COV-19: A Microscopic and Economic View
“China has become the world’s prime breeding ground for new and exotic strains of influenza and other viruses, including both the deadly SARS virus and avian flu…and the possibility of a pandemic in which tens of millions of people may die.”– Peter Navarro, Director of the Office of Trade and Manufacturing Policy (OTMP). From Navarro’s 2007 book, “The Coming China Wars, Where They Will Be Fought and How They Can Be Won”
Dr. Navarro, the current COV-19 virus, is this what you meant by “The Coming China Wars”? If so, was it pointed out to the President?
Sir, Mr. President, you have been known to be front and center at big boxing matches at New York’s Madison Square Garden. Like a match between an unprepared heavy weight of the world and a deadly contender, the “super power” left itself wide open to a punch. How long before your 10 seconds are up and the world referee calls it a knockout?
Over the Friday 13th weekend, the U.S. President remarked as to the large number of shoppers in food markets comparing them to the Christmas Holiday. Yes, Mr. President, there does appear to be more shoppers than in Christmas. But unlike past Christmases, Black Friday came first where shoppers in America were forced to stand in long queues to buy food and necessities, not frivolous purchases.
The pandemic has shined a light on a peoples’ and country’s strong character or lack thereof. Seeing and hearing of the rampages of shoppers running throughout stores, I am reminded of the economic term “irrational exuberance.” Yet, their faces are anything but exuberant. Fear and concern is on peoples’ faces, especially senior citizens and the physically challenged.
“Number one priority is the health of the people of our country.” U.S. Presidential Address to the Nation
Sir, several executives have sat across the table from you or stood with you, CEOs from industries such as pharmaceutical, retail, pharmacy, airline, cruise ship and banking. Airlines, cruise ships, or banks are NOT in the health business. Given some company’s track record with reported bank “consumer abuses,” poor ship infrastructure due to lack of reparations, and airline accidents, they do not inspire confidence.
Priority appears to rest on the economic health of these industries, not “the health of the people of our country.” Ten days since Friday the 13th and what resembled Black Friday, the President questioned the lockdown proposing that “the cure is worse than the disease.” Was he addressing Big Pharma?
No doubt, there’s a fine line between the art of science and the art of economy; a line that was once a great wall and that brought world cures and vaccinations for polio, measles etc. But that wall was taken down by the wrecking ball of government and BIG Pharma deals. Is it any wonder that patients are aggressively being questioned on how they’re responding to a drug? Adverse symptoms? No problem, we have a drug for that. Yes, Mr. President, “the cure is worse than the disease.”
Virus and Profit, from Micro and Macro(scopic) Views
In high school, I was selected to participate in a program for students to attend summer classes at a local university. I signed up for Microbiology and Economics. Why? I wanted to challenge myself. I had enjoyed and exceled in other fields and saw these as new and exciting.
Attending class at the Molecular, Cell & Developmental Biology department, I learned from the Micro level the importance of Microbes in human and animal species and their role in the organism’s internal system. In Economics 101 class, I learned of supply and demand, cost benefit analysis, ROI, etc. I immediately saw the connection to the external system, the food chain and commodities.
At the Macro level, I saw the interlock between people and Banking & Commerce and more importantly how consumers got themselves locked into both for life. Is this why countries with high consumerism forbid suicide, as it results in loss of a commodity, humans? Loss of a body means loss of a commodity, no microbes feeding on a host and no producer feeding a consumer.
At the Micro level, I saw how small microbes of bacteria can grow into botulism linked to canned meats. At the Max Planck Institute for terrestrial Microbiology/Ni, researchers recently noted in a January 22, 2020 report that “Like humans, bacteria in most ecosystems live with limited resources. Therefore they are constantly faced with investment decisions: should they enhance motile behavior and thus be able to exploit new resources, or give priority to cellular growth, thus gaining a reproductive fitness advantage?”
Current health crisis has put a demand on specific supplies where humans are resorting to “grab and go” resembling that of bacteria who “`Eat and run`: when food is scarce” as the researchers point out.
Although inspections are put in place to control for contamination, cases continue to come up. The public may become aware of some and not of others as companies are reputed to have inspectors paid off making the problem of bad publicity go away. If a person actually gets sick and sues, their case likely settles out of court and out of the public’s view.
Unlike a financial crisis, however, industry cannot down play a world health crisis. Yes, corporations are known to lobby government to go away. But you cannot pay a virus to go away, nor herd people together in an attempt to rush it out of your cities clearing the way for the economy.
Leaders were forced to make hard choices. Wrongly, some resorted to the practice of “herd immunity.” Permit me to share briefly how this type of mentality can and has led to a deadly outcome.
I recall as a child playing with a neighbor’s kids. One day while playing with Lucy and her siblings, I noticed she had reddish dots on her face and arms. Her two brothers and sister teased her and stayed away. A few days later, I was told they all had chicken pox. Several days later, only one of Lucy’s brothers and her sister came out to play. I learned from them that Lucy and her brother were sick.
Weeks later, I was saddened to hear that Lucy and her brother would never come out again. They had died. Lucy developed a serious case of bronchitis and her brother’s heart condition worsened. But what was even more shocking to me was when my parents learned that my friends’ mother resolved to purposely group the children with Lucy. Why? So that they all would conveniently be infected and not inconveniently elongate the event.
It appears that the practice of “herd immunity” is not restricted to parents but leaders as a “quick and dirty” tactic to get their country back to “business as usual.” Parents, having power over their children have been known to act ignorantly and sometimes recklessly. Leaders, having power of their people, have been known to act dangerously and criminally.
“Gig Economy” and “Service Economy”
Austan Goolsbee, Economic Professor at the University of Chicago Business School, points to the economic impact of the pandemic. Fear of the virus has “spread around the world…service-based industries…” being the most impacted as they play an integral part of our society and culture.
Gig economy replaced professional drivers and in the process disrupted public transportation. Similarly, the service economy flourished as manufacturing was exported. Yet, both appear to have fallen victim to nationwide community lockdown. But how healthy are those providing you a service?
“The United States and its politicians have used…ultra- ‘easy-money’ policies to keep American consumers and voters happy-or at least pacified…” – Peter Navarro
U.S. President’s recent response to lockdown of service economy, “people are dying to go to restaurants, on airplanes.” No, Mr. President, people are dying. Airplane flights? Hundreds of people have died from accidents alone. Recall Senator Roger Wicker (R) Mississippi October 2019 affirmation to Boeing:
“One year ago today, Lion Air Flight 610 crashed into the sea shortly after take-off from Jakarta, Indonesia…five months later, Ethiopian Airlines Flight 302 departed Ethiopia.” Both flights “experienced problems shortly after take-off and crashed.” “Both of these accidents were entirely preventable.”
People are encouraged by States like New York promoting the message to “stay home, stop the spread, save lives.” New York Gov. Andrew Cuomo projects knowledge and inspires confidence, a much needed public leadership style others clearly lack.
Unchaining and Make Shifting Supply Chains
In the current pandemic, consider the high demand and shortages of water, paper and cleaning products in the retail sector as well as medical devices in the health sector. At the local level people are hoarding. At the state level Governors are forced to compete.
From the East to West Coast, State leaders are showing their true colors. Yet, few have demonstrated the strong character of New York and California. Governor Andrew Cuomo by far, fearlessly rose to the occasion constantly making hard choices. Sir, when things become somewhat normalized, let’s talk about the 2024 election.
A business leader once stated, “Lack of preparation on your part does not constitute an emergency on mine.” Applied to the current crisis, I would rephrase it and direct it to the Commander in Chief. Sir, “Lack of preparation on your part should not constitute an emergency on the people of your country.”
As to supply chains and stockpiles, China is said to be “the only country that has a pork reserve…80% vs 11% U.S.” Exactly how many other critical reserves like medicine, household and food product, etc. does it have? More importantly, why would a nation, the U.S. who is primarily dependent on overseas imports not have reserves?
Director of Office of Trade & Manufacturing Policy, Peter Navarro, recently spoke on the subject of supply chains. It would have been helpful to hear more from Navarro as his insightful 2007 book, “The Coming China Wars, Where They Will Be Fought and How They Can Be Won”, offers a sleuth of information. Specifically, U.S.-China Trade Relations.
I made several comments in Prof. Peter Navarro’s book of which I shared with the author. (Full Disclosure: In my role as Faculty Assistant at the Paul Merage School of Business, I assisted Prof. Navarro.) Navarro makes several valid arguments relevant to recent Capitol Hill legislation, “the United States and its politicians have used…ultra- ‘easy-money’ policies to keep American consumers and voters happy-or at least pacified…”
Navarro point to the obvious reason, “from the fact that tax cuts and easy money and a lack of fiscal restraint…” Clearly such economic behavior is unsustainable without a risk of collapse of the market as was endured in 2008. Yet, having rebounded, 12 years later we find ourselves in a much dire position.
It begs the question once again why and how could this happen? Prof. Navarro notes that “… politicians allow this shell game to be run because they want to keep consumers and voters fat, dumb, and happy-and themselves in power.” I take his point, adding that as it pertains to the recent crisis, people, especially small business owners, will be forced to adhere to state guidelines but for the most part they will revert to their nature, in time.
As I note in my April 2019 paper, “Win-Win” Trade Deals: China’s Rising Victory and U.S. Fallen Wars,” China’s geostrategic influence and power is not only derived from the massive force of a dragon but the patience of a panda. Just give them time.
Traditional and makeshift supply chains operating outside of China during the U.S.-China Trade War may have seized the opportunity to push their products irrespective of its quality as the thinking of some is that “anything’s better than China” or “can’t be worse than China.” But this can be a gross error.
No doubt the Mexico-Canada-America (MCA) trade deal came in the “Knick of time” as a buffer to the disruption of the supply chain overseas. Necessary, but not sufficient. Recalibrating manufacturing sites for production of shortages appear to be in order as new products labeled “product of U.S.A.” are reemerging, but will the jobs?
However, is “Made in the U.S.A.” today the same as yesterday? Recall that “past performance is no guarantee of future results.” Manufacturing substandard food or house hold products may ensue as consumers find themselves misguided into thinking “anything is better than nothing.”
If the HIPPA Act is being revisited and FDA is reportedly laxing their requirements for COV-19 tests due to emergencies, then it stands to reason companies will follow suit. What does this mean for the consumer? Think “Buyer Beware” and “Sold as is.”
An indication that some countries were on first alert ready to capitalize on the U.S.-China Trade Wars combined with news of the outbreak prompted immediate action. Multinational companies in food and home products appear to have been planning for this at least six months in advance.
A foreign multinational or transnational company could contract new vendors from their own country or those providing similar ROI as that of China. For example, a German retailer who sells plants/flowers operating in Europe and the U. S. could contract a vendor in their county for the flowers who in turn subcontract another for the flower pot/vase. In the past six months, in Europe and the U.S., I and others have come across products long known to be “Made in China” appearing with the label “Made in Germany.”
Laws of Unintended or Intended Consequences?
Friday the 13th, in an update on COV-19, the U.S. President referred to a group that included four health officials and industry CEOs as “real geniuses”? I think there’s another word that perfectly describes them. No doubt, the officials serve the public’s interest. Yet, industry executives are known to capitalize on crises as those that invest “when there is blood on the street.” Time will tell.
Time’s up. Sunday the 15th, the U.S. Federal Reserve lowered interest rates to “0”. As the President exclaimed it was good for Wall Street, the Fed Chairman warned that he foresaw weakness in the economy. Like the 2008 financial crisis where banks were bailed out, will transportation and hospitality industry also benefit? If yes, how will Main Street benefit?
Solidarity may prove to be difficult in turbulent, let alone unprecedented times. The U.S. understood turbulence two decades ago. Up to and in the aftermath of it being attacked, the United States of America demonstrated strength in unity. But what one foreign physical affront did to instill insecurity and fear, another has instilled fear, uncertainty, and social distancing in an already divided country.
Fear, economic uncertainty, and disease have once again coalesced as the past 100 year trajectory reveals. From the 1918 Influenza followed by the 1929 “Great Depression” leading to FDRs “New Deal” to 1981 AIDs Pandemic leading to Reagans’ administration of underfunding the CDC culminating in the preventable deaths of tens of thousands finalizing in a decade of Cold War escalation and what became known as “Reaganomics.”
Fast forward to the 2008 financial crises to the now 2020 health pandemic triggering economic uncertainty and stock market volatility. And like in the 1980s, the President’s domestic policies have failed the people. And what is more disturbing is that the social and health panic due largely from unpreparedness (staff and supplies) could have been avoided.
Lessons Learned?
The U.S., the world superpower has authorized a $2.2. trillion economic package for the country. Its ally, Israel, has reportedly proposed an economic rescue package of 22.5 billion shekels. On the topic of economic stimulus I’d like to redirect the focus to entertainment. My suggestion to the creators of the American television drama series, “Billions,” Brian Koppelman, David Levien, and Andrew Ross Sorkin, you may wish to revise your upcoming season renaming the series, Trillions, at the rate nations and corporations are spending money.
Will lessons learned translate to both efficient and effective preparedness across the health and economic system? Michael Corbat, Citi CEO, “This is not a financial crisis…“ Sir, if government did not resort to bailing out industries that were too big to succeed, then actual losers would have faced financial crisis.
As banking facilitated the onslaught of predatory loans sold as a right to the “American Dream,” masking a privilege few actually have, travelling via air and sea has sold people on the idea that fly or sailing is a right for all and in some cases a luxury.
Airline and cruise industries have for decades profited in boarding people in spaces where they are inches or feet from each other. In the aftermath of this health crisis people may be wise to remind themselves that public transportation ≠ exclusive luxury traveling. The privilege of flying extends to cruising. As “money talks”, after the virus “dust settles” and the public compares their tiny piece of the $2.2 Trillion pie, they may frown upon the idea of boarding a plane or cruise ship.
Looking back 100 years, we see as unthinkable the industrial revolution and its effect of agriculture. Only today, instead of American manufacturing plants being adversely affect it is the retailers, the service economy. But will they bounce back? As Prof. Navarro notes:
“As the United States and other industrialized nations of the world learned during the Great Depression, moving people rapidly off the farms and into the factories is a recipe for far greater economic volatility once an economic slowdown hits. The reason: Farmers can always fall back during hard times on subsistence living. However, factory workers, separated from their land, can only stream into the street in protest.”
To economists and scientists around the world, I defer to my colleagues and Max Planck researchers:
“What could a Wall Street manager possibly learn from bacteria? “As the animal gut is no trading floor, we should treat the parallels to financial markets with caution,” Victor Sourjik jokingly remarks. “But increasing investment in proportion to anticipated future payoffs, even as resources get scarce, might work well for both biological systems and financial markets. At least for bacteria exposed to uncertain environments, this seems to be an optimal strategy.”
Ladies and Gentlemen, let’s learn from our microbes as our macro systems are but a reflection of those at the Micro level.
What 2021 and the Future Brings?
The beginning of the 21st century started with the West at war with the East climaxing in a global financial and economic crisis. 2020 marks the decade where the “Rules of Engagement” and Disengagement are being reset. Forecasts are not looking good around the world.
In the UK, Sarah Whitebloom’s 13 Mar 2020 article in the Oxford Science blog points that “Oxford University experts maintain the “COVID-19 ‘should not necessarily foreshadow an economic downturn.’” U.S. called for a return to normal by Easter. It then revisited its projection. Was this wishful political thinking? Some science experts may disagree.
“Professor Simon Wren-Lewis, economist and expert in the impact of pandemics at the University of Oxford, maintains that modelling he undertook after the 2008 global financial crisis, shows the coronavirus crisis should have a short-term impact and need not have a long-lasting effect on the UK economy.” I find Wren-Lewis analysis may be restricted to the U.K. and likely not to parallel the U.S. as Dr. Fauci asserted, it will not be “business as usual.”
Systems overhaul will be slow, dirty, and painful if the U.S. follows scientists’ precautions. However, if the “means to end” idea prevails where the benefits will justify the cost of doing business, then America will be “open for business.” I do, however, agree with Wren-Lewis argument: ‘If people start worrying about getting the disease sufficiently to cut back on this social consumption, the economic impact will be more severe than any numbers discussed so far. One reason it is severe is that it is partly a permanent loss.’
Fear is a powerful motivator and one that business and governments alike have utilized. Franklin D. Roosevelt, in his First Inaugural Address, has been known to famously have stated “Only Thing We Have to Fear Is Fear Itself.” He was wrong, for reasons he may not have feared:
Telemedicine is not immune to hackers and data breaches.
Relaxing the HIPPA Act may lead to further data breaches as reported by credit agencies, academia, hospitals…?
Government Administration two decades ago capitalized on fear of “terrorism” passing the Patriot Act.
Government Administration folded under pressure of the 2008 economic crisis concluding with the Health Care Act.
Government Administration has in the past five years capitalized on threats from cyberspace passing the Real I.D. Act.
Government Administration capitalized on peoples fear, health and economic crises to pass the Coronavirus Aid Bill.
In the present, I remember Lucy and her brother. They’re not here but I speak for them. To all who failed the children and the people, to all you bloody bastards, know that “pay back is a bitch.”
Sir, Prof. Navarro, in the final chapter of your book, “How to Fight-and Win!-The Coming China Wars” you state, “I hope to raise global awareness about the real risks looming before us. For the children’s sake…” My written comment, if you recall, “Important avenue to take is principally the media, especially via the internet to reach the new and older generations.” Sir, I hope you found all my comments helpful as I continue to find your book informative.
World Pendulum has stopped. Metropolises are revealing an earth standing still and bare. Exposed, nations lay as defenseless fortresses, weak to the elements and to man and machine.
Michael Morell, former Deputy & Acting CIA Director stated, “Most of the leaks do not come out of Congress. They come out of the Executive Branch.” Sir, not all information is leaked. At times, the most critical intel has been here, transparent for all the world to see.
In 2021, when the people look back, time will unveil “the good, the bad, and the ugly” truths of their leaders. The paying public will discover whether their fighter “took a dive” and noting Governor Andrew Cuomo’s words, “Call it what it is”, a fixed fight was orchestrated.