💭 After the virus

Risks and opportunities

We have a long way to go. Our nurses, doctors and public health officials face a punishing marathon in the next months. Families face uncertainty. We’ll mourn those who will succumb—their numbers rising daily. And our economies will struggle through a savage blow but at some point, and in some shape, we’ll come through this.

But what happens after the virus? 

In this letter, I’m going to explore what we could do once we get past this. I would encourage you to keep up to date, perhaps digging deeper than governmental statements to look at the critical analysis from scientists and other experts. The Internet is providing incredible, credible resources to go deep. I’ve put some pointers to interesting sources at the foot of this.

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This zoonotic menace is a strange hybrid. It’s born out of traditional, historical practices—eating wild animals bought in a live food market—a tradition that goes back centuries. Yet that market is embedded in the most symbolic motif of humanity’s future: the Chinese megacity. 

The Wall Street Journal has put together the arresting reportage on the first days of the crisis. It began with Wei Guixian, a seafood trader. Wei took ill on December 10th, nearly three months ago.

Epidemiologists who have studied the case data say the virus could have first jumped from an animal to a human as early as October or November, and then spread among individuals who either never got noticeably sick or didn’t seek medical care.

And the spread of the virus enabled by, not merely, national and global networks of steel and air, that measured progress, but also by a way of life that assumed those networks. More than half the world is now middle class, rather than poor and vulnerable, according to the Brookings Institution, and the proportion is rising. With that rising prosperity come certain trappings, of restaurants, travel over greater distances, international working, music festivals and sporting events, friends from far off places.

Efficiency uber alles and systemic risk

Our investments in every sizable cruise liners (the Diamond Princess, the world’s largest petri dish, had a gross tonnage of 116,000, more than a Nimitz-class aircraft a carrier) or faster supply chains, or more massive music festivals, demonstrate the power of our efficient, connected, modern world.

Since the 1970s, but really starting well before that, our guiding socioeconomic design principle has been to focus on exactly what we need to do and no more (companies do profits; people, themselves). Efficiency requires focus, no more, no less.

Image result for simpson head of sanitation

This monomania of delivering within strict guardrails became the guiding light of the boardroom. The dicta were core competencies; outsourcing; maximising shareholder value.

Anything beyond those narrow conceits? Well to quote Homer Simpson, when he became Springfield’s Sanitation Commissioner, “can’t someone else do it”, ultimately pursued in the name of efficiency. Practically, the manifests itself, inter alia, as privatising the gains while socialising the costs. We ignore systemic risks so that they don’t weigh down on individual businesses as they make day-to-day decisions. 

Finance did this in the run-up to the global financial crisis. The journey to the financial crisis is a long one, dating back to the vacuum left by the collapse of Bretton Woods. (Adam Tooze’s pretty exceptional tome, Crashed, is the best place to dig deeper.)

But as we reached into the mid-2000s, like traders in Hubei promising impossible remedies from pangolin scales, bankers persuaded us they could bury risk into complicated, interconnected, financial instruments that were networked in myriad ways. Volatility came down, “risk disappeared” in the years after 9/11. The CBOE VIX index, a measure of volatility expectations, reached its all-time low in Feb 2017, moments before the system imploded outwards. (See chart below.)

Our societies have undergone the same self-delusion with climate change. We put 13.8 kg of CO2 rubbish into the atmosphere per day per person. We didn’t care about the waste, the trash, perhaps “someone else would deal with it.” All the while, the additional solar energy retained is absorbed by our oceans, at the rate of three Hiroshima bombs per second, EV reader Bill Gross, and founder of Idealab!, tells me.

And so too with this current systemic risk, an “is-it-a-pandemic-yet” crisis. 

We have underinvested in pharmaceutical research for infectious diseases for decades. Here is Bill Gates speaking in 2005 (write-up here) about what he is most afraid of:

An epidemic that would be more infectious than Ebola…this is the greatest risk of a huge tragedy. This is the most likely thing by far to kill over 10m people. We don’t invest nearly what we do in military preparedness.

Finding vaccines for infectious diseases doesn’t usually keep shareholders happy. Epidemics in rich countries don’t last long enough for payback. Says Jessica David Pluss:

overall coronavirus R&D funding (focusing on MERS, but including SARS R&D and research targeting multiple coronaviruses) was $27 million in 2016, grew to $50 million in 2017 and fell significantly, to around $36 million in 2018.

On Wednesday this week, the US Congress celebrated its 231st anniversary. That day, it authorised an $8.3bn emergency coronavirus response funding. That $8.3bn represents 231 years of coronavirus R&D funding at the recent $36m per annum rate.  Is the universe telling us something?

Globally R&D was $179bn in 2018. So coronavirus R&D funding represents about 0.02% (or 2 cents in every $100.) 

Virtually every forecast predicts real economic as well as human costs. This one from the Brookings Institution suggests:

The loss of real GDP, relative to what would have been the model prediction in 2020 without the virus, is approximately $US2.3 trillion for the world. Of that, the US economy loses $US420 billion in 2020 [...] Of course, if the virus spreads more widely or turns out to be more severe, the costs would be larger.

Viral kryptonite

Isolation is kryptonite to pandemics. And fancifully, we could take isolation to its extreme, our guiding principle becoming closedness rather than openness. The real world of air, birds, sky, that reminds us of our physicality, embodied reality, becomes a venue for viral transmission. (Update: I wrote this before the Italian government put 16 million people in Northern Italy into quarantine. As Balaji Srinivasan says: “Better to prepare and be accused of “panic” than to panic because you didn’t prepare.”)

The logical extension is to move into digital enclaves, virtual reality worlds, unwilling to venture into physical space. Today, as Ian Bogost points out, “being holed up has never been so pleasant.”

Cushy and cosy for the affluent with nice warm homes and all mod-cons, but who are dependent on the less well-off who keep the hospitals, basic infrastructure and late-night pizza deliveries running on time. A pandemic, writes Charlie Warzel, is

a great way to examine American class inequities. There’s something especially clarifying as it pertains to the gig economy. Silicon Valley [is] solving problems of upper-middle-class men who spend far too much time working and crave microefficiencies [...] that convenience has created a precarious under-economy of contract workers, dangerous working conditions.

Isolation is a good tool in a pandemic emergency. Surely it is, as this analysis from Carl Bergstrom shows.

Should governments act faster to encourage measures to slow th spread?

This blog post by Scott Leibrand, estimates your “risk of dying of COVID-19 - or inadvertently allowing the death of someone in your community?” Scott’s paper suggests that taken measures like hand-washing or isolation are worth $250 per day. It is a pen-and-paper exercise, but worth reading.

But isolation is hardly a long-term strategy to persist after the worst of this passes.


In the exponential age, change will continue to accelerate; in the acceleration, the surface area of our vulnerability will expand. This world is spiky, and each shift weaves, Sierpinski-like, a new attack surface.

Shocks, surprises, could be expected to become more frequent. (Business may well receive more cyberattacks per second than they receive physical intrusions per year.)

Yet we have underinvested in the things that make us individually and collectively resilient to shocks. 

Systemic risks exist and will magnify, and so we need to invest in processes and systems that increase our capacity for resilience.

  • Early warning systems: Early warning systems can be technological, such as systems that health systems already use to share anomalous illnesses globally. They could be more sophisticated such as wide-spread genomic sequencing to hopefully catch emerging lurgies early. But they also require trust, processes and governance. Chinese doctors knew something was up in December, but were muzzled by apparatchiks a level or two up.

  • Supply chains: the vulnerability of our global supply chains will be felt starting this week as stocks run down and Chinese-originated ships disgorge their cargo at destination ports. Chinese exports are down 17% this year. Firms will respond by distributing their manufacturing and supply base.

  • Scientific and medical research: Given the risks of an interconnected world, we’re clearly underinvesting in vaccine research, screening technologies, protocols and operating procedures. (I love the idea, described here, about using robotics and ML to expose a virus at high speed to tens of thousands of existing compounds and seeing which ones are effective.)

  • Greater self-sufficiency: We need to design or engineer our cities for more self-sufficiency in food, water and energy. Can cities be self-contained if needed? Vertical farms could certainly help. Renewable power will too.

We need to think about how we do this. While firms will have incentives to distribute their supply chains to a China+N approach, perhaps combined with more reshoring, it is also clear that many of the other things will not be addressed by Mr Market’s short-term needs.

These are initial ideas. I’m open to discussing them further in the comments. You will have better ones.

Stay safe,

😷 Azeem

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Dig deeper

On our preparedness for resilience and the emerging nature of threats, listen to my conversation with General Sir Richard Barrons.

On understanding the complexity of megacities, listen to my discussion with Cesar Hidalgo.

My essays, Six ways coronavirus will change our world and Coronavirus on the Latin Bridge, have been read more than 110,000 times each.

A subset of things I am tracking to follow coronavirus

EV reader, Nicolas Granatino, is writing a daily newsletter on the emerging crisis. It is pretty good. Nicolas is an Oxford PhD in biochemistry and active early-stage technology investor.

The following Twitter feeds are interesting: