Sunday, May 24, 2020

Memorial Day - When The Great Lockdown of 2020 becomes an Extended Economic Distortion

In the March post Memorial Day 2020 - A Day of New Beginnings? the hope was:

    Hopefully, Memorial Day 2020 will not only be a day of remembrance for those lost in wars plus those lost in the 2020 Covid-19 Pandemic, but it will mark a week of new beginnings. Hopefully, new cases will have become minimal permitting many states to soon lift business closure orders and "shelter-in-place" orders for people under 65 (but not "safe distance"rules).

In that post, a projected timeline was offered. Subsequently, in a May 2 post here the term "Extended Economic Distortion" was first used, which was explained in detail on May 7 in the post Expect a consumer-based Extended Economic Distortion after the Great Economic Lockdown

Below is an updated, shortened version of the timeline which includes notations of an Extended Economic Distortion. Further, the likelihood of a 2nd Wave of the Coronavirus is noted after Labor Day as warnings are coming not only from the CDC but from senior military leaders.

We hoped for caseloads peaking around Easter, April 12. That didn't happen ...well, we don't really know because we still can't do much more than minimal testing even here in California. In some states, recognition of the pandemic has been minimal.

Here in California what we do know that is by late April daily deaths peaked and the number of patients hospitalized stabilized and then started to drop.

The hope expressed in that March post was that Memorial Day 2020 would mark the beginning of lifting of closure orders impacting "non-essential" businesses. Also for people under age 65 "shelter-in-place" orders would be relaxed but not "safe distance"rules.  That hope is becoming a reality though the new normal when we are in public not only includes staying six feet apart but includes wearing face masks.

Indeed, here in California Memorial Day 2020 will be remembered as "A Day of New Beginnings" even though we face the probability of an Extended Economic Distortion and the possibility of a "second wave" of Covid-19 infections.

Whatever the impact will be on the private sector, it is clear that financial and service disruption will occur in schools, local government, and state government likely lasting.through the remainder of Governor Gavin Newsom's term which ends January 2, 2023. Two important facts are:
  • Retail, restaurants, lodging, etc., made up 21% of California's total non-farm employment in February 2020. 
  • Schools, local government, and state government made up 16%. 
Prior to 1980, these two sectors responded to changes in the overall economy differently. Because of changes in tax funding, California government at all levels including schools are rapidly impacted by economic downturns.

The calendar above lists the next two major holidays which represent milestones relative to the Extended Economic Distortion. We will begin to get a feel for the impact of reopening the private sector by the Fourth of July. By Labor Day schools will be reopened and, along with local and state government, will be operating in a new budget year.

This Memorial Day weekend, however, is a time to reflect on those who have risked, and particularly those 100,000 Americans who have lost, their lives because of the Covid-19 Crisis.   The New York Times dedicated its front page today to a listing of 1,000 of those 100,000 Americans who have died which helps to remember that they were people, friends and relatives, of other Americans.

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.

Thursday, May 7, 2020

Expect a consumer-based Extended Economic Distortion after the Great Economic Lockdown

The only goal of the Great Economic Lockdown of 2020 was to slow the spread of Covid-19 cases during the first months of the Coronavirus Crisis. That allowed time to organize enough hospital beds to handle both Covid-19 cases and the normal flow of cases due to other illnesses (you know, cancer, strokes, heart attacks, auto accidents, etc.).

As the Lockdown restrictions are lifted, Covid-19 will continue to spread.The underlying reality for the next "x" number of months (or forever) is that while we struggle to create a new economic and social normal, each day hundreds of people from infants to centenarians will die or become disabled from a Covid-19 infection.

Prognostications from some sources indicate that an economic recovery will begin by the second half of the year. More likely the Coronavirus Crisis will lead to an Extended Economic Distortion.

Mistrust, a general sense of unease, is likely to be felt by most people. And the real meaning of "people" in this context is "consumers" whose spending drove the pre-2020 worldwide "consumer economy." In the United States that consumption represented about 70% of economic activity.

As the shutdown orders within the Great Economic Lockdown of 2020 are lifted many will consume less simply because their income will have been reduced, perhaps substantially. Others will consume less because (1) they will fear of a repeat Lockdown cycle due to an Autumn re-emergence of Covid-19 and (2) they discovered they didn't need to consume at the pre-2020 level to be happy.

An Extended Economic Distortion likely will be the result of consumers not consuming as much as as they did prior to the onset of the Coronavirus Crisis. By "distortion" it is meant that the entire political economy will be twisted out of shape, away from the expected direction.

As noted here in the 2018 series of posts The lack of comprehensive political economy goals will create concurrent pecuniary and environmental disasters for the U.S. Gen X and later generations, dynamic national and international political economies result in alterations to the distribution of income and wealth. A political economy is a system that includes these subsystems:..
  • legal,
  • economic,
  • political,
  • social,
  • cultural,
  • environmental, and
  • technological
...which are interdependent, meaning a change in one will create changes in the others.

Simply it is likely that the Coronavirus Crisis will lead to an Extended Economic Distortion with a political economy twisted out of shape which means the legal, economic, political, social, cultural, environmental, and technological subsystems will turn away from the expected direction.

That is what happened in the 20th Century beginning intensively in 1929 lasting 50± years - massive changes in the legal, economic, political, social, cultural, environmental, and technological subsystems.

Initially, a drop of, say, 30% in consumer spending would mean an instant 21% reduction in the U.S. GDP. In fact, the April Consumer Confidence Index is about 32.7% below what is was a year ago, 32.2% below the 2019 average, and 33.5% below February. Over a longer period it looks like this:

Assuming the 2020 drop in Consumer Confidence matches the Great Recession, at a minimum one would assume we will have a comparable recession. But it isn't that simple.

A recession - a business cycle contraction measured in GDP, income, employment, industrial production, and wholesale and retail sales- generally occurs when there is over two or more months a widespread drop in spending (an adverse demand shock). Historically the events causing recessions have been varied. In 2020 it is the Great Economic Lockdown designed to save lives during the Coronavirus Crisis. This instantly caused a significant employment contraction.

Employment since February has dropped by 19% (based upon unemployment filing statistics shown in the chart above-left) which is three times the drop in the Great Recession. Actually it is a Great Depression-level number. The 33.5 million unemployed is over double the peak number of human adult persons without jobs in the Great Depression. However, it is related to the Lockdown and some employees will be reinstated, maybe most, but certainly not all, as many businesses have shut their doors permanently.

The drop in personal income and the drop in personal consumption expenditures statistics are not yet available. But if employment and consumer confidence have anything close to a direct relationship to consumer spending, the consumer economy will see a significant setback.

Remember that economic conditions are but one subsystem in the political economy. Great Economic Lockdown of 2020 has substantially impacted the social, cultural, environmental, and technological subsystems, albeit some more obvious than others.

Comparing the 2020 situation to the Great Recession, one must recognize s comparison just isn't that simple primarily because of the radical shift in U.S. political, social, and cultural subsystems during the preceding decade. Those shifts led to actions impacting international trade by the Trump Administration. But prior to the Coronavirus Crisis the impacts seemed slow to most Americans other than farmers, accruing as small billion dollar increments.

It will soon be understood that The Coronavirus Crisis and Great Economic Lockdown of 2020 has triggered what is known as an economy-wide adverse supply shock well beyond toilet paper. Historically this has led to stagflation, conditions in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.

We already have seen farmers plowing crops under and dumping milk, meat processors closing down, etc.  On April 6 the American global management consulting firm Kearney released their annual "Reshoring Index" report Trade war spurs sharp reversal in 2019 Reshoring Index, foreshadowing COVID-19 test of supply chain resilience, The following are excerpts from that report:

    Kearney’s seventh annual Reshoring Index revealed a dramatic reversal of a five-year trend....
    The dramatic reversal of the Reshoring Index is primarily due to a major drop in imports from the traditional 14 LCCs, not from a significant rise in US manufacturing output.
    In 2019, imports of manufactured goods from 14 Asian low-cost-country offshore trading partners shrunk to $757 billion, from $816 billion in 2018—a 7.2 percent decrease—while US domestic gross output of manufactured goods reached $6,271 billion in 2019, virtually unchanged vs. 2018.
    This year’s report also shares the second installment of the Kearney China diversification index (CDI), which tracks the rebalancing of US manufacturing imports from Asia away from China to other Asian LCCs, most notably Vietnam.
    New to this year’s report is the Kearney near-to-far trade ratio (NTFR), tracking the potentially significant nearshoring trend of sourcing manufactured goods from Mexico.
    2019 saw companies actively adapting to what then felt like a major disruption—the US–China trade war—by reducing imports of manufactured goods from China while increasing manufacturing imports from the other countries in our Asia LCC sample, as well as from Mexico.
    This contraction is almost exclusively driven by a collapse in imports from China, which declined by 17 percent, likely as a direct consequence of the trade war.
    Without doubt, this change was largely driven by trade policy. Since Kearney’s previous report on US reshoring, the country’s economy felt the continued effects of a multiyear trade war, stemming from an America first economic policy. ...While these policies clearly contributed to the dramatic spike in the 2019 Reshoring Index, not all of these events have been positive for US manufacturing, which still faces a number of major challenges. ... The US MGO [manufacturing gross output] stayed flat from 2018 to 2019, in part due to export decline resulting from the trade war.
    2020 dawned with a disruption of a new order of magnitude—COVID-19. At this writing, the full extent of the societal and economic trauma the coronavirus pandemic may cause is unknown. But it will be historic. As a result, we forecast that companies will be compelled to go much further in rethinking their sourcing strategies—indeed, their entire supply chains.
    Specifically, we expect companies will be increasingly inclined to spread their risks, as opposed to putting all their eggs in the lowest cost basket. More fundamentally, we anticipate that the threat of future crises will compel companies to restructure their global supply chains with an eye toward increased resilience, as well as lower risks and costs, as resilience is the key to operating profitably in the face of ongoing disruptions.

The fact is in 2019 American manufacturing began changing their supply chains in the face of the Trump Administration's trade war. Then "2020 dawned with a disruption of a new order of magnitude—COVID-19" leading to this May 1 Los Angeles Times headline SUVs are left parked on ships off L.A. ports as glut of unsold autos grows and this May 6 Reuters story Port of Los Angeles 2020 volume sinks as coronavirus whacks demand.

In late April the Houston Chronicle ran this story: Oil collapse signals long-running economic crisis for Texas. A headline at the end of the month reflected the stress placed on retail: More than half of mall-based department stores could close in two years. An article this week raises a related issue What happens to Main Street when even the biggest retailers can't pay rent? This doesn't even reflect the crisis facing restaurants and bars, beauty and barber shops, tattoo parlors, and a myriad of various smaller businesses.

Regarding The Great Depression of the 1930's, Wikipedia tells us:

    Cities around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few alternative sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.

Back then the government did not immediately intervene with extensive funding provided by Congress and with the Federal Reserve shoring up debt of all kinds. Headlines tell us U.S. Debt Sales to Hit Record With Deficit Headed to $4 Trillion and Fed Is Propping Up Companies It Had Warned Banks Not to Touch, stories that reflect U.S. Government debt liability increases and levels with no precedent and therefore no understanding of implications. These headlines don't take into account the other government stories such as Coronavirus plunges California into worst budget deficit in state history explaining "California’s government faces a $54.3-billion budget deficit through next summer."

Nonetheless, the news stories provide information. Except we don't know what any of it will mean for the lives of the Millennial and GenZ generations.

Of course, this could all be erroneous speculation. Maybe we won't have a recurring or continuing Coronavirus Crisis. Maybe folks will restore consumer spending to its pre-2020 levels avoiding an Extended Economic Distortion. Maybe....

Saturday, May 2, 2020

Coping with the pandemic in California - the wisdom of geese and the foolishness of humans

People are considered dangerous by geese and they will protect their families and friends from people. The geese pictured above are visiting a Northern California beach where there are so few people during the Covid-19 pandemic that they feel comfortable strolling around. The geese are wise.

By crowding a Southern California beach, the human beings in the picture below have chosen to risk killing someone - a family member, a friend, a coworker, somebody sometime in the near future.

Some would argue that the risk of killing someone is overstated in the paragraph above the picture, that it's no more dangerous than the flu. When it comes to Covid-19 what you don't know can kill you. And there is much people don't know.

Consider frequent comparisons made between the regularly reported Center for Disease Control influenza data. The number of cases and the number of deaths from the flu each year is a statistical extrapolation from the confirmed data, not the confirmed data.

Because we don't have sufficient experience or historical data on Covid-19, they cannot statistically extrapolate from the confirmed Covid-19 data. What we should be comparing is the annual confirmed data on the flu to the confirmed data on Covid-19. The chart above compares the U.S. confirmed annual deaths from the flu to the U.S. confirmed Covid-19 deaths so far this year. That chart should make anyone uneasy.

What Californian's need to understand can be illustrated. The map to the left represents an area of the Northeast U.S. that is approximately the same geographical size as California though it has a 10% larger population. To date, there have been 52,632 confirmed cases of Covid-19 in California. Within the area on the map, there have been 497,287 confirmed cases. Even adjusting for that extra 10% population there have been 8.5 times as many cases in the area on the map than in California. Someone (or many someones) needs to be given some credit for that startling difference. While some might want to say "we're Californians, that's what we do", in fact careful research and hard decision-making by state and local government leaders created this level of positive results.

Interstate 5 in California running from the Northern California - Oregon Border to the Southern California - Mexican Border is 1,381 miles long, though if measured as the crow flies California is about 1,040 miles long. California had the worlds fifth largest economy prior to the Coronavirus Crisis of 2020. If today it were the 28th member of the European Union it would be the fifth largest country in population and fourth largest in area.

On March 15, 2020, while explaining the challenges of creating a plan for school closures, California Governor Gavin Newsom said: “We have to meet the needs of all our diverse communities in a nation-state with six-plus million children.” In fact, in the school year of 2018-19 California had 6,186,278 students in 1,037 school districts with 10,521 schools. In fact, California has more school students than 33 states have total population. But we only have one governor.

Nine very rural California counties have a population density of less than 10 people per square mile, counties with a total area the size of Maine but with 3% of Maine's population. San Francisco City and County at 47 square miles has a population of 884,000 or a  density of 18,800 people per square mile. Los Angeles County at 4,060 square miles is more populous than 41 states with a population of 10.8 million people or 2,533 people per square mile.

Four counties in California have had no Covid-19 cases, all among those nine very rural California counties. However, it must be noted that among those nine counties one has 26 cases, another 19.

It's the end of Week 7 in California's Great Economic Lockdown of 2020 and plans to unlock or "reopen" are being discussed (click image to read the article):

Here in this blog we projected that Week 11, Memorial Day week, California would begin reopening. Newsom is hinting that some loosening of the rules might come sooner. Still, the dominant reliable measurement regarding the Coronavirus Crisis is the list of important facts we don't know about Covid-19. Despite that absolute truth, elected officials are under tremendous pressure from constituents and protesters pushing to end the Great Economic Lockdown of 2020. As can be seen from the news, it isn't simple:

The most visible protesters are only slightly more ignorant about pandemics than their dogs. A second group includes those behind the scene with power and influence whose real religion is the worship of money and who are crassly merciless believing that humans are just nameless machines feeding labor into the all-important economy.

Important to ending the Great Economic Lockdown of 2020 is information regarding who will die or become disabled from the increase in Covid-19 cases. An expansion of the disease within the population will occur when we end the Great Economic Lockdown of 2020. Our ignorance is appalling in the context of hurrying to end the Lockdown:
  • We don't know the death rate - maybe, but we're not sure, somewhere between ½ of 1% and 1% which is between 1 out of 200 cases to 1 out of 100 cases, either of which is more deadly than the flu - we are only slightly less ignorant than our dogs regarding the death rate and the risk.
  • We've been led to believe that it's mostly the old that die, and in fact so far information indicates the deaths are distributed something like the chart to the right with 40%+ actually being care home residents; but Italian and British medical experts are investigating a possible link between Covid-19 and clusters of severe inflammatory disease among extraordinarily large numbers of children under the age of nine, which severe inflammatory disease appears to be Kawasaki disease, a leading cause of acquired heart disease in the United States which can lead to death but more frequently will cause long-term disabilities.
The fact is we have no idea what the risks are because, we are still at the beginning phase of the pandemic and the sustainability of our economic, social and public life over the next two years depends entirely on the adults in the room not behaving like puppies with short attention spans and a need for immediate gratification.

Regarding children, the news reports regarding the sudden presentation of Kawasaki disease among children began to appear the day the states of Georgia, Texas, Michigan, Hawaii and Alaska started reopening without have that knowledge to consider. At this point we have to remind ourselves about Texas politicians.

"No one reached out to me and said, as a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren? And if that's the exchange, I'm all in," Texas Lt. Gov. Dan Patrick said on Fox News on March 23.

Patrick said he wanted to save the economy for his six grandchildren. It's unclear what his position would be if it meant one would die and two would be disabled from heart damage, so that three could have a better economy. But it appears that many like him would find that acceptable or would chose to understand it as well as their dog.

But the point is no one, including Patrick, has the knowledge needed to make a decision to broadly reopen that all important economy. Unless, of course, they find perfectly acceptable to risk the killing and/or disabling thousands of people from infants to centenarian in order to pocket some dollars a few weeks earlier than everyone else.

A week ago Bill know him, the guy who predicted this pandemic in a TED2015 talk, published an 11-page memo The first modern pandemic: The scientific advances we need to stop COVID-19 in which he notes:

    The coronavirus pandemic pits all of humanity against the virus. The damage to health, wealth, and well-being has already been enormous. This is like a world war, except in this case, we’re all on the same side. Everyone can work together to learn about the disease and develop tools to fight it. I see global innovation as the key to limiting the damage. This includes innovations in testing, treatments, vaccines, and policies to limit the spread while minimizing the damage to economies and well-being.
    This memo shares my view of the situation and how we can accelerate these innovations.The situation changes every day, there is a lot of information available—much of it contradictory—and it can be hard to make sense of all the proposals and ideas you may hear about. It can also sound like we have all the scientific advances needed to re-open the economy, but in fact we do not. Although some of what’s below gets fairly technical, I hope it helps people make sense of what is happening, understand the innovations we still need, and make informed decisions about dealing with the pandemic....
    During World War II, an amazing amount of innovation, including radar, reliable torpedoes, and code-breaking, helped end the war faster. This will be the same with the pandemic. I break the innovation into five categories: treatments, vaccines, testing, contact tracing, and policies for opening up.Without some advances in each of these areas, we cannot return to the business as usual or stop the virus. Below, I go through each area in some detail.

It is a well-written, informed memo that deserves to be read by anyone who really wants to know how to live with the economic future of the world, particularly the next year or more that will be what Gates refers to as "semi-normal."

In this writer's opinion, too many pundits talk about the economic situation in terms of a recession or even a depression. The problem is mankind has never before seen an economy like the economy of the first two decades of the 21st Century. So we have never seen a reaction to a radical pandemic-based shift during such an economy.

“It is impossible to overstate the pain that people are feeling now and will continue to feel for years to come,” Gates warns us

The reaction is likely to lead to an Extended Economic Distortion, not a "great" recession or depression. Mistrust, a general sense of unease, is likely to be felt by most people. And the real meaning of "people" in this context is "consumers" whose spending drives the worldwide "consumer economy" which in the United States represents about 70% of economic activity.

All of which leads back to the fact that California had the worlds fifth largest economy prior to the Coronavirus Crisis of 2020. As a native Californian, this writer embraces Newsom's "nation-state" description. That very description is at the core of California's economy. Our technology and agriculture sectors depend upon immigrant labor and international trade, both strongly dependent upon movement of goods and people across our southern border and the Pacific Ocean.

How exactly California's economy will recover from the shock of  California's Great Economic Lockdown of 2020 if constrained by continuation of nationalist, anti-immigration, anti-trade policies of a reelected Trump Administration in an Extended Economic Distortion is difficult to determine.

That is a subject for a future post.

In the meantime it's Week 7. Memorial Day is in Week 11. Californians can surely wait so that we can learn how to minimize the impact on people from infants to centenarian. But with that said, it is likely that we will see recurring localized or regional Covid-19 epidemics.