COVID-19 + Power Failure = Double Disaster

Paul Steidler is right in his piece at Inside Sources. COVID-19-induced power failure is a “double disaster” we really need to avoid:

The electric grid is essential for all aspects of modern life — including hospital care, food preservation, computer operations (i.e., many people’s ability to work), and at-home medical devices for the sick, elderly and disabled.

When countries attack one another, there is an excellent reason the grid is typically a top target. By knocking out electric power, an adversary is thrown into disarray.

To make sure our grid stays up, we need to make sure the people managing the grid stay healthy. Indeed, this must be a priority.

The highly-skilled, hard-to-replace and experienced professionals in the energy profession seldom can work from home. In fact, there is no record of a power line ever having been replaced remotely.

There are also significant limits to “social distancing” in power production. Line workers often must be near one another.

The engineers and other professionals in the control rooms of power plants and transmission facilities must be able to communicate immediately, directly and close to one another.

Think things are tough now? Imagine being trapped in your house with your kids for a week without electricity.



At NPR Emily Feng presents some accounts of people in Wuhan who were pronounced recovered from COVID-19 who reportedly have it again:

NPR has spoken by phone or exchanged text messages with four individuals in Wuhan who are part of this group of individuals testing positive a second time in March. All four said they had been sickened with the virus and tested positive, then were released from medical care in recent weeks after their condition improved and they tested negative.

Two of them are front-line doctors who were sickened after treating patients in their Wuhan hospitals. The other two are Wuhan residents. They all requested anonymity when speaking with NPR because those who have challenged the government’s handling of the outbreak have been detained.

One of the Wuhan residents who spoke to NPR exhibited severe symptoms during their first round of illness and was eventually hospitalized. The second resident displayed only mild symptoms at first and was quarantined in one of more than a dozen makeshift treatment centers erected in Wuhan during the peak of the outbreak.

But when both were tested a second time for the coronavirus on Sunday, March 22, as a precondition for seeking medical care for unrelated health issues, they tested positive for the coronavirus even though they exhibited none of the typical symptoms, such as a fever or dry cough. The time from their recovery and release to the retest ranged from a few days to a few weeks.

Read the whole thing.

We don’t know whether these were the results of false negatives, false positives, some combination, or something else. Take it for what it’s worth.

Basically, I don’t believe any reports coming out of China these days but if individuals who’ve had COVID-19 don’t gain immunity it’s pretty much a worst case scenario.


South Korea’s COVID-19 Timeline

The Center for Strategic & International Studies has produced a timeline of South Korea’s response to COVID-19 which I commend to your attention. Their response has been hailed as a model for other countries but, unfortunately, at this point we just don’t know. More than anything I think it demonstrates what a small, compact country with high social cohesion and a recent history of authoritarian rule can accomplish.


Why Physicians May Go Out of Business

An article at 24/7 Wall Street makes the argument I’ve been putting forward in much greater detail:

The doctors who face severe financial shortfalls in their business fall into two groups. Just over 100,000 doctors are primary care physicians. Some will shutter their offices out of concern for doctor, staff and patient safety. Doctors who work in certain specialties, of which there are about 40, may be unable to treat patients at all. There are almost 20,000 ophthalmologists, 13,000 neurologists, 57,000 pediatricians and 7,000 plastic surgeons. Among these and several other specialties, office visits will drop to near zero as the number of sick and dead people multiplies.

Telemedicine has been suggested as one means to treat patients somewhat. However, the means to bill for these “visits” are ill-defined. And in some cases, the doctor needs to examine and see the patient physically. Areas under lockdown make this impossible. Doctors using telemedicine still need to pay office rents and insurance and sometimes staff members.

Some private doctors have volunteered to treat COVID-19 patients by volunteering at hospitals. Some hospitals require private doctors who have privileges to admit patients under normal circumstances to help their hospitals to treat COVID-19 patients onsite, but without pay. These doctors do not have time to see their own patients, even with the use of telemedicine.

I don’t know whether my circle of friends is typical or not but many of the physicians of my acquaintance aren’t great savers. I don’t know how long a “stay at home” directive they’ll be able to sustain.


Why Epidemiological Testing Is Important

I encourage you to read this post by Luigi Zingales at City Journal:

The Italian experience suggests that locking down towns is a necessary but insufficient condition to stop the spread of Covid-19. If 50 percent of the infected are asymptomatic, there is no hope of containing the disease unless we subject ourselves to massive testing. On February 22, 89 inhabitants of Vò Euganeo, a small town close to Padua, were found to be infected. Weeks later, the town is free of infection. The lesson of Vò Euganeo is of value to the world as it confronts this unimaginable crisis.

Vò Euganeo is a small town of 3,341 people located on the hills just outside of Padua, where I grew up. It came to international prominence on February 21, when Adriano Trevisan, a 77-year-old inhabitant, died of coronavirus. What will ensure Vò Euganeo a place in the history of medicine is the decision made by the Governor of the Veneto region (which includes Padua, Venice, and Verona) to test all 3,341 inhabitants of the town twice: the first time before closing it off from the rest of Italy, and a second time two weeks later.

In this respect, Vò Euganeo resembles the Diamond Princess, the ship that was quarantined in the port of Yokohama with about 3,700 passengers, making it comparable in size to the town. In both cases, we can observe an entire population exposed to the virus over time, with comprehensive testing. This is different from all other cases, where only a fraction of the population—usually symptomatic—is tested.

To understand what works in containing the spread of the disease, we need to have an accurate count of the infected. Reported infection numbers differ wildly from actual rates of infection and this gap might change over time, as regions expand their testing protocols differently. The experience of Vò and the Diamond Princess demonstrate how various testing approaches can have radically different results. On February 22, 3 percent of the inhabitants of Vò were infected. After two weeks, during which the town was locked down, only 0.25 percent were infected. Once these few infected people were isolated, the town reopened and has experienced no new cases. Compare this strategy with the one adopted in the Diamond Princess. Initially, passengers and crew members were tested when they showed symptoms, and only after that were they taken off the boat. Only toward the end did the authorities test all the passengers. As a result, what started with the infection of one passenger eventually contaminated 20 percent of the people on board. Thus, in one case we go from 3 percent to 0 percent infections, while in the other case from 1 percent to 20 percent.

Read the whole thing.

There are actually two messages here. The first is that the type of testing we’re doing now cannot achieve the objective of reducing the spread of the disease. The second is that epidemiological testing can. That can either be accomplished by sampling, universal testing, or a combination of the two.

Just as is the case with perfect compliance, completely universal testing will remain beyond our reach. We can’t even get everybody to immunize their kids against chickenpox or measles, for goodness sake. We can do better than we are but that will require many, many more tests with quicker results than are presently available and more reliance on epidemiological testing even if it means a reduction in diagnostic testing.

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It isn’t too early to start making a few, tentative predictions. I welcome your own predictions in comments. Here are some of mine.

  • Even with the strenuous avoidance measures that have been put in place the peak of the curve of active COVID-19 cases in the U. S. won’t be reached in two or three weeks. It may take months.
  • There will be plenty of kvetching and even some lawsuits about the attempts by governors, like the governor of Rhode Island, to reduce the flow of people from states with larger numbers of diagnosed cases into their states. Governors do have that power under states of emergency, the Privileges and Immunities clause of the U. S. Constitution notwithstanding. There is plenty of case law to support it. It’s century-old case law but it’s unlikely to be overturned.
  • The shortages of materiel (face masks, respirators, ventilators, etc.) will ease over the next few weeks if federal, state, and local officials allow them to. Lots and lots of people want to and are contributing to the effort against COVID-19. It will become a valence issue.
  • As testing increases the number of diagnosed cases will increase rapidly.
  • U. S. GDP will take a 10% hit. That will ripple across the world. If the strenuous measures presently in place and which will be put in place over the next couple of weeks continue past the end of April, the decline in U. S. GDP will be much, much greater. They sky’s the limit.
  • The number of personal and corporate bankruptcies will soar. There will be what amounts to a full employment program for attorneys.
  • Enough people in the top 10% of income earners are, effectively, living beyond their means, i.e. month to month, that defaults on loans that were thought to be secure will start happening.
  • As I’ve said before anyone who earns their livings through performing personal services will take an enormous hit to their incomes. That doesn’t just include people like beauticians and barbers. It includes dentists and physicians. Physicians who are still sole practitioners won’t be able to pay their malpractice insurance bills. After the dust has settled there will be calls to reorganize the way health care is delivered.
  • Companies that will face enormous headwinds due to the “stay at home” directives and fear of contagion include airlines, cruise ship companies, and oil companies. There will be pleas to bail out the airlines. They should be resisted. I don’t know whether Disney’s loss of revenue due to the shutting down of its parks and experiences segment will be outweighed by increased revenue from Disney+.
  • COVID-19 will be the straw that broke the camel’s back for the city of Chicago. It is presently spending money in vast amounts that it doesn’t actually have. Its bonds, already rated the worst of any major city in the country, will be reduced to junk which effectively means the city will be unable to borrow. Same with the CPS. There will be calls to bail out Chicago and other cities. These calls should be resisted.
  • Urban real estate will decline in value at least in relative terms.
  • Amazon and other online retailers will actually benefit from COVID-19. Small retailers other than grocery stores will take an enormous hit. Lots of bankruptcies.
  • Zoom’s stock has doubled in price. That will continue to rise. It’s one of the prime beneficiaries of the “stay at home” directives.
  • The longer the “stay at home” directives continue, the more workers from Mexico and Central America will return to their native countries. This will evoke a second wave of COVID-19 cases in these countries in the Americas. The same thing may happen in Africa and the Middle East as well but European countries’ more expansive welfare systems may stem that.
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COVID-19 Status 3/29/2020

I wanted to draw your attention to the table above, sampled from this article at the Associated Press, depicting the number of cases of COVID-19, deaths due to the disease, and number recovered by county. If I could embed the table, I would. It’s interesting for a number of reasons.

You should take note of a few things. The most important thing is that these are just diagnosed cases. I believe that the actual number of cases not just in the United States but everywhere is much, much larger. Maybe an order of magnitude larger. Notice that in the United States, Western Europe, and Canada the number of deaths as a percentage of diagnosed cases the number of deaths is in single digits (or less). Here in the U. S. it’s 1.65%. In Germany it’s less than 1%. In Italy (10.8%) and Spain (8%) are seeing much higher rates. Why that is will undoubtedly be the subject of much study in the years to come. Diagnosed cases and deaths will continue to increase. As testing expands beyond those who definitely show symptoms to include those who show no symptoms, the diagnosed cases will increase substantially. I strongly suspect that the number of deaths attributed to COVID-19 will not increase proportionally, i.e. deaths as a percentage of diagnosed cases will decrease substantially.

Consider that last column: recoveries. Those are the statistics I’m worried about. Even if the rise of new cases is slowed the very slow pace of recovery from COVID-19 could overwhelm the health care system.

I believe you could construct a model that demonstrates, at least as a first order approximation, that the number of cases can be predicted based on variables including population, population density, and how connected a country is to the world economy (maybe just to China).

Many, many major unknowns remain. Among them are whether reinfection is possible or even likely, whether the prevalence of the virus abates as the weather warms, whether the avoidance strategy being used here can work even with society-wide testing, whether there are effective treatments for COVID-19, whether a vaccine can be developed for it in the foreseeable future, and just how credible the stats that China is reporting are.


Strange Bedfellows

I was surprised this morning to find Wall Street Journal columnist Holman Jenkins citing economist Cass Sunstein favorably I guess that pandemics make strange bedfellows. Here it is:

Mr. Sunstein endorses two studies that see benefits of “aggressive social distancing,” even at the cost of considerable economic destruction, in terms of lives saved. Who doesn’t? But the proposals he cites define aggressive social distancing to mean something less stringent than the sweeping mandatory business shutdowns and shelter-in-place commands already in force around the country.

One study proposes seven-day isolation of those with symptoms, 14-day isolation of exposed households, and “dramatically reduced social contact for all those over 70 years of age.” The other, sterner study proposes closing schools, theaters and sports venues.

Even so, Mr. Sunstein allows that if the economic depression is long-lasting or the recovery slow, the costs “start to explode” and need to be rethought. And nowhere does he suggest costs shouldn’t be considered at all as the Bloomberg headline writers seem to believe: “This Time the Numbers Show We Can’t Be Too Careful: Hard-headed cost-benefit analysis usually confirms that it’s dangerous to be overcautious. The coronavirus is different.”

Huh? That’s exactly not what his column says. Even Gov. Andrew Cuomo, whose New York City is America’s worst coronavirus hot spot, was having second thoughts on Thursday about the strenuous social-distancing requirements he has been imposing on the city’s businesses and citizens.

Since I made a joke at CNN’s expense on Wednesday, I have had to explain to a few readers that it wasn’t just a gratuitous sideswipe. For news organizations, misleading the consumer can, at times, be part of the business model. If consumers put up with it or seem to enjoy it, it will continue. Like Hillary Clinton’s tweets, this is the last thing we need right now.

Mr. Sunstein goes to some length to explain why it’s exactly wrong and self-defeating to refuse to weigh the benefit of public goals against the cost of achieving them.

He chooses examples of the sort that excite ridicule when President Trump cites them, such as our tolerance for traffic deaths as the price for being able to move around freely, or acceptance of construction deaths (perhaps an unconscious wink to the real-estate impresario in the White House) so we can have buildings to live in and work in.

“I have long been an enthusiastic defender of quantitative cost-benefit analysis,” Mr. Sunstein begins. In words plain enough that a headline writer can understand them, he acknowledges that in the present situation a significant percentage of the “avoided mortalities involve older people” and this ought to be a factor in our calculations.

“Don’t kill Granny!” makes a good sound bite but poverty will kill her as surely as COVID-19 and her odds are at least 9:1 in her favor even if she contracts it.

While I agree that we shouldn’t minimize the risks of COVID-19, similarly we shouldn’t minimize the risks of a major economic downturn impelled by counter-measures. If enough people default on their home mortgages, it will inevitably bring the banks down. They’re in little better shape than they were 12 years ago. As the banks begin to teeter it will inevitably provoke the same plaints we heard during the financial crisis.

People who are particularly vulnerable are not simply the poor or the homeless but everyone who earns his or her living through personal services. That includes everybody from beauticians and barbers to physicians and dentists. There’s more than one way to overwhelm the health care system. Let’s avoid both of them.


Between Scylla and Charybdis

Extracting a gloss from the editors of the Washington Post’s denunciation of the choice between people contracting COVID-19 and letting the economy collapse:

The quick and certain result of a damn-the-torpedoes approach would be to overwhelm and break the health-care system. Hospitals would fill to overflowing. Those in need of ventilators would be out of luck — not only covid-19 patients but also babies, children, tweens and anyone else in respiratory distress. People who suffer strokes, heart attacks, broken bones and gunshot wounds would arrive at hospitals — if they were lucky or rich enough to find ambulances — to find emergency rooms resembling Grand Central Terminial at rush hour. Doctors, nurses and medical technicians would face extraordinary risks; many would not be spared.

That’s not an “exchange,” as Mr. Patrick simplistically imagines. It’s a social, political, moral — and economic — cataclysm.

The costs of the pandemic-induced shutdown are colossal — to the economy, society and the nation’s collective emotional and mental health. As dangerous as that is, it is more dangerous still to pretend the pandemic can be harnessed by diktat and wishful thinking.

The irony of their closing trope is that the governors and mayors who are issuing “stay at home” directives are relying on precisely that: diktat and wishful thinking. Sadly, in the near term that is all they or we have. I think we need a much clearer, more committed notion of just how long that “near term” might be. Eventually it will become a “Friedman interval”, a continually expanding horizon. While Scylla might be preferable today, in the long term Charybdis might have been more merciful.

It isn’t merely new cases of the disease that threatens to “overwhelm and break the health care system” but also the inadequacy of supportive care in treating it. But in every country I have been able to identify the numbers of those who have contracted the disease dwarf the number that have recovered from it by at least 4:1. I’m skeptical that prevention, the goal of those searching for a vaccine, will be feasible in the foreseeable future. To date no effective vaccine has even been produced for any coronavirus. And avoidance, which is what the governors and mayors are attempting to accomplish with their “stay at home” directives, is futile as a long term strategy. I have more confidence in better treatments being identified than that avoidance will “bend the curve” sufficiently to achieve its presumed goal or that a preventive vaccine will be invented.

President Trump’s supporters wanted him to “drain the swamp”. I don’t believe that he actually knew enough about the swamp to accomplish that. It takes an alligator to drain the swamp. Only a swamp-dweller has the necessary understanding. In retrospect good places to start might have been the Food and Drug Administration and the Centers for Disease Control.

Some red tape cutting in approving therapies using methods or pharmaceuticals that have already received approval from the FDA is an urgent necessity. And Abbott has developed a COVID-19 test that takes minutes rather than hours or days. Clothing manufacturers, idled by the directives, are ready, willing, and able to produce face masks in the millions but are stymied by state and local regulations. We’ll soon see if he’s the man for the job.


The Next Few Weeks

I wanted to share with you some information that just came into my possession. I have a colleague who is a heavy hitter in the supply chain management/warehouse management sphere. By “heavy hitter” I mean that he has been in the field for thirty years and is a senior manager of a division specializing in that area of consulting. I don’t recall whether his title is Executive Vice President or President but it’s one of the two.

He told me several very interesting things. First, manufacturers have something like three months of parts inventory before they will need to idle plants because they don’t have the components they need to keep producing. In other words their supply chains are breaking down.

Second, many of those supply chains run through China and, well, they are presently not receiving what they have ordered from their Chinese suppliers. He broke out laughing when I suggested that what we’re hearing from the Chinese government may not be the 100% truth. The next few weeks should be telling. If the container ships aren’t re-supplying manufacturers here, the issues in China may be much, much worse than we have been led to believe. That is what the Japanese, for example, believe.

Third, he tells me that the prevailing wisdom in the SCM/WMS community is that JIT has been tested and found wanting, that supply chains, particularly supply chains that run through China, are presently seen as being far too long, and that many companies are entertaining the notion of localized production/localized supply chains of the sort that 3M has been using for some time. I’m a bit skeptical that a lot of production will return to the U. S. but I think that some will as well as to Canada, Mexico, and Central American countries.

In the same conversation I heard, from another colleague, that India’s recent “stay at home” directive is straining software development schedules. India does not have the infrastructure we have here and working from home there is a drastically different affair than it is here. Power failures are common and unpredictable. Internet bandwidth is strained. The laptops Indian developers are using may be underpowered for the sort of development that they’re trying to undertake. Tens of thousands of development projects may be affected.

Stay tuned.