from covid-19

Michael Collins Investment Specialist

Michael Collins
Investment Specialist

Michael Collins <br>Investment Specialist

Michael Collins
Investment Specialist

Among the many messages is the notable one that competence matters during emergencies but is hard to achieve.”

Severe acute respiratory syndrome, or SARS, hit Taiwan hard in 2003. The virus tore through several hospitals and Heping hospital in Taipei was hastily closed, imprisoning staff and patients, after the head nurse became one of the 181 people to die from the China-born virus. The island’s 23 million people fell into “a collective panic as if everyone were in danger”. 1

The national trauma provided lessons. Seeing that the lack of a centralised body hampered the response to SARS, Taiwan made provisions for a Central Epidemic Command Center to marshal the response during future pandemics.

Around 21 January 2020, when the first infections from the Sars-CoV-2 virus that causes the covid-19 illness appeared in Taiwan, Taipei activated the command centre. Travellers were screened and those who had visited China went into mandatory self-quarantine. Face masks were rationed to prevent hoarding. Businesses, apartment communities and other hubs screened people’s temperatures and disinfected shared spaces. Large-scale activities were banned. Medical staff were prevented from leaving Taiwan. Hotlines were set up to guide people showing symptoms. The police used mobile records to track the social contacts of those infected. The government commenced daily briefings to maintain public confidence. On February 6, Taipei became among the first places in the world to prohibit entry to anyone who had visited mainland China or Hong Kong over the previous 14 days. On March 16, all visitors were banned and returning Taiwanese were subject to two weeks of self-isolation. 2

The measures worked. During 2020, Taiwan had among the world’s lowest death rates. In February this year, infection rates were still close to zero. Then suddenly they weren’t. Relaxed quarantine rules for non-vaccinated aircraft crews, complacency over contact tracing, nonchalance among the population about getting the AstraZeneca vaccine and socialising around entertainment venues led to clusters. Come May, Taiwan was recording 1,200 infections a week. 3

Success and failure, in either order, is a common theme, it seems, of the pandemic. Australia, Canada, Japan and India and East Asian countries have followed a similar slide from triumph to disappointment since the delta variant appeared. Advanced countries such as Germany, Sweden, the UK and the US experienced failure first before vaccines contained the health emergency. 4 Much of the emerging world has only suffered defeat.

What has the world learnt? Humbling lessons include that humanity is subservient to nature, something that will flow into the climate-change debate. Others are how little we know about the virus, even its origins, and how hard it is to contain. People have gained a new appreciation of risk and a realisation that modern society is as vulnerable to the same unforeseen traumas as were earlier generations.


“Health authorities were often bewildered as they juggled how to balance ‘a revival of the walled city in an age when prosperity depends on global trade and movement.” 5

Good lessons include the value of simple protections such as masks, handwashing and physical distancing. Others are that gain can come from misfortune (messenger RNA vaccines), a feat that shows the value of big business and usefulness of the profit motive. We learnt that tech enables society to function at an adequate level under lockdown.

Harsh lessons include that climate change is not the only risk, that even innocuous things can get politicised (masks), that people have limits (riots over lockdowns), the world lacks global leadership (the World Health Organisation lost credibility), that many risks are hidden (the fragility of supply), and disasters come with a domino effect (health responses trigger social and economic costs). Another, especially if you are young, is that while politics governed much decision-making the politics of intergenerational equity has little bite. The biggest undecided lesson relates to the political choice between lives versus livelihoods. It’s too early (and may prove impossible) to judge whether the lives saved from covid-19 will be worth the long-term economic and social price including future lives lost and ruined.

The main lesson that can be assessed so far? Arguably the most important is that competence matters when adversity strikes but is hard to achieve. China, foremost, failed to contain the outbreak but so did every other country. Even in advanced tech-savvy countries, administrations had scant capacity to fight a pandemic (no mass-testing ability and a lack of protective clothing). Health authorities were often bewildered as they juggled how to balance “a revival of the walled city in an age when prosperity depends on global trade and movement”, in the words of Henry Kissinger, 5 and often failed to safeguard the general public (leaky quarantines and no prioritising the vulnerable, especially those in aged care). Officials, in some cases, reported to politicians whose experience, judgement and temperament were unsuited to crisis management (most notably, US President Donald Trump and Brazilian President Jair Bolsonaro). 6

The result is that few governments have employed strategies that have contained the virus at a seemingly acceptable economic cost (perhaps New Zealand). The virus remains a menace because it is too contagious, society is too interconnected and winning strategies often provoked reactions that undermined them. The most obvious unintended consequence of successful elimination strategies was that it led to public complacency and hesitancy about vaccinations that left populations vulnerable when the delta variant appeared.

The worry is that governments are reaching the end of the financial support they can provide locked-down societies and they will need to pivot to allow semi-vaccinated populations to live with the virus. Split expectations within society – that ever-more-powerful governments can protect people clashing with lost faith in their ability to do so – are among the health, economic, social and political challenges confronting the governing classes as the world approaches the third year of the pandemic.

To be sure, the virus is not beaten so this should be framed as ‘some lessons so far’. The prompt development and rollout of vaccines have restored much confidence in the ruling elite (the US fully vaccinated 50% of adults by May). 7 Those in charge often learnt from mistakes. Officials, for all their failings, might have prevented worse outcomes, a feat that lacks political reward. Given the viciousness of the virus and its ability to spread and mutate, perhaps much of the criticism policymakers attract is too harsh.

But the repeated errors and lapses in competence hark to tougher conclusions about political leaders and their bureaucracies. The fact is the world struggled against a virus only as deadly as the largely forgotten flu of 1957 that society then, under smaller government, absorbed without lockdowns until a vaccine arrived within three months. Today’s health crisis needs to inspire today’s leaders to be better prepared for the emergencies that always arise.

An overhaul

In 2005 on holidays, US President George W Bush read John Barry’s The great influenza: The story of the deadliest pandemic in history. Back at work, Bush sought out what plans the government had in case of a contagion like that of 1918. The only plan was to speed up vaccine development and store anti-viral drugs. “This is bullshit,” said Bush, who sought to fix the situation. The result was Congress, based on a 12-page pandemic plan created on one night by one person in his parent’s basement, approved US$7.1 billion to fight pandemics. 8

A team of seven experts was set up to fashion a proper pandemic response. The best model they had was built by a 13-year-old girl (with help from her father) for a school competition. 9 The team, nonetheless, formed a plan that ‘social distancing’ (the origin of the phrase), shutting schools and curbing large gatherings would buy time before vaccines arrived. In time, despite a lack of support from the go-to Centers for Disease Control and Prevention (which is better known by its earlier acronym CDC) the US public-health system understood that fracturing social networks would best contain a viral outbreak.

“But the repeated errors and lapses in competence hark to tougher conclusions about political leaders and their bureaucracies.”


This is recounted in Michael Lewis’s book, The Premonition, which tells of how Bush’s official pandemic team morphed into an unofficial maverick group that tried early in 2020 to get the Trump administration and health bureaucracy to take the pandemic threat seriously and impose such steps. A core obstacle was that the US is a patchwork of local and state health departments that answer to local elected officials but where, for infectious diseases, all look to the CDC. But this risk-averse body doesn’t have legal authority to run a pandemic response. The CDC is almost villainised as it withholds support from local officials as the virus enters the mainland. Especially damning is that the CDC refused to test US citizens evacuated from Wuhan. 10 Nor did it get addresses as these people passed through US airports on their way to self-isolate at home. 11

Lewis traces the CDC’s inertness to the alarm it raised in 1976 about a deadly swine flu. The CDC urged President Gerald Ford to vaccinate the nation. About 43 million people were vaccinated but 54 deaths were linked to the jabs and the flu never materialised. The administration of Jimmy Carter fired the CDC head and the job became a presidential appointment. 12 Lewis’s book has its critics. But it does point to the shaken belief among many that “institutions can foresee calamity, arrest its impact and restore stability,” in the words of Kissinger again. 13

In the UK, Dominic Cummings’s notable insider view is another account of failed bureaucracies. Cummings tells that Prime Minister Boris Johnson was forced to take control of vaccine development because the Department of Health was a “smoking ruin” that had lost many of its best people to the National Health Service that operated as a separate fiefdom. 14 Other failings were that scientific advisory bodies operated in secret and their model predictions were regarded as unchallengeable even though they proved wrong, and that different health agencies had different data on infections and deaths. The success of vaccine procurements is attributed to the fact that a venture capitalist, not a bureaucrat, was put in charge. 15


“perhaps modern states are too complex to confront disasters efficiently”

His account is just another that points to systemic failings within government these days. Ryan Bourne, author of Economics in one virus, argues that the danger with government preparations is they prepare for the ‘old war’. No point reshoring production of essentials and stockpiling, he says, because the next challenge might be different. The only way to prepare for the next crisis is not to predict what that disaster might be but to cure “the origins of bureaucratic dysfunction that slow down responsiveness”. 16

But perhaps modern states are too complex to confront disasters efficiently. Historian Niall Ferguson in his book on the pandemic, Doom: The politics of catastrophe, writes that history shows that liberal democracies are only good at avoiding famines and have proved poor at coping with natural and man-made disasters.

So many mistakes are behind ‘small’ disasters such as the sinking of the Titanic in 1912 and the Challenger space shuttle explosion in 1986 that it’s hard to pin any of the mishaps on one factor or person, Ferguson writes. Disasters are more likely – and are more likely to overwhelm society – when systems become so complex that several points of vulnerability can trigger chain reactions. “The more networked society becomes, the greater the potential for contagion, and not just of the biological variety,” he says, referring to man-made disasters that include financial ones and war. “All we can do is learn from history how to construct social and political structures that are at least resilient and at best antifragile.” 17

Perhaps the governing class can learn from where it fell short during the covid-19 pandemic and a reengineering of bureaucracies could be covid-19’s legacy. 18 It’s pretty much the same lesson Taiwan learnt from SARS.

  1. Su-Ying Chung and Frank Huang-Chih Chou from the Kaohsiung Municipal Kai-Syuan Psychiatric Hospital, Kaohsiung, Taiwan. ‘Lessons learned from SARS to covid-19 in the Taiwanese population.’ December 2020. Hosted by the US National Library of Medicine. National Institute of Health. ncbi.nlm.nih.gov/pmc/articles/PMC7341042/.
  2. See Tsai Ing-Wen. ‘President of Taiwan: How my country prevented a major outbreak of covid-19.’ TIME. 16 April 2020. time.com/collection/finding-hope-coronavirus-pandemic/5820596/taiwan-coronavirus-lessons/ See also ‘Taiwan shows its mettle in coronavirus crisis, while WHO is MIA.’ 19 March 2020. brookings.edu/blog/order-from-chaos/2020/03/19/taiwan-shows-its-mettle-in-coronavirus-crisis-while-the-who-is-mia/.
  3. See BBC. ‘Covid-19: What went wrong in Singapore and Taiwan? 21 May 2021. bbc.com/news/world-asia-57153195. See also TIME. ‘How a false sense of security and a little secret tea broke down Taiwan’s covid-19 defences.’ 21 May 2021. time.com/collection/finding-hope-coronavirus-pandemic/5820596/taiwan-coronavirus-lessons/.
  4. See Ruchir Sharma, author of ‘The ten rules of successful nations’. ‘The short shelf life of pandemic national success stories.’ Financial Times. 23 May 2021. ft.com/content/38a7b862-4500-4c7c-9261-8277e572beb9.
  5. Henry Kissinger, US secretary of state and national security adviser in the administrations of Richard Nixon and Gerald Ford. ‘The coronavirus pandemic will forever alter the world order.’ 3 April 2020. The Wall Street Journal. wsj.com/articles/the-coronavirus-pandemic-will-forever-alter-the-world-order-11585953005.
  6. See Vanessa Barbara. ‘The unveiling of Bolsonaro’s supervillain plot is weirdly gripping. The New York Times. 27 May 2021. nytimes.com/2021/05/27/opinion/brazil-covid-inquiry-bolsonaro.html?action=click&module=Opinion&pgtype=Homepage.
  7. The White House. ‘Press briefing by Press Secretary Jen Psaki, May 25, 2021.’ whitehouse.gov/briefing-room/press-briefings/2021/05/25/press-briefing-by-press-secretary-jen-psaki-may-25-2021/.
  8. Michael Lewis. ‘The premonition.’ Allen Lane. 2021. Op cit. Pages 50 to 54.
  9. Lewis Op cit. Chapters 1 and 4.
  10. Lewis. Op cit. Pages 175 to 176. Page 206. In January 2020, the US government repatriated its citizens from Wuhan. One group of 57 went to a National Guard base just outside Omaha, Nebraska, to quarantine for 14 days. Nearby was the Global Centre for Health Security, which is charged with treating people with unknown pathogens. The centre’s boss, as protocol demanded, asked the go-to Centers for Disease Control and Prevention, better known as the CDC, for permission to test those in quarantine. The decision? No “doing research on imprisoned persons” was the answer, even though those quarantining wanted to be tested. The CDC didn’t even test others fleeing Wuhan or get addresses as these people passed through US airports on their way to self-isolate at home. In the introduction, Trump is likened to a “comorbidity”.
  11. Lewis. Op cit. Page 206.
  12. Lewis. Op cit. Page 281 to 294.
  13. Kissinger. Op cit.
  14. BBC. ‘Health Department was ‘smoking ruin’ on Covid – Cummings.’ 17 March 2021. bbc.com/news/uk-politics-56427280.
  15. Camilla Cavendish, former head of Number 10 Policy Unit. ‘Cummings’ testimony reveals fatal flaws of the British state.’ 29 May 2021. ft.com/content/828264c3-329a-4f28-af25-f951866b5439.
  16. Ryan Bourne. Economics in one virus. Cato Institute. 2021 Quote from ‘The next crisis will not be like covid.’ 22 April 2021. telegraph.co.uk/business/2021/04/22/follwing-covid-governments-must-avoid-mistake-fighting-last/.
  17. Niall Fergusson. Doom: The politics of catastrophe. Allen Lane. 2021. Quotes from page 14 and 17 in the introduction.
  18. See John Micklethwait and Adrian Wooldridge. ‘The virus should wake up the west.’ 13 April 2020. Bloomberg News. bloomberg.com/opinion/articles/2020-04-13/coronavirus-pandemic-is-wake-up-call-to-reinvent-the-state.

Michael Collins
Investment Specialist

July 2021