Michael Lewis can “Unravel complex issues like no other.” And few issues are considered more complex – or tragic – than the U.S. response to the COVID-19 pandemic, the topic of his latest book. .
At the guts of Lewis’ narrative is a central query: Why did the United States fail to reply?
To illustrate his point and draw lessons for the financial world, Lewis focused on the Centers for Disease Control and Prevention (CDC), the US national health agency, and the experiences of his book’s major character: Charity Dean, MDan authority in communicable disease outbreaks and former deputy director of the California Department of Public Health. Dean was a key member of the leadership team that led the response to the COVID-19 outbreak.
“Gut feeling test” for the USA
The United States has fared poorly by way of COVID-19 cases and deaths. At the time of writing, the country has recorded greater than 33 million cases and about 600,000 Americans have lost their lives, in response to data provided until . (A recent study estimates that the variety of COVID-19 deaths within the country is significantly higher, at over 900,000.)
“We represent 4% of the world’s population and 20% of the deaths,” Lewis said. “No matter how you twist it, no matter how you package it, it’s not a good response, it’s not a good outcome.”
The U.S. response to the pandemic is “a really serious gut decision” for the country, he said, especially because the country ranks first on the list of 195 countries. Global Health Security Index 2019‘s survey on pandemic preparedness.
Was the US response to the pandemic doomed from the beginning? According to Lewis, it actually seems that way.
Part of the issue was a decentralized approach to combating the pandemic. asked Lewis mention, that, “Because of the structure of the U.S. government, the response to the pandemic was largely left to state and local decision-makers.. In the absence of a strong national strategy, states implemented a patchwork of largely uncoordinated measures that failed to effectively contain the spread of the virus.”
For a response to be effective, it have to be consistent, said Michael Lewis.
“It cannot be that one state does one thing and another state does another,” he said. “The lack of unity at the top probably doomed the whole thing from the start.”
And Lewis points the finger directly on the CDC.
“We have an organization called the Centers for Disease Control that is not actually designed to fight disease,” he said. “That’s putting it a little harshly, but if you had asked the Centers for Disease Control to maximize the number of cases of illness in America due to COVID-19, they might not have behaved so differently than they did.”
The CDC and incentives
According to Lewis, the issues on the CDC are on account of perverse incentives because institutions just like the CDC have change into politicized.
To understand what he means, we now have to show the clock back to 1984.
At the time, Lewis said, the CDC was “the gold standard for public health in the world” and was run by officials who had absolutely no touch with the political process.
This meant that the person at the highest couldn’t simply be fired by the president on a whim and will give attention to protecting public health.
But then something modified: In the mid-Eighties, many federal government jobs were converted from everlasting careers to positions appointed by the president. This modified the inducement structure. Today, employees aren’t any longer hired from a general pool of qualified applicants without regard to political decisions, but are chosen from a smaller, politically motivated pool.
Perhaps the worst problem with politically appointed jobs is the short time horizon, said Lewis:
“They signal to the organization and to the person taking the job that this leader is not going to be in office very long. At best, he will be in office as long as the person in the White House is in office. In fact, the average tenure of these political appointees is 18 months to two years.”
Short-term appointments mean short-term incentives.
“Who in the world would say it’s a good idea to make someone CEO who everyone knows is going to be gone in 18 months to two years?” Lewis asked. “You’re not going to solve the long-term problems that way.”
Key lesson: Avoid short-term incentive structures.
How to change into a Charity Dean
While Lewis has only harsh words for the CDC, he finds a glimmer of hope in the shape of Dean and a bunch of doctors called Wolverines had all worked on the White House at various times and had stayed in contact due to their efforts to combat disease outbreaks.
Dean was a part of a bunch of scientists and doctors who raised the alarm concerning the COVID-19 pandemic very early on but were largely ignored.
As Lewis tells it, Dean went through a rough patch in her life, across the time she began working as a neighborhood health officer in California. The story Dean tells herself over and once again is a critical one, and will be summed up in a single word: courage.
“The story is that she is responsible for everything that has happened to her, even if she is not,” Lewis said. “She will accept that responsibility and insist on being brave, even if it is painful.”
Dean writes inspirational messages on Post-It notes and sticks all of them over her house to remind herself of the importance of being brave. One of her favorite sayings is, “Courage is muscle memory.”
Why is that this necessary? What can others learn from their example?
If Lewis is a “How to become a Charity Dean“Of course he would start with the meaning of the story we tell ourselves.”[Dean can] “She looks in the mirror and sees all the ugly parts, all the parts she disapproves of,” he said. “Instead of sweeping them under the rug, she consciously holds herself to the highest standards at all times.”
This makes her realize that sometimes it’s cowardice that holds her back.
“Being aware of when you’re giving in to weakness becomes an art form,” Lewis said. “It becomes something you develop muscle memory for, and when I’m teaching someone to be themselves, I would say develop that muscle memory.”
Most necessary insight: “Courage is muscle memory.”
Probabilities vs. Narratives
Risk is a theme that Lewis incessantly explores in his books. Regardless of the character or the story, one element at all times stands out: the gap between those that manage risk well and the remainder of society.
“You would think the markets would be more efficient,” Lewis said.
To support his point, Lewis referenced baseball, a game he covered in his classic. Baseball has been played essentially the identical way for about 100 years, with players doing their jobs in front of tens of millions of individuals and their every move being tied to statistics.
“You can assess the risk of baseball players, and you could have done that a long time ago,” he said. “The fact that nobody did that until the Oakland A’s came along and looked at Bill James’s finished product and thought about it shows that there is something in the human brain that is very slow to think in the terms it takes to think through risk intelligently.”
The key insight of Israeli psychologists Daniel Kahneman and Amos Tversky on risk, which Lewis explores in his book, is that individuals are “not probability machines.” So what happens more often than not is that individuals make decisions based on narratives slightly than calculating probabilities.
And that commentary applies to the COVID-19 disaster within the United States, Lewis said.
The narrative was that “America is the richest and best prepared country on the planet,” he said. “We have this institute called the Centers for Disease Control. They’re going to get this done.”
The problem with this approach, in response to Lewis, is that just about nobody aside from Dean and the Wolverines was considering by way of probability.
“That’s one of the big takeaways,” he said. “Even people whose job it is to manage risk at some level – and everyone deals with risk in their lives – don’t think in a hard, sober way, but in a different way that distorts their judgment.”
Key takeaway: When assessing risk, calculate probabilities. Don’t depend on narratives.
Finance as a force for good
While the financial world can have a positive impact, Lewis believes the fact shouldn’t be so easy.
The financial sector has maintained its profitability thoroughly up to now, he explained. Now, when innovations emerge and threaten that profitability, they’ve a harder time gaining a foothold than can be the case outside the financial sector.
“[Finance is] “Business is a extremely necessary a part of the economy,” Lewis said. “But the great forces inside it have an unusually hard time making their voices heard.”
When the financial world is at its best, it is usually quite boring, he said.
For young professionals who wish to pursue a profession in finance and make a difference, Lewis advises: “Think about who you are now. You could never imagine yourself doing the things you might be doing in three years’ time with so much money at stake.”
And when you end up in a dilemma in the longer term and have to come to a decision whether to do something that’s in your financial best interest but not in the very best interest of your client, don’t let money seduce you.
For those already established within the investment industry, Lewis’ advice was easy: control your spending.
“Live a life humble enough that when it all passes, it’s not a catastrophe, so that you don’t find yourself in a position where you have to make those bad decisions.”
Most necessary lesson: Remember your duty of loyalty and live modestly.
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