The Covid-19 virus is not politically correct. It discriminates against the old and the unhealthy. The biggest risk factor in dying from the virus is age. If you’re 60 to 70 years old, you’re 30 times more likely to die from Covid-19 than if you’re under 40. And if you’re over 80, you’re 180 times more likely. It’s not that the young don’t get sick or die, but the odds are dramatically different.
In the early days of the virus epidemiologists, who believed that the virus would equally kill the young and old, predicting a million or more deaths in the U.S., wanted everyone to shelter. The result has crashed our economy. Meanwhile, economists view 15% unemployment as an unacceptable and unsustainable cost of protecting everyone and want the economy to rapidly reopen, accepting that some additional deaths are inevitable.
They both may be missing the obvious. We’ve created an equal opportunity recession when in fact, the pandemic is not equal at all.
If the data about the demographics is correct, it may be possible to dramatically reduce cases and deaths if we shelter those at greatest risk and pay them to stay sheltered until a vaccine is available. This would allow those with dramatically lower risk to get back to work and bring a faster economic recovery.
Here’s how.
We’ve spent the last 50 years working to not discriminate for age or disabilities so it’s hard to acknowledge what, if these number are correct, or even in the ballpark, the data seems to say that people over 60 are 30-180 times more likely to die of Covid-19. And ~1/3rd of those U.S. deaths have been in nursing homes.
Age Relative Death Rate
18 <40 0.07%
40 <50 0.31%
50 <60 1.00 (reference)
60 <70 2.09
70 <80 4.77
80+ 12.64
Compounding the age risk factor are chronic health problems (i.e. heart disease, high blood pressure, asthma and other respiratory diseases, obesity and diabetes.) In addition, racial and ethnic minorities seem to have been at greater risk.
A good visualization of the fatality rates by age is below. It takes data from South Korea, Spain, Italy and China. The relative fatality rates by age in the U.S. seem to track these.
For COVID-19, data suggests that 80% or more of infections are mild or asymptomatic, 15% are severe infection, requiring oxygen and 5% are critical, requiring ventilation. If you’re under 40, the data says you’re five times more likely to die from Covid-19 than the seasonal flu.
Today, federal and state plans to reopen the economy focus on reducing the density and duration of exposure to the virus equally, across all ages. But little emphasis has been on focusing resources to keep safe the actual people who get sick and die.
We Got it Backwards – Protect the Old Versus Everyone
The consequences of mixing young, largely asymptomatic and much lower risk, with the old who are at significantly higher risk seems like a deadly game of whack-a-mole.
As states loosen shelter-in-place restrictions, mixing young versus old as we reopen restaurants, live entertainment (theaters, concerts, sports venues,) crowded office buildings etc. guarantees unnecessary deaths.
20% of those over 60 work. 12.5% of workforce is over 60
What if we acknowledged that the virus (much like the flu) discriminates against the old. As a thought experiment, how would we design a recovery that protected the old but required minimal restricting of our economy and a rapid return to normal? Here are some ideas.
- Continue sheltering in place adults over 60 (or some other age that the data shows most elevated risk), plus those with chronic health risks as well as other affected populations
- Open up the economy to everyone else
- Offer everyone over 60 (and those with chronic health problems) whose job can be done remotely the option to work at home. Pay for their computer, network, etc. Offer their employer an incentive to compensate for lost productivity – until a vaccine is available
- Provide Americans over 60 and those with chronic health problems whose job cannot be done remotely with a “personal payroll protection program” –pay to have them not show up at work – until a vaccine is available.
- Focus our scarce testing tools first on nursing homes and their employees and front line medical workers, next to everyone over 60, then those whose illness puts them at risk and then to the general population
- Provide this protected population with full health care
- Provide resources ($’s for separate housing via empty hotel/airbnb rooms etc) to protect the elderly who live in multi-generational housing
- Where possible continue wearing masks and distancing to reduce the risks to those under 60
- Broadcast the comparative risk of getting sick/dying from Covid-19 to typical risks we lived with pre-pandemic. This would allow everyone to make comparative informed decisions.
- For example, car accidents ~39,000 deaths in 2019 and over three-fourths of a million dead since 2000, ~70,000 drug overdose deaths in 2019 and over three-fourths of a million dead since 2000. All of these are avoidable, but as a society we decided that we are not shutting down our economy to solve these problems.
- Understanding deaths from seasonal flu in 2018/2019 ~34,000 deaths (~25,000 deaths >65, ~8,000 <65) provides a reference to the current prediction of 150,000 deaths from Covid-19 this year (5 times the risk of dying with seasonal flu.) Just for scale Covid-19 fatalities are closer to the 100,000 died in the 1968 flu pandemic, and the 116,000 dead in 1957/58. We made different decisions in those pandemics. We may want to think about why.
- Remove all business restrictions for workers and customers under a certain age. As a thought experiment, imagine restaurants serving only those under 40 (carding at the door). They would have no distancing requirements. Or that business rate themselves based on how age appropriate their virus safety is. Imagine movie theaters with special distancing showings for those over 60, nightclubs for under 30 or over 60. Same for sports and entertainment venues. Those who do attend will understand that the risks are not zero, but within the range of those they live with today. Same with offices.
- Create special hours and venues (stores, restaurants, workplaces, etc.) for those who need to shelter. Offer businesses who cater to them large financial incentives.
- Create special mass transit options with over 60 subways cars, buses, etc.
This would do six things:
- We’d protect the most vulnerable at-risk population
- With those over 60 sheltering, jobs are now opened up for unemployed younger people
- Businesses can return to normal without the burden of significant additional overhead costs
- Businesses can make additional revenue catering to those who remain sheltered
- The potential burden on the healthcare system would be lowered by removing the vulnerable from risk
- And this plan would dramatically reduce the overall economic cost of sheltering and accelerate the recovery
We’ve spent the last 50 years fighting age discrimination, but the virus is the ultimate discriminator against the elderly. It’s unequal and unfair. But it exists. Let’s look for ways to move beyond the choice between exploding death rates and economic disaster by acknowledging what the data is showing. Shape a plan to protect the most vulnerable and let everyone else get back to work.
Note: the author is over 65 and willing to abide by these restrictions
Lessons Learned
- We need to run some thought experiments about different ways we can protect the most vulnerable and restore our economy
- We need to put the risks in context with other risks we’ve taken and accepted as a society versus the damage that sustained 15% unemployment would bring
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Filed under: Covid-19/Recovery |
I believe this is the origin story for Logan’s Run.
This makes a lot of sense. This recommendation feels obvious but I donât know why itâs not being acted on. I suppose some of best ideas are often hidden in plain sightâ¦
Adrian Bartha | Founder, eCompliance & President of Alcumus North America
T: 416-855-3419
eCompliance | Eliminating 1 Million Workplace Incidents
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From: Steve Blank
Reply-To: Steve Blank
Date: Thursday, May 21, 2020 at 9:04 AM
To: Calvin Benchimol
Subject: [New post] The Covid-19 virus is not politically correct
steveblank posted: “The Covid-19 virus is not politically correct. It discriminates against the old and the unhealthy. The biggest risk factor in dying from the virus is age. If youâre 60 to 70 years old, youâre 30 times more likely to die from Covid-19 than if youâre under “
This makes a lot fo sense Steve. Shelters those most at risk, puts the money where it is needed and lets the economy and society get back to a semblance of normalcy.
Would love to see you do the same thought experiment for African Americans and other minorities. Also what do you think would be the implications of implementing this plan for bias and discrimination long term?
https://www.apmresearchlab.org/covid/deaths-by-race
Love you, Steve. Ultimate sense and rationale… Pekka (75)
Why should living versus dying be the only measure for assessing reopening strategies? What are the demographics of those being left with compromised health after recovery?
Also, is the risk to children growing, at least those with some existing health compromise?
If these children should be treated like the elderly should there be compensation for families that need to stay home with them?
Thank you, Excellent idea. I will forward to my senators and representative as well as the Governor
Thank you, Steve! For all the fans of Artificial Intelligence out there – your post sends a simple message: don’t ever underestimate billions of neurons of the human brain – especially the brain of Steve Blank!
It’s time to LEARN from the data and our experiences! This is what neural networks should do – real, or artificial ones…
We need more of your fresh and outside-the-box thinking – to escape the self-inflicted economic wounds! And data never lies. The only problem is: Our Politicians & CEOs who don’t understand data, make business-critical decisions on the advice of epidemiologists who don’t understand business or politics…
Never before, the lack of a sharp focus on the morbidity rates at old-age retirement homes and assisted living facilities was as deadly and as inexcusable as today. Would it be so difficult to mandate a small UV disinfection device to sanitize the phones, car keys, or the face masks in every room?
Better yet, is it so difficult to have the Roombas with UV lights attached – roaming the corridors at old-age facilities? I even tried to contact iRobot’s CEO on the above – bet never got any reply to my emails. Why would he? After all iRobot doesn’t need any human advice – the Roombas already have the AI built-in!
This makes more sense than anything I have read regarding the control of this virus. Age discrimination should not be seen as such. This affects lives & compromise/inconvenience are a big part of a hopeful solution.
I might add that I am 75 & have been staying out & it hasn’t been that tough.
Steve
Kudos for the thought experiment to generate thinking but I would posit your focus on age is misguided and oversimplifying the complex factors contributing to this current crisis. Yes, the absence of a rational plan is causing more economic harm in the U.S. compared to other countries like South Korea who quickly mobilized a response including comprehensive testing and isolation resulting in lower deaths and being able to open the economy sooner. We can also learn from the 1918 Spanish Flu Pandemic where cities in the US that had longer periods of shutdown had a faster return to economic recovery over time.
Yes, those that are most vulnerable are more likely to suffer the negative affects of COVID, but focusing only on age is overly simplistic. Economic status, access to healthcare, and underlying health conditions also increase the risk of serious illness and death across all age groups. Also, those in crowded conditions including nursing homes, long term care facilities, and prisons are at greater risk due to density. Why are the rates so high in nursing homes? Underpaid healthcare workers under the age of 65 working in multiple nursing homes that become perfect vectors for transmitting the disease in and between these facilities. When they themselves become sick, there is no capacity to fill those trained positions resulting in a perfect storm of poor conditions. The death rates in nursing homes reveals more about the travesty of how we care for the elderly vs. the lethality of COVID.
Reducing the rate of transmission amongst those <65 is an important element to reduce the overall infection and death rate in all age groups. There are also long term sequelae of COVID in all age groups we are just beginning to understand.
Comparing death rates for car accidents and opioid addiction is also a false equivalency as shutting down the economy would not be a rational response in those circumstances. But as a society we did implement measures to lower death rates dramatically including mandatory seat belts that some considered a violation of their liberty (the ‘Live Free or Die’ state of New Hampshire being the last to adopt mandatory seat belt laws).
COVID is politically incorrect, but predictably our response is political. A population based approach is required to address all vulnerable groups balanced with the economic impact. A solution based on only one variable, age, is not the proper course.
Hi,
I really like your views.
We need to take extra protection to save the most vulnerable portion of our population.
However, in developing countries (like ours), old people live with their children. For example, my parents are currently living with me.
So, to save them, I need to be extra careful as well. If I get the virus somehow, all my family members will get it. And one or both of my parents is highly likely to die (God forbid). It is very difficult or impossible to keep them separate from younger family members.
Let’s hope, everything will turn out to be fine for all of us.
// HADI Dhaka, Bangladesh https://www.facebook.com/Hadiuzzaman.Bappy/ +8801711504500
How did people over 60 live that long in the first place? They aren’t stupid.
I’m 69, have a co-morbidity. I was a paratrooper, a Ranger, and a combat engineer.
I don’t need y’all or the nanny state telling me what to do. I’m not offended by you giving me a bit of advice, but I already figured out I was responsible for me. I think I was 18 when I did that. Might have been 12.
Of course, we should only be quarantining those in risk with substantial focus on the nursing homes.
Those governors who tasked their National Guards to disinfect nursing homes whilst ensuring that those diagnosed with COVID19 were segregated from the general population were using that rare, uncommon trait called common sense. Bravo.
We’re going to be fine. Let everybody who is healthy and younger than 60 go back to work.
Meanwhile, leave me alone, I have enough common sense to make it through this.
Thus far my record on surviving crisis is pretty good. I’m batting 100% thus far.
Be well. God bless us all. God bless America. Be skeptical of the nanny state.
Thanks for the proposal.
This may be a viable strategy for the US, where nursing homes are common. For much of the developing world though, the vast majority of seniors live with their children. There are neither resources nor infrastructure to segregate 60+ citizens. Our path to recovery seems unfortunately much longer.
I agree with Mr. Minch, and it’s not just because of the fact that I miss pools, Pho shops, and buying stuff from my library book store. The truth is, an old age is indicative of wisdom. The Bible says, speaking of wisdom: “Happy is the man that findeth wisdom, and the man that getteth understanding. For the merchandise of it is better than the merchandise of silver, and the gain thereof than fine gold. She is more precious than rubies: and all the things thou canst desire are not to be compared unto her. Length of days is in her right hand; and in her left hand riches and honour.” (Proverbs 3:13-16). Hate to say, fools usually don’t live long. If the elderly have lived that long, I think they can make decisions. And, yes, I am very skeptical of this nanny state as well. This has socialistic despotism written all over it, from excluding masses of people from working, to determining (by the state) what businesses are and are not essential, to stimulus for all citizens (this is going to have to be paid off somewhere–likely, in taxes for years to come), to the people using this virus as an excuse to raid churches of their religious liberties, https://pulpitandpen.org/2020/04/10/breaking-police-assail-another-greenville-church-in-overwhelming-show-of-force/ , and even the relations the head Dr. Fauci has, and the contradictory statements he makes. There is definitely something more to this than just Covid 19, and I believe we do our best to be aware.
Hi Steve,
Thanks for your posts, I absolutely love them. I work at the University of Colorado at Boulder to help promote & inspire innovation & entrepreneurship, with a background in (small) startups. Your posts are always relevant, timely, and on point. As a co-founder of a commercial construction company, I really appreciated your post a few weeks ago related to the list of âhereâs the stuff you need to focus on now to keep your business open.â
Related to your post below, I have been thinking a lot about the age impacts of this virus and even considered the same model proposed below â and I think itâs the RIGHT solution.
I hope that we can begin to think of the solutions to this virusâ impact in a more practical way that allows us to protect our population â and our businesses.
Thank you for what you do!
Chris
Chris Gustavson
Director, Innovation & Entrepreneurship
Research & Innovation Office
303-492-7470
chris.gustavson@colorado.edu
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From: Steve Blank
Reply-To: Steve Blank
Date: Thursday, May 21, 2020 at 7:05 AM
To: Chris Gustavson
Subject: [New post] The Covid-19 virus is not politically correct
steveblank posted: “The Covid-19 virus is not politically correct. It discriminates against the old and the unhealthy. The biggest risk factor in dying from the virus is age. If youâre 60 to 70 years old, youâre 30 times more likely to die from Covid-19 than if youâre under “
I just received these thoughtful comments from someone who wanted to remain anonymous. After their comments, I offered my reply.
—-
No one has settled on a long-term strategy.
Our initial goal was to “bend the curve” to not overwhelm the health system; we did this everywhere except the NYC area. Now what are we trying to do? No one is sure. We have defaulted to “try to keep people apart – to some extent – to continue to push down the rate of new infections and hope (for very quick development and deployment of a vaccine and/or treatments OR the virus to wind up being seasonal — and we’ll then deal with what happens in the Fall when it happens). That is, there is no consensus on what we want to do now besides a vague “keep people safe” and a vague “minimize the economic damage. The White House, though, knows it’s goal: re-election.
As an academic (and natural naysayer), this is my feedback on the “New Idea”
– Who determines when the COVID-19 crisis is over?
– How do we define the act of sheltering in place (SiP)?
– Where can those people -SiPP – go and not go?
– Is SiP mandatory or voluntary?
– When would SiP end?
– Assumption seems to be that we keep the SiPP completely separated from everyone else (NoSiPP) since the number of NoSiPP with the virus would likely increase.
– When grandma is moved out of a multi-generational house to separate housing will hear family get to see her? If yes, under what conditions?
Cost?
– Loss of privacy regarding age and medical condition will be a major issue when someone declares themselves a SiPP. Age is not as big a problem (since it is relatively easy to uncover), but the SiPP under 60 will be revealed as having a medical condition which could hurt their ability to get insurance and jobs and make them “undesirable” in other circumstances.
– What type of health care coverage will SiPP have? Private insurance, Medicare, Medicaid?
– Will government pick up cost if they already are paying insurance premiums or only if they have no insurance? Will government pay all medical costs from first dollar? For COVID-19 related treatment or everything?
Cost?
– Who determines if a SiPP can perform job remotely, the employee or employer?
– Can company replace SiPP worker who stops working?
– Will SiPP worker be guaranteed to be able to return to their job they left?
– What happens to worker who fills in for SiPP once virus crisis is over?
Cost?
– At different points in this “thought experiment” there seem to be different proposed rules with regard to the extent to which safety requirements such as masks and social distancing are maintained.
I’m not sure how this will remove the burden to businesses of “significant additional overhead costs?”
– Other issues not addressed but which are important considerations now and will become even more important under this scenario
– Do we still try to take people diagnosed with virus out of the system if they don’t require treatment?
– Will businesses get any liability protection when they re-open?
– The big question that no one wants to touch is how much increased economic value (however that would be defined) is one life equal to (and do you want to discount the value of different lives)? (Of course, the state of the economy also has an impact on lives lost, so that would need to be part of the calculation also.) Policymakers are making that tradeoff, albeit without any rigor and with a tremendous amount of uncertainty. That is the trade off in reality, but are policymakers (with executive power) really thinking that when they declare a policy?
——-
My response to the feedback above is pretty simple:
1. Work backwards from the suggestion and ask, if it did work would it have better results (deaths, economic recovery) than what we are currently doing?
2. Then take each of the objections individually and…
– see how you might solve them (costs, logistics, etc.)
– what the results would be if you can’t (additional deaths, etc.)
3. Sum up all the objections (solutions versus can’t be solved) and see if the overall approach is better than what we are doing now.
4. Decide whether the optics/policy implications would be politically viable and supportable
Someone needs to decide that the idea is worth the work of further analysis.
A lot of this is just common sense. Much of it falls under the classification of sacrificing our native intelligence and common sense to the nanny state.
In the re-opening of the economy, there is a marketplace environment and a disconnected “elder” environment. There are two sets of rules.
In the end, we all have to think through and do things that work for our own companies, our workforce, our customers, our families, our livelihood, and the general public. CEOs should know the law, follow it, but think for themselves.
This is exactly where critical thinking and intellectual curiosity confront practicality and basic leadership.
Life is a not a “risk free” undertaking, neither is business.
I fear we are at a depth in the weeds that the nanny state is totally unarmed and sufficiently ignorant that they cannot provide operational answers.
I live in Texas and we have a very good handle on WTF we are doing. Our Gov and state gov’t are on the ball. But, then, it is Texas after all.
I agree with your answer that we have to use a lens of death, economic recovery, to which I add risk, liability, and, again, common sense.
If a business person does not possess sufficient common sense to make such decisions — after seeking whatever pool of judgment is available to them — then maybe they shouldn’t be running a business.
There is an element of rank politics to this. I also think it is a cheap shot to suggest that the WH’s (that’s the White House, not Waffle House) sole criteria is re-election.
IRL, we have to be able to multi-task. If you are going to cast that stone, then let’s chuck one at that idiot Joe Biden who has not made a useful utterance since 1964 and nothing on COVID19. Luckily, he is a plagiarist and will ultimately find someone with a brain to copy from, no?
Be well. Be brave. Be fair. Be lucky.
Could you test this MVP in a small area, like a small state that would volunteer to try? Seems like the agility principle/approach you and I have been working with for 35 years.
Sven Atterhed
Respect to you Steve, for your suggestion of a THOUGHT EXPERIMENT, that I haven´t heard that any government has performed yet!!
Sven Atterhed, The Foresight Group, Sweden
An interesting analysis indeed. It actually confirms the need of a larger scale testing that allows for a breakdown in risk groups. If we’d take such info more seriously earlier on, we could have largely stopped the spread of the epidemic.
I also think you do pay enough attention to a) the fact that by now over 40% of the U.S. population is obese and over 60 % overweight, with the concomitant risk factors like diabetes and heart and lung conditions–so how do we define ‘vulnerable’? (Does Trump and half of his Cabinet members fit that category?); and b) the distribution of risks not just between age groups, but also within. For example, as we have seen, navy ships with over 4,000 young and healthy men very tightly together (or prisons, or meat packing plants, or refugee centers) can as easily become hotspots as a nursing home. It is not surprising that within NY State the Bronx has a much higher rate of infection than Manhattan as there is a high concentration of workers in such industries, including home care helpers for frail elderly, as well as more poverty, obesity and other risk factors.
That general pattern is not surprising for epidemiologists. And reason to push for flu shots, especially for elderly, and especially for vulnerable elderly.
Focusing on (potential) hotspots should have been the main approach to start with, but perhaps not enough. The virus spread more rapidly and easily than the flu, with higher death rates as you note for elderly (while drugs and car accidents also cause many, largely preventable, deaths, these are not contagious and require a different approach). But how much more, and with what distribution across groups was not known until more data came out in late February and early March (still not prompting systemic policy response). We are now entering an interesting period with 50 states all doing their own thing without central guidance based on serious epidemiological study. These many different opening models will have quite different outcomes.
I would have favored an opening approach starting with all small businesses and shops, with limited numbers of people working and customers entering the premises. Like local supermarkets, and liquor and other food stores and UPS (but perhaps not Home Depot, that during the first weeks of the epidemic hardly provided any protection to its workers). And smaller restaurants, both for take-out and serving. Together with large-scale centralized purchase and allocation of personal protection and testing capacity to allow for comparisons of effectiveness across the nation, starting at (potential) hotspots in order to restrain and prevent (further) outbreaks. We now have started at the other end….
Kieke Okma, New York
Great essay, Steve. It made me think of Ray Dalio’s ideas in “Principles: Life and Work” in judging credibility with individual “baseball cards” that graded an individual’s experience, education, etc. to gain a sense if how one might value their opinion, independent of charisma and assertiveness. Substitute risk or vulnerability for credibility and imagine a scorecard quantifying it by the individual. For example, hypertension +5, weight +3, diabetes +8, age +12, etc. Healthy, young people with a low risk of serious consequences might have access to lower standards of social distancing. Restaurants might institute different standards depending on their business decisions and only allow people with scores that fit their layout and practices to dine in. Highly vulnerable people could find businesses that have instituted practices appropriate for their risk level. People who have been infected and recovered could be flagged as low risk and unlikely to infect. I’m over 60, too, and think it’s reasonable to tailor practices more closely to risk and potential consequences. If under 30 people have little risk of dire personal consequences and interact differently with each other than with older people or other people with higher risk factors, that seems reasonable to me. Also, it could help the economy recover and help our society to build herd immunity sooner.
.
Young folks need to be aware of the implications of cigarette smoking, vaping, and using marijuana. These risk factors are extraordinary. Maybe the highest amongst your grading system.
You are right on! I have a son that is an ER doctor and he was pushing this idea a long time ago. His comments were same as you are recommending.
I am very disappointed that the news people have focus on this information. I thought the investigative reports would figure this out.
These facts are correct and the answer should focus on the real problem. Define the problem and get a solution- protect the ones that the virus attacks and let everyone else work.
I think you’re missing that the true reason we sheltered in place was not to protect any one person, but to ensure our local healthcare systems weren’t overwhelmed. An over whelmed healthcare system, ie running out of ICU beds or healthcare workers would mean so many more deaths.
I also would like an analysis of how much of our economy isn’t needed? Ie Does civilization need 30million a year basketball players? The male sports entertainment complex was the first to shut down and it’ll be the last thing back …. the economy of providing for your family didn’t miss a beat.
This is an opportunity for the economy to reboot, refocus and get healthy … without a planet there is no economy. At some point we need to rejig our models of success such that sustainable living is prioritized over unsustainable growth.
Steve,
Thank you for sending this!!! It is aligning very well with what I have been thinking for two months. I have been suggesting design thinking workshops to design such a system where the compromised are more protected…and the rest are out making a living and supporting those who cannot. I have compare it to putting the oxygen mask on the mother and then the child, when on a plane that is going down.
Some thoughts I would add, is that we need to be very innovative with those over 60, and how we address it.
1- as there are many over 60 who are less compromised because of their immune system, acitivty level, weight etc., than those under. 2- there are many over 60 who are quite content in the fact that there are worse things than dying, and being separated from loved ones, not allowed to work, travel, socialize over a dinner out, would be included in that list. For those who embrace it…we rest in a faith that promises how marvelous heaven will be! Right now I have loved ones “confined” in “high-end” senior living places, with no access to socialize with friends, cannot even visit outside, and are not allowed to have their family into their own condos (that they “own”), due to HOA rules they agreed to, never dreaming of such circumstances.
I also agree that context is important, the deaths from cancer, opiods, car accidents etc., and recognizing the rise of suicides, drug abuse, domestic violence, pornography, human trafficing, etc. during such “shelter in places” are very significant.
While this great debate on how to reopen the economy is going on, I would also like to address “the morning after”…
Inevitably, massive industrial bailouts are the next-in-line. As much as some may oppose government handouts to various industries – I would like to remind us all that: the industry is going to ask for government assistance only because it was the government that FORCED the industry to shutdown!
So, if the shutdowns are mandatory – so should be the economic assistance programs to help the industries recover! However, it’s not to say that when taxpayers step-up to the plate, strings shouldn’t be attached to government loans. Post COVID-19 government assistance offers the best opportunity to the level playing field.
While we embark on a recovery from the worst economic collapse since WWII – businesses need to be “helped” to escape the Wall Street pressures. And here are my recommendations:
1) I firmly believe that cutting pay for executives IS A PRUDENT AND NECESSARY step. We already know that companies with high CEO-to-worker pay ratios have lower shareholder returns than companies with lower ratios. So, for example, no company receiving taxpayer bailouts should be allowed to exceed the 20:1 salary ratio – the proverbial Peter Drucker’s recommendation. And since no CEOs’ pay-hikes happen in a vacuum, it’s time for the governments writing the checks to start holding BODs accountable and for the Compensation Committees to act…
2) Also, since companies were ordered to shutdown, why would any business be measured today by the quality of its dividends? Especially, if some of the cash allocated to pay dividends is coming from the taxpayers? So, the companies receiving the bailouts SHOULD NOT be allowed to pay dividends until the loans are fully repaid. Why would we ask the corporate world to twist themselves into a pretzel & offer dividends – just to keep up with the few lucky behemoths such as Apple, Microsoft, or Amazon? The mandatory shutdown of businesses had nothing to do with their economics!
3) Until the government-mandated shutdowns due to COVID-19 pass, and until companies repaid their debts – NO DIVIDENDS and no SHARE BUYBACKS should be allowed. And why would we even allow SHARE BUYBACKS with taxpayers’ money? It’s time to reverse the biggest mistakes of the past and to make share buybacks illegal!
Is using taxpayers’ money to manipulate the markets & to send a “fake” message of a “greatly improved” measures of profitability more important than spending on R&D and Innovation? Before 1982, share buybacks were considered illegal and treated as market manipulation by SEC. There is enough evidence 38 years later that tinkering with SEC rules didn’t work.
The Bottom Line: if during the recovery corporate profits are to be reinvested in developing new products, building factories, reducing unemployment, or opening new stores – they shouldn’t be redistributed to shareholders. And if we don’t do so, instead of healthy recovery, we will be stuck with dwindling employment and diminished capacity to innovate for a long time…
Your comment is all about extracting a political pound of flesh, not something that will create new jobs, save existing jobs, or accelerate the economy.
In a capitalist, market economy, your suggestions are exactly what should NOT be happening.
The government should assist in righting the ship, not changing out the captain and crew. All we can hope for is that a company that was a good employer in the past, can regain its footing and be a good employer in the present.
This strategy is intended to keep the social and employment safety net from breaking, not to use it as a punitive, liberal chokehold on policy or to further liberal causes.
As a loan, of course there are repayment terms that are fair and prudent. I have no problem with limiting certain capital actions until the loan is repaid. I am adamantly opposed to using the loan as a vehicle to legislate.
If you want to change policy, then tell the US Congress and let them pass a law.
We don’t care if the jobs we save are Dems or Republicans, liberals or conservatives — most folks with a job don’t care at all. The want to save THEIR job and we should keep it that way.
If a company is able to handle the debt repayment provisions within its current and projected cash flow while maintaining the appropriate debt coverage ratios, there is no good reason while the company should be constrained as to what it will do after it has made its payments.
It is NOT the government’s job to pick winners and losers or to tell companies how they should operate. That last thing is the job of the Board of Directors and Management.
Let’s not abandon capitalism over a loan.
Another great comment from someone who wanted to remain anonymous:
Your “Protect the Elderly” proposal is very similar in nature to Dr. Graham Allison’s recent op-ed. I have many of the same concerns/feedback:
What about people over age 60 who need to work to meet their expenses (beyond what an enhanced Paycheck Protection Program might provide)? I couldn’t get your links to work for “20% of those over 60 work. 12.5% of the workforce is over 60.” and would be very interested in seeing these. The former number in particular seems low to me, especially given that working Americans expect to retire at age 66.
I worry about accounting for the high percentage of Americans with preexisting conditions – along with the uncertainty of even if you are under 45 and do not have preexisting conditions, there is no way to predict how your respective body will handle COVID-19 (you cannot guarantee that you will have a mild case – and you could be an outlier and end up among those who pass away from the disease). CMS states that “according to a new analysis by the Department of Health and Human Services, 50 to 129 million (19 to 50 percent of) non-elderly Americans have some type of pre-existing health condition.” Meanwhile, the Kaiser Family Foundation estimates that “almost 54 million people – or 27% of all adults under 65 have pre-existing health conditions.”
What about vectors of virus transmission, including asymptomatic spread? The recent South Korea outbreak comes to mind.
There is still so much we don’t know about Multisystem Inflammatory Syndrome in Children (MIS-C), which is likely linked to the virus. We might need to end up refining our initial hypothesis that only the old and those with chronic health problems are vulnerable.
I very much agree that measures to restore our economy are needed – but not at the expense of public health. Do any specific economic drivers, incentives, or innovative programs come to mind
This roughly makes sense but there’s one major complication: people that are not in the highest risk population but live with those that are high risk. Plenty of 30-somethings live with 70-somethings in the same house and the younger generation bringing the virus home would be a real problem. It would be easy to add young but at-risk to any scheme like this, I’m not sure how we should handle those that are low risk but living with high risk.
Fair comment on the surface, but the reality is there are few 30-somethings living with 70-somethings.
That is not a “normal” generation gap nor is it a normal grandparent-grandchild age gap.
The solution is to simply keep them apart. The degree of difficulty may vary from “very hard” to “piece o’ cake.”
In a great many of these things, we need to resist the pearl clutching, the tongue clucking, the cataloging of fears, and hand wringing (not hand washing) and just act on the problem, identify the danger and eliminate the danger.
The data also tells us tha schools should be open. The attention should be directed to teachers, older teachers and those with pre existing conditions should be restrctedvpossibly as to how they can teach and in what environment. Closing schools certainly isn’t warranted by thevdata.
Steve, an ex-student of yours here. Love your clear thinking as always. Any data/dashboards available on the deaths caused by the lock downs? We are in a false trade-off: save lives or save money. But poverty kills, economic dislocation kills (suicides, drug addiction, no access to healthcare, etc.). I believe we will follow your path if we change the debate to ‘which lives should we save?’ Mike Novotny
I wonder about the age of each of the commenters above. I don’t believe anyone identified what age group they belong to, which would help put their comments in perspective. Your comment of having those above 60 shelter at home, and those below go out into the economy freely strikes me as a police state. Your idea that government would continue to pay these sheltering individuals until a vaccine is discovered is naive at best. How long if ever will it take to create a vaccine? And, the Senate is reluctant to take up the latest stimulus package and paycheck reimbursement, even though the economy is crashing. How likely will they be to pay a large share of the population to stay home indefinitely? Funded on the backs of those who go back to work–sounds like another social safety net, and we know how well those are viewed by a large number of elected officials.
Great ideas, Steve. I am 60, and would welcome some of those suggestions. Just one point. Thought experiments are not real experiments. It seems to me they are the same as a founder sitting in his/her room reading stuff on the Internet and thinking they fully understand the problem, and thinking that their solution will definitely work. If the founder is a domain expert, they can probably simulate reality in their heads well enough to test the solution fairly well. But testing a solution/hypothesis in the real world is the best test, and is an actual experiment