We Didn’t Start The Fire – But We Tried To Fight It

When we read history, we are looking at it from a post-facto lens – the event has already happened. The insights from the history are often useful and they help us learn from the actions of the past. Many a times, this has helped in paving the way for the future.

However, one of the most important lessons we can learn from history is that history never repeats. It may rhyme with what has happened in the past, but it does not repeat.

You can read through every bit of history. You can make ample number of plans, strategies or policies. However, it can never prepare you for the events that will unfold in the future – be it a war, a global financial crisis or a pandemic.

For the entire human race of 7.8 Bn, the month of March 2020 was one such period. Never has there been an event which has impacted people across continents, across incomes, across regimes, across religions. Never has there been an event which has manifested into global calamity in such a short span of time.

Countries have locked down, hotels and restaurants have closed, the entire airline industry has been grounded, factories have come to halt, banks have stopped lending, global asset prices have collapsed, millions of people have lost jobs. Global super powers have been brought down to their knees.

And all this in a month’s work!

Was there a forewarning? Of course, there was. Most people and certainly, every nation head knew about this at least as early as in the middle of January.

Did nations know they can get impacted by it? Of course, they knew. The world has not been as globalised as it is today and almost every country on the planet Earth trades with China – from where this pandemic started.

Every nation has said that they had some plan to address this. None of those seem to be working. One of the best quotes of Mike Tyson encapsulates this almost too perfectly, “Everyone has a plan, until they get punched in the face.”

Why did people get this so wrong?

All the models were built from the learnings of history. From Spanish Flu, from SARS, from MERS, from Ebola.

However, most of those models (until it was too late) underestimated the infectiousness of this strain of coronavirus, asymptomatic spread, real mortality rates and the key factor – the impact of a far more globalised world than in the past.

More importantly, there has been a huge divergence in the disease spread and its impact on countries. Some of the most advanced countries with some of the best healthcare systems in the world have been impacted far more than developing nations with relatively poorer healthcare facilities.

In fact, in many advanced nations, triage decisions have become a day to day reality!

These are nations which had been role models, that developing and underdeveloped nations aspired to be! And most definitely, in health care.

This begs the question, how did this happen?

The answer lies in just one simple behavioural trait, right temperament. 

In an uncertain environment, our vision tends to get fogged and having the right temperament helps us in not missing the forest for the trees.

Learnings from history applied with the right temperament (to adapt or to course correct) can go a long way in handling an uncertain environment.

Let us try to understand what happened here.

First,

The last epidemic of scale that the western world had seen was Spanish Flu of 1918. It stretches back to over 100 years. It was before the time of penicillin and all the medical advancements that humans had seen. While its impact has huge, it was a distant memory and the times had now changed.

Most of these advanced nations had just read about SARS, MERS, Ebola or Nipah. Those epidemics had not impacted these countries in any meaningful way. They did not go through that period of stress that some of the less-developed Asian and African countries had seen – be it on their health care, lives of population or economic impact!

There was a tad bit of overconfidence that Western countries had on their health-care systems and their ‘per-capita’ hospital beds and their overall level of hygiene.

On the other hand, Asian countries (which got impacted far earlier by coronavirus) knew first-hand what it is to face an epidemic and how much it can impact the health care system; acted fast with testing, contact tracing, creation of quarantine zones, social distancing and lock downs.

Right temperament backed by history went a long way in creating policy responses for some these so-called ‘developing’ nations. More importantly, it gave their health care systems a chance to be prepared and not get overwhelmed by the volumes of cases.

Second,

For over two decades, the world and especially, the western world has been raising doubts over the veracity of numbers from China. Be it GDP data or human development indicators or financials of the Chinese companies.

At precisely the time when the world should have questioned those numbers, they decided to believe the stats coming from China on coronavirus. And, they built their policy responses based on those numbers – infections, recoveries and mortality rates.

The right thing to look for would have been the policy response from China – enforcing extremely strict lock downs and building emergency hospitals at breakneck speed. Heck, the first clue that there is something seriously wrong would have been when Hong Kong sealed its borders in early February.

The response from most of the western world came in only by mid to late March. Even then, there were so many options to course correct after seeing what had happened in South Korea versus Iran. However, West chose to take only tentative measures – not serious country-wide lock downs.

Data from China was given precedence over Actions of China by West. This was exactly opposite of what some of the Asian countries did.

Third,

Even before the crisis hit West, the world was on its way to a big slowdown as the supply chains from China had been thrown off-track.

Today, we should all be happy if it is just a recession.

While the western world attempted to model precise impact of the coronavirus on their supply chain from China, impact on their economies and GDP as well as theoretically, low mortality rate, they missed on one very important thing.

Whatever the central banks around the world may have you believe, the fact is simple.

The economy functions on people. Not the other way.

You may throw billions and trillions in the market. It does not change this fact.

Almost two-third of the world’s economy functions on consumer spending. This makes consumer sentiment and confidence the most important parameter on the road to recovery!

Asian countries knew what kind of impact previous epidemics had on their economies and how to contain it. By going into the lock down mode early, they were able to stem the spread to manageable numbers. This gave confidence to the people and will eventually help these countries get their economies back on the path towards some recovery.

In the west, the confidence and the trust of people in their governments is probably as low as it has ever been. Prioritising short term economic fall outs over health and lives of people has not helped the cause.

Boisterous leaders, with their daily flip-flopping on matters of public health, have definitely not helped the cause.  

While the west chose to go for a pyrrhic victory, others have opted in favour of losing the battle to win the war!

What does this mean?

As I mentioned before, right temperament would have helped in not missing the forest for the trees.

Right temperament would have meant, first and foremost, keeping people at the top of your priority, not economy.

Right temperament would have meant buying your health care workers (the first line of defence) more time by acting early, so that they have a chance to treat every patient and not have to take triage calls.  

Right temperament would have meant springing in to early action with effective monitoring, quarantines rather than making statements of how great your country and your medical facilities are.

Right temperament would have meant giving precedence to what actions others are taking when data is not reliable. Or at least, course correcting when reliable data came.

Right temperament would have meant taking long term view even if it meant taking unpopular short term decisions.

Right temperament would have meant lessons from history applied right.

What now?

At the heights of WW II, Winston Churchill (then Prime Minister of UK) gave his famous Master of Our Fate speech to the US Congress. Remember, this was in December of 1941, just days after Japan had attacked Pearl Harbour.

While all of us are slightly poorer as we do not have a world leader like Churchill (not that he did not have his flaws) in these tough times, some of the lines from that speech are relevant even today,

“Sure I am that this day – now we are the masters of our fate; that the task which has been set us is not above our strength; that its pangs and toils are not beyond our endurance. As long as we have faith in our cause and an unconquerable will-power, salvation will not be denied us.”

Churchill was right then. And, he is not wrong today, either!

We will overcome this too.

However, realistically speaking – things are likely to go much worse before they start getting better.

If the entire world had gone into a lock down mode in February or March, the world economy would have possibly been able to come back to life by June or July. Alas, this was not to be.

Unfortunately, in a global and connected world, wrong decisions taken in one part of the world can have calamitous impact on another part of the world. Countries which are economically weaker and have scores of poor population will face the brunt of it.

More businesses will close, more jobs will be lost.

Things will take time to recover.

Not days, not months, not quarters. Possibly, years.

However, those nations which have learnt the right lessons from history, which have displayed the right temperament and which have acted in earnest will come back faster and stronger.

One last thing,

Let us take India’s case.

India started airport checking earlier than most places. It also started contact tracing as early as in February. It enacted mandatory quarantine early. It has tried to ensure that all the essential medicines and medical supplies stay within the country. It had closed its borders far ahead of others. It mandated a 21 days lock down of the entire nation – which is unprecedented in history!

Yes, we should have been testing a lot more than we actually are.

Yes, our implementation of lock down has been far from perfect.

Many have pointed out to what else could be done better and they are not wrong.

Even I can point out a few things that can be improved – starting with a well thought out fiscal package (and urgently) as well as substantially better on the ground support to poor and migrants. Basic universal income does not seem like a bad idea today.

But, we are a nation of 1.3 Bn people and almost 20% of the population is below poverty line. As much as we aspire, everything can never go completely right. We have to think of getting things largely right. A nation-wide lock down will have a big impact on the livelihoods, irrespective of anything.

That being said, India has been earnest in its intent to prevent the spread of disease and flatten the curve. Today – as things stand on coronavirus, most Indians will say that they are better off than their developed world counterparts.

In the next few days, India will face its own economic triage decision – stopping the spread of disease or saving the economy – a situation no one ever wanted. We will, now, have to make that choice. And, it is not much of a choice as there are so many lives at stake. As of now, it seems that the lock down will end in a phased manner with densely populated regions staying locked for some more time. That seems to be the best course of action.

I don’t know much about policy making. There are many many factors involved in taking policy decisions, most of which I cannot fathom. The only advice to policy makers in India would be to ban all the foreign travel for at least six to twelve months. India should not pay for the misguided steps of others.

Also,

There were three reasons to invoke Billy Joel.

First, if we are ever going to talk about learning from history, Billy Joel’s song ‘We didn’t start the fire’ is a great reminder to what all has happened in history – in the so-called ‘peaceful’ times.

Second, if Billy Joel was to rewrite this iconic song in today’s times, it won’t be complete without a few references on coronavirus in it.

And finally, in today’s times the last three lines of the song seemed very apt: ‘We didn’t start the fire, No we didn’t light it, But we tried to fight it!’

The author is Partner and Head of Research at Bay Capital. Views are personal.