Chinese Lockdowns

A few weeks ago I wrote Pandemic Retrospective. Events since then pretty much confirmed everything I wrote.

The West got over covid. It's still there, but old people are overwhelmingly vaccinated, so nobody cares.

Meanwhile, China is doing its best to implement Zero Covid policy. OK, so here's what I wrote back then:

There's also an interesting idea for stage 1, to totally close not just countries but each city and region, and wait for covid to disappear there, before reopening only borders between covid-free areas. But this would only work if external country borders were closed as well, and it would be extremely disruptive. China sort of did that initially, but nobody else really tried that at all.

And what China did 5 days after I wrote that post? Literally what I said, on a much larger scale than in 2020.

Chinese lockdown is based on setting up borders. Not just external borders, and just borders outside cities, but borders between districts inside cities. It's extreme borders more than extreme lockdowns.

Instead of closing factories, China converts them to a closed system, where workers live in their workplace, so they don't need to cross internal borders. That's something Europe never considered, travel was open for "essential workers" which were a huge chunk of the population, far too great for covid to be possible to contain.

It's unclear if this will be enough to achieve Zero Covid - so far the signs aren't too great, but let's imagine they do. Whichever way it goes, one thing it proves beyond any doubt is that European approach - late severe lockdowns without corresponding external or internal hard borders - didn't have the slightest chance of ever working. European style lockdowns were completely 100% counterproductive.

And since I'm in a prophetic mood, Ukraine will destroy Crimea Bridge.

Pandemic Retrospective

There won't be anything too controversial here, just a bit of big picture view.

Basics

Covid-19 is not over, and there's no indication that it will ever be eradicated, there are just a lot more important things going on right now.

So far the only established human disease we managed to eradicate was smallpox. Polio eradication efforts have largely stalled, with little progress since year 2000. I still have some hopes that we'll win over polio, but the chance of total elimination of covid-19 in any realistic timeframe is essentially zero.

The most outcome is that covid will be just another seasonal disease like the flu, with us for the long run. This is mostly fine, as going forward, most people will get exposed to mild infection when they're young, and by the time they're old and vulnerable, they'll have some degree of immunity, from some combination of previous infections and vaccines.

Age is the main risk factor, far greater than anything else. Every extra 20 years means 10x higher death rate, or in other words every additional year of your life is extra 12% risk of death if infected.

This is a good way to put things in perspective. For example according to the few RCTs we have, masking (with a real medical mask) may offer about 10%-20% reduction in infection chance, with no reduction in severity of symptoms in case of infection. So you're about as vulnerable masked in 2022 as you'd be unmasked in 2021, just because you aged enough to counter all that benefit. And "masking" with non-medical mask doesn't seem to do anything at all.

Vaccination with regular boosters may reduce risk of death by about 80%-ish, equivalent to being about 15 years younger. So a fully vaccinated and boosted 40 year old is at about as much a risk as completely unvaccinated 25 year old. There doesn't seem to be much reduction in chance of getting infection in the first place, mostly reduced severity.

It's often underestimated just how much covid is a single-risk-factor disease, that factor being age. For example obesity increases risk of covid death by 25%. So 40 year old obese person is at as much risk as 42 year old healthy weight person.

I think it's a useful visualization tools to translate all relative risk factors into equivalent age differences.

Risk of hospitalization and other serious health outcomes roughly follows risk of death, with similar risk increase for every additional year of age.

Anti-Covid Measures

There are three stages at which we could intervene to prevent covid deaths (and other severe outcomes):

1. prevent pandemic from getting to your country in the first place
2. reduce spread of infection once there's already community spread
3. reduce chance of death for an infected person

A lot of measures have been taken, but only two have been very highly effective:

• total border closures (step 1)
• vaccinating old people (step 3)

Everything else did either nothing, or had minor effect, or was outright counterproductive. These include such measures as:

• bank account closures
• contract tracing
• firing people for having different opinion
• hand washing
• ivermectin
• lockdowns
• mask mandates
• masking
• mass event closure
• partial border closures
• quarantines for travelers
• riots
• school closures
• social media bans
• stimulus checks
• testing
• vaccinating low risk people
• vaccine mandates
• voluntary masking
• work from home
• etc.

In the end, none of them had a big impact on the death rate. Notably almost all the measures attempted to target stage 2 (reduce infection rate once it's already established), and for covid that was simply the least effective stage to target.

The most unexpected thing about covid is that stage 1 interventions (total border closures) were extremely effective even after covid already got established. The original Wuhan lab leak variant was just not all that infectious, so closing borders and preventing much more infectious subsequent variants from coming in was an extremely successful approach, even in absence of other interventions. Japan is a good example of this combination.

Cargo Culting

A huge problem with global pandemic response is that countries threw away all established science, and mindlessly copied what other countries were doing, even if it was completely ineffective. So instead of 200 different policies we could meaningfully compare, it's largely same ineffective policies tried over and over.

Knowing just country age structure, border closures, and vaccination rates among old people, we can fairly accurately estimate pandemic severity, throwing away all other information.

Arguably the main problem with global pandemic response was that everyone was cargo culting part of Chinese response that was pointless (lockdowns), and in a half-assed way that couldn't have possibly worked anyway; and they did not copy the part of Chinese response that actually worked (total border closures).

What Was Not Tried

In retrospect was can safely say that nothing targetting stage 2 would have worked. Any response strict enough to eradicate transmission after it was well established would just completely crash the economy, and with borders even partially open, covid would get back in anyway. And if you closed the borders, then you didn't need to be that strict in the first place (see Japan again).

At least none of such interventions would work if they targetted general population. We could have absolutely done crazy strict lockdowns of nursing homes specifically. About a third of all covid deaths in US was in long-term-care facilities, and these are not economically significant. We could have completely isolated them from the rest of the population (food delivery in full body ppe suit kind of isolation), and likely avoided 1/3 of all covid deaths. By moving more old and vulnerable people into similar protected environments, deaths could have been reduced even more.

Nobody really tried that, and there's been overwhelming lack of interest in any interventions that segregated people by risk level. If we did something more along the lines of:

• no restrictions of any kind on under-30s
• some modest risk reduction recommendations for 30-60s (no mass events, work from home recommendations, masking on public transport recommendation etc.)
• total lockdown for 60+s

That would be far more effective and far less destructive than what actually happened. To repeat the basic fact, 20 years of age difference means 10x risk of death difference. There's no sane way to treat kids and elderly the same, and that's what all countries did.

More idiotically, students were often restricted far more than adults, just because schools have far too much power over students' personal lives. It was cruel, and it did nothing to help with the pandemic.

There's some stage 3 interventions that could have had a meaningful effect, but weren't attempted.

The most notable one that would be mass vitamin D supplementation, as pre-infection vitamin D levels correlate very strongly with risk of death, and vitamin D insufficiency has been widespread in most modern populations. For people with most severe deficiency, effect size looks about as big as vaccines, based on observational studies. It would be much smaller averaged over entire population, as not everyone is as severely deficient. Unless you know that your vitamin D levels are adequate, you should absolutely get daily supplement, especially during winter, and not just for covid.

There's also some new antiviral drugs that could reduce risk of death. They happened late in the pandemic, but I guess if someone writes similar retrospective in 2025 they might get added to the list of interventions that made a big difference.

There's also an interesting idea for stage 1, to totally close not just countries but each city and region, and wait for covid to disappear there, before reopening only borders between covid-free areas. But this would only work if external country borders were closed as well, and it would be extremely disruptive. China sort of did that initially, but nobody else really tried that at all.

Who Predicted It Correctly?

Nobody at all.

Pre-pandemic expert consensus was very strongly against lockdowns, border closures, masking, and most other measures that ended up happening. Pretty much none of that was followed.

Epidemiologists' models were all universally worthless, and the whole field of epidemiology turned out to be about as reliable as social psychology.

Governments were both extremely incompetent and openly lying. The media were even dumber than usual. Social media companies were banning people for saying true things.

I don't think even any individuals got it right. As far as I know, nobody predicted either of these:

• the initial Wuhan Lab variant was no big deal, the variants were a big deal, so total border closures would be super effective even after Wuhan lab leak variant was already there
• vaccines would be developed very quickly, but they'd only offer big redution in severity and risk of death, and wouldn't meaningfully reduce infection rate, so mass vaccinating old people was really important, but any mass mandates are pointless

I don't think anything useful came out of prediction markets either.

Who Did Well?

The private sector did amazingly well. Rapid transformation of big parts of the economy from office-based to remote-first was amazing, and we should absolutely embrace the remote-first world, even if it made little difference for covid.

Similarly supermarkets, restaurants and so on switched very effectively from location-based services to delivery-based services. Restaurants have a lot more reason to exist than offices, but this shift is likely permanent, and a much bigger share of the economy will be online or delivery-based going forward.

Big Pharma did quite well. Multiple vaccines were developed in record time, of kind not used ever before, for kind of a virus that never had an effective vaccine before. Tests, antivirals, and so on were also developed very quickly.

What It All Means For The Next Pandemic?

Very little actually. Covid-19 had so many unusual features, there's no reason to expect the next one to be like that.

So what happens to government debts after the pandemic?

In most of the developed world, governments' economic strategy for the pandemic was to lock down the economy, take on massive additional debts, and give all that money away to everyone who might be affected by the lockdowns to keep the people compliant.

This would be fine, if the lockdowns were "two weeks" as was originally promised, but it's been already over a year, and depending on how new variants work against vaccines, it might take a few more years for the pandemic to end, and then another few for the economy to go back to normal.

It's common to look at GDP numbers, and claim it's not that bad, but GDP statistics are easily falsified by overwhelming short term cash injection.

Crime wave

A small side note, not terribly relevant to the main argument.

Many countries went through waves of riots (also known as "mostly peaceful protests" in propaganda media) and increased serious violent crime. 2020 in US had the highest homicide rate since late 90s, and 2021 data looks even worse than 2020 data. It's not as bad as early 90s, but it definitely is bad.

Some people make excuses that many other categories of crime didn't increase - but it's harder to commit burglaries if people stay at home.

Especially adjusted to prime crime committing population (young men, about 15-30), serious crime rates might already be as bad as in the '90s, it's just marked by including much more elderly in the denominator, who cannot commit any serious crimes even if they wanted to.

It's unclear if this is mostly an US specific issue, or if other countries are just as affected.

It's quite likely that this crime wave will take decades to go down to pre-pandemic levels, and until then, it will interfere with economic recovery.

Debt levels

Western countries already had record high debt levels before, as they never properly recovered from the 2008 recession.

Here's some visualizations of how bad debt levels already are. And it will keep increasing for as long as the pandemic is ongoing.

The quite recent orthodoxy that government debts should never exceed about 60% of GDP and shouldn't get even close to that except in most unusual circumstances, looks hilarious when the new normal is 100%+ debt for everyone, and 200%+ being nothing unusual.

Why is nobody even talking about it anymore?

So what happens next?

There really aren't that many things that can be done with such levels of debt. It would need to be some combination of.

Not paying the debt:

• government could repudiate all or part of the debt, just say it won't repay it, and get over it - the chance of this happening is basically zero for as long as politicians can kick the can down the road
• government could negotiate with creditors to get the debt down to more sustainable levels - Third World countries do that occasionally, are we going to see more of it?
• government could print more money and erode debt through sustained high inflation - if expected inflation is 2%, then 20 years of higher 5% inflation is about equivalent to reducing the debt burden by about 40%. This is the cleanest solution, but we live in heavily inflation-phobic era, and even hitting 2% consistently seems to be a problem for central banks. Even worse many developed countries are not monetarily independent, but enslaved to the ECB.

Repaying the debt:

• fast economic growth could erase debt to GDP ratio by rapidly increased GDP. Except the now dominant green anti-growth ideology is virulently opposed to the very idea of growth. They're virulently opposed to even building the much needed infrastructure (like the Heathrow Third Runway), and have been very effective at either preventing new infrastructure, or delaying it and increasing its cost so much it amount to basically the same thing. Even without the destructive green ideology, and NIMBYs, and all sort of special interests effectively using political process to block any potential competitors, it would be really difficult to achieve fast growth. Demographics of Western countries are all terrible - none except one have healthy demographic growth, and the one exception Israel only does it through Haredi population which largely refuses to integrate with modern economy, and is a huge burden on the rest of the society.
• government could increase taxes to repay debt - taxes in most developed world are already very high, and the harder you squeeze, the more harmful it is to the economy; increasing taxes by much is also politically very difficult, so politicians are trying their best to pass sneaky anti-democratic pseudo-taxes - for example "taxing Amazon" (which obviously will be 100% paid by people who buy from Amazon). We'll definitely see more of that, but this doesn't come even close to addressing the enormity of the debt.
• government could cut spending to repay debt - this works in theory, but it's a political suicide, and even if one party does it for the good of the country, very often opposition reverses the cuts as soon as they get the power
• selling or long-term-renting government property - this could be done to reduce debt a bit - for example US federal government own obscene amount of lands it doesn't use, and doesn't plan to use, and which could be sold (or at least transferred to the individual states, which then can use or sell them).

Living with the debt:

• paying interest, at rates compatible with historical rates - back in the 90s government interest rates in US were about 6%. At 200% debt to GDP ratio, this means 12% of GDP - or 1/3 of government revenue - goes to paying just interest, with no reduction in principal. This is ridiculously politically unsustainable.
• paying interest, at very low rates - if on the other hand interest rates were more like 2%, then such payment can be sustained, but how can government ensure that the rates stay this low indefinitely? As Japan shows it is possible, but only by monetary policy so brutal that it makes economic growth impossible. Government pretty much has to either make it impossible for any private investment to offer better rates; or force banks to take government debt, and starve private sector of any credit.

And that's the full list. There's no combination of these that looks good.

MMT is nonsense

Yes, MMT is nonsense, no point wasting time on it. It's basically stupid motte of "if we accept very high inflation, we can money print ourselves out of any debt" with bailey of "inflation will magically not happen".