We Cannot Let the Cure Be Worse than the Problem

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Mary Altaffer/AP

With today’s novel coronavirus (COVID-19) pandemic taking the world by storm, prominent leaders are facing incredible challenges. Pandemics are “epidemics that cross international boundaries and affect a large number of people worldwide,” writes National Geographic. The COVID-19 virus is highly contagious, and it is especially troublesome because carriers can be contagious while not showing symptoms. One major problem with this new virus is the uncertainty surrounding its transmissibility, mortality rate, degree of criticality, and treatments. Uncertainty leads to chaos because society functions based largely on the premise of security and certainty.

Crises are unique in that they require a sense of urgency not commonly prevalent. Risk-factors always exist. The public understands that risk is a constant but that we can take mitigation measures to ultimately control for the risk. As The Wall Street Journal writes, “Risk can be managed. Uncertainty makes it impossible to weigh costs and benefits, such as whether reducing the spread of a virus is worth the cost of an economic shutdown.”

Ultimately, history will judge our actions during these times. For example, future generations will judge the CCP harshly for hiding the virus outbreak for “weeks, silencing doctors, jailing journalists and thwarting science — most notably by shutting down the Shanghai lab that publicly released the first coronavirus genome sequence.” Future generations will also have the hindsight to analyze how government officials, business leaders, and media figures fueled panic and acted to “flatten the curve.”

The Stock Market Nosedives as Uncertainty Looms

The stock markets in the United States are volatile because of rampant panic among businesses and government officials. Declining revenue as a result of social-distancing policies and government-mandated lockdowns has further panicked executives. Additionally, panic has fueled stock market declines larger than those seen in the recent past.

In fact, March 16th, 2020, was the worst day for US stocks since 1987. Recent market volatility is best encapsulated in the Chicago Board Options Exchange (CBOE) Volatility Index, or VIX. The VIX climbed to 82.69 (the VIX had been lower than 40 since late 2011). The stock markets have been pricing in the risk of this novel coronavirus. It is possible that some of the decline in the market is attributable to the human tendency to follow the crowd, a phenomenon best explained by Gustave Le Bon in The Crowd: A Study of the Popular Mind. This sort of volatility led to an extraordinarily powerful tweet from billionaire investor Bill Ackman.

In Ackman’s March 18th appearance on CNBC, he warned of “a tsunami coming.” That tsunami was the March 26th reporting of a record 3.3 million unemployment claims, as a result of novel coronavirus lockdowns.

On March 18th, Bill Ackman went on CNBC and said, “Hell is coming” and “Shut it down now…There is a tsunami coming.” Ackman recommended that President Trump “effectively close the country for 30 days and shut the borders to stop the spread.” Ackman referred to this national emergency as a prolonged national “Spring Break.” Ackman felt confident that the President and state Governors would do what is right, which is to heed the advice of health experts and medical professionals. Even The Wall Street Journal’s Editorial Board wrote that “the costs of this national shutdown are growing by the hour, and we don’t mean federal spending. We mean a tsunami of economic destruction that will cause tens of millions to lose their jobs as commerce and production simply cease.” During this pandemic, America needs a strategy “that is more economically and socially sustainable than the current national lockdown.”

Uncertainty Has Driven Society into Panic-Mode

Uncertainty is driven by fear and by the lack of information. Fear is a powerful motivator. Historically, fear and panic have led to some disastrous outcomes. As the Foundation for Economic Education writes, “human beings by nature are prone to crowd-following, especially during periods of social unrest and panic. This instinct has resulted in some of the greatest tragedies in human history.”

As the federal government and states coordinate and implement public health measures, government officials are looking for ways to ensure that vast swaths of the economy are not financially decimated or forced into bankruptcy over this crisis. The best near-term solution should seek to mitigate long-term risks to businesses by eliminating the possibility of long-term losses of revenue. Given the limited but plausible possibility of an economic depression, Bill Ackman’s strategy seems to be the most prudent, as local officials are already pressuring restaurants, bars, and social gathering destinations to close their doors.

Until public health officials are confident that a vaccine or an anti-viral are prepared to be mass produced, this sense of fear will fester. There, fortunately, have been positive stories about the use of antimalarial drugs to treat the novel coronavirus. “Chloroquine phosphate and hydroxychloroquine have both shown early signs of improving symptoms of some patients diagnosed with Covid-19, the respiratory disease caused by the coronavirus, based on reports by doctors and researchers in South Korea, France and China,” writes The Wall Street Journal.

“This evidence fiasco creates tremendous uncertainty about the risk of dying from Covid-19. Reported case fatality rates, like the official 3.4% rate from the World Health Organization, cause horror — and are meaningless. Patients who have been tested for SARS-CoV-2 are disproportionately those with severe symptoms and bad outcomes.”

Right now, many in the public are fearful over how little we know. As John P.A. Ioannidis, an epidemiologist and Professor of Medicine at Stanford University, writes at Stat, “This evidence fiasco creates tremendous uncertainty about the risk of dying from Covid-19. Reported case fatality rates, like the official 3.4% rate from the World Health Organization, cause horror — and are meaningless. Patients who have been tested for SARS-CoV-2 are disproportionately those with severe symptoms and bad outcomes.” In essence, the mortality rate may be overstated, as the number of infected may be undercounted due to the lack of testing kits.

The creation and dissemination of novel coronavirus testing kits was botched, in part, due to the bureaucratic nature of the federal government. As Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, testified before Congress, “the system is not really geared to what we need right now.” Some may choose to blame the Trump Administration, but Duane Newton, the Director of Clinical Microbiology at the University of Michigan, notes that “the biggest limitation in diagnostics is not the technology, but rather the regulatory approval process for new tests and platforms.” As the MIT Technology Review notes, the “FDA rules initially prevented state [government] and commercial labs from developing” their own novel coronavirus diagnostic tests. As a result of the CDC’s botched test kits, the Trump Administration engaged commercial labs and private researchers to distribute and process the tests.

Until public health officials and medical experts have the capability of testing Americans at-scale, we will not know the full reach of this virus. This is precisely why the Trump Administration allowed (previous regulatory rules hampered this effort) commercial labs to develop their own testing capabilities. Additionally, the Administration has been reliant upon the private sector to voluntarily manufacture masks and other protective gear, which has thus far made it unnecessary for the government to invoke the Defense Production Act.

Taking Mitigation Measures for Yourself

In the sea of overwhelmingly negative news stories about the spike in novel coronavirus cases or deaths, we must take measures to mitigate public fear. We should heed the warnings of public health officials and engage in social distancing measures, and we must always support one another in these trying times. The best way to do so is to purchase from local small businesses and to protect those most vulnerable by social-distancing to the extent possible.

Additionally, you should take some time to pause and reflect on the barrage of negativity being thrown at you. During this pandemic, pay special attention to the “tickers and headline crawls, slick graphics and constant teases for upcoming stories, everything creating a sense of urgent immediacy.” Flip your channel between CNN and ESPN and you’ll immediately note the similarities. As a business model, these tactics make sense; however, during a public health crisis, these tactics inflame the prevailing sense of fear among the public. For example, look no further than this CNN article titled, “Trump peddles unsubstantiated hope in dark times.”

My advice during this crisis is to pause and take a moment to remember that this situation may be novel, but that we can persist. Limit your exposure to cable news and use this break as a reminder of C.S. Lewis’ famous essay titled, “On Living in an Atomic Age.” Lewis’ essay provides an optimistic perspective toward new threats against humanity:

“In other words, do not let us begin by exaggerating the novelty of our situation…It is perfectly ridiculous to go about whimpering and drawing long faces because the scientists have added one more chance of painful and premature death to a world which already bristled with such chances and in which death itself was not a chance at all, but a certainty.”

Threats to humanity are a feature of the system, not a bug. We are all destined toward the same outcome, but we must not exaggerate “the novelty of our situation.” During these troubling times we must not allow this threat to dominate our minds, instead we must seek outcomes that balance the threats to public health with the economic security of the United States. As President Donald J. Trump tweeted, “We cannot let the cure be worse than the problem itself.” If we all mobilize as one humanity with an optimistic outlook, we will prevail.

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Contributor to: FEE , The Mises Wire, and Bongino.com Interests: Technological Disruption, Economic Policy, and Public Policy

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