This is not so much a post about finance or insurance, though it concerns far more than these 2 aspects of our lives.
Covid 19 has come in like a wrecking ball in 2020, evaporating trillions in the equity markets and forcing many to shelter in place (or do a circuit breaker, welcome to Singapore). This has wrought untold economic hardships for millions of small businesses and individuals alike.
How has this come to pass?
Hindsight is 20/20, of course, but watching the events unfold across the globe (>2.6 million infected, >184,000 deaths due to the virus), but one explanation sticks out prominently for me, which is the entire focus of this article.
Human beings instinctively do NOT have an affinity with the exponential curve.
The first 100k cases occured over 90 days.
The next 200k cases took 12 days.
And all it took was 4 days for the world to record the next 400k cases.
Let me explain what this has to do with Covid 19, which is also applicable to climate change, population control, and a whole host of other problems that mankind is facing.
Linear vs Exponential
We, as humans, understand linear graphs pretty well.
Plant crops over 2 acres of land, and your harvest will be doubled compared to 1 acre.
Work 4 hours instead of 2, and you will feel twice as tired.
Sleep for 8 hours instead of 4, and you will feel twice as refreshed. (Approximately)
For a large part of humanity, our lives were governed by linear graphs. This included food (and consumption), news and data flow, and even population growth.
Then enter the industrial age, a golden age of technological and medicinal advances.
All of a sudden, everything exploded all at once. Mortality rates dropped precipitously (at least for the developed nations), food was plentiful, and technology helped us achieve efficiencies that our ancestors can only dream of.
This is exponential growth, where the rate of increase increases continuously. Take as long as you need to comprehend that sentence, because it has everything to do with the Covid 19 pickle we are in right now.
I’ll use Singapore as an example of how we didn’t understand the exponential threat.
It is early days: <15 infections daily
Easy Peasy! We got this. Lockdown?
Somewhere as late as Feb 2020, Singaporeans were still enjoying relative freedom. We carry on with our lives as per normal, even under Dorscon Orange.
Schools are operating, public transport run normally, and people are still going to work and gathering without restrictions.
Herein is the big mistake – because our highly paid ministers are human after all – not expecting the infections to sky rocket in as little as in 1 month’s time.
April 2020 approaches: > 50 cases a day becomes the new norm
The number of cases exploded, and the relative calm is replaced with controlled desperation, at least in the visage of Lawrence Wong.
Now we have entered the soft lockdown stage, so brilliantly named CB (Circuit breaker), something that our very human ministers have chosen to name … this soft lockdown.
But we are not done yet, because we’ve only triggered the first trap of the exponential graph.
Trap 1: Unexpected explosive growth
Ok so by now we are reeling from the effects of this trap, and have taken (somewhat) appropriate action to “flatten the curve”.
Action taken: CB
Just one more insidious trap to avoid.
Trap 2: An unexpectedly long die off rate
Many people (including our dear Lawrence) would probably not consider this as a trap, but I consider it more deadly than the first.
We have (finally) learnt to place emphasis and respect on the explosive growth portion, but the second trap is the one that can trigger this crisis all over again.
Let me elaborate.
At some point, we will also be keen to end this soft lockdown. When do we do that? When daily infections drop from 50, to 25, to 12, and to 6 daily cases?
Is 1 daily case reported safe enough to resume our lives?
My money is on ending these restrictions once we see our daily cases drop below 5.
If so, then I suspect that Covid 19 has won the second battle, because those few daily cases can easily re-spread into the nightmare that we are facing now.
To truly end the threat of Covid within the shores of Singapore, we should only relax our guard when the daily reported new cases hit 0 consistently for a period of at least 10 days, or more if we can afford it.
We need to respect the 2nd trap and feature of the exponential graph just as much as the first, but this is something I fear will go unnoticed, for want of reestablishing the economy.
Only time can tell.
In (partial) defence for our highly paid ministers
They are trying their best to do a balancing act, of taking care of public health while simultaneously preventing too much economic damage (which is a story for another day!).
While they don’t want to induce panic and invoke negative connotations of a lockdown, in their desperation have come up with a scholarly term like Circuit Breaker. I’ll overlook that for now.
However, they need to learn how to act like leaders. Meaning taking responsibility and trying to share the plight of many Singaporeans affected by the soft lockdown and virus.
I believe someone needs to step up and apologize to Hong Kong about mocking them about mask usage. That is something a real leader would do. (He could have been right, but the remarks got leaked, so…)
I believe many, if not all ministers need to lead by example and take a 100% paycut, which still places them in a far better economic situation than many others out there.
People can get behind your policies, if you show that you are willing to be in the same boat as them.
Perhaps the real takeaway here is that our leaders have much to learn about being proper leaders, never mind learning about a graph.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.
We also feel that it is time for us to chime into this crisis that will define us in the years to come.