The reasons why people are cynical about Covid are similar to the reasons behind technology cynicism — and two simple reasons explain it.
Technology cynicism and Covid cynicism have the same causes
Time-lags and exponential. Those are the reasons. Covid cynicism and technology cynicism are closely related. What they have in common is failure to understand time-lags and exponential.
I absolutely did not predict the extent of the Covid crisis. But on the 3rd February last year, I wrote here;
“According to the latest study from Kambiz Kazemi of La Financiere Constance in Toronto, the number of new cases of coronavirus seems to be increasing by 30 per cent a day. It’s projected that there will be 80,000 new cases by the end of this week.
“That is a frighteningly large contagion rate, made all the more worrisome when you consider that the disease is at its most contagious before people realise they have it. I will engage in some fear-mongering before I try to introduce a dose of reality. If new cases were to continue to increase by 30 per cent a day, that means doubling every three days, by the end of March, everyone on the planet would have had the condition.
“On the other hand, the fatality rate is mercifully low. It is too soon to say for sure, but so far it looks like a fatality rate of around two per cent.
“As I say, it is the speed of infection that provides the biggest cause for concern, and I gather a vaccination is some way off — more on that in a moment. It is because of this infection rate that authorities are likely to take extreme measures to try and stop the spread — and it is these extreme measures, however necessary, that pose the greatest economic threat.”
When I wrote the above, it was these two factors: time lags and exponential that scared me. I don’t think those two factors are understood.
At an intellectual level, most of us understand what exponential means. We know that if you keep doubling a number, to begin with, the resulting sum is relatively small, but then it gets massive.
But I don’t think we understand this instinctively. Deep down inside, we don’t believe it. I didn’t. I wrote the above words, but at the time, it felt quite academic. If I had truly understood what I was writing, I would have shouted it from the nearest rooftops.
Then there is time-lags. Sometimes, certain things have to happen for the exponential rate to occur. I would hazard a guess and suggest that early victims of Covid were relatively healthy people, like the people on skiing holidays who were thought to have spread the virus in Europe during the early stages. So it took time for the death rate even to start to rise exponentially. And during this period, warnings about Covid were largely dismissed.
After the horror of the Covid first-wave, I thought those lessons had sunk in.
But during the early Autumn/Fall I felt like I was subject to a deluge of Covid cynicism. “Yes, the first wave was real,” people said, “but this time, the tests are yielding false positives.”They asked: “Why is the death rate so low?”
The reasons for the low death rate were simple. Firstly, during the early stages of the second wave, it was primarily healthy people who got the virus. They spread it to healthy people. There was a time-lag before the virus spread to people who were more at risk. Secondly, that’s how exponential works.
Back in September, in response to Covid sceptics, I kept saying, “well review the numbers in November.” But in November, the death rate still wasn’t exceptional. I underestimated the time-lags.
The death rate is now at a scary level — that’s what happened when, after a time-lag, things change exponentially.
Of course, Covid cynics have migrated to people who now say that lockdown caused the high death rate and when you show that ain’t true - which the data proves, conclusively — they then become anti-vaccine.
Bill Gates said we overestimate how much technology will change in the short-run but underestimate its long-run impact. I think Gates is right, but he is right because we don’t consider time-lags and don’t factor in exponential.
That’s what happened with Covid. That’s why cynics were wrong, but it is also why the death rate didn’t even appear to increase exponentially at first, either. It’s why death rates only increased very slowly during the second wave before, tragically, the exponential rate set in again.
This is why very few people who believe that technology change is occurring at an ever-faster rate, are cynical about Covid.
Let me give an economics argument that applies the above point about time-lags. The greatest period of innovation we have ever known occurred from roughly 1865 to 1914. But there were long time-lags before we learned how to pick the low hanging fruit that period of innovation created.
That is why the western economy boomed in the 1950s, 1960s and early 1970s.
By the mid-1970s, we had picked all of that low hanging fruit. The economy slowed as a result. Neoliberalism and Thatcherism emerged as a result. They led to the 2008 crash. This led to austerity, which led to Trumponomics.
But various technologies are changing exponentially. As they converge, there will be time-lags and then and only then, economic impact will be enormous.
That is why techs have such high valuations.
Bill Gates didn’t only say we overestimate the impact of technology in the short run but underestimate its long term impact. He added: “Don’t let yourself be lulled into inaction.”
Just as Covid fatalities started slowly, and then rose exponentially, very quickly turning low numbers of deaths into terrifyingly high numbers, new technology’s impact will be slow at first and then exponential. As investors, don’t let yourself be lulled into inaction.
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.