JUST LIVING WITH COVID

Everybody’s headed for a hole in the ground. ~ Warren Zevon & Duncan Aldrich 

It’s been 25 months and more than 5.5 million global deaths since the insidious Covid-19 pandemic began. The World Health Organization (WHO) properly declared a public health emergency of international concern a month after this virus was first discovered in Wuhan China. How long will the Covid-emergency last? How long should it last? When can we just live with Covid?

Coronaviruses began infecting humans in 1965. They caused the SARS and MERS outbreaks in 2002 and 2012, respectively.

Virologists believe Covid will be with us for a very long time, just like the H1N1 virus that jumped to humans producing the 1918 Spanish Flu, which killed 675,000 Americans. The H1N1 virus is still with us; it’s now one of the strains in the seasonal flu virus.

Despite politicians’ and policy-makers’ fervent proclamations that Covid will be “conquered” and “vanquished,” it won’t be. Why? Because it’s a virus, it mutates constantly, forever. It won’t surrender even to our fully-modern medical technology. Like every other infectious disease-producing virus, it’s here for ages. The single exception to this eventuality was the smallpox virus that was eradicated world-wide in 1979, nearly 200 years after a vaccine was first produced, and after killing an estimated 900 million humans during its reign.

As we enter the third year of this pandemic, the question has been raised: how we can learn to live with Covid on an ongoing basis. Other questions include determining what continuing, non-emergency policies will sustain our ability to live, play and work alongside the presence of Covid, like we have done with the flu virus and many others.

Several prominent former members of President Biden’s Covid-19 Advisory Board have recommended creating “New Normal,” non-emergency health policies that will allow us to survive more safely with Covid. Their recommendations essentially involve strengthening the role of US public health agencies by improving and sustaining public health infrastructure. Such strengthening would involve significant, continuing federal and state funding, which, perhaps wisely, they did not enumerate.

The mystery isn’t only about what our Covid policies should become, after suffering so much in this enduring pandemic. There are others as well.

Because they don’t leave any fossils, it remains mysterious as to what viruses really are and have been. Many scientists believe proto-viruses began replicating on Earth several billion years ago. They have a giant head start; the earliest modern homo sapiens have been doing this for perhaps 300,000 years.

These virologists subscribe to the virus-first premise: Long, long ago, viruses evolved from molecules of protein and nucleic acid, before cells first appeared on Earth. Thus ironically, viruses themselves contributed to the development of cellular life.

The first human virus was scientifically identified in 1881, the yellow fever virus. During the past century scientists have changed their minds several times about what viruses are. They were first seen as poisons (the word “virus” is derived from the Latin term for poison, venenum), then as an elementary life-form and finally as biological chemicals.

Virus devaluation to inactive chemicals began 86 years ago, when biochemists determined that viruses are not alive. On their own they cannot produce life-required metabolic functions, such as conversion of food/fuel into energy to run cellular processes.

Viruses’ hosts provide these necessary functions, not the virus itself. Unfortunately, viruses can and have infected virtually every earthly life-form, from humans and insects to tobacco plants and bacteria. Some virologists believe viruses may occupy an enigmatic grey area between living and nonliving. Perhaps similar to what certain Dems believe Trumpists are.

They may not be alive, but the microscopic Covid viruses have affected hundreds of millions of people during the past two years, and will continue to do so all the way to its omega variant (which is 9 variants after omicron, if you never had to memorize the Greek alphabet like I did long ago) and beyond. This virus’s persistence – which, politicians, policy-makers and the rest of us should have previously acknowledged – has precipitated growing relevance for changing short-term, emergency policies to ones that support our need learn how to “live with it” (the Covid virus) over the longer-term.

It can’t be an emergency forever, as an infectious disease expert aptly phrased our current policies.

How can policies be changed from considering Covid not as an emergency, but as an ongoing epidemic? Increasing Covid vaccination rates is the most important objective for living with it. Shown below is one of a growing number of pop-up vaccination clinics.  Regrettably, it’s also the most problematic, given the political caste and personal reluctance that now surrounds vaccination. Next in line is widespread use of masks. The fragile nature of some healthcare systems also poses problems.  

A pop-up vaccination clinic in action.

Achieving this objective will be challenging and increasingly expensive. The “easy arms” have already been injected. At the moment, the US has a fully-vaccinated rate of 63%, much below what epidemiologists used to, but no longer talk about in terms of Covid’s Herd Immunity rate might be.

Medical personal directly involved with immunization describe the current process of getting reluctant folks to be inoculated as “a very grinding, slow process” that’s akin to “medical trench warfare.”

This is especially true after the Supreme Court’s misguided decision last week to block government-mandated shots by companies with more than 100 workers, who employ 67% of our labor force. The Supremes can no longer be relied on to support public health, among other issues. Itself a tragedy within a tragedy.

Interim policies that have been recently initiated should increase availability of take-home Covid tests and oral anti-Covid medicines. Other “living with it” policies once hospitalizations stabilize and decline may ultimately include modifying restrictions on: mask usage, isolation periods, travel, public and private meetings, social distancing, K-12 and college closings, restaurants, quarantines and business hours/operations.

To be successful in reducing Covid’s substantial negative externalities, such guidelines require everyone to comply. Those who willingly damage public health by non-compliance of vaccination and eased, non-emergency Covid-mitigation policies should result in added limitations-consequences for those people. Such compliance consequences would be completely consistent with existing, mandated inoculations in order for children to attend day care, pre-K and K-12 schools.

“Living with it” policies will require “get with it” public compliance. Here’s to a brighter, healthier future. 

TIGHT QUARTERS

You must be the change you wish to see in the world. ~ Mahatma Gandhi 

You might have missed this, but on February 3, when a virus wasn’t an all too central part of our attention, the US Mint in Philadelphia issued its newest US quarter-dollar coin. This coin, shown below, displays our very first President, George Washington, who has continuously appeared on our quarters since 1932 – no term limits for quarters apparently. Our newest quarter celebrates American Samoa on the relief (back side), which features a mother fruit bat and her pup hanging upside down. Aren’t you numismatists now excited? 

   The newest coin is part of the US Mint's America the Beautiful Quarters Program. According to the Mint, “the image evokes the remarkable care and energy that fruit bat mothers put into their offspring. The design is intended to promote awareness to the species’ threatened status due to habitat loss and commercial hunting. The National Park of American Samoa is the only park in the United States that is home to the Samoan fruit bat."

So start swimming across the Pacific to Samoa – it’s only 4,805 miles from here – and lend assistance to these threatened fruit bats. The Philadelphia Mint is no penny ante or mere nickel and dime operation; it usually produces 13.5 billion coins every year that represent 1.2% of the nation’s money supply. This spring, there were close to $48 billion worth of coins circulating. But the Mint’s production of coin has decreased due to measures put in place to protect its employees from the virus.

There are not enough quarters, or as I’ll refer to them here, Georges. Just like TP and paper towels, the coronavirus is now blamed for a shortage of quarters. This shortage isn’t the result of more young people playing coin games like deadbox or tinks, like I used to in grade school.

Only 70-90nm in size, roughly one-hundredth as large as a human red blood cell, the coronavirus has been blamed for aggravating virtually every shortage, inequity and malady.[1] The covid-19 pandemic is everywhere. The word pandemic, first used in the mid-1600s when the Great Plagues of Europe were killing 20% to 50% of the population, comes from the Greek pan demos (all people). In a viral variant of Parkinson’s Law that cannot be masked; the coronavirus has inevitably expanded so as to fill the time available for everyone’s fears and opinions. And, of course, it’s far from over.

The only comparable, politically mesmerizing event I remember is the 1973-74 Oil Embargo when suddenly, and belatedly, we realized that oil was a vital ingredient for a vast spread of economic activity and whose supply was no longer guaranteed. This embargo incented some economists to develop a BTU theory of value which measured a good’s worth based on how many BTUs (of then very scarce oil) were required to produce it. Thankfully, a covid theory of value hasn’t evolved, yet. Has it?

Nevertheless, as everyone knows from personal experience, the coronavirus has extensively changed our behavior. These behavioral changes include how much we’ve been spending and how we’ve been paying for purchased items. Paying for stuff requires some sort of money, which for economists like me leads to talking about “types” of money and the money supply. The US money supply is managed by the Federal Reserve Bank (the Fed), our nation’s central bank.

Simply put, the larger our money supply the more spending happens. The more spending that occurs the higher our GDP. The Fed has demonstratively supported keeping the US economy relatively afloat during the covid crisis. Over the past year, the Fed has increased the money supply by nearly $1.5 trillion dollars, an amazing 38.5% growth rate. That is a whole bunch of dollars, and Georges. It’s also a prime example of big-time expansionary monetary (money supply) policy. In July, retail sales slightly increased (1.2%) for the third straight month, after significantly dropping earlier in the year.

There are several types of money, including cash (like Georges and dollars), credit and debit cards, checks, and zeros and ones (digital money). With the exception of cash, most monetary transactions end up as zeros and ones in your (or someone else’s) account.

There’s more money circulating, courtesy of the Fed, but Georges and other change are in tight supply. Because of the apparent shortage, the Fed has rationed coin supplies to banks across the country. That’s not necessarily a large macro issue because coins aren’t used in many high-value non-digital purchases. Federal Reserve research indicates coins and cash are used only in about 12% of purchases costing $100 or more. Such transactions thus don’t provide much change, which is not the same as what Mr. Gandhi was referring to at the beginning of this blog post.

But coins and other cash are used for 49% of payments below $10. That’s why laundromat operators are wondering where George is. Laundromats are quarter kings because their washers and dryers require them to operate, as you probably remember.

There are about 29,500 coin-laundries in the US, generating nearly $5 billion in annual gross revenue. It costs the typical laundromat customer about 8 quarters to wash her/his clothes and about the same to dry them. Some laundromats charge less (6 quarters), some more (16 quarters).

Most laundromats provide on-site change machines for their customers so they can use the washers and dryers. The stores’ owners/operators thus need a steady, substantial supply of Georges. That’s becoming more challenging. Charles, a laundromat owner, drives to six banks in his city every morning in search of Georges. The banks now each limit him to no more than $120 worth (480 quarters). Most recently, he’s been running low on Georges, which is bad for his business: no quarters, no washing or drying.

He and other small business-people believe the coronavirus has somehow blocked coins from circulating in the economy. Many non-essential businesses remain closed, perhaps with their unemptied register tills on the premises. People are making fewer shopping trips, and depending on the store type, buying less per visit. That is happening, but it’s not just the supply of Georges and other cash that may have shrunk because of the virus, it’s also their velocity.

Money velocity is an economic term that measures the rate (speed) at which money is exchanged for goods or services in the economy. It’s the rapidity at which people and firms spend their money. Unlike driving on the Interstate, money velocity has no regulated speed limit, it depends on the size of nation’s macroeconomic output (GDP), relative to the size of the money supply.

US money velocity has lessened over time. From the beginning of 2020 through June 30, money velocity dropped 23%, a big reduction. Velocity is at its lowest in 60 years. Lower money velocity means each dollar (and quarter) is not being used as often to buy things. This lower demand for purchasing items produces lower GDP. The US real (inflation-adjusted) GDP dropped 9.5% from the first to the second quarter of 2020.

Despite the Fed’s successful efforts to increase the overall money supply, money velocity has significantly dropped as has the supply of coins. Lower velocity mitigates some of the effects of the money supply's increase. Georges and other cash are being used less to purchase of goods and services.

Where’s George when we need him?

 

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[1] The media has taken to multiplying the pandemics we’re facing, so hardly anything is left out of its realm: witness media sightings of the fashion pandemic, the housing pandemic, the wildfire pandemic, the Great Barrier Reef pandemic, the schools' laptop pandemic… 

DÉJÀ FLU? THE POTPOURRI PANDEMIC

The straight path never leads anywhere except to the objective. ~ Andre Gide 

Every state is now relaxing or modifying in some fashion their Sheltering-in Place (ShiP) orders. The first state to withdraw its ShiP order was Georgia on April 24, others like Florida and Alaska followed the next week. Now all states are in this process, each following their own reopening paths.

In California that means localities are exercising Governor Gavin Newsom’s four-stage plan for reopening to some sort of newly-defined normalcy. The qualified good news is there’s a plan; the bad news is it needs to be followed. How will this happen? What’s in store with this “reopening”? No one really knows; everyone’s wandering down their own recovery road. Ultimately, it will be up to us consumers as we decide when and how much to partake in the nation’s commerce.

California’s current covid situation is quite mixed. Some areas have done better than others; no surprise for a state as varied and large as ours. According to Google, Californians have more strictly abided with ShiP orders than people in other states, with fewer visits to retail stores and pharmacies. 👍 However, on May 26 California was the only state that had more than one metro area in the NYTimes’s list of areas with the dozen highest daily growth rate of covid-19 cases; both cities are in Southern California.

New coronaviral cases have risen state-wide, despite extant ShiP orders. There’s no recent decline or even plateauing; they’ve steadily ascended since May 17. During the past four days coronavirus cases have climbed 44.4% in California. 👎 That result is hardly according to anyone’s plan.

The governor has announced California sits in a very large, very deep hole because of covid-19. This threatening cavity is an expected $54 billion (B) fiscal deficit, together with unemployment hovering above 20%. It means the state is already in a substantial, viral recession.

For perspective, this $54B deficit is by itself larger than 40 states’ entire 2018 budgets. This fiscal hole will require state-funded services to be reduced (when they should be expanded), budgets to be cut, furloughs and layoffs to occur and taxes likely increased especially for richer folks. Unfortunately, there aren’t enough richer folks even in California to fill the state’s colossal revenue hole.

Here’s a local example of one consequence: the Berkeley School Board is now engaged in the painful process of how to quickly cut 10% from its coming school-year budget, a reduced budget that somehow has to provide a viral-safe PK-12 education for its 9,500 students.

California’s viral recession, like most places, has been caused by both supply-side (producers) and demand-side (consumers) shutdowns, which is the objective of ShiP orders. It means economic recovery will require both stimulating producers and consumers to re-participate in economic transactions. It also very likely means such a recovery will not be characterized as a “V” (relatively quick). Nope, it’s more likely to follow an “L”. This is unfortunately consistent with the Federal Reserve Bank of Atlanta’s most recent real GDPNow forecast for 2020Q2 (April-June) of a staggering -40.4%. This is not a recession forecast, it’s a depression forecast.

When former governor Jerry Brown was asked what could be done about California’s dismal economic dilemma he said, “The response should be a Rooseveltian intervention and effort to mobilize the economy the best way we can.” These are fair, but fictional words, as Mr. Brown knows. Such broad-scale intervention requires big-time federal funding. The current occupant of the White House now has no intention of “intervening” with hefty heaps of fiscal largesse to assist true blue California, or for that matter any other state. In the unlikely but best of circumstance, #45 and Sen. McConnell might offer selective, non-Rooseveltian funds only after the state agrees to provide some politically-substantial payment in return; maybe a guarantee that each California recipient will receive a certificate with #45’s beaming, orange-ish image at the top. Oh my, that’s what having to deal with Beelzebub (aka, our Lord of the Lies) may come down to.

California is now relaxing its Stage 1 rules in most regions, leaving reopening decisions up to local authorities. The City of Berkeley, like the rest of the hesitant SF Bay Area counties, remains in Stage 1 through the end of May – we’re staying in our homes, attempting to flatten the now well-known curve. Nevertheless, the Stage 1 restlessness index is rising. The transition to Stage 2 will ease the ShiP orders and lift restrictions for lower-risk workplaces.

We’re at Stage 1.8 in Berkeley, and expect to enter Stage 2 soon, by necessity. We should also expect that as cities, counties and states open up, they might selectively move or reorient the official goalposts, changing imperatives to rid themselves of rules they cannot fully comply with, like Washington DC has done.

California’s tourist industry is the largest in the US. Oops, no one is touristing these days and hasn’t been for several months. I’m not alone in cancelling several trips. About 600,000 of California’s travel industry employees have lost their jobs. Hotel rooms in California’s famed Napa Valley are empty; on a recent weekday only 6% of the thousands of rooms in Napa were occupied. Vineyards’ tasting room revenues have been transformed into empty glasses; revenues have dropped 400%. Overall spending on California wines has fallen at least 25%. Vintners wonder how they’ll survive.

Such revenues are all highly-taxed. Travel-related tax proceeds are an important item for many California cities’ revenues, totaling about $12B last year; they won’t be anywhere near that level this year.

No matter what the official ShiP orders state, more people now are publicly walking, hiking, driving, meeting and interacting, even in Berkeley. Our masks-to-exposed-lips (MEL) ratio remains fairly high here, thankfully. I expect we’ll seep into Stage 2 without satisfying every one of the governor’s requirements.

Why? Because ShiP fatigue is at hand, people want orders relaxed and rules’ enforcement is a no-win proposition for anyone. Equally importantly, state, county and municipal budgets clearly necessitate it. The costs of ShiP continue to escalate. State tax revenues have greatly dropped, county property tax receipts are flagging, local tax revenues are unsustainably dwindling.

It’s not quite Exodus, but the fiscal waters parted when Berkeley, whose city council has consistently disdained the need for automotive transport (while sizably raising parking meter fees), stopped the collection of parking meter payments during Stage 1. It’s as if the city told residents please, please drive downtown to safely engage in commercial activity.

Unlike many people, my ShiP “quarantine” hasn’t been a binary change from full-time work to staying at home watching the artichokes grow. My change is one of degrees, because I’ve been retired for a while and have worked only part-time. Increasing numbers of people are unsick and tired of ShiP and want to re-engage in some hopefully-benign fashion. Beyond being simply stir-crazed, large numbers of folks need money that’s headed into their wallets from worked wages, no matter what their covid concerns. Increased income is everyone’s – workers and businesses – very top priority.

The policy “contest” between epidemiologists and economists that I previously characterized has rapidly edged into reopening, after following the epidemiologists’ prescriptions since March. According to one assessment, 25 million more Americans ventured out of their homes on any given day during the first week of May than over the prior six weeks. Nonetheless some steroidal epidemiologists believe, among other needed changes, cities should be thinking about installing new doors that don’t require grasping a handle and re-engineering traffic signals so pedestrians don’t have to push crosswalk buttons. They also suggest that meatpacking plants turn entirely robotic and paid sick time might become a necessity for jobs of all types.

Despite swimming in the deep end of daily pronouncements about covid-19’s treachery, much technical knowledge about the coronavirus remains unknown. Including how contagious and how deadly it is for whom, and under what circumstances infections can be mitigated for how long.

Epidemiologists remain unsure about how to answer the “What should I do?” question that has been posed since the pandemic began more than three months ago. The process of gathering and assessing relevant covid data has indeed been sped up. But as one scientist put it, “The pace of uncertainty reduction in science is way slower than the pace of a pandemic.” That uncertainty means people will favor safely reopening the economy, come covid or high water.
   In due course when we consumers gain enough disposable income and confidence, our demand for goods and services can grow, benefiting all of us. That hasn’t happened yet. US consumer spending dropped in April by 13.6%, the largest one-month decline since this data series began in 1959. This colossal reduction includes spending on durable goods, non-durable goods and services. 

Since #45 has selfishly rejected providing further federal government support or specifying how we are to re-engage commercially and personally, each state and locality is forging a distinct path forward. We can think of this now as our potpourri pandemic. Here’s hoping your and my paths deliver healthy benefits for us and many others.