FT subscribers can click here to receive Swamp Notes by email.

“It’s gonna be cold, it’s gonna be grey and it’s gonna last you for the rest of your life.” — Bill Murray as Phil in ‘Groundhog Day’ (1993)

The last thing I want to do is associate Bill Murray with the coronavirus. The former is invariably amusing while the latter is deadly serious. Moreover, the duration of the Covid-19 epidemic will greatly exceed Punxsutawney Phil’s six-week shadow. But we need to get acclimatised to repetition. Many of us have not internalised the arduous road ahead. The history of epidemics shows that they come in waves. Sometimes the second or third wave is worse than the first.

© AP

In a break from the usual Swamp Notes format, I’m devoting this edition to an interview with Ron Klain, who was Barack Obama’s widely-lauded “Ebola czar”. Although he is a lawyer not a scientist, Klain has experienced more about managing an epidemic than most of us will ever know. It was Klain who set up the National Security Council’s pandemic unit that John Bolton scrapped in 2018. Should Joe Biden win in November, Klain will probably become his chief of staff. A Biden administration would inherit whatever stage the Covid-19 epidemic had reached by then. Klain’s prognosis is sobering.

I was expecting Klain to emphasise the importance of developing a vaccine. An even bigger headache, in his view, will be getting it out to people. “The science part may be the easiest part — we know how to do that,” Klain said. “The challenge will be manufacturing literally hundreds of millions of doses. Those are not small tasks. It will require a massive diversion of existing capacity. Usually we make a lot of vaccines to administer to children. This must get it to everybody. That will be the story of 2021.”

By everybody, Klain meant everybody in the world. A global world is only as safe as our weakest link. “Americans travel all over the world, and when they do, they come back,” he said. “We would need roughly 90 per cent compliance with the vaccine.” Given the strength of the anti-vaxxer movement in the US and other countries, that will pose a political headache. I suggested governments would have to impose penalties on those who refuse it. Klain sidestepped that question. The take up rate for normal flu inoculations is 50-60 per cent in the US, he said. Moral and social pressure on the “vaccine hesitant” could lift that number higher.

To what degree can we lift restrictions before we have a vaccine? Having been the first in, China is now trying to be the first out. Its difficulties suggest there is no simple answer to that question (even assuming we believe China’s rosy statistics). Klain says we will have to feel our way. “I think it’s sadly likely that we’re going to see multiple waves of Covid,” he said. “Of all the misconceptions in the public arena right now, the most important one to dispel is this nice clear image of Covid as a parabola. We see this curve on the news every hour every day. There has never been an epidemic in the history of the world that has worked that way. There are multiple uneven hills. You relax the measures, then it comes back, and so on. Sometimes it comes back worse than first time.”

Our first step would probably be to reopen the factories but with stringent protective regulations for its workers. Offices, restaurants and other consumer-facing businesses would take far longer to return, and even then in moderated form. Tables would have to be further apart. There would be severe limits on the numbers of people allowed inside any establishment at a time. Anyone who has recently shopped at Trader Joe’s in the US, or Waitrose in the UK, will be familiar with that rule. Big sporting events and concerts will probably only return after a vaccine. “There is a lot of focus right now on when the restrictions will be lifted,” Klain said. “We need to focus much more on how things will reopen rather than when.”

The key to all of this is testing. Klain was reluctant to grade which countries had done well and badly in managing the epidemic, because we are still at its early stages. But he said those that have done well so far are the ones that have tested the most. Two of the biggest laggards are the US and the UK. America is testing 140,000 people a day. It should be half a million he said — or roughly 1 per cent of the population every week. Bizarrely, in Klain’s view, Donald Trump this week said it would be up to the states to decide how many to test. That was not his responsibility. “Our testing rate has plateaued,” Klain said. “We haven’t seen hockey stick acceleration you would want to see. Trump said it was not his job to test everyone in America. This is a horrible mistake. If you want to see economic activity resume as quickly as possible you need to do as much testing as possible.”

Klain was puzzled as to why Trump was taking a stance that could actively harm his re-election prospects. Moreover, the US president seems to be assuming that consumers will rush out to the shops and fast-food joints the moment they get the all-clear. They will only do so if they trust the epidemic is under control. “The anxiety won’t go away — it will hang over us as a brake on economic resumption,” Klain said.

Yet Trump continues to undermine faith in the system. A basic rule is to have one person in charge of the administration’s efforts. In March Trump went through four: Alex Azar, the secretary of health; Mike Pence, the US vice-president; Deborah Birx, the government scientist; and now — apparently — Jared Kushner, his son-in-law, who runs a “shadow task force”. Moreover, they keep making promises they do not keep. “Trump said last month there would be drive-through testing centres in every parking lot,” said Klain. “There are only five around the nation. Why say you’re going to do something you can’t do, or never intended to do?”

That struck me as a good question to ask of Trump at any time on almost any question. But this is an epidemic and the president’s re-election hinges on how he is perceived to have coped with it.

Rana, I know you are still in the thick of it in Brooklyn. There may be some hope that New York is reaching a peak and things will start to ease off in the next few weeks. My question is to what degree do you expect things to relax? Are we looking at a W-shaped recovery, or lots of Ws stuck together?

We’re offering a free 30-day trial to Coronavirus Business Update, our level-headed briefing on how the epidemic is affecting the markets, global business, workplaces and daily lives. It also includes access to FT.com. Please spread the word by forwarding this newsletter to friends and colleagues who you think would find it valuable. They can sign up here.

Recommended reading

  • My column this week looked at Bernie Sanders’ legacy. “Ronald Reagan famously said ‘I’m from the government and I’m here to help’ were the nine most dangerous words in the English language,” I write. “Covid-19 has taught Americans that nothing is more worrying during a crisis than government’s absence.”

  •  Samantha Power, Obama’s ambassador to the UN, and Klain’s former colleague, wrote an excellent column in The New York Times about how this isn’t over for anyone until it’s over for everyone. “If President Trump doesn’t overcome his go-it-alone mindset and take immediate steps to mobilise a global coalition to combat the Covid-19 pandemic, its spread will cause a catastrophic loss of life and make it impossible to restore normalcy in the US in the foreseeable future,” she writes.

  •  In the same vein, my colleague Martin Wolf looks at the radical steps we need to take to get through this. Options include a temporary universal basic income, monetary financing and new IMF special drawing rights in which high-income countries donate their proceeds to poor ones. “Managing such painful trade-offs depends on high levels of trust and trustworthiness, hardly salient characteristics of today’s democracies,” he writes. “But the test is now. Governments that fail to confront these challenges risk collapse.” 

Rana Foroohar responds

Fascinating stuff, Ed. In terms of what shape the recovery will take, I think it may look like multiple W shapes trending downwards. Consider the stock market crash of 1929; it took until 1932 for stocks to reach their bottom, in part because of continuing disruptions (albeit for different reasons) to the real economy:

When I look around my Brooklyn neighbourhood, I see Two Boroughs, just as there are Two Americas. One, the one that I am fortunate enough to live in, consists of people who can easily take their work online, who have savings and who may have also shifted their own portfolios around in anticipation of the bursting of this debt bubble. We have been hurt, and certainly the value of our homes is decreasing (the Covid-19 impact on both residential and commercial real estate is the topic of my next column). But we can wait this out.

Then, there is the other Brooklyn, the one made up of small and midsized businesses that are shuttered and may never return, and workers who can’t move online or can’t make ends meet that way (many of us have been supporting our favourite local restaurants and massage therapists and cleaners via GoFundMe campaigns). I suspect that when the first wave of restrictions are lifted, many of those people will rush to reopen, and at least some of those who’ve been cooped up for weeks will start mingling.

A second wave of the virus seems somewhat inevitable. My hope was that we could somehow figure out how to make and get antibody tests to people so that the re-entry could be done in the safest way — but based on your interview that seems unlikely. As for myself, I can’t imagine going to a crowded bar or a theatre production for quite some time. I think that in the same way that second world war rationing resulted in 25 per cent savings rates in the US, we might see the consumption dampening effects of quarantine continue on for quite some time.

We’ll have an epic — and very unproductive — debt bubble at the end of it. How to deal with that will be the topic of a future column. 

Your feedback

And now a word from our Swampians . . .

In response to Moral hazard, again“The lack of independent oversight of the support to business in the $2tn stimulus package is not moral and under this president is not a hazard — it is a certainty.” — David Jepson, former social housing executive, Liverpool, England

In response to Let’s keep God out of this, shall we?: “Leaving aside all the arguments you could make about God and Mammon (and this president clearly worships Mammon, so that’s leaving a lot unsaid), if Covid-19 is God smiting a nation for turning away from Him, why the hell did He wait until His Chosen One had been in the White House for three years doing His will, trashing His creation and packing the courts with lunatics? If this is His punishment, His timing is lousy. And why isn’t He sparing all the believers who are still going to churches and attending Liberty University? Ed, as you point out, some of the Liberty students are already sick. (Also some of the students and parents think the policy is dangerous, so they’re not a monolithic group.)” — From a discussion between Chris Durban in Paris, France, and Lillian Clementi in Arlington, Virginia, both self-employed financial translators

We’d love to hear from you. You can email the team on swampnotes@ft.com, contact Ed on edward.luce@ft.com and Rana on rana.foroohar@ft.com, and follow them on Twitter at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletter.

Get alerts on US politics & policy when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article