Categories
Nature Society

Delta foxtrot

A couple of weeks ago I WhatsApp-ed a few of my diehard virus-obsessed friends to ask them: “Why is the UK so crap at Covid?”

After all, we’re at the forefront of the world when it comes to vaccinations.

And we’d been stuck in some form of lockdown longer than most countries, too – with restrictions just extended again beyond 19 June.

Yet it already seemed we were on the cusp of a third (fourth? fifth?) wave of Covid.

I’d been concerned enough by the numbers to move my second jab forward by five weeks.

Better to look silly than sorry.

Case studies

That new-wave thesis has since been borne out in the curves:

We’re on the up and up again (Source: World in Data)

Our long lockdown over winter and into spring – plus the hugely successful vaccine rollout – had flattened the last wave by mid-May.

And yet here we are rising again as other countries flatline.

Various theories were put forward by my friends, from weaker guidance adherence at home (allegedly) to tougher restrictions abroad (supposedly).

I don’t buy any of that. To me this is clearly the Delta variant at work.

Always the sick man of Europe

In the past week the rest of the world seems to have woken up to the threat of Delta – or at least the stock markets have.

Yet we’re also hearing the same stuff we’ve heard throughout the pandemic as to why Delta won’t spread across Europe, or surge in the US.

Apparently it’s a British thing because it’s – um – currently in Britain? Yeah we’ve seen that movie before.

The one constant in this pandemic has been wishful thinking, and I’m finally immune to that.

It’s very likely that all those countries in the graphs above will see a resurgence of Covid over the next few weeks. Poorer countries with few vaccinations will be hit worse.

Israel, the other super-vaccinated country, has also seen cases rise in the past fortnight, incidentally.

Of course the pandemic has made us all look silly at one time or another. For instance while I definitely acknowledged the threat in March 2020, I didn’t believe the virus would prove so enduring.

I also feared the economic impact of lockdowns would be far more visible – mostly because I couldn’t have imagined the level of emergency government support and intervention we’ve seen, even in the US.

So perhaps I’m wrong and Delta’s proliferation in the UK is down to some particularly unfortunate set of circumstances here.

Oh, and – um – in India.

Yeah, perhaps not.

Deaths down despite Delta

Happily there is one good bit of good news, and it isn’t wishful thinking.

By and large vaccinations do stop you going to hospital with Covid, let alone dying.

There’s some lag in the data as always (because deaths don’t happen for a bit) but this UK Delta wave isn’t killing as many so far:

(Source: Our World in Data)

True, it’s sobering to think that 15 deaths a day would have been seen as terrible news in January 2020 – and to remember that every death is someone’s lost life and the loss of a loved one.

But deaths were running as high as 1,200 a day in early 2021. We’re in a far better spot right now.

Cases aren’t anything like as high as early 2021 yet, so more deaths will surely follow.

But a crude extrapolation might put us at about 150-200 deaths a day if things got so bad as January 2021.

(And they shouldn’t get so bad, given that more than 80% of people have been vaccinated. Vaccinations must act as some sort of transmission firewall, however imperfect.)

Prime Minister Boris Johnson looks determined to fully re-open the economy, despite Delta. In PMQs today he even used the unofficial term ‘Freedom Day’ for the rescheduled end of restrictions on 19 July.

So it seems we will finally see what “letting it rip” looks like.

Probably a lot of us getting Covid as it becomes a perpetual low-level irritant.

But hopefully not much more dying.

Clearly we can’t keep hiding from the virus forever.

And after the vaccines there’s arguably nothing else left to wait for – except perhaps even better vaccines.

On the other hand, the rest of the world is about to go through Delta. Brewing-up new variants while doing so.

This isn’t over until it’s over – everywhere.

Categories
Society

Crying out for a 0% corporation tax rate

You don’t need to look far to feel bad about late-stage capitalism in 2021.

The sky-high executive salaries.

The crazy valuations on certain product-less, profit-less, SPAC-enabled stock market listings.

Dogecoin.

However we citizens also need to shoulder some of the blame for the ruinous reputation of the system that sustains us.

In particular, well-off middle-class people in the West need to stop drifting through life on the gilded conveyor belt of the market economy, while simultaneously ranting that corporations are evil and cheering when company taxes go up but their income tax doesn’t.

Such hypocrisy extends in every direction, of course.

I could moan about Guardian readers shopping in the departure malls of Heathrow Terminal 5 telling each other ‘capitalism’ is cooking the planet until the cows come home (or more specifically, until the cow comes to their destination mini-break hotel, in the shape of a formerly CH₄ -spewing chateaubriand…) but never wondering if they really needed a third holiday overseas this year, let alone one that lies directly beyond the slowly submerging Maldives.

But I won’t. Let’s just stick with taxes.

Because we’re all taxed more when corporation tax rises.

Just in a more boneheaded way.

Communism versus capitalism

Quick reminder.

Communism believes that people who struggled to remember their gym kit at school on a Wednesday are best-equipped to determine what society needs. Aided and abetted by a one-party system that soon becomes entirely preoccupied with its own survival.

In contrast, capitalism hands the power – and much of the rewards – to the savviest and greediest members of society. That doesn’t sound too promising (and it isn’t) except their self-interest means they’ll typically try to sell something that consumers actually desire, as opposed to putting in an order for another 100,000 tractors for the Volgograd oblast because they owe their brother-in-law a favour.

In other words, at its best capitalism figures out what we need and how to get it to us.

We the people outsource planning, production, and fulfilment to profit-seeking companies.

And – notwithstanding a huge amount of waste, noise, red herrings, and the occasional fraud – those companies deliver, as best they can.

Which is why you’re reading this on an Apple Mac and not a Sovietski 1992 teletype prompter with a pedal-powered CPU.

Who pays corporation tax?

The point is, capitalism mostly makes things we want.

I’m not saying it makes what we should want. That’s a discussion for another day.

But it’s a fair generalisation to say that the successful firms are those that supply the most popular goods and services at the keenest price.

Given this, isn’t it obvious how absurd it is to tax companies at all?

Company A produces a vacuum cleaner that everyone wants to own. It’s sexy, collects dirt like a third-term Tory administration, and lasts longer, too. The company makes as many as it can, as fast as it (prudently and profitably) can.

As a result it gets thwacked with a tax on its profits, reducing the cash it has left at the end of the year.

Company B produces a terrible vacuum cleaner that people have to be tricked into buying. It’s expensive, and it leaves your carpets dirtier than it found them. The company makes no money.

As a result it’s rewarded by our system, by being charged no tax penalty at all.

Why would we tax the company making the things we want – and so directly shrinking it – while giving the loser a break?

If anything we should tax loss-making companies!

You win, you lose

If its profits weren’t taxed, Company A would have more money left to redeploy at the end of the year. Like this, its shareholders and executives would be rightly rewarded for their success.

Instead, the State docks it hard for producing what we want.

Now, there are ways for smart companies to get around this – if their aim is genuinely to grow as much as possible to meet demand.

Amazon is a good example.

Amazon was decried for years as a money-burning chimera, by so-called analysts who somehow missed it was taking over the world on the back of its supposedly dismal business performance.

What Amazon was really doing, of course, was reinvesting everything into expansion and efficiency. By the time the £9.84 you spent on weird soap bombs for gran for Christmas reached the bottom line, there was not a penny of profit to be seen. Yet Amazon kept on growing. You could even track its escalating scale and success in its soaring cash generation figures.

This solution – pre-spend what would be taxable profits before you’re taxed on them anyway – is fine, in so far as it goes.

But we don’t really want capital allocation decisions to be distorted by tax policy.

There are loads of reasons why not, but to give just one – a profitless company can’t pay dividends. Pension fund managers and others who lean on income to meet their obligations must instead sell shares to generate cash. Which is in theory no problem, but in practice for many a problem. It introduces friction and cost, too.

Far better to let every company show its true profitability without fearing it’ll be taxed, and to let it do with the cash what it wants.

In most cases that will include reinvesting to produce more of what we want, which is how it’s making those profits in the first place.

Tax the rich

None of this is to say we don’t need taxes.

Nor that the profits created by companies are somehow ring-fenced from taxation.

No, there’s a very simple way to tax them, which is at the point they leave the company.

That’s typically via wages, dividends, and stock options.

By all means tax salaries, dividends, and capital gains (we do). Increase the rates if you deem it best for the wider good.

I’m not a neoliberal zealot who thinks all taxation is unjustifiable theft.

I’m just saying we should do our justifiable thieving at the point where the money has left the corporation to which we’ve outsourced the meeting of our needs and wants.

At that point it definitely won’t be spent on new factories or superior analytics or employee-enhancing office plants.

It will instead be going on hot tubs and handbags for its owners.

Fine, tax it.

The withdrawal method

Corporation tax makes no sense. In the UK it only came into being in 1965. It seems sex wasn’t the only messy invention of the 1960s.

Indeed I suspect company profits are taxed mostly because they sit there looking so taxable.

Or rather, they were sitting there. This isn’t even true any more, in the era of multinational tax arbitrage.

Probably better today to tax overseas companies operating on your shores via sales and income taxes (on salaries), and to tax shareholders when they extract profits.

Beats trying to fight a pan-global hydra.

Taxing matters

Of course, there are also problems with a 0% corporation tax rate.

When personal tax rates were very high in corporatist Britain, all kinds of middling managers drove around in expensive company cars.

Various personal expenses were put through the company’s books, rather than paid out of a fat cat’s post-tax salary.

It’s an issue.

Nevertheless I stand by the principle.

Taxing company profits in a capitalist society is like paying a cash bung to get a job done in a communist one.

Which of course happened.

Because… people!

Categories
Society

Frictionless burns

Friction gets a bad rap in everyday speech.

For example we talk about the unnecessary friction involved in the home buying process.

Or we’ll say there was a lot of friction between two world leaders.

Or between me and my old boss.

Friction burns are flat-out agony.

Yet when you think about it, friction is almost as vital for our life on earth as oxygen and water.

Without friction we’d be sliding all over the place. Items put down without perfect precision would continue to move across the desk or the floor until they hit a sufficiently chunky obstacle.

And – stretching the definition of ‘friction’ a bit – all the while we’d be being assailed by face-bound objects flying at us through the air and would-be shin crushers rolling on the ground around us.

We’d have to be permanently armoured, and we’d fasten our stuff down with hooks, magnets, and adhesives.

Although really, we wouldn’t – because we’d actually be very different creatures in a very different world, probably more like crabs or corals.

You can’t touch this

Maybe there are lifeforms getting by in the very-near-frictionless depths of space, waiting to be discovered/injured by some ill-prepared earthlings in a rocket ship.

But for now one of the closest approximations we have to a frictionless world is what quaintly used to be termed ‘cyberspace’.

The Internet enables us to move data here and there with virtually no impediments

Of course no laws of physics are being violated. Data centres are heating up. Signals are being boosted along the way. Energy from our transmissions is leaking out into space.

And even in terms of analogy there are friction equivalents, as anyone whose seen their Netflix buffering during lockdown can attest.

But compared to the real-world, the online realm is a near-frictionless place where many of the awkward everyday resistances that have defined our evolution are lessened or absent.

This has consequences – not all of them good.

We the people

Clearly I’m playing with a metaphor here.

But consider how the physically frictionless agglomeration of Reddit was able to mass together and drive up the price of GameStop.

They were aided in this by the frictionless share dealing of the fee-less trading platform Robinhood:

“It’s when friction decreases that you expect much more action, more trading, so going to zero in trading fees matters. The more frequently that people get price updates the more it warps, and changes their behavior.”

Stephen Wendel, Morningstar – Bloomberg, 3 February 2021

The whole thing was orchestrated, obviously, over the Internet, where to the conception of a human mind, information just blinks into existence in different places like quantum particles.

In reality there’s a speed of light and bandwidth thing going on, I know.

But we only notice that when the Net gums up at the limit, when servers are overwhelmed, say.

In contrast 100 years ago a mass buying frenzy on this scale would have involved huge crowd of punters squeezing into bucket shops waving dollars to buy shares, jammed lines to New York, and elbows jostling.

Take out all the friction and you upgrade the mob in ways we’re only just coming to understand.

Nothing’s gonna stop us now

Another example – and a parallel I’ve drawn before – was the Trumpist insurrection in Washington.

How did these people on the fringes of the right develop their views to the extent that they felt entitled to walk into the White House?

Equally, how do so many on the left come to believe that the slightest deviation from their agreed truth represents Neo-Nazism?

In part because the Internet has taken out most of the friction – social as well as physical – from their interactions.

There’s no sawtooth against wood, pulp against milling equipment, or rubber tire on road required for the fringiest elements to broadcast their message to anyone in the world.

Meanwhile on the social side, voicing even extreme views online gets little if any heat – friction – provided you do it in the right corner of the Web.

A National Front thug or a Citizen Smith of the 1970s would have been quickly reminded that few thought the same way if they went too far with their theories in their local pub, let alone at work or with family.

But now there’s mostly no counterforce to their theorising. No friction, short of some interfactional backbiting.

Stop the Word – I Want to Get Off

The frictionless physical world I described at the start of this piece sounds alien and terrifying.

But we might be getting a preview of its potential to cause harm in what it’s doing online today.

Categories
Society

Radicals who have their heads in the cloud

January 2021 saw not one but two semi-spontaneously mobilised armies of radicals take on the US establishment.

On 6 January a mob of President Donald Trump’s supporters stormed the White House.

Their actions were violent and surreal by turns. Lawmakers hid under their desks. The US Capitol was locked down. Several people died.

On 28 January traders from a popular subReddit drove up the share price of troubled US retailer GameStop to near-$500, from less than $20 weeks earlier.

They’d already caused one hedge fund to seek a $2.8bn bailout. Soon brokers were shutting down trading in GameStop, citing a threat to their platform’s operational viability. Meanwhile the market was tanking and there was talk of a revolution on Wall Street.

Whose riot is it anyway?

Depending on what gets your juices going, you may see my associating these two events as offensive in one of many different ways.

Some people will see good – ordinary traders taking on hedge funds – lumped in with evil – right-wing fanatics attacking democracy.

Some will see freedom fighters – battling for a different election result – versus greed – boys in their basements getting rich quick.

Alternatively you may see similarities between the principle agents, but they too will be contrary to the similarities seen by others.

Maybe you see the same angry white male faces in both groups asserting excess privilege.

Or sex-less young men unfairly demoted by society, casting about for meaning.

Or a pandemic that’s made all kinds of people lose touch with reality.

Or a shared frustration with the 1% capturing 99% of wealth creation.

And so on.

How can we all think so different about the same reality – let alone the (il)legitimacy of the events themselves?

Rage in cahoots with the machines

We all know by now the answer is social networks and echo chambers.

Did Trump incite the Washington rioters? Hard to see it otherwise from here.

But his words fell on ears that had selectively funnelled a distinct view of the world to the brains between them for years.

Fermenting a well-fertilised conspiracy myth whose time had come.

Were those amateur traders really trying to strike back against Wall Street and revenge the financial crisis?

That rhetoric pervaded their posts and interviews, even if to outsiders it looked like an old style pump-and-dump. It’s not obvious why they’d say it if they didn’t believe it.

Both groups inhabited online spaces with particular self-evident truths, immutable laws, creation stories, and private jargon.

Which brings me to what these events really have in common.

Tik tok boom

Forget your own version of how the world is going to hell in a handbasket.

Let’s get down to the technicalities.

Because what I perceive are two civic spectaculars spun-out of the unrelenting iterations of algorithms.

Algorithms that forever sift, test, promote, highlight, and propagate the most compelling narratives that emerge about all our social ills.

Making the best – most transmissible – story stick within different self-selected communities.

Creating feedback loops that encourage us to pile-in and promote, highlight, and propagate whatever best fits our own evolving intolerance about how the handbasket is hell-bound.

Hitherto most of the fallout from this sort of thing has been suffered by individuals in the form of online persecution.

Women harassed, threatened, and driven offline or worse by battalions of angry gamers, many of whom apparently believed they were just standing up for unbiased journalism.

Or woke students righteously de-platforming academics and others whose opinions or work falls outside of what their faction currently deems to be a speakable truth.

This was quite terrifying enough. (All that protects anyone from an online hate mob is good luck and obscurity.)

But with the White House insurrection and the GameStop short squeeze, we can see the invisible hands of these algorithms mobilising real-world happenings on a grander scale.

Not through any conspiracy or masterplan.

Just as a by-product of totally understandable commercial imperatives.

Radical pique

This may seem fanciful.

There are deep political divisions in the US, after all. And there have been frothy share discussion boards for decades.

History is replete with semi-spontaneous uprisings, too.

What’s different, you might ask, except for faster and wider communications, and the much deeper integration of the substrate by which these narratives spread into our daily live?

The phones we carry everywhere at all times in our pockets and purses? And check first thing in the morning and last at night?

That host the online platforms some of us seem to derive our sense of self from?

Well that’s plenty enough.

But I also think a big difference is there’s an aimlessness – literally – to all this which is different to say the civil rights battles of the 1960s or boiler room schemes that profit from the rise and fall of penny stocks.

From what I could tell from the news reports, for every super-pumped, weapon-toting rioter at the White House, there were two or three who appeared to be playing some kind of far right-wing LARP.

Photographing the sights, the flags.

Queuing to take part in the insurrection like tourists at Disneyland.

Equally, little thought had been given as to what was supposed to happen next when the GameStop share price did soar 70-fold and hedge funds started faltering.

Very few of the traders (at least of those who made it to the top of up-ranking discussion algorithms) talked about selling at the highs.

They had ‘diamond hands’ and would hold until GameStop doubled again and again.

And, um, again?

Boring old farts like me warned that a short squeeze is finite, and that you didn’t want to be holding the bag when the move turned.

I guess our dull story was slow to go viral.

Days when decades happen

Viewed through this lens, such events seem like almost random happenings that emerge from the excesses of social media mechanics.

With participants who mostly never set out to end up there.

True, perhaps this isn’t entirely unprecedented.

It took months for the French revolutionaries to decide what to do with King Louis XVI once they had him, for instance.

And that revolution continued along its murderous way in unscripted chaos for years.

Maybe the real difference is just that these things seem to pop-up and attract global attention within weeks, rather than over decades.

Karl Marx’s Das Kapital was published in 1867. More than 50 years passed before the Bolshevik’s established the Soviet Union – communism’s first State-level touchdown – in Russia.

You wonder if it would now take a summer.

Then again, there’s a lot else to be going on with these days.

Every week some new unparalleled mania.

Maybe what protects us is the sheer noise of it all. A new Marx might not be heard for long enough for anyone to really listen.

Or maybe it would happen quicker, like everything else does these days, as we spin towards the singularity?

If that thought bubbles to the top of global consciousness, just remember you heard it here first.

p.s. A friend mentioned the Arab Spring of late 2010 when we talked about this theory. My memory was it had involved more peer-to-peer communication – direct messages between young people – rather than having been nurtured by algorithms. It seems social media played some disputed role, however. So this has potentially been going on for a decade.

Categories
Investing Society

Bursting bubbles

How it started, and how it’s going.

Seems like everyone I know and read believes we’re in a gigantic stock market bubble. A green bubble. A bond bubble. A real estate bubble, at least in the US.

I get it. There are signs of mania all over if you want to see them.

Freetrade and Robin Hood junkies punting their way to overnight riches on hot momentum stocks.

Government bond yields only just back off the flatline.

Tesla’s shares rising from $100 to over $800 in less than a year.

Bitcoin multi-bagging to more than $40,000.

The SPAC boom.

Some call it the everything bubble.

It’s a bubble-spotter’s paradise.

It’s the end of the world as we know it

Consider though the times we are living in. Are they not unprecedented?

  • A global pandemic that has half the world in self-isolation
  • A US president who urged his supporters to insurrection
  • The major central banks holding short-term rates at near-zero for the foreseeable future
  • Governments borrowing and distributing significant slices of our future wealth as stimulus and life support today
  • We’re maybe 50 years away from catastrophic climate failure

That list feels like it barely scratches the surface.

Given the strangeness of the times, should we really be surprised to see pockets of apparently irrational activity spilling into the capital markets, too?

Wouldn’t it be stranger if the financial world stood apart from all the mayhem?

If equity markets were processing at a stately 8-10% a year clip, and Treasuries returning 3% a year?

I’d join the conspiracy theorists in such a reality.

Same difference

Contrarily, what if the world isn’t so unusual right now?

My friend posted the photo above contrasting two generations of world leaders to Facebook. It got the traction you’d expect.

Yes, we do seem to be living in a madhouse run by clowns.

But consider that 1940s portrait again.

Stalin killed tens of millions.

Americans added the Twenty-Second Amendment in the wake of Roosevelt’s fourth term, because they sniffed dictatorship.

As for Churchill, I’m unfashionably and on balance a fan, but the man conducted briefings in his bathtub naked and often began his daily drinking before I break my intermittent fast.

The point is history looks neat in the history books. Trite but true.

It’s the same with stock market bubbles.

Anyone can see a bubble once it’s burst.

And it’s equally easy to see a bubble that isn’t a bubble.

It’s all the shades in-between that make reality – and investing – such a challenge.

Sorry to burst your bubble.

Categories
Society

Relocation, relocation, relocation

Blah, blah, blah…

No, that’s not a publishing error. I haven’t forgotten to write my introduction.

It’s how I feel when I read the whole world of work – and with it office and home property – has changed forever due to Covid-19.

From the Financial Times:

In the world of social distancing, many of the world’s office workers have not seen their desks for weeks. But when coronavirus lockdowns finally ease, there may be fewer desks to return to.

Facing a sudden need to cut costs, chief executives have indicated in recent days that their property portfolios look like good places to start given the ease with which their companies have adapted to remote set-ups.

“The notion of putting 7,000 people in a building may be a thing of the past,” said Jes Staley of Barclays.

Financial Times, 1 May 2020

That is just one of innumerable articles. I picked it because Staley was one of the first big shot CEOs to jump on the bandwagon fleeing Central Business Districts in big cities across the globe.

Back in May, with lockdown underway, it was easy to be gloomy.

But here we are in September and the narrative hasn’t really changed. Indeed it’s gone mainstream.

From Marie Claire:

Following COVID-19, over 3 in 5 (63%) respondents strongly or somewhat agree that following the pandemic the 9-5 is, in fact, over. This shows that the 9-5 as we know it doesn’t suit workers, and perhaps, it never did.

Marie Claire, 10 August 2020

That article covers lots of angles, with survey results suggesting the Marie Claire demographic is divided about the future of office life.

As for the stock market, it also has… an opinion:

Source: Google Finance, 2 September 2020

Shares in Landsec (LSE: LAND) are down more than 40% for the year. They were hardly booming beforehand.

At the end of its last financial year, Landsec’s net tangible assets per share (TNAV) were £11.92. So Landsec shares are trading at a discount of more than 50%.

Seen another way, the market is prepared to pay £500,000 for ownership of a building that surveyors value at £1 million.

Shares in REITs like Landsec have sometimes trading at premiums to TNAV, so this is no structural feature. One side is too optimistic, and the other pessimistic. The property can’t simultaneously be worth £11.92 and £5.66.

Okay, it’s not quite so simple. The market is discounting future cashflows and uncertainty, and Landsec’s valuers aren’t making their estimates based on a firesale of all of its properties for cash.

But the discount is vast enough to make such points moot. Something is wrong somewhere.

Meet me for a coffee

This isn’t all about offices.

Landsec is only partway through getting rid of dated retail assets.

Worse, what it thought were its prime retail assets – coffee shops in mixed use ‘campuses’ in Central London locations and the like – were rendered sub-prime by the virus.

I do believe the shift to online retail is real and continuing. Some discount is surely warranted.

But more than 50%?

I suspect you have to believe the Everything Has Changed outlook for that to hold.

Personally, I doubt everything has changed. There were lots of reasons for lots of people to cram together when working in the past – and always plenty of reasons not to.

In contrast, the purported huge change has been sparked by just one thing – Covid-19. That won’t last forever.

Yes, some companies have been exposed to how modern technology can stand up virtual offices that enable plenty to get done more cheaply.

But that technology existed before Covid-19. Lots of companies were already using it.

I also suspect many companies are coasting on the institutional memory, networks, and systems acquired by working together.

There’s a sunk cost they are benefiting from that would need to paid some other way in a massively distributed working world.

Of course this doesn’t apply to one-man bands and start-ups. But it never did.

Nearly there

A friend of mine works for the Google AI division Deep Mind in its Kings Cross campus. Those offices were deliberately built in Central London on a campus that – also very deliberately – includes the new home of the longstanding Central Saint Martins art college and the new Francis Crick Institute for biomedical research.

These facilities were all built close to each other for a reason.

I had exposure to the ‘future is working from anywhere’ meme in the early 90s. We had the Internet at my university, and I was years ahead of the masses in predicting people would soon work wherever they liked, thanks to ubiquitous connectivity.

Very early, and very wrong!

In the years that followed, Silicon Valley prospered and London boomed. Prices rose in the prime cities of the world as young smart people stove to live, work, and play near each other.

The potential for a pandemic was always present. It will never go away. But I suspect our memory of the hassle, pain, and loss will.

I think the fear of density is a blip.

There will be changes due to lockdown and the virus – especially for those who lived through it (i.e. generational) – but there were incentives to proximity in 2019 and I think there will be in 2022.

My view: The more people can be anywhere, the more they will want to be somewhere.

Disclosure: At the time of writing I own shares in Landsec and a flat in London.

Categories
Society Technology

A singular feeling

“I’ve had enough,” said Simon the other day in a lockdown Zoom chat. “I just want things to stop for a while.”

“God I miss the 1990s,” he added.

“It’s true,” I said. “Nothing happened in the 1990s.”

“Maybe the PlayStation.”

Like a lot of people, I’ve got the sense the world has been going slightly crazy in the past few years.

The financial crisis. A bear market. Online warfare. Trump. Brexit. Russian bots. A bear market, again. A whipsaw rally.

A virus that flies commercial. Around the world in a month, not a year. A horror story you see coming, between the photos of your aunt’s cat on your social media feed.

I realised I’ve been thinking about this all wrong.

This isn’t an overwhelming number of things happening.

It’s all the same thing happening.

It’s exactly what my friend Simon says. The world is speeding up.

It took over 500 years to go from Gutenberg’s printing press to IBM’s electric typewriter.

It took 25 years to go from the electric typewriter to the Compaq desktop PC.

15 years from there to the Imac. Ten years from iMac to iPhone.

Five years from mobile phone calls to Facebook to WhatsApp.

People aren’t shouting at each other on Twitter because they have gotten angrier.

They’re shouting on Twitter because it exists, and before it didn’t.

People don’t disagree with you because they know better.

Everyone disagrees because nobody is sure of anything.

The government lied. Wall Street lied. The news lied. Facebook lied. Now everything might be a lie.

And faster and faster it goes.

This is how we make way for the singularity.

Not with a bang. Not a whimper.

A whirligig.

Categories
Society

Life moves pretty fast

A quick update on developments in Covid-19, most of which support the thesis outlined on this blog over the past six weeks.

(The notable exception is the lost years to Covid-19 fatality research. Seemingly much higher than I was presuming).

We now know there were indeed probably vastly (i.e. orders of *magnitude*, not low %) more cases of Covid-19 in hotspots than officially being estimated even a few weeks ago, although this data is still very preliminary and uncertain:
https://www.marketwatch.com/…/more-than-21-of-new-york…

We now know there’s a strong chance the virus will slow in summer due to sun/warmth, and may never spread catastrophically in the hot developing world for same reason; always seemed likely but the pushback was (and still is) no sure proof:
https://metro.co.uk/…/us-says-covid-19-lives-just-2…/

More evidence/modelling suggesting the virus could indeed have been spreading in NYC and (I am suggesting) London weeks before being officially recognized:
https://www.nytimes.com/…/coronavirus-early-outbreaks…

It’s still too early to be sure, but signs from Sweden are that ultra-lockdown, with its catastrophic impact on the global economy, is probably an over-reaction. E.g. Sweden is still bad but better than us:
https://twitter.com/jburnmurdoch/status/1253459552164556802

(I think our first three-week lockdown was prudent in the circumstances but we need to transition to something softer ASAP. Also, you probably have to lockdown *very* early to have a big impact on spread, and then you leave yourself vulnerable to importing future waves. E.g. Early test-and-trace success Singapore is now back to 10,000+ cases).

I’m actually disappointed by what I see as a low % of antibodies in early New York results (21%) that has so shocked the US media for being high. But all told this is a meaningful set of developments.

On the other hand a new research paper very depressingly suggests on average 10 years of life lost to a Covid-19 fatality, which is definitely higher than I would have thought from casually skimming the data in the past weeks:

https://wellcomeopenresearch.org/articles/5-75

One outstanding question for me remains whether full lockdown is a bit of a sideshow once the virus is spreading at scale, and doesn’t much impact the natural history of a local pandemic.

Remember I’m just an interested citizen trying to convert uncertainty into risk as a way of coping with lockdown.

I definitely have my own biases, so please take everything here with a pinch of salt.

Categories
Society

Locked and unloaded

A week before the UK government spun on its heels and ordered a nationwide lockdown, I got my hair cut.

While I still could.

My hairdresser and I discussed the virus, the shutdown in Italy, and how business for him had already slowed to a trickle.

I warned he’d probably have to close up entirely in a few days. I’d studied the graphs, and it was clear we were going the way of Italy. An Italian-style lockdown seemed inevitable.

But he was having none of it.

Why should there be a lockdown in the UK? This wasn’t Italy. We didn’t have lots of people dying. How could they order everyone to stay at home? People needed to get their hair cut.

And he couldn’t survive without work for weeks on end.

Who could?

Here, there, everywhere

I don’t want to single out my hairdresser for his lack of foresight.

Because ever since the novel coronavirus – SARS-CoV-2, or Covid-19 – appeared on our collective radar, most people have been confounded by events that seemed pretty predictable.

If the virus was discussed at all by Western firms and economists at the start of 2020, it was in the context of supply chain disruption.

I was astonished at talk in January and February about how China would suffer as companies permanently shifted their supply chains to nearby places like Vietnam.

The implication was this was a Chinese problem – even as the virus was already spreading to neighbouring regions and beyond.

Why wouldn’t the virus come here? And if we failed to contain it in just a dozen places, why wouldn’t it spread everywhere?

Well, we know what happened next.

The latest surprise is from people who are shocked to learn that if you switch off the economy, you barrel towards a depression.

Yet just a month ago – as every newspaper and Twitter pundit screamed at the government to impose a total lockdown instead of – they all but alleged – killing people for kicks, there was almost no talk about the economic consequences.

I felt heretical when I wrote here a few weeks ago:

I believe there’s a very high probability the strategy of isolating everyone as much as possible that is being pursued across the world will crash the global economy.

Note: This is a bad thing.

If you think we have political/inequality problems now, you won’t like it better with a couple of million suddenly unemployed in the UK alone, alongside tens of thousands of bankrupt businesses.

– Fear is a Virus, Bennallack.com, March 18, 2020

Back then even the financial press was still talking blandly about “economic downsides” and a “potential recession”.

I thought a recession was pretty nailed-on. Only the loneliness of my position gave me pause.

This blog is still new and it has no readers. So I decided to share that post with my friends on Facebook.

It’s a sign of how nervous I was about pointing out the – cough – ‘economic downside’ that I only shared it with close friends via a special list. Their response was still pretty frosty.

Now people have started to lose their incomes at a record pace – or seen their friends lose theirs – and suddenly everyone gets that you have to do some outputting to have some economic output.

This week we were told the Office for Budget Responsibility sees UK GDP plunging 35% if we continue in lockdown.

The Guardian put this decline into context for those fortunate folk who don’t spend their lives immersed in financial esoterica:

We’re gonna need a bigger Y-axis.

Meanwhile in the US, all measures of distress are flashing red.

For example the Empire State Manufacturing Index just came in at minus 78.2%. That’s more than twice as bad as the worst figure seen in the financial crisis.

With many millions having lost their jobs, the US unemployment rate is up to at least 12% – the worst since the Great Depression.

By the time you read this, I estimate at least 22 million Americans will have officially filed as unemployed.

I suspect the real figure could be well over 25 million, given how the State apparatus is being overwhelmed by surging demand.

All this in less time than it takes your monthly Netflix subscription to roll around.

No obvious solution to Covid-19

Did we have to go this way? I don’t believe so, although we’ll never have a counterfactual to know for sure.

As I’ve written before, one alternative would have been to exploit the restricted demographics of the victims of Covid-19.

We keep being told the virus “does not discriminate”. But we know its lethality definitely discriminates: by age and underlying health.

Given the enormously wide variation in experiences of different countries in dealing with their pandemics – hard though they are to be confident about, given the varied testing regimes – there’s probably much else going on besides. (I suspect Vitamin D, obesity, and pollution will also prove to be part of the picture.)

I concede the government probably had no choice but to order a nationwide lockdown – albeit this was partly as a consequence of its muddled initial response.

But it should have been stressed (and planned) that this was to be temporary. Maybe a month to give us breathing room.

Personally I suspect Covid-19 is massively infectious where it spreads (countries like ours, as opposed to hot countries in Africa where it seems pretty impotent, and especially in big, polluted cities with public transport systems like London and New York) but also mostly harmless.

Indeed I’ve a hunch that working back from what I guess is a pretty low mortality rate (maybe as low as 0.3%) that five to ten million Britons have had the virus, largely asymptomatically.

It also seems reasonable to assume the virus was spreading rampantly in March in places where the old and vulnerable are clustered, such as hospitals and care homes. So unfortunately the very people most likely to die from this coronavirus may have been in the firing line in the first wave.

Cast your mind back. There was none of this six-foot wide berth on the pavements going on then. Everyone was hugging, hand shaking, and going to the Cheltenham races.

If it’s as infectious as it seems, why wouldn’t it have spread everywhere? It probably did.

So what then was the alternative to opt-in economic carnage?

Like everyone I’d have preferred testing, tracing, and aggressive quarantine, but that’s much easier written than done from scratch.

As I said last time, my Plan B would have been mandatory lockdown of the over-65s and anyone else deemed vulnerable, coupled with aggressive physical distancing. No handshakes, no kisses, et cetera.

It’s instructive to look at Sweden. That country has no enforced lockdown, and while a fear-mongering Guardian stresses its deaths per million figure is higher than its neighbours, it is still not much more than half of ours.

Judging by these stats, far fewer Swedes are dying with the virus than Britons, adjusting for population.

Remember: That’s with no lockdown.

This is a bit of a flyer, but I believe it’s possible we may learn in time the whole lockdown manoeuvre was a phoney war that did nothing much to alter the natural history of the virus.

Here’s locking down you, kid

This all matters because full lockdown is the embodiment of government-sanctioned catastrophic thinking – modelling the worst that can happen and then turning every dial to 10 to try to ward off that supposed direst outcome.

It’s blown up the economy, and people’s common sense.

I know people in their 40s who leave their mail on the porch for days, then bleach it. They unpack their shopping with disposable gloves.

One of my closest friends isn’t going for walks during lockdown. He even says he’ll stay inside after the lockdown is lifted.

“Why shouldn’t I do everything I can not to get this disease?” he retorts when challenged. “Can you tell me there’s no chance I will be sick or die if I catch it?”

My friend believes this is a winning argument. In reality it only proves how detached from rationality people have become.

The sensible justification for lockdown is to curb the transmission rate of the virus and so curb the pressure on the health service – so that hopefully we won’t need, for example, the NHS Nightingale hospital in London that currently lies all but empty.

Lockdown is not so that someone like my healthy friend doesn’t get a mostly harmless virus that they’ll probably eventually get anyway.

I try to reason with him. Will he no longer eat at restaurants in case of food poisoning? Will he quarantine himself away from October to April so he doesn’t become one of the 12,000 to 17,000 seasonal flu victims in Britain each year? Will he no longer travel by accident-prone car?

What about his lifestyle? Will he stop drinking – he often goes over the limit – and will he lose weight and eat a vegetarian diet?

Of course not. His newfound ‘rational’ regard for his health extends only as far as Covid-19.

My friend recites the official death toll – roughly 13,000 in the UK as I write, though I calculate it’s probably more like 20,000 if you take into account care homes and other out-of-hospital deaths.

But he doesn’t know this statistic includes everyone who died in a hospital that tested positive for Covid-19, regardless of whether they were even showing symptoms, let alone if it killed them.

No doubt many are dying of the virus – the death rate in the UK is well above average right now.

But 13,000 were not killed by Covid-19. Probably nothing like it.

If you went out today and got hit by the proverbial bus – and then when you were tested after dying in hospital you were found to have the virus – you’d go into the coronavirus stats.

Again, regardless of whether you were even showing symptoms.

Consider this graph:

The BBC continues:

Every year, about 600,000 people in the UK die.

And the frail and elderly are most at risk, just as they are if they have coronavirus.

Nearly 10% of people aged over 80 will die in the next year, Prof Sir David Spiegelhalter, at the University of Cambridge, points out, and the risk of them dying if infected with coronavirus is almost exactly the same.

BBC, Updated 14 April

Meanwhile, any young person who is unlucky enough to die with Covid-19 is splashed across all the newspaper front pages, as if in warning to their teenage peers who are struggling to stay inside with their parents, 24/7.

Because this virus does not discriminate, remember?

Only, it does discriminate. Last I looked fewer than 100 people under-40 had tested positive for Covid-19 at death.

Most will have unfortunately had underlying health conditions.

Saving for the future

Of course if we’re doing a lockdown then we should all lock down.

I am, despite my personal misgivings and the fact I suspect I’ve already had it. The kids should, too.

My point is not that we should freestyle our actions in the face of the virus.

It is that the climate of fear we’re enduring in the UK – and which is so absent in grown-up Sweden – has distorted everything.

That’s why anytime a politician suggests we need to look for a way out of lockdown, an army of the terrified or the virtue-signalling shouts them down.

Like me, the professional pundits among them are mostly middle-class journalists writing from their comfortable home offices, enjoying their ongoing salaries, and perhaps removed from the reality of the millions who’ve lost their jobs.

They protest that we can’t put a price on health.

Firstly, we can and we do it all the time. (Learn about QALY).

Secondly, this lockdown will itself kill people.

Again this felt dangerous to write four weeks ago, but now academics are steadily popping up to say the same thing.

Even the fearful Guardian has looked into domestic abuse killings, which have already doubled.

But there’ll be lots more going on than that.

People aren’t seeing their GPs. People aren’t exercising. People are drinking more. They are deliberately socially isolated – a known marker for all sorts of bad outcomes.

This is just the start. Throw unemployment into the mix, food poverty, educational disruption, and most especially loss of tax revenues for future health spending, and it seems very possible more people will die from lockdown than from coronavirus.

You still think I exaggerate? The government is reportedly looking at 150,000 deaths as a long-term result of an ongoing lockdown.

And University of Bristol researchers estimate that with a 6.4% decline in GDP, we’ll see more loss in life expectancy due to lockdown than we saved from Covid-19.

Clearly this is all very uncertain.

However it gives lie to the idea that caring about the economic impact is simply advocating for greed.

Buy now, pay later

Just in case I’ve won you over and from now on you’ll pause a moment before shouting “Murderer!” at any politician who suggests ending lockdown would be desirable, allow me to snatch away my victory by concluding with some more economy-minded thoughts.

Because even aside from its impact on our health, lockdown is a terrible thing to hurl at the economy we all depend on.

Government and Bank of England support – while commendably swift and extensive – is implicitly picking winners and losers.

For example, self-employed people who happen to operate through a limited company are being massively disadvantaged compared to sole traders, by overnight government edict.

That would have been a fierce multi-year wrangle before.

Or take physical retailers. While the secular trend towards online shopping is clear, some were managing to adapt to a hybrid model, helped along by firms like Shopify. They (and their landlords) have been chopped off at the knees, again overnight.

Shutting down the entire economy will have broken lots of fragile connections that have taken years to build up. People and firms will make other arrangements, and so they may not be around when the switch is thrown back on. A free market is an ecosystem, where millions of entities depend on one another.

This means that after an initial growth spurt when we’re finally allowed out again, the recovery will proceed in fits and starts. Productivity will likely be dinged for years.

Entrepreneurship has fallen. Who’s starting a business now? Who will start one if saddled with debt from the upcoming recession?

That’s important because small and new companies are the lifeblood of innovation, and of job creation.

Talking of debt, all that government support doesn’t come free.

Here’s an estimate from the Financial Times:

Alas, poor austerity, I knew thee well…

The government is quite right to be spending money. Injecting funds now to suspend as much of the existing infrastructure as possible in economic carbonite will help kickstart growth when we do come out of lockdown.

Indeed those – especially in the US – who criticise state action as subverting the free market even when the government has already done the ultimate subversion by telling industry to go home and watch YouTube, well, that is how laissez faire capitalists get a bad name.

So yes, the state spending has to be done – but there will be a reckoning.

Hopefully the powers-that-be won’t try to austerity our way out of the deficit this time. If they do then our great grandkids will still be living with the consequences of Covid-19.

But one way or another, making up for lost output now by pulling it forward from the future will need to be paid for.

Taxes will rise, and savers may see their cash inflated away.

Calculating the final cost of all this – in lives and years lost versus those saved, in temporary and permanent economic impairment, and on household balance sheets – will take years.

But at the least, realise there is a cost.

And maybe don’t shout at the telly when somebody muses it’d be a good idea to end this lockdown ASAP, even if the health experts ultimately decide we can’t.

Categories
Society

Fear is a virus

Unpopular opinion: In a couple of months we’ll probably see the global lockdown strategy to tackle COVID-19 is flawed and unworkable.

I believe there’s a very high probability the strategy of isolating everyone as much as possible that is being pursued across the world will crash the global economy.

Note: This is a bad thing.

If you think we have political/inequality problems now, you won’t like it better with a couple of million suddenly unemployed in the UK alone, alongside tens of thousands of bankrupt businesses.

When virus fears go viral

We’re lucky this virus overwhelmingly kills only the elderly or vulnerable. This should give us a fighting chance to respond flexibly, compared to if everyone was equally likely to be killed by it.

However there’s little suggestion of that in the tactics to-date.

I’m definitely NOT saying do-nothing to mitigate the spread. But I struggle with the logic of the current universal approach.

Yes, like everyone I’ve seen and shared the flattening the curve graphs. And I too find the argument very convincing:

Doing something is clearly better than doing nothing.

But again, rather than “all in it together” I can’t see why for instance we don’t try to reduce escalation of hospital cases by extremely isolating the more vulnerable to try to reduce the hospital load.

This would then leave the rest of us soldiering on to keep the economy going – and to get on with getting and shaking off the virus, which is exactly what is needed in the long run.

Is the immediate lockdown aiming to buy time to get through the first wave, to make more ventilators, et cetera?

If so, then let’s communicate that it’s a one-time drastic measure. That might reduce uncertainty and enable businesses to plan and raise financing, rather than giving up and firing staff or folding.

Any vaccine is 12-18 months away, so the plan can’t be meant to get us to that, surely?

Is total lockdown the solution because even if COVID-19 only kills say 0.2-0.4% of under-60s, that’s still a huge number?

That makes some sense, though I’d like to see how the 0.2% for the youngest cohorts is further segmented according to existing health conditions (as would everyone else, I know.)

Perhaps the epidemiologists are correctly telling us that the more comprehensive the lockdown, the fewer COVID-19 deaths.

But does their analysis take into account all the non-virus externalities caused by such a lockdown?

And how many of the old and vulnerable cohort predicted to die by the models would have – very sadly – died anyway over the lengthy forecast period?

Misheard immunity

On balance, I suspect the initial – misunderstood – approach by the UK government was probably along the right lines, if flawed in presentation and implementation.

It did not seem to do much to specifically isolate the old – probably for political reasons – to the extent that the populace took the strategy to be aimed at deliberately killing them.

Nor was there much emphasis on the quick and easy wins of social distancing – versus later guidance to self-isolate and avoid pubs and restaurants, which is going to be economically ruinous.

But it at least foreshadowed the elephant in the room: that most of us are going to (and need to) get this virus.

In my (clueless) opinion it would make much more sense for everyone over-65/vulnerable and their carers to be isolated indefinitely (i.e. stay inside, food delivery at a distance of five-foot from the front door) and for the government to spend several tens of billions mobilising the army/others to deliver food and other essentials and give income support until the threat abates.

The cost would be astronomical, but it would be targeted and will anyway probably be less than seeing a self-inflicted economic armageddon because you tried to lock away everyone in the prime of their productive lives and blew up several vital sectors (e.g. hospitality, retail) doing so.

The vast majority of the non-vulnerable could then aim to social distance according to the 80/20 rule, rather than Prepper-style…

  • Keep apart from one another
  • Wash our hands regularly and without fail
  • Zero hugs, zero kisses, zero handshakes
  • Stay at home when we get the virus
  • Sensible social restrictions where greatest modelled impact
  • Use hand sanitiser gel like Howard Hughes having a bad day
  • More regular cleaning of communal spaces, especially fomites like door handles, counters, and lift buttons

…but otherwise life, work, eating out, and buying a latte goes on.

The virus would spread, but social distancing could slow it down.

The cost of economic collapse

A deep recession will cause untold personal misery for millions, and smash tax revenues.

There will be less money for hospitals, schools, nurses, and the rest of the Richard Scarry professions. Poor kids will grow up with greater food insecurity. Relationships will break down.

More immediately, closing GP surgeries for instance means children’s rashes going undiagnosed, odd lumps not spotted. People are going to die anyway due to lockdown, albeit fewer from COVID-19.

Calls for economic stimulus as an offsetting response are misguided. You don’t electroshock a patient you deliberately put into a coma.

Direct loans/grants for individuals/businesses are much more sensible but I doubt they can stave off a big recession.

Eternal return

The full lockdown strategy would be a clear winner if the current COVID-19 outbreak was a one-time event.

But I’ve not heard anyone explain how given we got to today’s state from just a handful of hapless travellers bringing us the virus mere weeks ago – from the very few places in the world where it was at that point established – why it won’t keep happening repeatedly until we get a vaccine or treatment, or until we’ve mostly all had it.

The current Draconian lockdown probably won’t even work therefore and will be abandoned. The cost will be for nothing.

I’m following the official government guidance and I think you should, too. This isn’t a call for anarchism.

But we will probably have to do something different soon.

Update: New data suggests more young people are being hospitalised than was reported earlier in the crisis. This would undermine the case for a more segmented approach to guidance.

From the FT:

Dr Mike Ryan, the WHO’s executive director, said two thirds of those who are in intensive care for the virus in Italy are under the age of 70, and 12 per cent are under 50. In South Korea, nearly a fifth of deaths were of people under 60, he said earlier in the week.

Interestingly, more than 80% of those who have tested positive for the virus in Germany are under-60. That said, given Germany’s low death rate and high testing, this could be seen as reassuring if it indicates the virus is actually quite widespread already.

Update 20 March 2020: I just went out to buy bread and (like every day this week) a socially-distanced latte from the small indie coffee shop in the station that is probably going to go bust after a month of this semi-lockdown.

The streets are full of old people shuffling around, chatting, not wearing masks, buying provisions. I counted them (this is in a subdued suburb of West London) and in a 20-minute walk I got to over 100 definite over-60s and more than 40 over-70s.

I would estimate about one-quarter of everyone I saw was in this vulnerable group. Anecdotal but suggestive.

At the same time today we have the government back-tracking on a rumoured London lockdown.

So to me it looks like the worst of both worlds — a half-baked London lockdown where people come and go at leisure (i.e. NOT what seemingly worked in Wuhan in China, which was much stricter) and at the same time a crashed economy – with as far as I can see a large potential COVID-19 exposure to elderly / vulnerable demographics.

I’m not saying my thought piece above is correct. But I maintain it’s a question worth asking. Especially given we don’t seem to be doing the lockdown properly.

Caveat: Armchair know-nothing non-epidemiologist, just musing aloud.