The coronavirus pandemic is not just one global crisis. It is actually two distinct crises rolled into one.
- On the one hand, there is a public health crisis. The speed of contagion combined with the severity of symptoms — for about 20% of those who catch the virus — leads to hospitals becoming overrun.
- At the same time, there is an economic crisis. The work stoppages and severe “social distancing” measures required to slow the contagion rate — and protect the hospital system — are deadly for the economy and threaten to usher in a brutal recession or even a depression.
The crisis elements seem to be in direct conflict. If you fight the virus directly (with stoppages and social distancing), you kill the economy. But if you try to shelter the economy, the virus spreads like wildfire.
Here is the good news: An answer exists. There is a way to handle both crises at the same time.
Based on what we have seen in other countries, and based on what we’ve seen of the coronavirus thus far, we can say with confidence there is a way to beat the pandemic, while saving the economy, too.
What it comes down to, aside from a bit more hunkering down, is four things:
- Test Kits
- Supply Chain Coordination
If a country has sufficient quantities of those four things, the battle can be won, while protecting the economy. But you need all four, and the virus can’t be fooled.
Consider two countries with notable success in the pandemic fight thus far: South Korea and Germany.
The notable thing about these two countries is their prodigious rate of testing. South Korea is reportedly testing 15,000 people per day, or 105,000 people per week. Germany’s testing rate is even higher, at a reported 160,000 per week.
If America had a test rate comparable to Germany’s, in proportion to population numbers, it would be testing at a rate of 640,000 per week.
Why does testing matter? Because with widespread testing you can spot-check for the virus, while still allowing your economy to function.
In South Korea and other Asian countries, the shops and restaurants are open. Public transport is still running. Non-essential businesses can still operate.
The difference is that, everywhere you go, temperatures are checked with an infrared thermometer. It’s quick and easy, with no human contact. And then, if anyone has a high temperature, they are immediately tested.
The slight inconvenience of temperature-taking all over the place — every time you get on a bus or walk into a shop or enter a building — enables normal life to function. But testing is key here. The ability to test en masse is a form of spot-targeting the virus. This keeps spread rates down, which saves the hospitals from being overwhelmed.
So, the first thing America needs is test kits — huge volumes of test kits, enough to test hundreds of thousands of Americans per week. This will allow the vulnerable and the elderly to get tested early, as a precautionary measure. It will also allow anyone with mild symptoms to double-check their status. These things make it easier to spot-target the virus, while still letting people circulate.
The second key element is masks, primarily for doctors and nurses on the front lines. A mask shortage is dangerous because, when a doctor or nurse gets sick, they get taken out of commission. Even if they would prefer to keep working, the risk is too high of infecting other patients.
Along with a severe shortage of test kits, America has a severe shortage of N95 masks, the high-grade masks that block a majority of virus particles. Doctors and nurses around the country are reporting mask shortages, and breaking protocols by re-using masks that should have been incinerated, or imploring volunteers to sew makeshift masks by hand (because anything is better than nothing).
With a surplus of masks, the nation’s healthcare workers can keep the hospital system at full strength. If a significant percentage of healthcare workers fall sick, the hospitals and care centers will weaken and the system will face more strain.
The third thing America needs is ventilators. Because the coronavirus has a roughly 20% hospitalization rate, one out of five who get sick could wind up needing oxygen or a ventilator machine.
A ventilator shortage is deadly because, when equipment is lacking, treatable cases become fatality cases. If a patient needs a ventilator and one isn’t available, it is possible that patient could die when they otherwise could have lived.
The fourth thing required is supply chain coordination among the country’s hospitals. This is necessary to prevent price gouging, rational hoarding, and artificial shortages.
Price gouging happens when a supplier sharply raises prices in response to overwhelming demand. There is no easy solution to this because, when it comes to public health, the free market solution is not acceptable.
A free market solution to overwhelming demand would either be raising prices sky high or “first come, first serve” while waiting for production lines to increase later on. But in a pandemic, that solution — let the market clear at its own price and time frame — is no solution at all, because it greatly increases the rate of surplus deaths (patients who die who otherwise didn’t have to).
Rational hoarding is another outcome born of non-coordinated supply chains in a pandemic. If Hospital A doesn’t know how much of a medical supply is available, it should rationally buy all the product that it can, just in case. This might leave no supply at all for Hospital B, even as Hospital A has spare closets full of the stuff. Meanwhile neither hospital knows about the other’s situation.
This kind of thing doesn’t have to be someone’s fault — in choosing to buy all it can, Hospital A is acting rationally in the face of uncertainty, not knowing if supplies will be available next week or month. In a pandemic, rational hoarding leads to artificial shortages, which in turn leads to surplus deaths.
All of these things work together to create a functional system in the face of biological threats.
- The economy relies on a functional health care system. (A panicked populace terrified of falling ill is in no mood to buy things.)
- The health care system, in turn, relies on a manageable rate of incoming patients, which in turn requires slowing the rate of contagion.
- The way to slow the rate of contagion, for a country with a population of 327 million, is to do mass testing on the order of hundreds of thousands per week, to spot-target the virus.
- For those who need treatment, the way to further keep the system functioning is to have an ample supply of masks (for frontline health care workers), ventilators (for patients who need them), and supply chain coordination (to avoid deadly shortages).
If America had these four things squared away — test kits, masks, ventilators, and supply chain coordination — then the hospitals could be saved, and shortly after that, the economy could be saved. We could get the rate of contagion under control, spot-target the virus, and keep the hospitals functioning while mostly returning to work.
That’s the good news.
The bad news, as of late March 2020, is that the U.S. still has severe shortages of the first three components, and the fourth component — supply-chain coordination — is a question mark.
We have to take care of these shortages before life goes back to normal, or any semblance of normal. If we don’t, the virus could just flare up again, and then everything comes skidding to a halt (again).
This is why the key thing right now is World War II-style mobilization of mass production for the first three items — test kits, masks, and ventilators — and a supply-chain coordination plan for all of the country’s hospitals as a simultaneous effort.
Without those four things, we can’t “go back to work” with any measure of confidence. Nor can we truly restore confidence to the stock market.
That’s because the virus can always come back, and past infections have shown a tendency to come in waves, regressing in the spring, but returning again in fall or winter (or both).
If the U.S. is sufficiently prepared for a follow-on wave of coronavirus in the fall, we can handle it with protected systems. If not, we’re looking at more lockdowns and more economic chaos.
In sum, it really is like a war — and we need those four things to win it.