My last post of the year befittingly falls on the last day of the year. For the past few weeks, people in the news and on social media have been reviewing the year and a narrative of 2020 as the year to forget has developed. The pandemic, the markets, celebrity deaths, the death of democracy in Hong Kong and other places where governments used the pandemic as an excuse to clamp down on individual rights, have fed this narrative.

Certainly 2020 will be a year to forget for many. If you or loved ones suffered from Covid, or even had people you know pass away, this was a terrible year for you. But let’s not lose perspective, I don’t want to downplay Covid-19 but there were massive successes in 2020 and many of the blunders were made in fear, not from the pandemic itself. So I’m going to start a new annual post, about the year in fear, reviewing the sensationalism and fear based knee jerk reactions that helped but probably mostly hurt us throughout the past 365 days.

The Pandemic

Fear of the pandemic rules in 2020. I’ve even been guilty of falling victim to the tyranny of fear myself with posts that I made about Covid weeks before those in the wider public started to realize the dangers of the spread of the virus. I consider myself a news junkie but I am also someone that is highly critical of the mainstream news media of all political leanings. When big events happen, we have to be extra critical of what the media feeds us.

Those who own and control the media, be it traditional TV media or social media have been well aware that fear is a powerful attraction for the masses. Channels like CNN get their biggest audiences when there are big crises, be they terrorist attacks or violent protests. The viewers during these events tend to linger on the channels longer too. In short, crises are good for business. This gives media companies an incentive to play to your fears to keep you watching, because if you don’t you could be in danger, or even be next. This whips up hysteria and the public then puts pressure on politicians to act, who, wanting to make the quickest and most immediately effective decision, usually go with the simplest and recently used option. In the case of the pandemic this produced lockdowns.

The mainstream media seemed to push a narrative that lockdowns were the most effective way to stop the spread of the virus. In fact, this was not known to be true. The only truly effective case of lockdown occurred in Wuhan and it could be argued that the lockdown there was not effective at all because it still allowed the virus to escape to the rest of the world. Other places like Korea enacted regional lockdowns combined with aggressive testing. Taiwan relied on aggressive testing alone along with sanitary compliance (masks, washing hands etc.).

Rather than blanket lockdowns, I early on called for aggressive testing and tracing through what I called a “Pandemic Patriot Act” in this post. This, along with targeted lockdowns of vulnerable places such as nursing homes, I felt was a more sensible option as opposed to throwing millions of people out of work who may otherwise be able to handle the virus. This ended up essentially being the strategy Sweden employed and although results did produce Covid deaths about 20% higher than that of Italy on a per capita basis, the country did not experience a significant recession like the rest of Europe did.

In the US it is not such a clear cut case. California implemented some of the most severe lockdowns, yet currently is seeing per capita Covid rates only about 5% lower than Texas which essentially has no lockdowns according to data here. So it could be argued that fear and knee jerk reactions played a big part in the way we reacted to the virus. In economic terms, the pandemic produced other fears but those fears turned out to be very different from those of Covid.

The Economy

After the repercussions of the pandemic became more clear to Wall St., investors headed for the exit en masse. March 23 marked the bottom of a 34% fall in the S&P 500 and many expected the market to fall further. Fear of losing money always fuels these crashes. Stocks were repricing based on the new outlook of a global pandemic and a potential recession based on government action. Many don’t react logically in these situations and sell into a falling market, which induces prices to fall and others to sell emotionally too, the spiral then just continues on downward.

However the fear soon morphed into FOMO after the Fed intervened with massive stimulus. They took the financial crisis playbook and through legal slights of hand, extended liquidity to areas such as municipal borrowers and even the junk bond market to act as a backstop. The market roared back in a whiplashed and completely unexpected rally fueled by tech which ended up producing a 16.26% gain for 2020 overall. Besides the actions of the Fed, Congress passed a $2 trillion relief package which would have been an unthinkable figure during the last recession, especially since Congress didn’t mandate that much of it be paid back.

While We Were Panicking

Don’t believe for one moment that the new laws and clampdown in Hong Kong had nothing to do with Covid. The Chinese Communist Party had enough of Hong Kong and its recalcitrance years ago and apparently was simply biding its time for the world to be distracted. Covid provided the perfect opportunity, even better that it hit the US and Western Europe hardest, who were the main supporters of representative government in Hong Kong.

This will create big problems in the long run for the territory. As we saw with Jack Ma and Ant Financial a few days ago, the problem with a government that rules by decree is that its unpredictable for business. Hong Kong flourished for decades due to its transparency and familiar legal code which provided the economic underpinnings for free markets. Although this may seem more political at this point, the takeover raises the risk for foreign business to operate there. If they can’t really on the predictability and transparency of Hong Kong law and its rulers, what’s stoping companies from setting up their Asian headquarters in Singapore as opposed to Hong Kong?

Even outside of Hong Kong governments used the pandemic to tighten their reigns of control, even here in the US. Curfews became a common tactic during the George Floyd demonstrations this past summer in the US to give police an excuse to lock up anyone they found on the streets. It was little noticed then that Nashville implemented a curfew the night after the Christmas Day bombing, despite that being an unprecedented move. Don’t be surprised to see curfews creep into more local occurrences now that we have become more accustomed to them.

The Positives

Fear of the virus, the spread and the economic fallout made the year and likely decided the presidential election, but there were some major positives this year that it’s worth reflecting on.

• The Vaccine – Everyone was so anxious for a vaccine and so flustered with the day to day of its rollout that we sometimes may miss the fact that we witnessed one of the great achievements in human history: the development in record time of a vaccine that is highly effective and has the potential to save millions of lives globally. Governments didn’t do this, the much maligned big pharma did it. It took coordination from the mapping of the virus’s RNA in China to the testing and sharing of information across academia, government and private business. This is literally a hallmark achievement of modern science and we’ve spent most of the time taking it for granted.
• Work From Home – Millions of workers have had a huge boost to their quality of life produced by the lockdowns. Useless hours spent in transit have been replaced by simply walking over to a computer. This means more time with family, friends or working on passions or hobbies outside of work. It has given back to many of us hours each day. This will certainly upend the commercial and residential real estate industries but represents a great win for white collar workers worldwide and will speed up the adaptation of new technologies that can further utilize this new way of working. The lasting outcome of this pandemic may be forever changing the way many of us work.
• The Toll – We have to go all the way back to the last pandemic in 1918 for comparison but the great strides we have made in medicine as well as our understanding of how viruses are transmitted and evolve is evident for anyone that cares to look. The Spanish flu pandemic killed around 675,000 people in the US at the time, even with a number of places implementing something resembling our modern day lockdowns. This represent about 0.65% of the population at the time. The equivalent figure given our population today would be close to 2.1 million assuming a similar mortality rate. Despite the grumbling about mishandling of the response, given that we now have a vaccine, it seems we will likely avoid the mortality proportions that the Spanish flu produced. In addition, like many people, I haven’t had a cold in almost a year and I know I’m not the only one. Masks and vigorous hand washing and freely available hand sanitizer have kept many of us from being miserable with other viruses too.

The take away from much of this may be that many of us are so focused on our fears, so much focused on the downsides in life that we often miss the upsides and the unexpected wins that come out off difficult situations. Massive changes in our lives often come unexpectedly.

The pandemic was relatively easy, or dare I say enjoyable for me personally given the hardship that I had faced in other areas of my life recently. Despite the fact that the year for me included a divorce, a death in the family and discovering I had a long lost brother among others, the pandemic wasn’t always on top of my list of concerns. With all the extra time spent with family, some of us may actually miss the pandemic when things move on to their new normal. So no matter how difficult this year has been for you, don’t let fear and uncertainty get to you. The conditions of our lives will never be perfect but the choice to enjoy the small victories, no matter how small they may be, is a choice we can all consciously strive to make. Despite all that has happened to each of us, there is still a place for hope and optimism.

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