Corona Daily 480: The Lottery of Birth

Inequality is extensively researched and reported, but rarely acted upon.

In 2002, Queen Elizabeth’s mother died at a 101 years, leaving her daughter an estate worth 50 million pounds. It included works of art, jewels, antiques and thoroughbred horses. The law would have required a British citizen to pay 20 million pounds as inheritance tax. But the Queen is above the law and is tax-exempt. Queen Elizabeth’s current annual package is 50 million pounds.

The economics textbooks we studied told us that capitalism rewards ability, enterprising spirit and hard work. I tried to work out which of these the Queen would fit under. She didn’t. She was merely born in the right palace.

It’s not only about the queen. Donald Trump and Mukesh Ambani, India’s richest man, have built on what their fathers started. For that matter, each of us is an outcome of the family and the country we were born in. Warren Buffet calls it the ovarian lottery. And in most cases, our station in life remains largely unchanged.

Inheritance perpetuates inequality. India abolished estate duty in 1985, Russia in 2006. It exists in the USA, but 11.58 million USD worth of assets are totally exempt. An American child can inherit 11.58 million dollars, even if they were earned dishonestly. The current minimum federal wage in that country is 7.25 USD per hour. A poor American on minimum wage will need to work for 760 years, without spending a cent, to reach 11.58 million USD. 

You will find that the concept of giving a basic monthly income is usually questioned by those who live in a house their grandfather built, and run a business started by their father.

We accepted we are not all equal, as communism had propagated. But we didn’t know we can be so unequal. That the world’s 26 richest people should own as much as the world’s poorest 50%.

In a circus, the animal trainer feeds the animal after every trick performed. That’s both an incentive and a reward. The animal is fed just enough to be motivated, but not more lest it should refuse to obey. In today’s distorted world, most people are like those circus animals, ruled over by a few throwing minimum wages at them.

Yesterday, two miles north of my home in Mumbai, 2000 migrant workers gathered to protest defying orders, putting themselves at risk of getting infected. Most of them, taxi drivers, street vendors and others, have no money left for food. They have voting rights and freedom of expression, which are good things to have. But they can’t be eaten.

Hunger and thirst are so basic; satisfying them should be considered a human right. If the world learns how to satisfy this right, that could make a good change post crisis.

Ravi

Corona Daily 481: Mikhail Coronavirus

Universal basic income is a complex, controversial reform. It deserves a few articles by way of background and explanation.  

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The Soviet Union sent the first man, and before him the first dog, into space. While the USSR was conquering space, Soviet citizens started their day on earth with dogfights, queuing up for bread and meat. Soviets focused on military power at the cost of consumers. Patriotic wars, May parades or Sputnik missions were found to be poor substitutes for food, human dignity and life without queues. Communism as practised by the Soviet Union was not sustainable.

American capitalism, on the other hand, focused on the consumer. So much that America has more cars than people who can drive them and more guns than people who can fire them. America focused on building the strongest nuclear shields, state-of-the-art atom bombs, and now faces fatal shortages of masks and ventilators. The first world has focused on consumerism and defence at the cost of climate and health.

In 1991, Communism duly collapsed. The world celebrated.

In 2020, Capitalism as currently practised, collapsed. Of course there is no formal announcement. There are no CNN-moments like the fall of the Berlin wall or Yeltsin standing on a tank. But history will note 2020 as the year when unsustainable practises of western economies crumbled.

A system that gradually decays needs a trigger for a collapse. Mikhail Gorbachev was that trigger for communism. He highlighted the flaws in the system. He launched an attack on the system. Gorbachev wanted to reform it, but the system had so decayed it collapsed. Though Russia subsequently went downhill due to politics, the Communist Economics never returned.

What Gorbachev did to Communism is now done by a small, invisible virus. It is travelling the world highlighting the flaws of the anti-climate economic system. Suddenly the mighty nuclear weapons are silent, wondering how to defend against a virus. The world has woken up to the fact that on-line white collars can’t run the world without off-line blue collars. 

It is premature to celebrate the demise of the current system. Neither is this the right time. However, there is no doubt that the demands made by the Coronavirus for a ‘Perestroika’ are not an ounce weaker than Gorbachev’s.

Ravi

Corona Daily 482: We Are All In This Together

We are all in this together, said Donald Trump. We are all in this together, said Boris Johnson. Different world leaders said this to their populations in their respective languages. Why have we never heard this phrase from them in the past?

When the wealth, even inherited wealth, of many went up by 28% because of the stock market boom in 2019, why did nobody say we are all in this together?

Just before the Corona crisis, Oxfam issued its annual report which now shows 2153 billionaires with more wealth than 4.6 billion people. 22 richest men have more wealth than all the women in Africa. And women’s unpaid care work is valued at 10.8 trillion USD. Valued but not paid. These reports with startling facts are issued every year. None of the billionaires has ever said: ‘we are all in this together.’

The poorest of the world, (even America has at least 40 million people below the poverty line), have negative wealth. They have debts, not savings. They work for a meal tomorrow or for a meal today. The only reason they are not called slaves is because they live in constitutional democracies.

How can a homeless ‘work from home’? How can fifty labourers sharing a slum-room keep social distance? How can people wash hands with soap for twenty seconds, when it’s a struggle to get a bucket of water?

Now they are locked down, their jobs taken away, wages taken away, but not their debts, and not their hunger. When from the podium somebody says: We are all in this together, it is understood we are not. Those speakers want to prevent food riots and political revolutions in which they or their political careers may get killed, that’s all. They wish to comfort those who may eventually cause either.

Why should such slogans appear only in times of crisis? Why can’t we all be together in times of prosperity? Why not make provisions to prevent food riots and revolutions?

One good thing that will come out of this pandemic is to compel nations to implement the concept of the ‘Universal Basic Income’. More about that tomorrow.

Ravi

Corona Daily 483: The Hand-Face Distancing

I haven’t touched my face in weeks. I miss it. – Donald Trump  

Rubbing, scratching, caressing a beard, hair flicking, nose picking, chin stroking, pulling at your lip. Locked up in the house, social distancing is easier than keeping your hand away from your face.

Researchers are freaks. No subject is taboo for them. Spontaneous Facial Self-Touches (sFST) is the subject matter of several scientific studies. Ordinary monkeys rarely touch their face. But Gorillas, Orangutans and Chimpanzees touch faces as often as humans.  

A 2015 Australian study observed a group of medical students. Each student touched his/her face 23 times per hour. 36% touched their mouth, 31% nose, 27% eyes, and 6% a combination. Another study observed 249 randomly selected individuals in Brazil and Washington. In Brazil, the subjects touched common surfaces (like door handles or lift knobs) and then touched mouth/nose 3.3 times per hour, in Washington 3.6 times/hour.

The main reason seems to be emotional. You may have seen nervous speakers taking their hands to their face. Facial self-touches are soothing, a bit like a child’s thumb sucking. One study says the soothing mechanism involves some type of sensory stimulation of skin. Touch releases a hormone called Oxytocin. This allows us to reduce or avoid tension and stress. One study found people were prone to touch their face more often while lying.

How does one stop a spontaneous action? This month, several suggestions have sprung up: wear woolly gloves, wear masks, sit on your palms, scratch your elbows when you feel like scratching your nose. There is even a website that uses your webcam to train you how not to touch your face.

Handwashing and minimizing hand-face touching is recommended as a hygienic practice. In current times, it may make a difference between life and death.

In any case, this is a good habit to develop. Surely we don’t wish to contract the Coronavirus. But we would be happy to avoid even the flu if it can be done with water, soap, and keeping our face away from our hands.

Ravi

Corona Daily 484: In Search of a Vaccine

Across the USA, chickens lay millions of life-saving eggs at secret poultries. The eggs are so precious, they have bodyguards. For the past 80 years, most influenza vaccines rely on chicken eggs. The selected flu virus is injected into a hen’s egg, where it incubates and replicates just like it does inside a human host. Scientists then harvest fluid containing the virus from the egg. The virus is then purified to create the virus antigen, the critical element to create a vaccine. During the latest flu season, the USA used 140 million eggs, each egg producing one vaccine. But the Coronavirus doesn’t replicate inside an egg. This method won’t work.

For the novel Coronavirus, till date 116 treatments and 79 vaccine programmes have been proposed. Vaccine making is not a profitable business, so big pharma companies are not in the game. Bill Gates has invested billions to fund seven different vaccines, in the hope that one or two may work.

The race is frantic. Moderna, a ten year old biotech company, has gone from decoding the virus DNA to initial human trial in a record 63 days. (The injected woman had to sign a 45-page waiver). Two factors have helped vaccine creators. The Chinese sequenced the genetic material of the virus speedily, and shared the sequence with the world in early January. Secondly, SARS and MERS vaccines never materialized, but much work was done on their development. Now some of it is revisited to see if tweaking may help create something against the current virus.

Regulatory and approval process may be cut short in a crisis. However, following is the shortest flowchart to create a vaccine.

Sequencing the virus genes------ creating a vaccine ------ initial trial----- animal testing------ large scale trials ------ develop a proven vaccine----- manufacture it----- ship it----- inject it into people.

It is not a smooth process. Anything pumped into the arms of a billion people must ensure it doesn’t harm healthy people. During the 2009-10 swine flu pandemic, Pandemrix vaccine (GlaxoSmithKline) was administered to six million people. It had to be withdrawn from the market after thousands complained of Narcolepsy, a disorder causing the person to sleep many times a day.

The best case scenario, therefore, is a vaccine in the second half of 2021. Whenever it happens, one thing is certain. The world will look at vaccine-making far more seriously in the future.

Ravi

Corona Daily 485: No Lockdown in Sweden and Japan

Those in lockdown envy those without. The world is full of science-defiers and covid-90 skeptics who are egging their governments on to lift lockdowns and return to business as usual. My Indian friends point out Sweden (9000 infected/800 dead) and Japan (5500/100) as models India should emulate.

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Sweden is a small country. The virus is capable of killing more Indians than the entire population of Sweden (10 million). Second, the population density of Sweden is 60 people/sq mile, India’s is more than 1000. Mumbai has 80,000 people per sq mile and Dharavi, a giant Mumbai slum has 800,000 per sq mile.

If you have sixty people residing in a square mile, social distancing is not difficult. (In the strictest curfew time in Mumbai, I am sure sixty/sq mile will be found on the road.) Swedes have been isolating themselves for years. No 70-plus Swede lives with anybody younger.

If Sweden were to close schools, 25% of the doctors and nurses wouldn’t be able to report to work. Or grandparents would have to babysit those kids and increase the risk of infection. Sweden already has a shortage of medical personnel. They have weighed those factors and opted for a no-lockdown.

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In Japan, salaried suits are still crowding the trains. Restaurants are open. Legoland Japan welcomes visitors. Why is there no lockdown?

Because Japan’s laws don’t allow Shinzo Abe to declare a lockdown. He can’t close any city, transport, schools, or even private events. The anti-influenza laws allow him to request, not order. And if the request is ignored, there is no penalty. (Compare with the latest from Singapore: If you meet a person you are not living with, you are liable to six months jail or 7000 USD or both).

Abe has done what the law allows. He has declared an emergency in Tokyo and six other prefectures. But the emergency can in no way hamper personal liberty. The Japanese legislation is so strict due to the abuse of emergency powers during the WWII. The pre-war Meiji constitution could have imposed a lockdown, not any more. The Samurai DNA possibly makes the Japanese more afraid of breaking the law than contracting the virus. The Japanese strategy may turn out to be hara-kiri.

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All countries are suffering. But each country’s strategy is based on its individual circumstances. You can’t simply copy-paste them.  

Ravi

Corona Daily 486: Wrong Time

We have known M’s family for a long time. She lives in Mumbai with her daughter, and her husband works out of Delhi. He visits Mumbai every weekend.

Now with the lockdown, he has been stuck in Delhi for three weeks.

The Indian lockdown has completely paralyzed public transport. No flights, no railways. Only trucks carrying vegetables and other foodstuff can move on the highways. Even in Mumbai, you can’t move from the South to the North.

‘I will take the first flight once the flights begin.’ M’s husband assured M every time they spoke over the phone. He continued working online in his rented Delhi flat.

Last Sunday, M called him. The phone didn’t answer. Must be resting on Sunday, she thought. Although what is the difference now between Sunday and other days? She left a WhatsApp message asking him to call back. When he hadn’t called by evening, she called his friends. They knew as much as she knew, and they were in Bombay.

The family realized they had his phone and Delhi address, nothing else. They knew nobody in Delhi, not even his landlord. Calling the police can be frustrating, and they didn’t know which police to call and what the complaint should be. An MP (Member of Parliament) was a friend of M’s brother. The MP moved wheels, literally. He made the Delhi police go to the address and break open the flat.

M’s husband was found dead. The presumed cause was cardiac arrest. In current times, nobody thinks of an autopsy. The MP then booked an ambulance and made it carry the dead man to Bombay. M’s family went to the crematorium, where they had to hurriedly cremate the man soon after the ambulance arrived.

I didn’t ask about the suitability of an ambulance to carry a body for 1000 miles in this April heat. I didn’t want to know the answer.

What would have happened if the family didn’t know an MP? What if the medical staff had suspected this man was a Covid-19 victim? Would the ambulance then carry him?

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The lesson is for those who live alone or are trapped somewhere alone. Give your families or friends the phone numbers of your neighbors, colleagues, and landlords.

If any of your family or friends is trapped somewhere alone, make sure you have ways to contact their neighbors.

In current times, living alone is bad enough. Dying alone is a catastrophe.

Ravi

Corona Daily 487: Who is Next in Line?

Boris Johnson, virus-bitten, is in the ICU. So who is in charge of the UK now? UK has no written constitution. Dominic Raab has been appointed as Johnson’s stand-in (not to be confused with stand-up). He is remembered as the Brexit secretary who didn’t know Dover was an important port for the UK trade. His current approval rating is minus 17. He is young and not infected. Though a stand-in, Raab can’t attend weekly meetings with the queen, and can’t write an action plan (letter of last resort) in the event UK along with its PM is wiped out in a nuclear attack. This letter- writing is a privilege of every new PM.

Raab now runs a Zoom cabinet that includes among others Michael Gove (in self-isolation because of an infected family member); Matt Hancock, health secretary who tested positive; chief advisor Dominic Cummings, infected and isolated; Lee Cain, communications director with symptoms; and advisor Eddie Lister, 70, a high-risk member.

Besides managing the Pandemic in the UK, Raab’s Zoom cabinet will negotiate Brexit further with the EU’s negotiator, Michel Barnier, who fell ill with Covid-19 three weeks ago.

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US Constitution has the most professional succession plan. As systematic as for the British throne. Eighteen members queue up in case anything happens to the President. Vice President Pence replaces Trump, something America has waited for since 2017. If the virus sends them both to intensive care, Nancy Pelosi, the house speaker, will become the acting president. She is 80.

Unlike the UK, India has a written constitution, but no clear succession system in place. In the past, it was easy - hereditary rules applied. When Indira Gandhi was assassinated, her son Rajeev promptly became the PM. Bachelor Modi rules out that option. India’s home minister is the likely substitute, but Narendra Modi is the fittest member of the cabinet, so this is theoretical.

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In France and Italy, the Senate’s president becomes the acting president.

In Chinese language, the word succession doesn’t exist.

Russia has a monocracy. As per Russia’s constitution, the Prime Minister Mikhail Mishustin will replace Putin if Putin were to be incapacitated. But replacing Putin is a fantasy, because that man is irreplaceable, virus or no virus.

Ravi

Corona Daily 488: Is Pandemic Force Majeure?

Every businessman knows Force Majeure as the clause that relieves a party from certain contractual obligations during events such as earthquakes or floods. Non-business people also sign agreements all the time, sometimes without realizing it. Will your gym extend your membership? Will your French holiday be refunded? Will your insurance company hide behind Force Majeure and not pay Covid-19 deaths? (Fortunately, Life Insurance Council of India has confirmed all insurance companies in India must pay Covid-19 deaths, without applying Force Majeure).

It is naïve to think Common law will protect us because of the pandemic. Force Majeure is not a creature of law, but of individual agreements.

Agreement: First thing is to check the FM clause in your agreements. Does it include an epidemic, or a catchall phrase such as ‘any other event beyond the reasonable control of the party?’ Existence of the clause doesn’t automatically protect you. The pandemic must have actually affected your ability to perform. E.g. our internet provider, phone company, Netflix are not (yet) affected.

Mitigation: You need to show you have made attempts to find alternatives. With office and traffic shut, your employees are working from home. Your Chinese supplier couldn’t supply, but you have found a Malaysian supplier.

Notification: You must notify the other party of your inability. If the other party notifies you, you must respond quickly. UN Sale of Goods contracts require a notice within reasonable time. Create as much documentation as possible. Talk to the other party, and ideally renegotiate the contract.

Certification: If possible, demand from your government such a certificate. Since 27 February, China has issued a record number of ‘Certificates of Force Majeure’. In international trade, that will protect several Chinese companies.

Doctrine of frustration: Where the purpose of contract becomes impossible, the doctrine of frustration may apply. If a couple booked a wedding hall that was shut by the lockdown, the purpose is frustrated. In such a case, the agreement will be void (and the court is likely to ask the hall management to return the deposit to the couple). 

While the pandemic is on, some sympathy and flexibility will be shown. After the pandemic, courts everywhere will engage in millions of cases, where the force majeure clause and the parties’ subsequent actions will be closely scrutinized.

Ravi

Useful reading: One (Global)/ Two (US and China)/ Three and Four (USA)/ Five (UK)/ Six (UN)

Corona Daily 489: The Only Sport Tournament in March

Just one major international sport event took place this March. “Candidates” is the most important chess tournament that happens every two years. Eight best players in the world battle for three weeks to decide the challenger to the World Champion. The tournament was scheduled to open on 16 March and close on 4 April in Yekaterinburg, Russia.

As luck would have it, two of the eight players were Chinese. A month before the tournament, Russia banned entry for Chinese citizens. FIDE, the international chess body, governed by Russians, managed to issue ‘humanitarian’ visas to the Chinese delegates. On arrival, Ding Liren, the leading Chinese player, and his team were taken to an isolated cottage outside Moscow and quarantined for two weeks. A great way to prepare for the tournament.

On 6 March, Teimour Radjabov, the Azerbaijani grandmaster told FIDE it was wrong to hold the tournament in the current climate. FIDE said legally and practically they could not postpone the event. FIDE tweeted Radjabov was withdrawing for personal reasons, and replaced him with a French grandmaster.

On 16 March, the grand opening ceremony was attended by 5000 spectators, but the players were absent for safety reasons. They were replaced by specially made dolls shaking hands with one another. On the previous day, the Russian sports ministry had ordered cancellation of all sports events in Russia. Fide tweeted the decree would not affect this event. The FIDE president had received assurances the event was safe and could go ahead. (FIDE president was Putin’s assistant, and a deputy PM before turning to the chess body).

The tournament began with no spectators allowed. Ian Nepomniatchtchi, a Russian player, fondly called Nepo because nobody can pronounce his surname, was leading. He was playing fantastic chess. But after the fourth round, he started coughing, and feeling feverish. It is not known whether his moves or his cough were more intimidating for the opponents.

Nepo tested negative. But the Russian government announced closure of international flights in 48 hours. Getting trapped in freezing Yekaterinburg is not an idea any grandmaster cherishes, even when that is a route to becoming a world champion. Everyone rushed to the airports to board the last flights. The tournament was postponed to an undisclosed date in the future.

Radjabov, who had seen the game a few moves ahead, now wants to sue FIDE. He will have to wait for some courts to open somewhere.

Ravi