Barbarians Today Believe Crisis is Abnormal in a Capitalist Economy
Before my weekend break, my publisher Doug Hill interviewed me on the impact of the coronavirus.
Hey, I also have views on Tom Brady, quantum computing, President Trump, artificial intelligence, Bernie Sanders, integrated circuits, Pope Francis, 5G, Ronan Farrow, WiFi6, Kobe Bryant, the electromagnetic spectrum, Harvey Weinstein, among others. I have views on women too, that are too salacious to divulge at my age.
I share with most other commentators a lack of any relevant expertise or knowledge on the subject of the virus. I suppose that under duress I could tell you the difference between bacteria and viruses. I am not altogether clear why a virus is harder for the immune system to combat, though I suppose it has something to do with the virus hitchhiking on other cells, using its trojan horse strategy.
You get the picture, an ignoramus with the usual smattering of conventional knowledge — what the great Spanish philosopher Jose Ortega y Gasset called a “barbarian of specialization.” I parlay my knowledge of certain particular fields into opinions on subjects on which I know little.
The barbarians are invading everywhere these days, using their confidence as actors, or microchip experts, or lawyers, or doctors of philosophy, or politicians to express confident opinions on subjects they know nothing about, such as God or CV-19.
So, I chattered on to Doug for a half hour or so. After all I have a brilliant daughter who is a physician at a refugee camp in Thailand and may be in charge of its response. She believes anti-malarial drugs may be effective. I have a son who works for American Airlines and a daughter-in-law who works for JetBlue. They can comment on the impact on the travel industry. It is understandably dire, but air travel is not going to go away.
I’ve had the flu from time to time and I’ve been to China, Italy, and London.
Diamonds Form Under Pressure
What I do know something about is capitalism and markets. The barbarians today seem to believe that a crisis is abnormal in a capitalist economy and requires major government intervention to address.
This is an advantage for all of you who know that capitalism, in Nassim Taleb’s coinage, is “anti-fragile.” It gets stronger under pressure.
A crisis is a buying opportunity. It also is a learning process. Since real economic growth is learning, you can learn as you buy. Crises tend to accelerate long-term growth.
As Andy Kessler observed today in the Wall Street Journal, crises like this are also inflection points. “The current market turmoil tells me a new era is breaking, so question everything. Will cable, energy, mobile and social media ever come back? And if not, what’s next.” Crises change economic leaders, filter out vulnerable companies, strengthen the survivors, open the way to new industries.
I’m involved with a number of biotech companies started by my young genius pal Matt Scholz. He has many interesting views on the crisis and one of his companies may have already developed a vaccine. And so have various rivals. But the issue is how quickly vaccines can be produced in volume. I think I heard something like a year.
As an alternative Matt points to existing anti-malarial drugs which have been shown to mitigate the effects of the virus:
“If I were running the country, I’d squeeze a big pharma and pay them to make tons of this stuff tomorrow. Then, I’d start giving it to every geriatric person who can safely take it if they have been anywhere near a SARS-CoV-2 positive person as post-exposure prophylaxis! After that, I’d start giving it to younger patients who test positive and have worsening symptoms. It’s admittedly a bit of a swing for the fences, but small molecule drug manufacturing is scalable and cheap, healthcare providers and critical care infrastructure are neither. Even with a modest effect size, keeping the most vulnerable patients healthy could be life or death for the healthcare system itself. It would also allow younger people to get back to work without undue risk and give us a shot at preventing an economic catastrophe of epic proportions. We already know these drugs are well-tolerated, we’ve given them to healthy travelers on their way to malaria-endemic regions for decades. It’s true that we don’t yet have proper large double-blind placebo-controlled trials proving they work for this purpose, but by the time we do, we’ll have lost many thousands of lives and billions of dollars.”
That’s the problem, not developing solutions but mobilizing to manufacture them in a country that the climate cranks and weather bores and chemophobes have rendered direly hostile to manufacturing and chemical companies.
Also, the problem is the healthcare burden on infrastructure. Paraphrasing Anton Waldman, giving numbers to a previous judgment from contrarian John Tamny at Forbes, we’re sacrificing trillions of dollars of wealth and income in order to avoid a few billions of dollars on new hospital facilities. Wealth is knowledge, the answer to the crisis.
I read widely that the crisis signifies the end of China’s growth phase. Or as old pal Kessler puts it: “The end of Chinese dominance is certainly coming.” But China has undergone an intense ordeal of fast learning. If the Communist party has learned to rely a bit more on private companies, China will emerge stronger than ever. They used privately provided drones from JD, online ecommerce platforms and big data from Alibaba, face recognition tools from SenseTime, 5G communications from Huawei, artificial intelligence from Tencent, Ping An, and other companies to turn around the situation in Wuhan in less than two months while continuing services, food supplies and other commerce.
Back in the US, we’re still worried that technology invades privacy. Let me say it again. Privacy has nothing to do with anonymity. It protects identity and expands the capability for expressing it more fully, safely, and robustly. People and bureaucrats and nanny-state pettifogs invade privacy. A camera and an ID system know nothing whatsoever about you. But they can save your life and your country.
As time passes, the development of technology is increasing everyone’s privacy massively by increasing options, knowledge, wealth, mobility, and communications.
This crisis will provide many opportunities to invest in the future. That’s the purpose of my letters.
Editor, Gilder’s Daily Prophecy