Unsanitized: The Case for COVID Optimism

Plus, the entertainment giants lock up distribution. This is The COVID-19 Daily Report for October 13, 2020.

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First Response

It’s hard to find someone more knowledgeable about epidemics and virology than Donald J. McNeil Jr., the longtime science writer for the New York Times. For months it was hard to find someone more pessimistic about the trajectory of the coronavirus pandemic. But today, he pronounced himself optimistic about the state of play, arguing in informed fashion that we are about nine months away from returning to normal.

It’s certainly depressing that nine months is the benchmark for optimism at this point. But McNeil is a serious guy, so I want to go through why he’s looking up and thinking we’re at about the halfway point of the disease. Much of what he puts forward relates to what we’ve been saying at Unsanitized.

McNeil starts by giving credit for slowing the spread to the public at large. We focus so much on a few yahoos walking around without masks that we don’t marvel at the situation that Americans had no history with masking and considered it a foreign concept, and now has adopted masking near-universally, up to 90 percent in some polls. And we have in general sworn off large indoor gatherings. These actions have saved lives, but it can’t get us all the way there. McNeil’s optimism comes from how pharmaceutical actions are progressing.

Operation Warp Speed has succeeded in dramatically reducing the timeline for a domestic vaccine. We did learn yesterday that Johnson & Johnson has paused its study because of one sickness, but that’s more an indicator of responsible development than anything. It’s likely that we’ll have a vaccine by early next year.

It’s important to point out, however, that this still will put the U.S. behind the rest of the world. China has joined almost every other nation on Earth in the 183-country COVAX Initiative, which has invested in vaccine development with shared access, bulk manufacturing, and low-cost distribution of 2 billion doses or more. Only the U.S., Russia, Malaysia, Belarus, Kazakhstan, and a handful of small island countries aren’t part of COVAX.

Read all of our Unsanitized reports

China is on track to beat the U.S. to a vaccine by a matter of months, and the lack of open-source collaboration has caused needless delay when the pandemic really invited the world to come together. All of that said, the combination of public measures and the acceleration of a vaccine means that the U.S. will likely avoid the 675,000 deaths from the Spanish flu, which would be 2 million in an equivalent population to today. (Considering we have 100 years of medical technology to build on, I’d call that a low bar.)

While we just learned of a reinfection in the U.S., McNeil argues this is unlikely to be replicated in large numbers, and as vaccine is distributed, we can break the chain of spread. McNeil also doesn’t buy polling that shows half of all people will reject the vaccine, saying that the chance to eat in restaurants and hug loved ones will be too much of a pull as people report success in vaccination.

Like we’ve been saying, mortality rates have dropped. Nursing homes are protecting their residents to a greater degree, and doctors are learning how to handle sick patients rapidly. Increases in flu shot takeup (I’m getting mine tomorrow) and a nearly non-existent flu season in the Southern Hemisphere has weakened prospects of a “twindemic.” Monoclonal antibodies, of the kind that President Trump has been hawking after he presupposed that they helped him, could prove an excellent bridge therapy before a vaccine, though the logistics of distribution are seriously difficult. McNeil posits that the antibodies could be given to contacts of a known case, what he calls “ring vaccination.”

If the whole world gets covered, if vaccine skepticism wanes, if antibodies and other therapies hold strong, we could get a return to normal life by next summer. McNeil says that this extends to the economy, with pent-up demand enabling a rapid recovery. Here he sounds more like a science writer than an economic analyst. Counting on mass bank lending to restart businesses and a private-sector comeback without federal help is dim, and the federal help, and in what form, is a ways off.

But it’s refreshing to see someone who has been largely dour about the state of the world brighten. It’s just unfortunate that a 9-month timeline is now what passes for optimism.

Now Showing

Disney is as close as you get in the entertainment industry to a monopoly. At one point in 2019, nearly 40 percent of all movie ticket sales came out of the House of Mouse. The decisions of this one company has significant ramifications for a large sector of the economy.

At the risk of disagreeing with Don McNeil, what Disney stated yesterday should make people extremely pessimistic in the near term. The company is reorganizing its media division to focus on streaming. The pandemic has tipped the market and “accelerated the rate at which we made this transition,” CEO Bob Chapek told CNBC.

The market loved it, because it means cutting overhead by beaming into homes directly. Activist investors had called for focusing on Disney+ and even cutting the dividend to acquire more capital to buy content. But the effect of a direct-to-consumer approach will lead to no ticket taker, no usher, no popcorn salesperson, no rent paid on the theater, no property taxes, and so on. The largest theater chain in America, AMC, will run out of money by the end of the year. Disney is cutting out the middleman entirely, which is efficient, but in a pandemic-induced economic crash has a “kick them while they’re down” quality.

If Disney is moving in this direction, you can plausibly say that the rest of the entertainment business will. Controlling content and the means of distribution was deemed illegal in the 1940s with the Paramount decision, and Disney and its counterparts have found a loophole, by controlling distribution virtually. Prices for streaming, a narrow market with a handful of major players, will rise as other options dissipate.

Progress should not be halted to protect legacy jobs. But the timing of this is such that a lot of temporary layoffs will shift to permanent. The transition costs will be high, and given the state of Washington, I don’t anticipate much in the way of transition adjustment. That’s entertainment.

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