manner?  Workers start going back to work while elderly stay home and kids stay out of school.  Restaurants and bars re-open, but with rules.  Something.

If not, more Americans will start running the cost/benefit analysis.  “I can’t pay my bills.  I can’t pay for food.  I will take my chances.  Open the doors and let the chips fall as they may.”

Many of you reading this are months or maybe even years away from needing to think that way.  But your tenants, and the employees of your tenants, are already facing that horrific decision.  Unchecked, you may eventually face the same decision.  Will your commitment to social distancing be as strong then as it is now?  Will mine?

At some point, are we better off just resuming life and taking our chances?

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