A few months ago I had the opportunity to read a blog post by Howard S. Marks, Co-Founder and Co-Chairman of Oaktree Capital Management, titled “Knowledge of the Future.” According to Marks, “these days everyone has the same data regarding the present and the same ignorance regarding the future”. In that scenario, the human instinct is to look to the past for lessons, patterns, and cycles that can shed some light on the future.
But “blind faith in the relevance of past patterns makes no more sense than completely ignoring them. There has to be good reason to believe the past can be extrapolated to the future … it has to be informed extrapolation”. The problem is that “if you’re experiencing something that has never been seen before, you simply can’t say you know how it’ll turn out.
More importantly, “there’s no ‘informed’ way to choose between the positive and negative scenarios we face today, and most people decide in a way that reflects their biases”… In other words, we may not be able to know the future, but that doesn’t keep us from reaching conclusions about it and holding them firmly.” And he is right.
I refer to this blog because as I write this column it has been exactly eight months since the World Health Organization (“WHO”) decreed a global public health emergency on January 30th. At that time, 9,439 cases had been reported worldwide and the cases in the United States totaled six. We do not know how many cases there were in Puerto Rico back then, if any. But the fact that it was a novel virus, with no known treatment and highly transmissible did not prevent many from making bold predictions about the future, without any scientific or statistical basis. Our then secretary of health assured us that the virus would not reach our shores because “China is far away …”
Well, as of September 30, the WHO reported 33,441,919 cases across the world and 1,003,497 deaths from COVID-19. This number of deaths exceeds those caused by malaria (620,000), suicides (794,000) and HIV (954,000) during all of 2017. While in the United States more than 7,000,000 cases and over 200,000 deaths have been reported, exceeding the total number of combat deaths of US soldiers during both the Korean and Vietnam wars (approximately 110,000). In Puerto Rico, the data as of September 30, pointed to 24,000 confirmed cases, 24,755 “probable” cases, and 661 .
By April we had learned enough about the virus to order a lockdown of a large part of the world population. The Economist estimates that around April 10 there were at least 3.5 billion people under orders to stay home. The objective of this public policy is to break the virus transmission cycle, keeping a large part of the population isolated. It is a blunt but effective tool.
However, many of the problems we have today are due to the fact that many countries, including Puerto Rico, did not take advantage of the time provided by the lockdown to increase their testing capacity, implement effective contact tracing, and build facilities to isolate positive cases. In addition, many jurisdictions lifted restrictions prematurely, due to economic costs, before the virus was truly under control.
Thus, we find ourselves in a complex situation. The virus now is much more dispersed than in March, the economy much weaker, no more help from the federal government appears to be in sight (at least for now), and although there has been some progress, many governments still do not have the necessary capacity to handle this public health emergency. Eight months after the WHO’s declaration, containing the transmission of the virus while maintaining a high level of social interaction and a functioning economy has proven to be impractical in most countries.
Furthermore, the public policy options available are limited and all have serious adverse consequences. This dilemma was embodied in an emblematic way in England. In recent days, two letters written by different groups of academics have been published. The first, made up mostly of public health experts, advocates for another lockdown to reduce the infection rate. This option, as we already know, entails not only economic costs, but also mental health costs, loss of teaching time, and the escalation of other social problems.
The second group, made up mostly of economists, argues the virus tends to affect older people or those with certain pre-existing conditions more seriously. Their proposal is to “protect” these groups and that the rest of society continue to function normally. This option would lead to the social stigmatization of those groups identified as “high risk” and a significant increase in deaths since the virus does not affect only those groups. Note, furthermore, that the debate does not revolve around the “science” of the virus, but rather on how to manage the risks and political costs of the virus.
Which brings us back to Mr. Marks. The reality is that we continue to experience something that we have never seen before, and we do not have an informed way to estimate or forecast what is going to happen. Therefore, most people, including government officials, continue to make decisions based on their own biases.
Beware, then, of those who peddle simplistic solutions, of the hackneyed discourses of those seeking a “balance” between health and the economy (so far we have not found it), and of the use and abuse of “official” data of doubtful validity and even less usefulness. The best we can do right now is follow the public health guidelines: wear masks, limit outings, wash our hands, and practice social distancing. When will this end, you ask? Well, Dr. Fauci already told us at the end of March: “the virus will let us know.”
The Spanish version of this column was originally published in El Nuevo Día on October 11, 2020.