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My COVID story - Part 1
As the world's fascination with COVID finally wanes, I reflect on my experience of the insanity
March 2020 — People lose their minds
My first ever public comment about COVID was this. I was both prescient and wrong.
Everyone has lost their shit about coronavirus as if lives lost this way are worth orders of magnitude more than lives lost any other way. In two to three weeks time the reality will set in that there are real costs of locking down society that can be measured both in value of resources wasted and in blood. All perspective has been lost at present.
If only I’d written years instead of weeks, then it would have been spot on.
As someone who has thought about health policy, well-being, and trade-offs for many years, my first reaction to the media coverage of COVID and the mystery China virus was to ask the following question: What is the normal number of deaths in a city the size of Wuhan? Without this context, all the media coverage made no sense. A city with 12 million people can expect about 96,000 deaths a year. That’s 264 a day.
So when I read headlines like “Death toll rises to 600” and that smoke from crematoriums working overtime was filling the city, I had a reasonable baseline from which to sniff out nonsense. The numbers mattered then and they still matter now.
If you search online for news articles of COVID or coronavirus deaths from February 2020 you will see just how small the death numbers are and how crazed and fearful the reporting was. Some of the reporting just had made-up figures, with orders of magnitude differences from one article to the next. No one really cared.
Even at this early stage, the lack of deadliness of the virus was becoming clear for those who wanted to find out. The case fatality rate was likely to be sub 0.7%, even with relatively limited testing (i.e. 0.7% of known cases, not all cases). Clearly, this implied that early estimates were hugely biased because infections were far more widespread than initially assumed.
The Diamond Princess cruise ship had 3,711 people on board and had 14 deaths. On this cruise, 0.37% of people died over a two month period. Is that good or bad?
We know that background mortality is about 0.8%. So every two months you can expect 0.13% of people to die. But this is across the whole age distribution. Even a small skew towards the elderly massively increases this number. For example, in your 80s you have a one in twenty chance of dying each year on average. In your 90s, a one in five chance.
The age distribution of the Diamond Princess was super high, so 0.37% of people dying within two months is totally within the normal range.
We knew this in March 2020.
We already knew then from the Italian outbreak that the average age of COVID deaths was higher than deaths from all other causes combined.
Taking all this information together was pretty encouraging. This is why herd immunity was thought to be simply a matter of months away. Flatten the curve for two weeks, then a month or two later the whole thing would be over. No one expected to be having masks, border closures, vaccine mandates and passports for two years.
With markets crashing I took the opportunity to put forward some ideas about macro-stabilisation policy, such as having a public agency take equity stakes in companies that wanted bail-out money and buying up housing developments in distress to smooth construction cycles and add to public housing stocks.
Of course, none were taken up. But looking back, they were much more sensible than what we got with a JobKeeper giveaway, a Cashflow Boost, that cost hundreds of billions and resulted in a net upwards redistribution of wealth.
May 2020 - Economics dies, outsized stimulus arrives
In the first week of May I had surgery in a rather quiet hospital—a right hemicolectomy. Suspected bowel cancer. It runs in the family. It all went as well as it could. Not cancerous. But it did make me realise that if hospital treatments are good for health, a quiet hospital is bad for health, and the longer this keeps up, the worse the population’s health will get.
That month, people became very upset when the costs of benefits of lockdown policies were assessed. Granny killers and other terms circulated. Some economists enjoyed the attention of an audience that would approve of anything that justified their panic. They claimed to show that the benefits of lockdowns outweighed the costs by trillions. Health economist Paul Frijters called them out for their nonsense calculations, which had the benefits exaggerated by roughly a factor of 1,200!
Because I realised that our response was driven by herd mentality rather than by scientific evidence, or by policy directed to maximising health and well-being, I could start making predictions like this, that are looking more correct each day
That month I also did a podcast with Nucleus Wealth arguing that Australian house prices are more likely to rise 20% in the next 18 months than fall 20%. My arguments and reasoning were clearly correct in retrospect. But at the time they went against the crowd. All the banks had made dire forecasts. While many people appreciated my arguments and evidence, many wanted to stay in fear. They’d been waiting for a market crash for too long to change their views now. The parallels between the fear-driven approach to both property and COVID were obvious.
In response to their own policy panic and that of the states, the federal government began splashing money around. By July the unprecedented size of stimulus measures was apparent.
Don’t get me wrong, I think fiscal policy works and should have been used. But most predictions at this time were still very conservative about the future path of the economy and especially for housing markets. Very few called out the give-away of JobKeeper in advance, only Rohan Pitchford and Rabee Tourky could see in advance that it was going to me mostly a profit subsidy, something that later became obvioius and led to a movement to get businesses to voluntarily repay billions.
Basic principles of economics leaves us convinced that it will quickly deteriorate to a simple subsidy to business, which accrues all its benefits at the expense of workers. It is also akin to a protectionist program, and it may take a long time to wind down the scheme.
Driven by my analysis of the housing market, I was seriously shopping for a house to buy and made some offers.
July 2020 - Panic is the new normal
After months of lockdowns and border closures, my friend Gigi Foster appeared on the ABC television talk show Q+A. She explained how we risk killing more people from our policy reaction to the virus than the virus itself, something that was obvious to anyone that looked.
The responses to this revealed the extent of underlying fear and panic in the community, what we now call mass formation (i.e. the formation of a mass, or crowd). I wrote my reflections of that period here.
That people were getting things so wrong didn’t matter. The modelling was wrong. The endgame was nonsensical. The estimates of virus infections were wrong. Fatality rates were wrong by orders of magnitude.
But people loved lockdowns. COVID gave their lives meaning. Especially the Twitter bluechecks.
Sept 2020 - The polling is the science
Victoria’s sixth big lockdown was in full swing. Few seemed to care that the first five didn’t work.
Some people had the exact wrong view about it—that it was about political power being exerted against the will of the people. Nope. The people wanted this. It was classic crowd behaviour.
Doctors in Victoria tried to raise their concerns but the media ignored them. COVID and the fear able to be created from it had boosted the ailing mainstream media, meaning there was little incentive to promote contrary views.
Those same economists who claimed the benefits of lockdowns outweighed the costs but were called out, tied themselves in knots to now say that you can’t even try to understand costs and benefits in health policy. According to the new logic they had found to justify their position, there is simply no way to know whether your policy response is killing more people. By their logic, if you knew that lockdowns would save a certain number of Quality-Adjusted Life Years (QALYs) from COVID, but cost ten times that number of QALYs from other deaths, they would just say "Oh well, can't make interpersonal comparisons between these deaths so killing more people doesn't matter”. What an embarrassment to the profession.
By now, doctors in Sweden were wondering why COVID seemed to disappear so quickly, even when restrictions on movements were minimal.
I backed my predictions and bought a house.
To be continued… (Part 2 is now available here)
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