The *Love Letter* has a P.S.
As people start reacting to Covid-19, they are looking mostly to the larger businesses for assistance. Costco and Walmart are packed. Amazon and UPS are delivering our packages. For entertainment at home, Americans are relying on Netflix and the cable companies. For information on Covid-19, Twitter is a very useful stop. As hospitals become overcrowded, CVS and Rite Aid may become important as local health centers and sources of community information.
It turns out that the larger, more profitable businesses are the ones that have the talent, the command of public attention and the financial resources to adjust to these changing conditions.
Big business also has been ahead of the curve when it comes to prediction and adjustment. The NBA postponed its season before most politicians, including the president, realized the gravity of the situation.
Only a month ago, there were headlines mocking Silicon Valley for being overly concerned with Covid-19 and for avoiding handshakes. The tech community had a high degree of advance awareness of Covid-19 problems, and it was ready with telework and other adjustments when the time came. The tech world’s penchant for carrying what seemed to be absurdly large surpluses of cash — last year Apple had over $100 billion in cash reserves — now also seems prescient. Apple’s stores are currently closed in most parts of the world.
And this:
Larger businesses are also easier to assist if necessary. Whatever you think of the forthcoming bailout of the major U.S. airlines, logistically it will not be very difficult to pull off, since the targets are large and obvious and relatively easy to monitor. Banks are willing to lend to them, because they know the government does not contemplate a world without major airlines.
It is much more difficult to bail out the millions of small and medium-sized enterprises around the world that will demand assistance. How do you find and track them? How can you tell which have no chance of bouncing back? Government bureaucracies cannot easily deal with those problems, and in turn private banks do not perceive governments to be making credible commitments to these small businesses. By contrast, there are numerous precedents for governmental aid or loans to airlines or other major businesses.
That is all from my latest Bloomberg column, much more at the link. One problem Italy has, of course, is a fairly high reliance on small business.
Bill Dupor of the St. Louis Fed on fiscal remedies
The entire piece is interesting, here are two highlights:
Subsidize COBRA Continuation Coverage Employer -provided health insurance is commonplacein the United States. Laid off (or furloughed) workers, even if they receive higher UI replacement rates, would (or at least could) lose their health insurance. The federal government already has the COBRA program to allow for continuation of coverage for workers losing their jobs. This program, however, requires worker-paid premiums. These premiums increase the relative cost of engaging in nonmarket activities. To reduce that cost, the federal government might temporarily cover 70 percent of the COBRA premiums for the unemployed or furloughed. Calculating an appropriate size of such a program, even in a rough sense, is difficult at this stage. For a baseline, suppose the allocation were $25 billion, which was the value of a similar program implemented under the 2009 Recovery Act.
And here is another way to get cash into people’s hands quickly:
Penalty-Free Withdrawals from Individual Retirement Accounts
Many Americans hold tax-deferred individual retirement accounts. Individuals can withdraw funds on retirement (and a few other special situations) or any time they wish if they pay a 10 percent penalty. This 10 percent penalty is in addition to the taxes that are due on the withdrawal. In the event of a severe viral outbreak, the federal government could temporarily remove this 10 percent penalty up to a certain dollar amount and for a preset length of time. Since the initial contribution to the retirement fund was tax deferred, taxes would need to be paid on the withdrawal even if the additional penalty was waived.
Recommended.
Convalescent Blood Therapy
A simple and medically feasible strategy is available now for treating COVID-19 patients, transfuse blood plasma from recovered patients. The idea is that the antibodies from the recovered patients will help the infected patients. The idea is an old one and has been used before with some success. Here is Robert Kruse from Johns Hopkins (who also makes other suggestions):
A simple but potentially very effective tool that can be used in infectious outbreaks is to use the serum of patients who have recovered from the virus to treat patients who contract the virus in the future. Patients with resolved viral infection will develop a polyclonal antibody immune response to different viral antigens of 2019-nCoV. Some of these polyclonal anti-bodies will likely neutralize the virus and prevent new rounds of infection, and the patients with resolved infection should produce 2019-nCoV antibodies in high titer.Patients with resolved cases of 2019-nCoV can simply donate plasma, and then this plasma can be transfused into infected patients. Given that plasma donation is well established, and the transfusion of plasma is also routine medical care, this proposal does not need any new science or medical approvals in order to be put into place. Indeed, the same rationale was used in the treatment of several Ebola patients with convalescent serum during the outbreak in 2014–2015, including two American healthcare workers who became infected.
As the outbreak continues, more patients who survived infection will become available to serve as donors to make antisera for 2019-nCoV, and a sizeable stock of antisera could be developed to serve as a treatment for the sickest patients.
Kruse worries that the exponential growth of the pandemic will be too fast but I think he makes a mistake. The number of recovered patients will far exceed the number of hospitalized patients so the supply of plasma will rise more quickly than the demand.
Convalescent blood therapy was used to treat people during the 1918 flu pandemic and appeared to be useful (see here for references to papers from that time.) A recent meta-analysis of patients treated with blood therapy during the 1918 flu found good results (noting, of course, that data from a hundred years ago wasn’t ideal) :
Patients with Spanish influenza pneumonia who received influenza-convalescent human blood products may have experienced a clinically important reduction in the risk for death. Convalescent human H5N1 plasma could be an effective, timely, and widely available treatment that should be studied in clinical trials.
Blood therapy has also been used periodically since that time to treat Ebola patients, MERS patients, Junin patients and others but under non-ideal conditions where lots of things were being tried at the same time and controls were not ideal. Results have been mostly positive or non-negative, e.g. this study on 84 Ebola patients found few benefits but also small costs. Blood therapy has also been used for animals.
To implement we need a database of recovered patients. The recovered patients then needed to be tested to find those with the most antibodies. It is probably best to use recovered patients from the same location to maximize overlap although the Chinese brought plasma from China to Italy. Most of the dangers from blood transfusion such as passing on another disease are well understood and should be manageable with testing and knowledge of donors. In rare cases such as Dengue it can bad to stimulate the immune system (see discussion here).
Plasma therapy is not difficult and there are firms with expertise in the field including Takeda and Regenernon the latter of whom developed a blood based treatment for Ebola. Thus, CBP seems worthy of consideration.
Hat tip: Monique van Hoek.
Further Tuesday assorted links
The best economic plan against the coronavirus
I have produced a 7 pp. document, mostly micro- rather than macroeconomics, leaving the pure health and health care issues aside, you will find it here (link is now corrected). Intended for policymakers. Here is the opening bit:
“We need a series of policies to achieve some rather complex ends, and in conjunction. Other than the obvious goals (“minimize human suffering”), these ends are:
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Scale down economic activity in a rapid way to keep people at home, but without devastating the physical, cultural, or organizational capital that will be needed to restore growth and normality.
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Boost the confidence of markets — both retail and financial markets — by showing progress in limiting the spread of the disease. (But note that merely slowing the spread of the disease may not help the economy, as uncertainty would linger for longer periods of time.)
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Keep business in a position to rebound.
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Create incentives for production to bounce back once that is appropriate.
You will notice a tension between #1 and #2-4, which is what makes this policy issue so difficult. The ideal policy mix should both lower and raise output, and at just the right speed. No one ever taught us how to do that.
Furthermore, policymakers need to figure out which sectors a) we wish to keep up and running (food, health care), b) which sectors we want to contract rapidly but bounce back rapidly as well (education), and c) which sectors we do not want to protect at all and would be willing to see perish (e.g., cruise ships, note that most operate under foreign flags and employ mainly non-Americans).
Those classes of sector may require very different economic policies, most of all we should not waste aid on the latter class of sectors. Be nervous of general proposals for “the economy.”
Again, here is the link, please do leave your suggestions in the comments section of this blog post. I thank Patrick Collison for some writing and editing assistance with this document, though of course he is not liable for its final contents or conclusions.
Mercatus call for short papers
Today, the Mercatus Center put out a call for policy briefs related to the COVID-19 pandemic. We hope to gather short, actionable analyses for decision makers in the public, civil society, and private sectors regarding both immediate response (what’s working or could be done immediately), as well as in the medium term (what do we need to be thinking about now so that we’re prepared in six to twelve months).
More information can be found here.
Papers will be published quickly (within 24 hours in most cases), and authors will receive a $1,000 honorarium.
The list of possible topics is advisory and by no means comprehensive; our goal is to assemble the smartest actionable analyses as quickly as possible.
Hedgehogs in particular: what do you know here that the foxes should hear?
Note that research need not directly relate to public policy, but also how the business sector and civil society can and should respond.
Tuesday assorted links
1. Extremely strong claims of intracellular neuronal computation.
4. Does long hair belong in a clinical setting? How about traveling with liquid hand sanitizer?
5. We need new legal protections that make it easier to discharge patients from hospitals.
6. Behavioral fatigue and social distancing.
7. Where testing stands. The best and most thorough look I have seen at that question.
8. “TikTok Told Moderators to Suppress Posts by ‘Ugly’ People and the Poor to Attract New Users”
9. Podcast with Kyle Harper on pandemics in Roman history.
10. An optimistic Israeli case that R0 will fall faster than we think.
11. Susan Athey and Dean Karlan on how to soften the blow on your local economy.
12. By a modest margin, voters approve of Trump’s handling of the crisis.
13. Dube’s unemployment insurance plan.
Sorry for so many links, but they are all worthy.
The Luis Garicano EU economic plan
Here is the tweet storm summary, here is the 3,000 word plan.
Small grants for student work on coronavirus
The highly intelligent Michael Gibson emails me:
Not sure if it’s worth an assorted link link, but we’re giving out $1k grants to students home from campus who want to work on ideas to mitigate the effects of the crisis. People can pitch ideas here:
It matters that more older people are working now
Working women – For the first time, there are now more women aged 60-64 in work than not, analysis of data from the Office for National Statistics shows. The shift has been triggered by changes to the state pension age, the data reveals, with the number of older women in the workforce increasing by 51% since the reforms were introduced in 2010. The number of working men aged between 60 and 64 increased by 13% over the same period. Experts described the shift as “seismic” and said it would have profound implications for women now and in later life.
That is from the Guardian about the UK, via Stephen Gibbons.
Monday assorted links
1. How Shanghai hospitals adjusted.
2. Various classical music archives have been opened. And new Yale on-line course in the history of pandemics.
3. Slides, good overview on coronavirus.
4. Did the U.S. have 100k or so cases by March 12?
5. Hope from existing anti-virals? And a story in Spanish.
6. Wednesday 11 a.m. doing a live podcast with Russ Roberts on corona-related economic issues.
A report from the hospital front, from a reliable source
I visited *** Health Center in ***. They are not a hospital, more like an urgent care clinic funded by the city and state. They act as triage for three area hospitals, take vital signs, can write prescriptions and send serious cases to Hospital ERs. They have been overwhelmed with people worried about COVID-19…They had been testing people for the virus; they have run out of re-agent so they have stopped that….If they were provided with isolation beds and ventilators, could they take 20 patients? No, it is not in their license and an application to change their license takes two years. When NYC reaches maximum hospital capacity, this clinic will not be part of the solution.
I visited [underfunded public health consortium] in ***, which was at the forefront of the response to H1N1 in 2009 and Sandy in 2012. They typically see 150 ER patients a day; during H1N1 they averaged 350 at the peak; they think they will be over 1000 during COVID-19….There is no such thing as a “test kit” which tests for the virus; when people talk about those kits, such as those dropped onto that cruise ship, they are talking about a nasal swab packaged with some reagent, which is then mailed to a facility with a Polymerase Chain Reaction Machine that can look for the RNA from the virus.
You can find PCR machines on eBay for $25,000; such a machine is labor intensive and can do maybe 10 tests a day. The hospital complex I visited, which has been designated a testing center, has been swabbing about 200 people a day and receiving multiples of that number from other hospitals. The vast majority they are sending off to a federal lab. Two weeks ago the turnaround time was three days; now it is five to six.
There are much faster machines. The Roche Cobas 6800 can do 3000 tests a day with very little human interaction; it costs $500k a year to rent, which is way outside a poor hospitals’s budget (while still not providing sufficient testing for the receiving area in the coming months.) Outside their budget until today, when we gave that money (I specified first year only, though they should be sure to ask in a year) as part of a larger check. We also gave money for 10 transport ventilators with two ports, 20 isolation beds, the money to hire 14 nurses for round the clock coverage of those beds for 6 weeks, and other things that they need. Overall it was a $1 million check, with a promise to talk to them in a week to cover anything we might have missed and to talk to them whenever they ask during the crisis. Overall, I was pretty happy with the visit. They were stunned, they work in a bureaucracy where everything takes 3 years.
One thing that they can’t get enough of is N-95s [face masks]. The first thing that almost every doctor I talked to mentioned was the frustration at having to re-use N-95’s, not for multiple patients, but for multiple days.
Again, here are the Emergent Ventures prizes to encourage work to support work to fight the coronavirus, and please support them if you can.
What should I ask Emily St. John Mandel?
I am doing a Conversation with her, no associated public event (duh) and we are likely to do it remote. I am a big fan of her novels Station Eleven (about a pandemic, by the way, I promise you that is a coincidence), and the new forthcoming The Glass Hotel.
So what should I ask her?
*The Infinite Machine*
The author is Camila Russo and the subtitle is How an Army of Crypto-hackers is Building the Next Internet with Ethereum. Yes, this is the story of Vitalik Buterin and Ethereum. Very useful, and I am glad there is now a good book on this topic. Due out July 14, you can pre-order here.
Robert Browning and Ingmar Bergman in a Bloomberg column
With all those fools going to bars and concerts, or running marathons, it is evident we still need to solve the problem of entertainment, as I argue in my new Bloomberg column.
It is instructive to look back to the days of World War II. The U.S. government played a critical role in encouraging Hollywood to make cheery movies, and it helped by not trying to force every actor into the armed services. Major league baseball, the national pastime of the era, continued to hold a regular season and a World Series, again to distract people from wartime worries. Many top players, such as Ted Williams, were away fighting, but there were adequate replacements. The government knew that wartime drama could not be the only drama on tap.
With Covid-19, the goal is to keep people at home, at least if they are not essential workers. But if staying at home is too boring, cabin fever will take over and people will run out to social gatherings when they ought to be staying put. So solving the entertainment problem is one very real piece of the puzzle for minimizing the effects of the coronavirus and keeping Americans not just in good spirits but healthy.
The very worst scenario is that the coronavirus itself — how it is playing out, how officials and celebrities and neighbors are reacting — becomes our main entertainment. It could become an ongoing horror show that drives us crazy and makes people even more cynical about politics.
To avoid such a mix of frustration and terror, I have a modest proposal: We should restructure a few of our traditional entertainments to be safe from the coronavirus.
As suggested on Twitter, how about inducing a few of the cable providers to offer free streaming for a few months? The Met has announced a big increase in opera streaming. And:
Or how about proceeding with some version of the NBA Finals? Take a subset of the best qualifying teams, test every player for coronavirus, isolate them in a remote area with a college gymnasium, and have them proceed with a shortened version of the real thing in front of only a TV crew. With so many other public events closed down, television viewership would probably reach an all-time high, and the sense of drama would be incredible. It would be one NBA Finals we would never forget, and the quality of play would respond to the very high psychological stakes.
Ben Golliver serves up a concrete NBA proposal. You’ll have to click through to get to the Browning and Bergman parts, the latter being Easter egg. At least the Candidate’s Tournament still seems to be on in chess, you can all watch that for the next few weeks, starts Tuesday I believe, try www.chessbomb.com.
Lecturing alone won’t work: we really do need to make it more fun for people to stay at home!