How to reopen the economy amid COVID-19

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Ignore Chris Joye. Listen to Tomas Pueyo:

A month ago we sounded the alarm with Coronavirus: Why You Must Act Now. After that, we asked countries to buy us time with Coronavirus: The Hammer and the Dance and looked in detail at the US situation with Coronavirus: Out of Many, One. Together, these articles have been viewed by over 60 million people and translated into over 40 languages.

Since then, the number of confirmed coronavirus cases has grown twentyfold, from 125,000 to over 2.5 million. Billions of people around the world are under the Hammer: Their governments have implemented heavy social distancing measures to quench the spread of the virus.

Most did the right thing: The Hammer was the right decision. It bought us time to reduce the epidemic and to figure out what to do during the next phase, the Dance, in which we relax the harsh social distancing measures in a careful way to avoid a second outbreak. But the Hammer is hard. Millions have lost their jobs, their income, their savings, their businesses, their freedom. The world needs answers: When is this over? When do we relax these measures and go back to the new normal? What will it take? What will life be like?

When do we get to dance?

This article will explain when, and how, we will dance. Specifically, we will discover:

  1. What can we learn from the experiences of countries around the world?
  2. What measures will we need to implement during the dance, so we can get back to a new normal? At what cost?
  3. How can we make them a reality?

Here’s what you’ll learn:

The Hammer has bought us time. Millions have been saved.
Now we know what we need to do to dance.
Many countries have shown us the path.
We can learn from their successes and from their failures.
In fact, we can dance for pretty cheap.
We likely won’t need to keep businesses and schools closed.
But we need to know exactly what these measures are, because we need to prepare for them now.
Governments have a major role to play.
Most haven’t done what they need to do yet.
They are antsy to get back to normal, so they’re rushing without being ready.
Many will have a second outbreak.
If we do it right, in a few weeks we can get back to a new normal.
Our lives will change for a year or so, but these changes will be reasonable.
They will allow us to avoid both massive deaths and economic collapse.

This article has exploded into the size of a little book, so instead of releasing it all at once, we will release one section per day. If you don’t want to miss any article, sign up for the newsletter. Today, we are releasing the 1st part of the article: A Dancing Masterclass.

Let’s do it.

1. The State of the World

Cases across the world keep growing.

But that growth hides a very positive fact: Things are getting better.

Some countries are still fighting the worst of the crisis. But the ones that were quick to adopt the measures they had to take saved millions of lives.

This graph shows a row per country. For each country, the redder the day, the closer it is to the maximum number of daily cases. Countries with the reddest all the way to the right are still seeing their worst days in terms of new official cases, whereas countries with more yellow / green days at the end have left the worst behind. Conditional formatting is per row, so each row has the entire gradient from green to red. I show absolute cases, not relative to population (ie, not “per capita”), because I’m not judging the country’s response, but rather whether it has an outbreak that is being controlled. That is independent from the country’s population. I chose countries instead of regions or cities because they are the political level that can have the biggest impact on the management of the crisis. I don’t show day-on-day percentage changes because they are skewed towards early growth. Note that this represents official cases: that means that countries that are having a recent surge in testing will see a recent surge in cases. It might not represent an outbreak, just the reporting of it. I still think this is the relevant representation, because true cases are unknown, official cases are widely communicated, and there is not enough granularity of testing per day per country to account for that effect. Some countries might look good here just because they’re not testing much lately.

Looking at this graph, the first question that pops to mind is: What did they do? What can we learn from the experience of different countries, both those that overcame the crisis and those that avoided it altogether?

For that, we need to know where different countries stand on the hammer and the dance phases.

Countries under the Hammer account for nearly 60% of the world’s population. Billions of people have lost their freedom of movement and livelihoods. They need to start life back again, but they’re scared, or they just can’t.

That’s why many countries in the Hammer phase are planning to open up their economy little by little. Some have started opening schools, others their businesses. But most have not done it yet.

How can countries deep in the Hammer phase figure out what the Dance phase will look like in the future? How can they put together a plan that will reduce the sick and the dead, while the population can remain confident that a second outbreak won’t come back and destroy their lives again?

By using a time machine.

It’s called the internet

And the future is called Taiwan, Hong Kong, China, and South Korea.

2. The Dance Masterclass: A Journey into the Future

The tunnel we’re in is long and dark, but there is light at the end. We know it, because we’ve seen how some other countries are already out into the light.

If we want to know what will happen after the Hammer, the first stop in our trip must be the only country that has left a Hammer behind. So let’s breach the travel ban and visit China.

China’s Dance after the Hammer

Article narrating details of China’s case here. Timeline of events here.

China has gone from a peak of close to 6,000 new cases per day to less than 60. That is around 2,000 times fewer daily cases than the US per capita. They’ve achieved that through the heaviest Hammer the world has ever seen. This guy’s experience succinctly expresses what it was like. The gist of it: Everything was closed, everybody home, all the time, for weeks, everywhere.

What does life look like now? This twitter thread shows images of Beijing as of April 10th.

People are walking in the streets again — with masks. Most companies, transit stations or businesses have checkpoints for people’s temperature and health code.

These are codes assigned by the government. If your code is green you can go everywhere, but if it’s yellow or red you must self-quarantine or isolate and are barred from entering most buildings.

It is believed that the government centralizes all the data from these apps (either centrally or regionally), to know where every person has been, and track all the potential people that might have been infected by a contagious one.

Travel is still very limited, but there is some, with again lots of testing and, for workers, personal protective equipment (PPE) way beyond masks.

Schools remain closed, but some will reopen by the end of the month.

The other countries and regions that are most relevant to us are South Korea, Singapore and Taiwan.

South Korea is relevant as the first country that has successfully vanquished an outbreak and is now successfully dancing — without country-wide lockdowns. Singapore is relevant because it danced for a long time successfully; we can learn from its mistakes. And Taiwan is relevant because they never had an outbreak at all despite being extremely close to China.

Let’s have a look at them.

Taiwan’s Eternal Dance

Taiwan was supposed to suffer a massive outbreak due to its proximity and close ties with China. Instead, as of April 19th it ranks 104th in number of coronavirus cases, with about 400 in total and just a couple of new cases per day. Andorra, 300 times smaller in terms of population, has twice the number of cases.

Taiwan achieved this despite having no business closures, no preemptive school closures, and no bans on social gatherings. Taiwan just didn’t need to suffer the massive costs that other countries have had to endure. How did they do it? This gives you a sense:

In this story, a traveler narrates his experience from landing in Taiwan to the incredible quarantine he went through. A few quotes from the quarantine part:

8:30am the next day, I was woken up by early morning call. It was from the local government council to confirm where I am, that I am who I am, and check my travel history and current health issues and symptoms.

14:30 Afternoon, another random call came from local council checking with me. “Standard random checking Mr. Chen. Local officer will do an initial home visit to your place at 15:00. You felt well?”

“I am fine, so you do random calls to ensure us stay home?” I asked.

“Yes, we do, 2–3 times per day. Please do not leave your address and take necessary precautions to protect your family. If you leave home, I am afraid the police will be on their way soon.”

“But how do you know people leave home? I was not GPS-tracked as I have not received any tracking mobile phone device to carry at the airport?” I raised the question.

“No. The mobile phone only will be given if you do not have one. Since you got your own phone, please make sure you have it on at all time for the next 14 days. If you lost your signal, please contact us by other means immediately otherwise it might trigger police attendance at your door step…..”.

“You mean I am tracked already…..? “

“Yes, you provided us your number and that was enough.”

A message was received later at 20:30, asking me to report back to an after hour number. I rang back and asked why as I did not breach any rule.

“You might have lost signal temporarily or did not make any movement for an extended period of time, so the system thought you might have left your phone at home and we can not risk you going out.” The after hour service officer told me. So their system can detect you’re idle if you don’t move much expected…

I must say, this quarantine program is mind-blowingly impressive…
—Jonathan Chen

Taiwan’s level of preparedness is jaw-dropping. This is a list of over 100 measures they took before March. Here are some examples, from the list and other sources:

  • Early and strict travel bans, updated every day.
  • They centralized the management of mask production, starting at 2.4 million per day (twice their need of 1.3 million at the time).
  • They set the price to avoid profiteering, initially at USD $0.50 per mask.
  • The penalty for price gouging for masks and other key items became 1–7 years in jail and a fine up to USD $167,000.
  • The spread of fake news could be fined with USD $100,000.
  • Proactive detection of cases: They tested all people who had previously had flu symptoms but tested negative for flu, finding some coronavirus patients.

All of the above happened BEFORE Wuhan even shut down! Then, they continued:

  • Soldiers were mobilized to produce masks.
  • The official price of masks was eventually down to ~$0.20 by the end of February.
  • Eventually, they ramped up production to 10 million masks per day (for a population of 23 million) before the end of March. Masks were rationed and their export banned.
  • Travel and healthcare databases were connected, so healthcare professionals could know who was at a higher risk of being infected. The Taiwanese CDC could track what was happening on the field in real time.
  • It triaged travelers based on their risk, from free to enter the country with self-monitoring to mandated quarantines.
  • Quarantine support with food and encouragement.
  • Enforcement of the quarantine through people’s existing phone signals. If they don’t have a phone, the government provides them with one. An alert is sent to the authorities if the handset is turned off for more than 15 minutes.
  • Persons who were not compliant with home quarantine orders were turned over to law enforcement and tracked by police officers. A couple was fined USD $10,000 for breaking the 14-day home quarantine rule.

If the world was a class and each country was a student passing a coronavirus exam, Taiwan is acing the test. And it’s offering to help. If I were another student, I would take that offer.

There are a couple of things to highlight. First, the country was able to do that because the Taiwanese CDC was ready and had broad powers from its experience of SARS in 2003.

Second, they acted fast and heavily, mandating new country-wide measures every day.

Third, they connected the healthcare data with the travel data and fed positives to the police. They appear to use standard human tracing techniques, combined with healthcare and travel data, but not with phone-based mobility data or credit cards as far as we could tell—unless you’re infected. They have only suffered around 400 cases as of April 20th, which makes their caseload manageable.

South Korea’s Little Hammer and Scalpel

South Korea was the first country in the world to beat a coronavirus outbreak without a country-wide Hammer. No country-wide closure of restaurants, factories, shops. No shelter-in-place. No ban of events above a certain size.

What did they do? They used a small Hammer and a Scalpel.

The main outbreak happened in a city called Daegu, after the now famous Patient 31 spread the virus to what would ultimately be over 5,000 people linked to the Shincheonji church — about half of the entire caseload in the country as of today.

There, the government didn’t close businesses, but the population had experience from a MERS outbreak in 2015 and vacated the streets nevertheless:

Malls, restaurants and streets in Daegu, the country’s fourth largest city with a population of 2.5 million, were largely empty in scenes that residents and social media users likened to a disaster movie.

“It’s like someone dropped a bomb in the middle of the city. It looks like a zombie apocalypse,” Kim Geun-woo, a 28-year-old resident told Reuters by telephone.

Daegu authorities shut down kindergartens, postponed schools, and closed public libraries, museums, churches, day-care centers and courts.

But that didn’t happen outside of Daegu. Quarantines were limited to outbreak areas and didn’t aggressively impact the economy.

A way to measure the impact of these measures is through mobility: How much have South Koreans moved around over the last couple of months? A great way to look at it is comparing their mobility with that of a heavy hammer country: Spain.

So how did South Korea control the epidemic without a heavy hammer? By learning exactly who is sick and quarantining all their contacts.

To learn who is sick, you need to test as many people as you can.

We’ve all heard about their amazing testing, from drive-through to phone booths, which can get tests done in 7 minutes.

The result is one of the most intensive testing operations in the world.

We choose % tests that turn out positive because it’s the best way to assess how good testing is. We introduced it in our last article, Coronavirus: Out of Many, One. Total number of tests is meaningless if a country is big or there are lots of cases. Tests per capita makes no sense if there’s few cases. But a low % of positives tells you a country is testing a lot of people in comparison to the magnitude of their problem. Some people agree.

Countries that are overwhelmed by cases, like France or the UK, don’t have enough kits to test everybody. Even countries like Germany or Singapore, who used to be able to test nearly everybody, can’t anymore given their outbreaks.

Meanwhile, countries/regions like Taiwan, Hong Kong, Vietnam or South Korea are all testing enough that less than 3% of their tests are positive. They are not just testing people with symptoms. They’re testing all the people who’ve been in contact with them. How do they know? In the case of South Korea, through one of the most advanced contact tracing systems outside of China.

The South Korean government has access to mobile phone data, credit card data, and CCTV data during epidemics, the result of a law approved after the MERS outbreak:

“We had laws revised to prioritize social security over individual privacy at times of infectious disease crises.” — Dr. Ki, via the New York Times

With that information, they know where people went. They then release that information publicly (stripped of personal identifiers) so that other people can figure out if they might have crossed paths with an infected person. They detail hour-by-hour, sometimes minute-by-minute, timelines of infected people’s travel — which buses they took, when and where they got on and off, even whether they were wearing masks.

They also use that information to send emergency alerts to people’s cell phones whenever new cases are discovered close by. People who think they may have crossed paths with a patient are urged to report to testing centers.

This is not just a broad messaging system to whomever was in the area. It is targeted. When an infected patient is identified, teams of contact tracers use their health records, credit card transaction data, CCTV and mobile phone location to trace their prior movements and find their contacts. Those who are determined to have been near the infected individual receive these phone alerts.

Source

If your test turns positive, you are sent into isolation in a government shelter where you get basic medical support and observation or a hospital, or at home, depending on symptoms.

If you are negative, if you recover, or if you are just potentially exposed, you are quarantined at home. You must download another app that tells the police if you go outside. This service is assisted by a local monitoring team that calls twice daily to make sure you stay put and to ask about your symptoms. The fine for leaving is $8,000 and as much as a year in jail.

Other measures they follow are temperature checks at the entrance of buildings, hand sanitizer everywhere, and heavy mask wearing. 98% of people say they sometimes wear masks outside, and 64% always do. After a massive mask demand surge, the government intervened to manage the supply.

One silver lining of the early outbreak in South Korea is that it had a severe reverse travel ban. By mid-March, most countries applied a travel ban to and from the country. Ironically, it might have saved many lives in South Korea, as we will see later.

The bread and butter of South Korea is thus testing, contact tracing, isolations, quarantines, hygiene, masks, and travel bans. They didn’t need a heavy hammer because they mostly used a scalpel.

Singapore’s Critical Missteps

Singapore’s response to the coronavirus started very similar to Taiwan’s. Their timeline of decisions is equally flabbergasting. It did many of the same things that Taiwan or South Korea did. But it didn’t work. Why? The differences are what’s telling.

Three things stand out in Singapore compared to Taiwan or South Korea: travel bans, contact tracing, and masks.

First, travel bans. As you can see, Singapore was pretty quick to ban visitors from Hubei, when there were 6,000 cases there, by January 29th. They then banned all visitors from China three days later, on February 1st, when there were 12,000 cases there.

But then it didn’t act fast enough after that. It didn’t ban travelers from Italy, France, Spain and Germany until March 16th. At that time, these countries together had over 50,000 reported cases, probably many more. All short-term visitors were banned a week later, on March 23rd. By then, the world had 150,000 cases outside of the countries already banned.

This delay in action caused a severe seeding of new cases. At the end of March, a full 80% of cases in Singapore were coming from abroad. Within a week, the number of imported cases fell to zero, but it was too late. These cases were enough to seed the local transmission that exploded over the following weeks. If they had closed their borders around March 10th, it is likely that this outbreak wouldn’t have happened — or wouldn’t have been as bad.

In Part 3 of this article, in a couple of days, we will go into the detail of how to decide what travel restrictions to use.

The second big difference with countries like South Korea is contact tracing. The Singapore operation was not actually world class. Until the end of March, their teams could only trace around ~600 contacts. That’s because their process was extremely manual. Tracers had to rely on interviews or CCTV cameras to do their research. No mobile phone data, no credit card data, no connection between the healthcare and travel data as far as we could find. It is unclear whether the investigators force is much stronger or weaker than Taiwan’s, or if their tools are much better or worse. But Taiwan never got overwhelmed by the massive arrival of foreign cases.

At the end of March, the country released TraceTogether, a mobile application that people can download and, through bluetooth and encryption, anonymously keeps tabs on all the people you’ve encountered, so that you can get a notification if one of them tests positive.

The idea is great, but it only has 20% penetration (1 million users vs. 5.6 million citizens). The problem is that this is not enough. For a contact to be registered, both people must have the app working. If one random person has a likelihood of 20% to have it, two random people will have 20%*20%=4% likelihood of having it. Put another way, only 4% of contacts will be registered through the app.

And that assumes that the 20% refers to the app functioning properly. If 20% refers to just downloads — as is customary when developers want to tout the success of their application — many of the people who downloaded the app won’t open it, many of those who open it won’t set it up, and many of those won’t have bluetooth on all the time.

It’s still early: Singapore released the app four weeks ago. Hopefully, its penetration will go up in the coming weeks. But the country is arguably among the best in the world to convince its population to use the app: The mobile penetration is huge, the country is small, and the citizenry trusts the government. If Singapore can’t do more than 20%, who can? They themselves say that this can’t replace manual contact tracing at this time.

To be clear, this does not mean that the technology is bad. On the contrary, bluetooth in smartphones has amazing promise to solve the problem of contact tracing. The problem is penetration. It is awfully hard to get lots of people to use an app. South Korea doesn’t require it, and they’re able to track contracts much more easily. We will cover in depth all these issues in Part 2 of this article, coming in a day or two. Subscribe to the newsletter to get it.

Third and finally, masks. Until April 3rd, Singapore only recommended masks for the sick. As we saw before, that contrasts with both Taiwan (with masks managed centrally) and South Korea (with 98% of people wearing masks at least sometimes and 64% all the time outside).

This matters because, as we will see in Part 3 of this article in a few days, masks are fundamental to stop the virus.

The importance of these three factors together — travel restrictions, contact tracing and masks — is illustrated by this chart:

This is the graphical representation of all cases in Singapore as they know them.

Red dots are active cases and green dots are cured. You can see an overwhelming amount of red cases. They highlight the recency of the outbreak.

If you try some cases, you might see this:

This is a case that has been properly investigated. Unfortunately, most cases now look like this:

This illustrates the burden of contact tracing that investigators can’t handle. This case hasn’t been thoroughly investigated. Most cases are like this.

Red clusters have formed around specific areas: dormitories. I looked all the clusters up to see which ones are dormitories:

The answer: most of them.

These are mostly inhabited by migrant workers. As we noted before, Singapore took a long time to enact travel bans, and by the end of March over 80% of cases were imported.

But then these imported cases started spreading because there was no limit to the sizes of social gatherings, and no masks.

Even after the limit to the size of social gatherings above 10 was approved, this is what one of the dormitories looked like:

Lots of people, not all with masks.

It seems like Singapore’s missteps include late travel bans, late limits on social gatherings, late universal mask requirement, and overwhelmed manual contact tracing system. This is starting to inform the core measures that every country needs to have to fight the coronavirus.

Here is the list of measures every country should consider. There are four types:

  1. Very cheap measures that might be enough to stop the epidemic
  2. Somewhat expensive measures that might still be necessary
  3. Expensive measures that aren’t necessary
  4. Healthcare measures

It’s time we dive deep into them.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.