The Fall

I’ve been watching the news closely the past weeks. I’m looking for patterns that reveal both what is happening and what will happen. We are living in history right now and the narratives are being written. We are simultaneously the participants and the observers. I think that in a society if someone knows all the driving forces it is possible to predict with some accuracy what will happen in the near future. I will use what I know to predict what will happen next.

The Virus

First, I look at the wrench in society called Covid19. It’s a virus that’s easy to spread. In much of society (the youth), it is fairly mild. In another segment of society, (the elderly and already ill) it is deadly. This has already lead to a bifurcation of people who are worried about the disease and people who are not. The virus will continue to spread.

Here, in America, we are still in the early stages of the virus. Soon the hospitals will be overrun in localized areas; mainly large, dense cities. Cities will be hit the hardest since they’re where people go when they fly in from other infected cities. Also the close proximity of many people make it easy for the virus to spread, especially in offices or public transportation. The cultural and geographic divide between urban and rural people may actually delay or reduce the virus’ affect in rural areas. I know, from being in such areas, that people in small towns dislike going to cities or having much to do with city folk. It’s still entirely possible infections could burn through rural schools/day cares which will be the prime vectors for further spread.

Once hospitals are overwhelmed, there will be a spike in fatality. This is because people who could be treated to recovery will instead die. More people with other treatable illnesses will also die because it will be difficult to find treatment. This is the paramount problem with the virus, and it will be the main goal of society to keep the hospitals functioning. Unfortunately, there are issues related to America that will make this scenario worse than in other countries.

Why America Will be Worse

America’s for profit private healthcare system is problematic since we already see people not getting treatment before hospitals are overrun with infected. Let’s take me for example. I have a poor healthcare plan like many Americans. If I experience bad pneumonia and seek treatment at the E.R., I will leave with a bill for $6000 dollars. This is because my insurance won’t actually pay for anything until I personally pay $6000 per year. I could afford this, since I am financially independent, but boy would it hurt. There are many people who may have recently lost their jobs or are living paycheck to paycheck who in no way could afford a $6000 bill (or much more if they are uninsured). This massively shifts the cost/benefit analysis for many Americans. When seeking treatment could make you bankrupt and homeless, you might chose to risk it at home. Tens of thousands of people already die because of this every year.

The second part of the problem is for profit hospitals are always running at capacity already; since it isn’t profitable to build and maintain extra rooms and beds that aren’t used. Hospitals are private businesses making it difficult for the government to force them to build more space and breathing equipment. Despite months of warning, hospitals are no more prepared for this virus now than they were last year. The extra capacity (if it is provided) will have to come from the government. But then there’s the problem of staffing additional makeshift hospitals with doctors.

China, upon realizing the virus was a huge problem, built several impromptu hospitals near Wuhan and forced thousands of doctors from surrounding provinces to move in to treat the sick. America will not be able to do this. Cities with spare medical resources will not give to cities under siege because they will know it is only a matter of days until they are in the same situation. Space in hospitals will be limited, there will be few doctors and nurses able to provide care, and many will risk recovering at home due to financial concerns. The fatality rate in America will be high.

Mitigating the Virus

As of today, there is only one known way to reduce the spread of the virus: shut down the economy. Social distancing cripples economies. People need to be kept apart and that means they will be able to consume less. We’re only now seeing the effects. Malls, restaurants, theaters, schools, and just about every non-essential business is being shut down. What isn’t being said is that this isn’t temporary. Since this type of distancing is the only tool America has to keep the infection rates down, it isn’t going to stop until the threat of the virus has been minimized. This could be months or over a year. Even if tomorrow the virus is cured, there will still be a recession. Continuing this for months and months is going to be catastrophic for America.

I have trouble wrapping my head around it. America is a consumer based economy. In effect, the reaction to the virus is to stop consuming. The coming decline will include negative numbers so large it will be difficult to map them to the actual human suffering going on. How high will unemployment go? 20, 30, 40%? The only industries who remain viable in this economy are those who provide food, household products, and remote entertainment. Everything else is expendable, and everything else is a lot of people. The layoffs will hit the millions faster than we’ve ever seen before. It will be difficult to get unemployment service due to the sudden massive demand. Rent and mortgages will all be in a sort of limbo where no one is quite sure how bad it is, especially if the government fails to take drastic action.

How it Ends

This will end, probably this summer. An antiviral treatment of some sort will be found effective in minimizing the lethal effects of Covid19. There will be a rapid expansion to manufacture as much of this drug as possible. At first only high risk(and wealthy) people will be able to get it, then everyone. By this point there will be enough test kits in America. Anyone with early flu-like or respiratory symptoms will be tested and then treated with whatever drug cocktail is found to be most effect. Finally with the fatality rate reduced and treatment available at every walk up clinic, society will return to normal.

Unfortunately, there will be long term effects. Many will have died, some cities would have been at the brink of total collapse. This will suppress consumer demand for some time. Unemployment, after snapping back to some degree, will still be much higher than when this started. Businesses would have switched to more telecommuting and less travel. This would be seen as akin to the “going green” movement many businesses have already adopted. The travel and tourist industry will remain depressed for years. Real estate will decline and remain depressed similar to the 08-09 crisis. This time it will be because of high unemployment and the death of many home owners (the elderly). Interest rates will remain low for the foreseeable future. Some cities will be hurt worse than others. People will flee those inner cities because they were hit the hardest.

Maybe in a decade or so everything will be more or less back to normal, and the process will repeat itself. But it will be something different blamed next time. The core problem will always be the same: people can’t afford to live and each generation is worse off than the last. Until the underlying prosperity of the worse among is is fixed, the economy will keep going through these deliberate and devastating crashes.