IT’S GOVERNMENT AND MEDIA, NOT COVID
01 OCTOBER 2020
Most of the damage supposedly caused by COVID-19 is really from poorly thought over government policies.
It’s government and media, not COVID that are causing most of the economic destruction and unseen health consequences. I’ve always leaned towards the belief that the government response was an overreaction, which is why I tended to use the term “government lockdowns” instead of “COVID-19” in my investment reports whenever I discussed the cause of 2020’s economic shortfalls.
I could understand and sympathize with people who thought a hard lockdown was needed in the early days of the outbreak. But where we stand now, knowing everything we know about the first wave, it is ludicrous to me that tighter government restrictions are what we need.
I want to point out the unseen health consequences and real causes behind the economic movements “related to COVID”. This should help you make better investment decisions since you will understand the cause and effect relationship between government policy, economics and healthcare.
Why did we lockdown in the first place?
The original intent of the lockdown was to prevent hospitals from being overwhelmed with COVID patients and so personal protective equipment (PPE) would always be available for those who need it most.
“Expert models”, which project COVID case numbers into the future helped justify the lockdowns. Here’s one from the Department of Health. Virtually all models look something like it.
This model cost taxpayers USD 1.5 million (facepalm).
Needless to say… I think they’re a bit off. The first wave proved most hospitals were far from being overwhelmed.
Anyone who’s studied math and statistics knows that models are only as good as the assumptions and predefined data you give it. All these models did was extrapolate the rate of infection out a few months. They didn’t factor in the effects of herd immunity, natural antibodies, lifestyle, weather conditions or a number of other things. It should not have been a surprise how inaccurate these models were.
The media did report a few hospitals got overwhelmed, particularly in denser cities. Whether these hospitals were actually overwhelmed is questionable since no hospital was “overwhelmed” to the point where COVID-infected people were refused treatment and dropped dead. Not to mention, the media’s overreaction to the virus may have caused hospitals to get overwhelmed. Almost all kids and young adults have no need to take up a hospital bed if they get COVID. Staying at home and resting is enough treatment. Yet, many kids and young adults rushed to hospitals in fear because of what they heard from the media.
If the West did not have such an invasive media, I’m almost certain fewer people would have rushed to hospitals when they found out they had COVID.
Unseen health consequences
All the media ever talks about are the number of COVID cases. Add in a dose of fear to get your daily mainstream media playbook.
The media never talks about the unintended consequences of the governments’ actions.
The government themselves have not reflected on the unintended consequences, probably because doing so would force them to admit they screwed up.
We shouldn’t just look at one number (cases) and apply some policy to it. Of course, if the government and society banded together to squash the number of cases, I’m pretty sure we’d succeed to some extent.
But that kind of approach, which is what many Western countries have taken, leaves out all other factors that make a society healthy.
Instead, we should look at all the factors and see how they change across a long period of time.
I have yet to see a model from the government on the deaths from non-COVID deaths. My instincts tell me if they published such a model, long lockdowns wouldn’t sound like a good idea at all.
Some unseen health consequences are:
- An extra 1.4 million tuberculosis deaths over the next five years.
- Preventative measures for malaria were curtailed.
- HIV positive women in Africa won’t have access to drugs which prevent their children from getting it too.
- Less cancer screenings mean more people will die from late-discovered cancer.
- Childhood immunizations have been put aside, increasing the chances of childhood disease outbreaks.
- More house evictions, divorces and stress, which may alter a person’s life in various negative ways.
Much of the collateral damage won’t be seen for a few years. This is the problem with how much of the West is handling COVID: government policies address one or two factors in the immediate run, while ignoring the overall effects over the long run.
Compared to other countries
Why are the UK and Canada thinking of a second full lockdown?! Why are some states in the US still locked down?!
The rest of the world has already moved on! Most Eastern Bloc, Asian, Middle Eastern and African countries are not in lockdown anymore; some never locked down to begin with.
Traffic congestion is a reliable, hard-to-fudge measure of the strength of a domestic economy.
- Traffic congestion for China’s top 10 cities is above its 2019 average.
- Europe and Asia are seeing traffic congestion return to normal levels. The Americas (heavily weighted to North America) still have not recovered.
- Gasoline sales in India are up 2.2% year over year.
Case study: Egypt
I’ve been watching expats and tourists vlog their daily lives on YouTube. It’s fascinating to see how some countries just don’t care about the virus at all.
Popular travel vlogger Drew Binsky went to Egypt and found its citizens indifferent to COVID.
Egypt only has 5000 COVID deaths in a population of 100 million. Nobody wears a mask. Nobody social distances. Business and life is bustling like there is no pandemic.
Egypt didn’t even have a full lockdown in the early days of the pandemic.
The situation in Egypt throws a wrench in everything the Western media advocates for:
- Masks may not be as effective as the media says.
- Social distancing may not be as important as the media portrays.
- Government statistics are poor predictors of how the virus will behave.
- Lockdowns may not be effective at eliminating COVID deaths in the long run.
Poverty is a health issue
At the end of the day, there’s still a lot about COVID that we don’t know about. And I think that’s where the heart of the issue lies.
Governments just can’t say “I don’t know”.
They must always have a “solution” or policy to “help” the population. Even when governments don’t know what to do and haven’t considered the overall effects of their actions, they’d rather pretend to know what they’re doing and push through destructive policies.
Dr. Fauci’s nay mask to yay mask is a perfect example. He could’ve just said, “I don’t know if masks work to cut the spread of COVID.”
I always thought people should work off of what they know instead.
Based on historical data, we know for certain that poverty and social unrest causes deaths. Knowing that, lockdowns only make sense if governments could clearly justify that locking the country down would cause less deaths than free roaming people with COVID.
Western governments did the exact opposite. They ignored all historical data related to poverty and social unrest in favor of reducing a single metric – the number of cases.
The result: more people will likely die from issues related to poverty, social unrest and unseen health consequences than COVID.
In the end, economic and societal issues are health issues. It’s appalling how they weren’t factored in to any epidemiological studies.
Going forward…
Did governments learn anything from the first wave?
Nope!
Canada and the UK are talking about a second lockdown or more restrictions just like the first. Again, their only focus is on case numbers.
The point of this article is to say, economic damage and social unrest is mostly a result of the government and media, not COVID itself.
I see many investors trying to trade based on COVID trends only to find out a small spike in cases brings another wave of government restrictions. If this is you, you need to understand that government policies move the market far more than COVID cases. You should focus on trading around government and media, not COVID.
I don’t know how governments will react, although my gut says they’re going to drag the “crisis” on as long as they can. That being said, I’m not a trader. Fundamentals First is not about making short term predictions and trading around them.
Instead, I recommend focusing on buying great businesses that will do well over the long run (even with COVID and bad government policies). Focus on business fundamentals like cash flow, assets and macroeconomic tailwinds and you’ll be successful over the long-term.