Monday, May 18, 2020

Being an old Californian in the time of the Covid-19

Three facts about the Covid-19 Crisis and Great Economic Lockdown of 2020 are clear and should be a source of alarm:
  1. As the apparently very fragile economy begins reopening in mid-May, it has been two months - yes, just 2 months, half of March, all of April, half of May - since the Lockdown began during which 65%+ of employees are still working and, along with retirees, are still doing their best to buy stuff.
  2. Children do get Covid-19 and do die from it.
  3. In a relatively short period of time seniors age 65 and older in care homes died in significant, disproportionate numbers when compared to the population as a whole and compared to the "free range" senior population.
But let's begin at the beginning.

I'm old. I'm a Californian. And this is the time of a strange newcomer among diseases, Covid-19.

In the last 8,000 years of human history, a epidemic has been an expected, but still surprising, spread of a disease affecting substantial numbers of people within a relatively short period of time. A pandemic is a epidemic that spreads across multiple regions or continents - or worldwide in the case of Covid-19.

By "relatively short" period of time, the time of spread within an epidemic has always been fast relative to the speed people traveled at the time. In the 21st Century we travel pretty fast compared to those who lived prior to the domestication of horses.

Even "Free Range" Old People and Kids are Dying

About being old in the time of the Covid-19, it is reported, and repeated by too many, that more old people die from Covid-19 while children were seemingly immune.

Initially Covid-19 was compared by journalists to the 1918 Spanish Flu which had a higher than expected mortality rate for young adults. Normally the flu disproportionately kills or causes permanent harm to the very young and the very old.

But it isn't that simple. When humans face a new disease, it requires months, even years of scientific study to gain a basic knowledge base. Plus the 21st Century has created a society with a short attention span.

That combination could prove to be fatal and disabling to many, from infants to centenarians. If kids matter to you, you should have doubts about rapidly ending the Great Economic Lockdown of 2020. Despite what many short-attention-span Americans believe because of the shallow news media,  the Lockdown never was about saving old people in nursing homes or even a "free range" old guy like me.

It is believed that the first recorded Covid-19 victim in China was a 55-year-old man who fell ill on November 17, 2019. Yesterday was May 17, 2020. It has been 6 months, we are entering the 27th week since that original case, and this past week the CDC has issued an alert to doctors about a “Multisystem Inflammatory Syndrome in Children,” or MIS-C, linked to COVID-19 in children. You may want to read ‘Straight-Up Fire’ in His Veins: Teen Battles New Covid Syndrome before hurrying to open schools.

Yes, kids have died from it.

But regarding being old in the time of the Covid-19, as the economist and demographer Lyman Stone tweeted:

And while Stone's comments are valid, what this epidemic has made clear is that those persons with illnesses and disabilities requiring that they be in care homes are at high risk, whether over age 64 or not. The most recent estimates range from 40% to 50% of all deaths.

The rest of us old people, what I term "free range" old people, share a range of death-risk numbers with middle-aged people

Which brings us to the term "herd immunity" used by the press and repeated by too many, offered as the solution to the pandemic. In fact it is being repeated by many of those middle-aged fat guys marching around demanding their freedom to go overeat and drink, preferably at an NFL game surrounded by thousands of people with symptomless Covid-19. Let's just let Covid-19 run its course, they shout.

The problem is we don't know if  "herd immunity" is possible with Covid-19. But assuming it is, to achieve herd immunity about 70% of the population will have to be infected with Covid-19.

What would have letting Covid-19 run its course really meant to Americans. When you combine what information is available (admittedly prone to errors and frequently based on derived estimates) you get the table to the right.

What you might notice is that about 3.5 million of the 39 million (9.0%) Americans over age 65 not in care homes ("free range") would have had to die to achieve herd immunity in the U.S. . Of course, 2.3 million of the 36.5 million (6.4%)  Americans age 55-64 would have had to die and 4.2 million of the 60 million (4.9%) Americans age 35-54 would have had to die.

It is true, however, that we "free range" old people do have a significantly greater risk of death or disability than the Millennials and younger.

Still it bothers this "free range" old guy that so many middle-aged folks are enthusiastically advocating so many deaths among their peers (1 per 20) and can't comprehend that by this coming November they might have killed their kid, or a niece, or nephew.

Sure there is much blather on news shows and from politicians about treatments, many of which are fictional and none of which are cures, but in truth we were not even close to being able to treat tens of thousands of cases in hospitals in the couple of months between mid-March and mid-May.

And then there is the promise of a vaccine, sometime, maybe, if....

True stories that tell us we don't know much about Covid-19 except that it isn't like the flu, stories like Five USS Theodore Roosevelt Sailors Test Positive for Coronavirus a Second Time.

About being a "free range" old guy in the time of the Covid-19, in fact something is going to kill me, more likely sooner than later. But as Lyman said regarding "something", there is "an extra wolf in the pack" that started circling a few months ago.

Economics: About Being a Northern Californian in 2020

This "free range" old guy was born and raised in Northern California. I've lived seven decades as a Californian.

As someone whose residence for the past 30+ years has been in California's Mendocino County (see map above) what is surprising is the number of angry people here who think the only good thing is to open our County's economy, heavily dependent on tourism, thereby permitting the Coronavirus enemy to make advances into the blue area which will kill people in Mendocino County.

These angry people probably shouldn't be surprising, but the discussion raises the issue of  the "normal economy" in California at the end of 2019. For most Californians, the 2019 experience of a "normal economy" looked like this:

Most certainly that was an unusual "normal economy" offering a positive take on life. It wasn't, however, the economy of The Great Recession of ten years earlier or the early-2000's recession following the collapse of the "dot-com bubble." Nor was it the "normal economy" of the 20th Century. The 10-years of economic growth of the Obama Administration which continued into the Trump Administration should be considered an anomaly.

The Coronavirus Crisis economy experience begins with the Great Economic Lockdown of 2020 which this past week was reflected in this headline California Unemployment Rate Approaches 25% for a story telling us that 24.4% of the state's civilian labor force is unemployed.

To give this some perspective one need only note that on April 6, 2020, Market Watch said: "The soaring U.S. unemployment rate might not match the peak of 25% seen during the Great Depression of the 1930s, but it could come uncomfortably close in the next few months."

Pandemic Hits Spending Hard; 79% Dive In Clothing Sales Leads A Record Plunge was the headline offering up some reasons for the unemployment. In a nation that depends on consumer spending for 70% of its GDP, it all tends to tie together.

But it isn't yet an experience comparable to The Great Depression.
  • In the first months of the Great Economic Lockdown of 2020 the federal government sent a majority of taxpayers $1,200 (or more) dollars. 
  • Workers laid-off are able to draw a normal unemployment check increased by an additional $600 a week (the most recent average California Unemployment Insurance payment was $340 a week which means the average payment rose to $940 a week). 
  • Some "small" businesses are getting federal financial aid. 
  • The Federal Reserve is propping up lenders and the bond market. 
Nothing like this was available if the first years, much less the first months, of The Great Depression.

Still, much like Covid-19 coronavirus, what we don't know about the post-Lockdown economy easily becomes a long list of questions.

Yes, many California retailers - stores, restaurants, people and pet grooming services, etc. - large and small are closing down. Some tenants, landlords, homeowners, commercial property owners, seem to be struggling. Yet from the numbers it appears that 70%± of workers are still working.

Shutdown orders began in the early weeks of March, opening up began in the mid--weeks of May. That's about two months, sufficient time to create extra hospital space in urban areas and even many rural areas to handle an instant increase in Covid-19 patients if and when needed.

A "free range" old guy must make an observation.  It appears that our 21st Century economy literally could not stand a two month disruption because people couldn't go out to eat!

Ok, that's a bit sarcastic, but supply chains collapsed, international trade nearly stopped, food production hit crisis mode, the stock market crashed, and much more because of a two month disruption.

In recent years, California has had the worlds fifth largest economy.

During my 70+ years in Northern California, I lived in the Sacramento Region, the Monterey Bay Region, and the North Bay Region. What is pretty obvious is that since the 1970's the economic growth engine of that area is Silicon Valley.

The Valley's largest city,  the third-largest in California, and the tenth-largest in the United States is San Jose. The San Jose Metropolitan Area according to the Brookings Institue has the third-highest GDP per capita in the world after Zurich, Switzerland and Oslo, Norway.

Last May, the Bay Area boasted 835,600 technology jobs. Economist Christopher Thornberg noted then:

    The entire Bay Area economy is booming, and tech is the core driver of the success and income being generated there.
    There are a lot of banks, and stores, and restaurants, and homeowners, and others who are happy the gravy train is still rolling.

The situation this May? For two months for a lot of banks, stores, restaurants, homeowners, and others, the gravy train stopped rolling. In part this is also true in the tech sector. By mid-April at least 21,000 employees across more than 200 startups reportedly had been laid off. In truth less than 5% have been laid off. Big tech companies are having their employees work from home and are even considering making that an ongoing option.

Then, of course, there is Zoom, the previously almost invisible corporate brand that everyone now knows as they use their product. The headline this week was Coronavirus: Zoom Video to hire 500 new software engineers as usage surges. Because of shelter-in-place rules, people have taken up video conferencing to keep in touch with family members, work remotely and conduct remote school lessons from home. The San Jose-based Zoom is now seeing more than 300 million daily users compared to about 10 million a day in December 2019. The company is planning new engineering centers in Phoenix, Arizona, and Pittsburgh, Pennsylvania, but the engineers will work remotely until the coronavirus abates. And Zoom is the extreme reflection of a huge increase in internet use across all ages for a multitude of purposes, including schooling.

As Northern California's economic engine tech isn't going away. In fact, the Canadian author, social activist, and filmmaker known for her political analyses and criticism of corporate globalization and of capitalism, Naomi Klein, has already expressed a lengthy opinion piece published entitled How big tech plans to profit from the pandemic. Klien expresses some legitimate concerns about a dystopian future. But what she describes isn't really the future.

    This is a future in which...almost everything is home delivered, either virtually via streaming and cloud technology, or physically via driverless vehicle or drone, then screen “shared” on a mediated platform.
    If all of this sounds familiar, it’s because, pre-Covid, this precise app-driven, gig-fuelled future was being sold to us in the name of friction-free convenience and personalisation. But many of us had concerns.
    Today, a great many of those well-founded concerns are being swept away by a tidal wave of panic.... Now, against a harrowing backdrop of mass death, it is being sold to us on the dubious promise that these technologies are the only possible way to pandemic-proof our lives, the indispensable keys to keeping ourselves and our loved ones safe.

Ignoring Klein's political views and thinking about California's economy, it appears the Googles and Facebooks of Silicon Valley, along with numerous other established tech companies, will flourish after the Lockdown. In fact, as far as tech consumers are concerned, despite heavy demands the apps pretty much continued business as usual with employees working from home.

On the other hand, this new reality accelerated a shift in a major Southern California economic engine known generally as "Hollywood." Video streaming sources were already increasing and expanding with the advent of Apple+ and Disney+ and expected services such as Peacock. What wasn't expected was the closing of theaters leading to numerous movie releases via pay-per-view streaming. As "movie-making" returns, except for "blockbusters" the reality of profitably bypassing theater releases is coming clear.

As explained in detail in the previous post, a consumer-based Extended Economic Distortion - people spending less - is the likely outcome of the Great Economic Lockdown of 2020. For many in retail, it will feel like a recession. It will test economic creativity, particularly if there are the expected repetitive rises in Covid-19 infections.

Lastly, we are faced with financial and service disruption in schools, local government, and state government. That will require a future post of its own.

Being an old Californian in the time of the Covid-19 certainly offers a new perspective.

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