What we know we know

The current crisis can seem to be a series of ever-expanding unknowns, but the list of things we do know is worth exploring more closely. 

A few years back on Finance Twitter there was a semi-viral tweet that went around asking something to the effect of — if you could know the price of any asset 20 years from now, what would it be and how would that change what you’re doing today? 

No one’s answer matters then or now.[1]

And while I think there’s often a push in mental models circles to drill down on what you don’t know, the knowledge you do possess matters.

The pursuit of a solution to a hard problem requires acknowledging what you do know as much as what you don’t. There’s a lot of faux-modesty implicit in missives about how much some accomplished, respected investor or thinker doesn’t know, and also perhaps an embedded error in fetishizing the potential knowledge available in these still-dark areas of understanding.

And indeed, our collective grasp of any given problem may be best improved by pursuing these unknowns. But our individual understanding of a topic is enhanced by accepting the necessarily bounded limits of what we know we know.

Since this is a nominally business-oriented newsletter, maybe this works: instead of saying you don’t know where the stock market is headed over the next year, someone who knows a thing or two about markets can knowingly say that they don’t know where the market is going over that year.

But this is very different than not knowing about the stock market.

All of which, like everything else right now, brings me back to the pandemic.

At this stage of the crisis there seems an obvious opportunity in reframing our knowledge set around what is known about the virus, the economic fallout, and what can be done instead of paying continued fealty to the unknowns of our situation.

A question I’ve been asking myself lately is what might’ve changed — our personal, local, national, global response to the pandemic — if we knew on, say, March 19, what U.S. daily case counts of COVID-19 infections would be on July 19? The answer, for starters, is 63,907

As a resident of New York City, I’d assume things in the city would still be out-of-control apocalyptic in July. Which, in a pleasant surprise, would turn out not to be true. 

It’s also possible that I’d more seriously look at breaking our lease and finding a place with some space and some quiet outside the city. Neither of us has firm guidance right now on when we’re heading back into the office on anything like a regular schedule, but it’s very clear that the smart money is taking the over. And even if there is a move at some point in say mid-2021 to get 50% of people back into the office, what’s gonna happen if you’re in the 50% that says: “Can’t come in. I live in Boulder now.” Nothing! The leverage the employers exert over their employees’ living situations has disappeared for an indefinite amount of time ranging from a couple years to forever. As I discussed last week, I’m leaning forever

If I knew today’s case counts four months ago I’d also be deeply troubled, as I think we all would. I’d also be surprised to find out July’s data is part of a rise, not decline, in case counts. 

According to Covid Tracking, there were 4,671 confirmed COVID-19 on March 19 infections which brought the national total to 19,770. Leaving out that this was, obviously, a massive undercount, recent data suggests we’re now seeing more daily infections now than we ever did back in the spring. 

And by month’s end, when there were a couple thousand confirmed cases per day in NYC and it was clear the situation was going to get very bad, 70,000 cases/day nationally of a disease that still seemed to carry an IFR in the low-single digit percentages (which is down to around 0.5%-1% now) would’ve brought me towards a kind of paralyzing terror that might’ve just kept me inside for the next year. If I knew four months ago what current daily case counts are now, I would’ve guessed that instead of refrigerated trailers storing dead bodies in New York City there’d have been people literally lying in the street outside hospitals dying. So: I guess this means things are good? 

And if I knew today’s level of infection four months back, what would I think would be happening in the economy, the stock market, what about schools in the fall, professional sports, my own life? Would I even be alive in that kind of environment or would the world look like Contagion

If you’re waiting for the punch, you can stop. 

The build up here is the point. 

There is no right answer to any of these questions and I imagine many readers will be thinking about their own versions of these experiments as we go along. But possessing future-certain knowledge about July’s case counts and the hypothetical steps one might take in response are a distraction away from measures that can be taken to bring the spread of the virus under control. It’s a thought experiment, the kind in which we’re too often engaging when it comes to our response to the virus, a conceptual game that precludes discussion of what needs to and must be done now in response. 

Tallying our unknowns is increasingly used to excuse away a lack of guidance or leadership when both are sorely needed. This virus is a collective problem that requires individual actions. And people ought to stop acting like they don’t know what to do anymore. 

Because despite what July 19’s case count is, we know that masks are effective in stopping the spread of the virus. We should wear them. We also know social distancing is effective. We should practice more of it.

The economy can be supported despite the forced closure of thousands of businesses and entire sectors of the economy, but the measures must be broader and more generous than they’ve been so far. Sending consumers and businesses money works. We need to continue our bare minimum efforts to date. Broadening them would be better. 

And life can go on in a safe, altered way that feels less alienating and penal than how it all broke in March and April. There is no force other than the sheer cruelty of our fellow citizens and political leaders that is pushing the nation towards ever-higher levels of infection, of pain, of suffering, of death.

Denial has been a potent element of the pandemic universe. We’d do well to practice acceptance. 

All across this country every day people are lining up to get tested, to get food, to get paid, to demonstrate. Unlike the last crisis this country faced, the pandemic is not the aftershock of some unknowable financial Catherine wheel finally doing the system in. 

Everything happening now is the result of decisions made and not made by people with the power to make them. 

It’s growing clear the spring of 2020 wasn’t about the onset of the COVID-19 pandemic. At least not specifically, not exclusively.

In the spring, we entered a new era of magical thinking in American history, an era enhanced by — and given the perfect foil in the form of — a deadly pandemic. The pandemic is a conduit through which we’re now seeing, many of us for the first time, what’s been papered over by tax cuts, globalism, and cheap televisions. 

Patrick Wyman this week wrote about the way freedom has been defined in America — “Authority is fine, and so are rules, as long as they apply to other people.” — and this foundational concept serves as the breeding ground for the moment we live in now. Intentional misunderstandings of the principles that underwrite the entire American project are as old as this stolen land. 

Back in February, I quipped that headlines about how long supply chains would be disrupted by the not-yet-a-global-pandemic novel coronavirus were 2020’s version of when Boeing would get the 737 MAX jet back in the air. This was mostly right, except I missed the part where the real horror of this repeated history is that we wouldn’t be talking about the distant, amorphous challenge of global supply chains but the concrete task of opening schools, businesses, and safely normalizing anything like life here in the U.S. Tasks that all require resolute and firm action by those entrusted with taking such actions. 

Yet instead, most of our leaders have decided to take this moment of required leadership to abdicate responsibility and claim there is simply nothing anyone can do. Least of all them. Even though we know, because the balance of evidence bears it out, how and why this is just not true. This is a simple concept, but is the most explained-away plain truth in American life right now — we know what must be done and our leaders won’t tell us to do it.

Some people have power, and they’ve chosen the only moment for which having power is worth anything to do nothing. The Baby Boomer generation succeeded in gaining near-complete control of a system they claimed conspired against them, against all of us, only to ensure this system failed at the time of greatest need.

Back in late April, CIDRAP published their famous three paths for the virus, outlining the slow burn, fall peak, and peaks and valleys frameworks. I’m not totally sure what our current curve suggests as the likely path. Maybe it’s the peaks and valleys. Maybe it’s the fall wave pulled forward. 

But the lesson from that paper is that while the path the virus would take through the population might vary, that the virus will make its way through the population either by infection or inoculation is certain. “Whichever scenario the pandemic follows (assuming at least some level of ongoing mitigation measures), we must be prepared for at least another 18 to 24 months of significant COVID-19 activity, with hot spots popping up periodically in diverse geographic areas,” the authors write. 

We are now in month five. 

And some of this uncertainty presented by the virus some months back has indeed been answered, as CIDRAP’s Michael Osterholm has outlined in recent episodes of his podcast

We do know that this is not a seasonal influenza-type virus. We know that while the widely-assumed fall wave may yet materialize, the virus did not go into hiding during the warmer months. Indeed, it seems to thrive indoors, where people in hot climates are forced during the year’s warmest months. A fall wave, if it materializes, will be the result of our continued refusal to act to stem the spread of the virus, not because of any property of the virus itself. 

This is just some of what we know. The future is in our hands. We ought to look at them. 

1: IIRC, popular answers were the level of the Fed Funds rate (not surprising) and the level of the Nikkei (somewhat more surprising but, if you think about it, also not really).

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