What Happens Now?
There are many unknowns that have a dramatic effect on the path forward, and how the endgame plays out.
A few big ones dominate.
I do not see it as plausible that the new strain is confined to England. It has already been seen in several other nations, and the numbers in England are not compatible with it not being essentially everywhere already. It’s still right to cut off flights and travel now to slow things down, but the barn door is already wide open.
The biggest question is, instead, is the new English strain (or another similar strain like the one found in South Africa) really 65% more infectious as measured by infections per infected individual?
If that number is greatly exaggerated, then the strain will take a lot longer to get to where it matters, and even when it does the control systems and vaccinations can keep things mostly in check, and we are still on something not too different from the previous track. My guess is that aside from England itself, we could mostly deal with about a 33% more infectious strain given our timetable before it does that much damage.
If the 65% number is accurate, however, we are talking about the strain doubling each week. A dramatic fourth wave is on its way. Right now it is the final week of December. We have to assume the strain is already here. Each infection now is about a million by mid-May, six million by end of May, full herd immunity overshoot and game over by mid-July, minus whatever progress we make in reducing spread between now and then, including through acquired immunity. Which will help somewhat, but likely only buy a few weeks at most.
One worry I have is that the control system could actively make things worse between now and then, and accelerate the timeline. By the end of January, we should see up to a one third drop in the death rate purely from protecting nursing home residents, and then it will drop further as we protect other elderly people. If as I suspect the control system mostly acts on the death rate, they will use this as a reason to loosen and take more risk, and infection numbers will rise, or not fall the way we would have otherwise expected.
Then once the new strain arrives, it will be like March and April 2020, where by the time the deaths start spiking it is very late in the game, and there have already been three or more additional doublings.
The good news is that when this happens, most of our most vulnerable will have had the opportunity for vaccination. Assuming most of them take it, the (need for) hospitalization rate should be dramatically lower, and the IFR should also be dramatically lower if the hospitals don’t collapse. The hope is that with enough of the vulnerable protected, even a gigantic surge in cases might not collapse the system.
That’s the hope. It is basically the best (realistic) case scenario. It seems to be too late to speed up vaccine production much, although I see some reports Joe Biden is considering using the Defense Production Act to do so, in which case why the hell aren’t we doing whatever it takes to get that happening already? Have we considered throwing relatively tiny amounts of money at the problem? Maybe not quite that relatively tiny? No? Oh well. But I digress.
On the good news front, our tests still mostly seem to work fine for the new strain, although there is some small worry.
There is the concern that the vaccine might not be effective against the new strain, but based on my looking into this, the prior on there being much effect here should not be so high, except insofar as the new strain is more infectious so everything will be somewhat less effective at preventing spread. But if the virus has escaped from the vaccine already while also becoming more infectious, the timeline does not allow us to adjust even if we acted correctly, let alone acting realistically, the best we can hope for is maybe to protect some of the most vulnerable but I do not expect a Biden administration to allow movement fast enough to do that in this scenario. Instead, we’d see completely overwhelmed medical systems across the country, and that would be that.
On the potentially very good news front is the other big question. Is the new strain less virulent (dangerous) than the old one, and if so by how much?
I don’t think this is a favorite to be true, but I do think there’s a substantial chance (30%?) that it is, and we should investigate. All the news reports say that there’s no reason to expect that the mutation is more dangerous, which is true, but also not the change one would expect to often happen. The real question is whether it is now less dangerous, and for now the answer is we don’t know. If the effect size is big we will presumably figure this out by the end of January. Keeping an eye on England’s IFR will be important.
There are plausible physical mechanisms that suggest that some of these mutations may have led to less virulence. One piece of evidence that the strain is less virulent is that it is more infectious! Being less virulent causes it to be more infectious, so if the strain is more infectious, there’s a decent chance part of that was caused by less virulence.
Note that if we do face that scenario in the fourth wave, unless virulence has gone down quite a bit, you now face an even more stark version of what you did preparing for the third wave.
If we are in this scenario, it is inevitable that there will be a several week period, at a minimum, in which it is super easy to catch Covid-19, with a super infectious strain everywhere, and at a time when there will be no hospitals to help you, and no vaccine that works.
In that scenario, actually protecting yourself becomes vital if you haven’t been infected by the time the climax is approaching. As in essentially not being anywhere near a human outside your bubble, for weeks on end, at least until the hospitals stabilize.
It also becomes realistic again to worry about our supply chains or civil disorder. I expect everything to hold, but that can’t be assumed.
Then there’s the other nightmare. When this starts to happen, how will the authorities react?
Benevolent authorities would be responding now by making every attempt to speed up our vaccine efforts, and to prioritize the most vulnerable while we can. But if we had such benevolent authorities, they would have already been doing that. When something goes from super overdetermined to super duper overdetermined, it’s not generally the time to expect people to suddenly come up with the right answer when they didn’t before. Still, there’s some hope that this would happen, as the ‘don’t let it get so bad they sell out of pitchforks’ mechanics kick in. The other problem, as I’ve noted, is that there is not that much room to move faster without much more aggressive disregarding of barriers put in to prevent action, which would cause a ton of cognitive dissonance, and is not Biden’s style.
The question is what our actual, present authorities will do.
Like England, they might go for a full ‘lockdown.’ My assumption is that if they do this, people will end up largely ignoring it, and it won’t be enforced. There’s no will to make real restrictions stick even in blue tribe areas, and red tribe areas would be in open revolt, especially when it comes from a Biden administration. People have had enough, and they’ll have been told the story of how things were supposed to be returning to normal.
And even when they do that, they’ll still provide enough loopholes that it presumably wouldn’t work even if people didn’t go into open defiance of the rules.
Still, will they try anyway, doing epic additional economic damage and potentially causing open conflict? I worry about this a lot.
Thus, I don’t know if one should buy stocks or sell stocks on this, or even if one should buy volatility on this or not. If things crest once more and then burn out, that is not bad for stocks. It’s only bad if we get a dramatic response, which wouldn’t help the problem much but also give us a whole additional set of problems. We need to get ready, now, to do what we can to stop this from happening when the moment arrives, if the moment arrives. Sure, if it worked one could argue in favor, but the math seems rather clear that it won’t do any good. When politicians start trying to make it to next week without taking blame, and attempt to destroy everyone’s lives to do it, we need to find a way to stop them.
Or we could figure out how to make our efforts actually work. It’s not impossible. Is there still time to get our house in order and deal with this head on, if we want to? Hell yeah. But we can’t do it by Sacrificing to the Gods and taking sledgehammers to everything people like doing. We can’t even do it via doing that and being willing to shut down economically important activity, not for long enough to work. I’d be pleasantly surprised if we could even stabilize growth rates that way, and it’s completely unsustainable.
What we could do is prepare a testing regime now. Have that in place a few months from now, for real, and do the kind of testing on everyone that some universities do with their students. If we took all the regulatory gloves off, my guess is we wouldn’t even have to subsidize to get there on time. Add in proper focus on Vitamin D, airflow, outdoor activity and so on. We could still make it, and it would be an essentially free action.
We could probably start this on January 20 and still make it.
To be clear: We won’t attempt to do this, and it won’t happen. But it’s important to note that we still could, in at least some sense, still win, while also noting that we will lose. You never know. Maybe someone, somewhere, is actually listening.
In summary, I am attempting here to do now what I failed to do in December or January, which is to actually model what happens next based on exponential growth and realistic reactions by authorities.
My guess is that the English strain is probably sufficiently infectious to get there before enough vaccinations can happen to let realistic measures contain the pandemic. Right now I’m giving the strain something like a 70% chance to be sufficiently infectious, and if it is, I don’t see a way around this outcome.
This has counterintuitive implications, both for public policy and for individuals. As always, one’s approach to the pandemic must be to either succeed if one can do so at a cost worth paying, or fail gracefully if one cannot succeed. Thus, one could plausibly either make the case for being even more careful in response, or to folding one’s hand entirely. You can raise, or you can fold, but you can’t play passive and call all bets and hope to go to showdown.
It’s also important to figure out whether the new strain is less virulent than the old one, and if so to what extent, since that could change the math on sensible courses of action quite a bit. I haven’t fully wrapped my head around the implications, and I doubt many others have either. Simply saying it is “good news” does not begin to cover how this changes correct actions.
Let’s actually engage with the physical situation and model out what happens, and learn from last time out’s mistakes.