Guest author: C. van Rijn

The Corona crisis is one of the biggest problems humanity has had to deal with in a long time. People are dying in great numbers and radical measures are being taken amid this panic and maybe even mass hysteria. It is often said that human life has no price. And yet, human life has a price. This price is determined on a daily basis by health care systems using the incremental cost-effectiveness ratio (ICER). Usually, countries in Europe are willing to pay in between €20.000-€100.000 to extend a person’s life for a year. On the basis of the concept of quality adjusted life years (QALY) it is calculated whether a person with cancer is still entitled to immunotherapy or whether an older person is still entitled to a heart transplant.
To calculate whether the current measures are worth their money, we are going to estimate the gain in life expectancy resulting from the lockdown and compare it with the costs.

To this end we need to know a few things:
a) total costs of the lockdown;
b) how many years of life are likely to be lost without the lockdown;
c) how many years of life are lost even with a well-executed lockdown;
d) how many years of life are likely to be lost as a negative side effect of the lockdown;
The costs per year of life gained by the lockdown are then: a/ (b- c -d).

These calculations seem easy, but they are quite complicated. As an example we take the Netherlands and operate partly on precise numbers, partly on rough estimates. The findings can be extrapolated and applied to any other country.

First the cost. The economic loss according to CPB estimates stands at 1.2-7.7% and that calculated by the IMF at 7.5%. This means in total about €8 billion to €50 billion.
To calculate how many years of life are lost without the lockdown, we need to know the crude mortality rate (CMR) and the infection fatality rate (IFR). Until now, attention has only been focused on the Case Fatality Rate.
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We are witnessing the greatest transformation in the oil market in history.

What was recently political fiction has become reality: Saudi Arabia, the US and Russia are on the same side. After long negotiations, the largest producers of the black gold agreed to drastically reduce extraction. The limitation of the produced quantities by 20 million barrels per day (according to Trump) means a 20% lower supply (every day a total of 100 million barrels are offered in the world). Although many investors still see no reason for a rapid increase in WTI and Brent (two main types of oil), as world demand has fallen by 25 million barrels due to the so-called pandemic, the determination of the global players should be a warning to the bears on the market. The most likely scenario for most members of the new giant cartel (which also includes Canada, Mexico, Brazil, Kazakhstan and Azerbaijan) is price stabilization between 60 and 70 dollars per barrel. If prices are higher, they are more likely to counteract this, as it would encourage an acceleration of the introduction of massive e-mobility, which would not play into their hands. You can find more about commodities, which will soon be an attractive investment, in our next Bulletin No. 43.

Yesterday (March 25, 2020), Vladimir Putin held a televised speech addressed to the citizens of the Russian Federation, occasioned by the emergence of the coronavirus worldwide epidemic. He talked about the unfolding events that have hit Europe and the United States and announced a number of measures that the government was engaged in, combating the biological threat. During the whole coming week all professional activities are to be suspended while citizens will be secured with money from the state and a number of tax exemptions. A speech like any other that might be held by any leader of any state under the circumstances. There was, however, something that distinguished this address from similar speeches.

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Towards the end of his appearance President Putin announced an important fiscal initiative: recipients of dividends earned in Russia will have to pay a 15% tax (rather than the 2% as binding at present) if they intend to transfer the money abroad. Consider that the income tax in Russia amounts to 13%. With this measure President Putin is doing away with yet another yoke that was put on Russia during the Yeltsin era. With this proposal of a legislative bill President Putin will put a stop to capital flight. Surely, the moment for such an announcement was carefully selected: who during the time of the worldwide pandemic, as the current events are referred to, will dare to oppose the move?

President Putin also announced that Russia would renegotiate with other countries agreements on double taxation and in case those other countries did not yield to Moscow’s demands, Russia will unilaterally renege on those agreements.

Consider also that President Putin can kill two birds with one stone. Capital will be kept within the country and the same measure will affect the oligarchs and their Western partners. There will be less money to line the pockets of foreign investors, less credited to foreign bank accounts, less money for subversive political activities in Russia and – what follows naturally – a resultant more intense – let us express it in mild terms – dislike for the Kremlin “regime”, voiced in unison at home and abroad. Also, since almost every action is like a double-edged sword, there might be smaller foreign investment in Russia.

As things accompanying the epidemic are developing, we can note a few interesting phenomena:

[1] borders are useful after all whereas the mass movement of people may be deleterious;

[2] virtue signalling has long gone beyond being ridiculous;

[3] the international solidarity is wishful thinking;

[4] Beijing and Moscow are far closer to Italy – a European Union member-state in need – than Brussels, Paris, Berlin or for that matter Washington.

[1] Borders are useful. Up to now the principle of the free movement of people (to be precise: labour and customers) has been enshrined in all Western states and regarded as unassailable. Whoever had second thoughts about it was ridiculed mercilessly and touted as inhumane, backward and what not. Nowadays all European governments have decided to isolate their countries from the outside world, including their EU member-state neighbours, and they did not need approval from Brussels. Fear of the DNA double helix soaring here and there made conceited politicians and self-assured citizens bow their knees to reality. They have all at the long last recognized that reality is something that refuses to satisfy our wishes.

[2] The other value enshrined in the Western world was its ethics of being race blind. Lo and behold fear of death has shown that people are race conscious, xenophobic and tend to cherish in-group loyalty rather than the global fraternity of all human beings. In Italy and the United States people naturally have begun to behave in a way suggestive of their conscious avoidance of the Chinese co-citizens or visitors. A quite natural behaviour when you consider that the epidemic started in and spread from China. This, however, was like the gauntlet thrown down to the politicians and social activists who have made a point of virtue signalling. Coronavirus prompts ‘hysterical, shameful’ Sinophobia in Italy (Al Jazeera); As the coronavirus spreads across the globe, so too does racism (The Atlantic); Coronavirus: Spike in reports of ‘racist’ abuse of Chinese people in Italy (The Local). These are but a few titles. For them it is not the epidemic that poses a problem, it is racisms that is rearing its ugly head. Only when it comes to acid tests can we see reality – something that refuses to bow to our wishes – of inter-human relations. People are in-group oriented (why shouldn’t they be, after all?) and xenophobic. They are hard-wired for that. Naturally, they are concerned first and foremost about their families and then about their extended families (even though they may not admit it consciously or in an attempt to avoid official ostracism) and not about the whole world, about nations in neighbouring countries, let alone about communities located in the other parts of the globe. This provides fertile ground for the few who want to tout themselves as friends of humanity and feel they are operating on moral high ground, which is a shot of dopamine as good as any other: Italian Mayor Urges Citizens to ‘Hug a Chinese’ to Fight Racism; Italian virologist says political correctness doomed his country’s coronavirus response; and On February 1st Florence, Italy, Celebrated “Hug a Chinese” Day.

You still don’t know why the death toll in Italy has surpassed that in Wuhan?

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