Living with Risk Daily Briefing – April 29

Published on April 29, 2020 / Leer en español

Center for a New Economy

Edited by
Sergio M. Marxuach


Five things you should know today

1) Oxford University team leads the way in race for vaccine

The New York Times reports that a team of researchers from Oxford University is in the lead to develop a vaccine against COVID-19. According to the Times, “scientists at the university’s Jenner Institute had a head start on a vaccine, having proved in previous trials that similar inoculations—including one last year against an earlier coronavirus—were harmless to humans.”

Now they will proceed to test it on over 6,000 people to determine if it is safe and if it works against the disease. Ethical issues remain though as “ethics rules, as a general principle, forbid seeking to infect human test participants with a serious disease. That means the only way to prove that a vaccine works is to inoculate people in a place where the virus is spreading naturally around them.”

Assuming they can work around the ethical issues, this is good news. While the timetable for the vaccine remains uncertain, we also note there are dozens of scientific teams working on different vaccine technologies to attack the virus. This is good because in all probability different vaccines will be needed for different at-risk populations and also because it helps to avoid production bottlenecks.

2) The other race: Developing a drug to fight the disease

In addition to the development of a vaccine, which would work as a prophylactic measure, that is, to prevent people from acquiring the disease, other teams of scientists are working on a therapeutic drug to help people who already have the disease. According to this story in The Atlantic, the SARS-CoV-2 virus has 29 proteins that can attack human cells, take them over, and in many cases cause the death of a human being. The author, Sarah Zhang, writes that “if there is a way—a vaccine, therapy, or drug—to stop the coronavirus, it will be by blocking these proteins from hijacking, suppressing, and evading humans’ cellular machinery. The coronavirus may sound small and simple with its mere 29 proteins, but that is also what makes it hard to fight. It has so few weak spots to exploit. Bacteria, in comparison, might have hundreds of their own proteins.”

So scientists are looking for weaknesses in the virus to:

  1. stop the virus from getting into a cell;
  2. stop the virus from replicating; or
  3. stop the immune system from overreacting.

Most of the scientists are working on repurposing existing drugs because that is the fastest means to get some help to people currently ill. However, “unless researchers get very lucky, though, these repurposed drugs are unlikely to be a cure-all for COVID-19. Still, they might just work well enough to keep a mildly ill person from becoming severely ill, which is enough to free up a ventilator.” And that would mean one life saved, as approximately only 14% of COVID-19 patients who have been intubated survive.

3) Risks to the food supply chain

The COVID-19 pandemic has forced several food companies to shut down production facilities due to outbreaks among their workers. Tyson Foods, for example, recently announced that as pork, beef, and chicken processing plants close across the United States, there is the potential for severe dislocations to the food supply chain. According to Bloomberg News, “outbreaks are forcing the closure of some of the country’s biggest slaughterhouses, where tens of thousands of animals are processed daily. As the plants shutter, producers are left with nowhere to sell their livestock. It’s forcing farmers to make gut-wrenching decisions to dispose of their animals. The situation is so severe that the U.S. government is setting up a center partly to assist on ‘depopulation and disposal methods.’”

Currently, one-third of pork and 14% of beef processing capacity is offline due to the COVID-19 pandemic. Frozen inventories will partially offset the decline in production, but only temporarily. As expected, prices are already increasing, with wholesale pork prices jumping close to 30% last week.

How this will play out in Puerto Rico is unknown at this point in time. Wholesalers usually keep a two-week inventory, which should last a little longer given that most restaurants are currently closed. However, if the supply keeps decreasing, it should not be surprising to see some shortages of beef, chicken, and pork at the retail level fairly soon.

4) Unemployment blues: Not only in Puerto Rico

The local press has reported that the Puerto Rico government has been unable to deal with a significant increase in unemployment claims due to the economic slowdown related to the COVID-19 pandemic. It turns out many states on the mainland are facing similar problems. Reuters reports that “millions of Americans who have been thrown out of work during the coronavirus pandemic have been unable to register for unemployment benefits since the U.S. economy entered a free fall.”

According to a survey carried online by the Economic Policy Institute, “for every 10 people who said they successfully filed for unemployment benefits; an additional 3 to 4 people tried to apply but could not get through the system to make a claim and 2 additional people did not try to apply because it was too difficult to do so.” That means an “additional 8.9 million to 13.9 million people have been shut out of the system,” according to Ben Zipperer, the study’s lead author.

The reasons for this quagmire vary by state. But it appears that understaffing is the most common problem. According to the Reuters story, “states had the equivalent of 26,360 full-time workers in their unemployment offices in the 2018 fiscal year, according to the U.S. Labor Department, down 30% from staffing levels during the peak of the Great Recession in 2009 and 2010.” Keep that in mind the next time you hear someone complain that “government is too big”.

5) Secretary Mnuchin: No bailout for the states

The Secretary of the Treasury, Steven Mnuchin, appears to have sided with Senate Majority Leader Mitch McConnell in opposing additional aid for states in financial trouble due to the COVID-19 pandemic. According to Bloomberg News, the Secretary said: “he approves of local governments using coronavirus funding to enforce public safety through law enforcement, but not for revenue lost because of the economic shutdown or ‘states that were mismanaged’ before the pandemic hit.” This position supports Senator McConnell’s view that states in financial distress should just declare bankruptcy. We note, however, this logic is quite myopic from a policy perspective, as states will be forced to raise taxes, cut back programs, or fire thousands of government workers, which will ultimately worsen and prolong the economic slowdown related to the COVID-19 pandemic.

Quote of the Day

Albert Camus’s insistence on placing individual moral responsibility at the heart of all public choices cuts sharply across the comfortable habits of our own age. His definition of heroism—ordinary people doing extraordinary things out of simple decency—rings truer than we might once have acknowledged…

—Historian Tony Judt on Albert Camus

This is the end of today’s briefing.
Stay safe and well informed!