Herd Immunity: Are We On Our Way?

We may, unwittingly, be more infected than we think. That is the good news.

To explain: People with COVID either live or die. Those who survive – the so-called IGG positives- develop anti-bodies that make them immune to the strain. They are no longer infectious and therefore can mingle in the community and go to work. It is believed that if 60-70% of a community is IGG positive, COVID will die because there will not be enough bodies to host the virus. This is the concept of herd immunity which a number of leading institutions including the WHO believe may have merit but more studies are needed.

Reputable reports from Germany and the U.S. suggest that many countries are closer to herd immunity than they think.

A University of Bonn study in Heinsberg, the epicenter of COVID in Germany, found that 14% of the population tested positive for IGG with a death rate of only one-third of one percent.

A preliminary study at Stanford University found that as many as 81,000 people in Sta. Clara County could already be infected which is 85 times the official number; with no commensurate deaths.

A University of Southern California study reports that up to 442,000 people in its community could already be COVID positive which is 55 times the official figure of 8,000; again with no commensurate deaths.

A study by Massachusetts General Hospital found that 31.5% of a random sample size in the suburb of Chelsea had the COVID anti-bodies i.e. were IGG positive.

The studies were performed by reputable institutions in different countries. However, as always, their conclusions have been questioned for procedure, statistical significance  and interpretation. Call it scientific one-upmanship.

If indeed empirically valid, the results show that, one, many counties including our own have been infected for a while; two, the mortality rates are within the norm of other viruses;  three, the fear behind COVID19 is therefore unwarranted and, lastly, the social restrictions that have been imposed in countries like ours are largely disproportionate to the problem.

Many believe COVID has been around as early as the fall of 2019. China discovered its first case in mid-November of last year.

In the Philippines, anecdotal data in many but small samples show infection rates of up to 31% which is consistent with some of the above-mentioned studies.

Data from closely contained cruise ships, condominium communities and frontliners in RITM and Ospital Ng Sampaloc show high infection rates with zero or near zero deaths.

Singapore (population 5.7 million) has reported 15,000 infections and 14 deaths.

The novelty of the virus, the media paroxysm and Government policy responses have created a climate of fear which arguably has been more damaging than the virus itself. The post-trauma effect  especially among the vulnerable has still to be measured. So too is the social impact of domestic violence, child abuse, mental illness and incidents like the random shooting of Cpl. Winston Ragos by a policeman.

Then there is the economic carnage, the millions out of work, the businesses destroyed, the lifetime of savings vanished, the trillions in Government assistance that will eventually have to be repaid by future generations. 

The March 15 ECQ was warranted because we did not know any better. A serial killer was on the loose, exponentially multiplying and when that happens you cordon the area, overturn every stone and lock down every living thing. This we were told by China was the thing to do; and it was.

But now eight weeks into the manhunt is it still the right thing to do?

What if the killer is already in us but our immune system has done a better job than we think of overcoming it?

Why cluster bomb the country when the killer has grazed many but killed few? He is at best lightly armed or a poor shot. The collateral damage from the Government weaponry is worse than the killer’s victims. 

What if the killer is a bogeyman, a fiction created by the DOH to frighten us?

What if the so-called experts are so invested in their power, their science, their rules and their egos that they cannot admit that it is time to release the Filipino from his bondage? These ‘experts” have been wrong before, why can they not be wrong now?

How do we determine how far we are into herd immunity?

One, Government should partner with the private sector to massively test and contact trace.

Two, we must test big but, more important, we must test smart. We should test in homogeneous clusters – high density Barangays, squatter areas, prisons – rather than at random. Closed models with no exogenous factors provide better statistics.

Three, we should do surveillance testing in communities rather than clinical tests in a hospital where the test groups are already sick and the outcomes are biased.

Four, the tests should be for anti-bodies rather than for the virus itself. The kits of choice are therefore the rapid tests rather than the PCR because they are cheaper, more rapidly deployed, produce quicker results and show for IGG immunity. PCRs are for the symptomatic.

Five, in the absence of adequate testing we should use total number of deaths rather than number of infections or number of COVID deaths as the basis for policy response. “COVID deaths” are a misleading indicator because they are subject to definition. For example which is correct, deaths “by” COVID or deaths “with” COVID where the virus is only one of the causes? Counting all deaths and matching them against historical norms is a more meaningful metric. It also enables us to better estimate our healthcare capacity for dealing with all illnesses not just COVID.

What are the policy implications of herd immunity?

One, it will reveal who among the infected can return to work without contaminating the community. As we move to the 60-70% herd immunity rate we can aggressively open the economy.

Two, we can dispense with the disruptive and artificial controls like checkpoints and passes. The freedom of movement will grease the economy.

Three, we can slowly and voluntarily open schools since kids are not virus susceptible. Like the measles some believe contamination in children has merit.

Four, encourage but not oblige the elderly and vulnerable to stay home. Trust them to behave safely and if they do not tough luck. The current proposed rules for seniors (and youngsters) are, by order of merit, laughable, illegal and unfair. They are indicative of the “science” that got us into this mess.

Five, ensure there is enough capacity in our health care system. For this reason large public gatherings should be discouraged to prevent any unexpected surge in cases.

We can never achieve 100% immunity nor deaths. The virus could mutate and return, we could get imported cases once travel is opened. However we can work with probabilities and manageable rates of infection and fatalities. Supermarkets accept a pilferage rate of 1-2% as the cost of doing business. Similarly, we must accept an infection and mortality rate that is within the norms for say flus or even road casualties.

The cost to achieve perfection is too economically expensive otherwise.

The COVID Bogeyman

We have seen the future and it is not pretty.

By May15 I expect us to go from an ECQ to a MCQ but this may not be enough. Businesses will continue to run out of cash. Despite the trumpeting, SMEs will still be waiting for their subsidized loans. The truth is no bank is going to lend to any business, small, medium or large, that is likely to fail in any form of quarantine. Demand has been destroyed and will not return until consumers feel safe. Businessmen are concerned the social distancing measures that will be imposed will cut their capacity making them unsustainable.

Businesses in the travel, tourism and entertainment industries will not resurface for some time. Highly indebted companies will fail. Even companies with staying power will have to retrench in a half-baked economy.

Businesses want clarity and they are not getting it. The President has announced he will lift the ECQ when a vaccine is universally available and there are no more deaths. Many businessmen cannot and will not hold their breath for that.

The President has rightfully pointed out that Filipinos want hope but his pronouncements do not offer that. Instead we are presented with a dire scenario that risks throwing the economy into a death spiral from which we may not emerge. Hope is when we are told the cavalry is on its way. Hope is not when we are told the cavalry is still gathering itself but has no idea when. 

The President’s fears are, I suspect, largely fueled by the “experts” in the IATF. After earlier assurances that COVID was not an existential threat, that there was no need to impose a travel ban or rapid test, these “experts” have frantically reversed themselves with frightening  predictions for the end of our race. They warn of the collapse of our healthcare system. They suggested a ban on the exports of nurses depriving them of the unique opportunity to make a better life for themselves. They prescribe starving the patient while waiting for a cure. The IATF is playing to if not stoking the President’s worse concerns.

And yet the facts show a different picture.

Hospitals and quarantine centers are reporting unused capacity. If this continues hospitals will start cutting back on their COVID beds because right now they are bleeding from the loss of elective procedures.

There is a surplus of nurses, what is lacking is equipment and protective gear.

Our mortality rate of 5 per million of population is one of the lowest in the world.

The mortality rate even in hot spots is surprisingly low. The Diamond Princess is the cruise ship that was stranded in the Japan Sea for the longest time. It had about 5,000 people on board including about 500 Filipino crewmen. I believe two seafarers died.

The Research Institute for Tropical Diseases (RITM), the facility that does COVID testing, announced that forty frontliners were infected, 31 have recovered and the rest are under observation. No one has died.

In a recent cluster outbreak that I have personal knowledge of, 30% were tested  positive but after several weeks none have died. They are all asymptomatic.

Singapore has 13,000 COVID infections, the third largest in Asia after China and India. Total number of deaths: 12.

What does this all possibly tell us?

It  tells us that COVID has probably been with us for a while, that many Filipinos have been infected but that almost all have recovered. 

It tells us there will be deaths but there are always deaths. In 2016 there were 12,690 road fatalities in the Philippines, the 4th largest cause of deaths in the country. Yet we have not banned 7.6 million cars and 3.2 million motorcycles from the road. It tells us we need a broader perspective.

It tells us there is arguably more deaths from non-COVIDS than from COVID: Sick people who refuse to go to hospital for fear of contagion so die at home, those unable to secure treatment because of lack of transportation, the mentally ill.

It tells us the number of positive cases will rise with more testing but that is not the end of the world.

It tells us the IATF “experts” have scared us with the unknown but also with the known. The “experts” have warned us of the outbreak of COVID but have not clarified that most of the COVIDs -the IGG positives- are fine. The “experts” are not making that distinction but instead have held the country -and the President – hostage with the bogeyman that all COVIDs will kill us. They scare us with a shadow that indeed exists but is not existentially threatening.

 The President has unfortunately bought into that story and 109 million Filipinos are suffering for it. The economic damage of COVID is running at three-quarters of a billion pesos per death and that excludes the social damage to the community many of which are permanent.

It tells us the ECQ was fine because we did not know any better then; but now that we do we must re-think it. It tells us we need a second opinion from qualified medical experts.

It tells us the virus is possibly in our minds, not in our lungs.

Surprisingly, the IATF’s COVID narrative has not been challenged despite the body’s dismal track record in assessing the virus. Fourteen Senators who in the best of times cannot agree on much have asked for DOH  Sec. Duque’s resignation but to no avail. Despite the damage to themselves the business sector has remained mum, accepting the IATF ‘experts’ sayings as the oracle from Delphi. Why is that?

One, the business sector has been pre-occupied with itself.

Two, the non-health members of the IATF feel they are not qualified to comment. Nobody wants to be responsible for being wrong.

Three, the President’s men look to where the President is leaning and go with the flow. Why be the messenger that gets shot?

In the meantime the natives are getting restless. Cracks are starting to show. Many of the marginalized and unemployed are not getting their checks. In an unusual display, the Army buried with honors Cpl. Winston Ragos, the retired soldier shot by the police. This was possibly a message to the PNP although both sides officially deny it. When asked to explain the unjustified shooting of Ragos by one of his own, the head of the PNP told Karen Davila in Headstart, essentially, Hey, shit happens. Emotions are starting to fray and dangerously.

Businessmen are now thinking of permanently laying off their workforce rather than wait for May 15. 

The poor are starting to rattle their cages.

A quarantine by whatever name, whether enhanced, modified, improved or in our case mystified; is still a quarantine. Like the IATF, its power comes from the DNA of fear and that DNA is unlikely to disappear.

So we are here for a while.

Wanted: A Second Opinion

– “If I agreed with you we would both be wrong.” –

 In mid-April I bet that the April 30 ECQ deadline would be extended. Unfortunately I won my bet.

My reasoning then was that:

1. We would still have insufficient testing and tracing data to make a decision. As of this time we have tested around 60,000 or .0006% of the population.

2. The decision to extend would be driven by the “science” not by the economics. The IATF is dominated by the health “experts” and doctors are not wont to lift quarantines.

3. The President is obsessed with COVID. He has vowed not to lift the ECQ until a universal vaccine is found. He says this could take another two years. He has offered a P10 million bounty – since raised to P50 million and again to P100 million- to whoever brings in COVID, dead or alive.

So here we are Day 41 of the ECQ with possibly only another 689 days to go.

The business sector had asked for some modifications to the ECQ but most of these were not granted.The reason business is not making headway is because the President is primarily preoccupied with the health rather than the economic concerns.

COVID related deaths stand at 477 as of this writing. We have spent so far about P353 billion in COVID-related assistance so that translates to, let’s see, about a quarter of a billion pesos per death. Think about that.

The COVID issue is one of health vs economics, of physical lives vs economic livelihoods.

The medical “experts” refer to infections, transmittal rates, morbidity quotients, deaths and death ratios with no clear definitions nor how data is gathered. Because of lack of testing and contact tracing, the sample sizes are small and therefore insufficient to make assessments or predictions. 

On the other hand, the businessmen talk about jobs, GDP, and fiscal deficits. 

Both sides are talking over each other’s head. The health people are talking apples, businessmen oranges and right now the President wants to talk apples. Business has to start talking apples if it wants to catch the President’s ear.

How does business talk apples? 

The business sector needs to start talking in terms of science not economics. It needs to present a health model that has credibility and can be supported by medical data. Such a model might go like this:

1. Not all COVID positive cases are created equal – Positive cases can be either IGG Positive where the person has been infected, has the anti-bodies and is no longer infectious; or IGM Positive where the person is infected has the anti-bodies but is still infectious. The IGG Positives are safe and can mingle harmlessly in the community. They are behind the concept of “herd immunity”.
2. The Philippines has many positive infections but they are possibly IGG and therefore a good thing – COVID19 is probably more prevalent in the Philippines than we think. Thus recent instances of COVID infections in closed communities show a high proportion of positive cases -up to 30% – with no symptoms or deaths even after four weeks of quarantine. This means many of us may be IGG positive, exactly what we want.
3. In the absence of enough data we should look at the number of COVID deaths as our metric- Although still lamentable, the Philippines has one of the lowest COVID death rates in the world, less than 5/million of population. This may be due to our young demographic or the heat or our genetic resiliency or whatever, but this we know: Despite a high number of positive cases Filipinos are dying less from COVID than other countries. This may be further confirmation that most of our positives are IGG, infected but not contagious.
4. Deaths of Filipino staff in known infected cruise ships are small- This re-confirms that, for whatever reason, young Filipinos are resilient to the virus.
5. Hospitals are reporting unused COVID capacity- Makati Medical, St. Lukes, Medical City, San Juan Medical and even PGH have unutilized COVID beds. The first three may be because the healthcare is expensive but even PGH which is now 100% dedicated to COVID cases and San Juan Medical which is ground zero for COVID; has unused capacity. Again, this may confirm that most of our positive infections are possibly IGG.
6. The health model should develop more efficient surveillance and cluster based testing such as used in Germany.
7. If indeed Filipinos are now largely IGG Positive and non-contagious, there is less need for a strict quarantine. Such people can already return to work and the economy re-open. We just have to ensure our healthcare system can deal with residual cases which currently we are able to do.

There may be other better health models but the point is this: As a nation we need a second medical opinion other than that from the IATF. The latter has proven time and again to have been behind the curve: It initially opposed the travel ban which saved us 100,000 lives according to the WHO; it resisted rapid testing such that we are now having to play catch up. The “experts” behind the IATF have been so wrong they prompted a Senate resolution for the resignation of DOH Sec.Duque.

The IATF “experts” and the President are looking for certainty in an uncertain world. The President has said he will not lift the ECQ until there is a panacea for COVID.That could take months if not years by which time millions of jobs will be lost and thousands die of economic hardship. We cannot be 100% sure before moving. As they say sometimes the perfect is the enemy of the good.

Business thrives on predictability. It is prepared to wait six weeks, maybe eight, for there to be more clarity but anything beyond than that is courting disaster. If the President continues to insist he wants zero COVID deaths before ECQ is lifted, then businessmen will not even wait for another two weeks to finally close shop. They will do so right now. When that happens the economy will go into a tail spin from which it will be extremely difficult and long to recover. Rather than manage expectations, the President’s dire warning could have the opposite effect of sending us into a death spiral.

To conclude, we as a nation need a second opinion that will speak in the language of science that the President wants. This second opinion should not push any particular agenda be it of the business sector or others. It is needed to get to the truth, to provide an alternative way to look at the medical data, and to present the President with another  science-based model that he can relate to. With millions of Filipinos’ livelihoods at stake we owe it to the nation to have such a second string to our bow.

The non-IATF community should assemble a team of experts that can provide this second opinion. It did so when it convened a panel of doctors led by Dra. Minguita Padilla to look into rapid testing in the face of resistance from the IATF  “experts”. It should do it again on the other broader COVID issues.

The President is open to alternatives to the ECQ. However the options must be based on  science and not on economics. Businessmen have to start talking apples if they are to make their case.

On The Road Again

“ There is nothing more permanent than a temporary Government solution.”

Instead of COVID, for a change let’s talk about something more grim like how to revive this economy.

Re-opening the economy is not like switching the light on, it is more like adjusting the dimmer. There is still the overhang of the virus and the second and third wave of contamination that will  follow once social distancing measures are lifted. This thing needs to be done in phases, it will take a while.

There are soft and hard issues that must be addressed. The former refers to qualitative concerns like freedom, confidence, trust and wisdom. The hard issues are the money and policy responses to propel the economy. The soft issues are in many ways the more difficult ones to tackle.

On March 15 2020 we went from an open to a command economy with Government as the only economic player. This kind of power is addicting and hard to shed. Decision makers start to believe they alone have the wisdom to allocate resources by fiat. As we are seeing, this produces economic inefficiencies, gaps between supply and demand and over zealous enforcement. 

For our economy to re-emerge we must allow the market forces to play and that means freedom of movement for workers to seek the best jobs for their skills, freedom for businessmen to decide which enterprises to re-open and freedom for goods and services to find their optimal use.

Confidence is the second ingredient in a revival of the economy. Businesses must have confidence to hire workers, to expand, to invest. Consumers must have the confidence to spend. The ECQ has resulted in total demand destruction. Businesses need to run down their inventory but once done can restart their factories when the demand is there. With consumers it could take more time: With the trauma of the last six weeks Filipinos are unlikely to immediately go on a shopping binge even after ECQ is lifted.

Confidence is also a matter of trust in the country’s leadership. Is the Government ahead of the curve or is it forever playing catch-up particularly on the health front?  Is it responsive to what the community has to say?

Fourteen Senators recently passed a majority resolution seeking the resignation of DOH Sec. Duque for “poor planning, delayed response, lack of transparency, misguided and flip-flopping policies that endanger the lives of the Filipino people”. The resolution just fell short of citing indictable behavior but as the IATF likes to say “it is still too early to tell’.

The resolution is no political hatchet job. It is unequivocal language from members of the Administration bloc who have  never publicly questioned their leader. It included Senators Grace Poe and Sonny Angara who are normally balanced. Sec. Duque is accused of objecting to a travel ban that is said to have saved us 100,000 lives, of  resisting rapid testing which if implemented  earlier would have flattened the curve, of failing to contact trace, and of leaving our health care workers unprotected such that their mortality rate is one of the highest in the world. The IATF’s dream scenario is “to push out the peak to 2021” by which time the Philippines will be a wasteland.

The Senate resolution is important because it speaks to the heart of public trust. President Duterte has chosen to retain his DOH Secretary. Sure, no strongman likes to be told what to do but he is still stuck with the words of his Senators: That the man he has entrusted with the health of this nation poses an existential threat to the Republic.  That is cause for concern. For the economy and the country to heal a DOH Secretary needs the full confidence of the public, not just of one man.

On the policy front what is needed to get us going?

The problem is not on the supply side of the economy, it is on the demand: If demand can be boosted the animal instincts of business will take care of ramping up the economy. Here are some options to do this. 

Government must continue its dole-outs to the poor. Cash transfers are proven worldwide to be the most direct and strongest stimulus. The Government has allocated over P100 billion a month in “social amelioration” assistance but that is only good till May. That assistance should be extended for at least another two months.

We should act big but think small. SMEs account for the vast majority of jobs. They should be saved through a public/private partnership where the burden of relief is shared among the Government, the small entrepreneurs, banks and their goods and service providers – landlords, utilities, suppliers.

Government can provide financial guarantees of up to say 80% of small business loans with banks taking on the difference; conditional upon workers being rehired/retained at their original salaries and suppliers taking a haircut. The latter can either be mandated by law or via a DTI-led initiative to arbitrate differences. Singapore has passed a law that will extend a six month rent moratorium for those SMEs who can show they have been adversely affected by COVID.

Public transportation must be loosened initially to say 50% of capacity while enforcing social distancing. Checkpoints can be dismantled but soldiers remain for peace and order. Regional border controls are political delineations that have no purpose in health or economics.

Major infrastructure projects should be re-kindled but these are not all immediately scaleable and fundable and are location specific. The Government should in the meantime undertake smaller Keynesian-like projects like farm to market roads or irrigation which can be launched nationwide, are financially bite-size and can be triggered quickly.

There should be no restriction on which businesses should reopen subject to proper health protocols. So far Government has prioritized “essential” activities but that definition is an artificial construct. Today Vitamin C tablets are out of stock not for lack of the items but for lack of the packaging. Cardboard companies were not among the “essential” industries. The market should determine what factories are to re-open, not the IATF.

The Government should calibrate tariff policies temporarily to jump start businesses. Although admittedly aggressive, the Government should consider a short term National Buying Program for over-stocked inventory that can generate vital working capital to SMEs and farmers.

Local tourism must be promoted to replace foreign visitors. Air travel needs to be gradually lifted.

We should move aggressively to take over the supply chain that is leaving China. We should do likewise for BPOs that are exiting India.

It is said never allow a good  crisis to go to waste. Since we are rebooting the economy now is a time to review the massive income inequality in this country. Central to this should be an agro-industrial program that will finally allocate resources away from congested cities and Imperial Manila to the countryside which is home to 75% of Filipinos. 

Grin And Bear It

“When you get to a fork in the road, just take it.”

Sec. Sonny Dominguez is between a rock and a hard place.

On March 15 2020 the Philippines overnight went from an open economy with multiple players equating market forces; to a command economy with only one player, the Government, and no mechanism to efficiently allocate resources. The result has been a disconnect between supply and demand, a disruption between the supply chain and demand flow. We are seeing this in various forms: For example, vegetables are reportedly being dumped on the roadside and chickens culled and sold below their cost of production; even as people are struggling in the streets. 

In the terminology of Karl Marx we went from a capitalist to a communist system without the “communism” part of it. In the latter, the means of production – the factories, land, businesses, etc.- are owned by the State which allows it to fund the economy (“From each according to his ability, to each according to his need”). What the Philippines has now is the worse of both worlds, a system where the Government has to save the country without owning the assets to do so.

This model is clearly unsustainable. In addition to its regular spending for administration, interest payments and committed infrastructure, the Government is shelling over P100 billion per month in financial assistance alone even as its tax take is dropping by P33 billion for every 1% fall in GDP. If that were not enough, every politician and millions of Filipinos are tugging at Dominguez’ coattails for more dole-outs. Businessmen are complaining why many countries are spending up to 11% of their GDP (PHP 2 trillion for the Philippines) in stimulus when we are not.

And the President is listening.

Sec. Dominguez is by nature fiscally conservative. He understands that there is no such thing as a free lunch, that every peso borrowed is a peso that must be repaid by future generations. He has painstakingly reduced our debt to GDP from 70% to 41% and upgraded our credit rating to its highest level. Now he is being asked to dismantle years of his work. He faces two challenges: One, how to deal with a binary President who is surrounded by people afraid to question him; and, two, how to handle a process that he is asked to finance but that is out of his control.

The President is an uncomplicated thinker who does not believe in half measures: The world is either black or white. Whether it be the War On Drugs, foreign policy, or now COVID19, the President is convinced every issue can be solved by force and fiat: To eradicate drugs you simply kill every addict. In foreign policy, you are either with us or against us. In COVID you lock down the economy, buy out the collateral damage and wait for a vaccine. The President’s marching orders to Dominguez are simple: You beg, borrow or steal the money, I don’t care, just do it.

The President really cares for the Filipino. He is concerned about the virus and the economic price we will have to pay for the remedy but most of all Duterte is worried about the peace and order implications. He understands that in a crisis the most important message to the public is the Government is in charge, that it will leave no Filipino behind and that it will spend what it takes to keep the country whole.

Dominguez understands this and so publicly confirms the money is there even if he knows we cannot keep spending billions we do not have. He privately railed against the recommendation by 23 business organizations to the President that the Treasury spend an additional P280 billion to save the economy. That, he told the businessmen, was pressure he did not need. He reportedly opposed Cavite Governor Remulla’s recommendation that middle-income earners also be bailed out but lost that battle. The President approved a P50.8 billion lifeboat for them.

The President has put on Dominguez the burden of funding the COVID crisis yet has not given him control of the process nor its timeline. The IATF, the body tasked with dealing with COVID 19, is chaired by Exec. Sec. Medialdea and DOH Sec. Duque with the latter driving the medical agenda. Duque is reportedly a politically savvy person who has survived more than one Administration but in this crisis people ask if he is up to the task. The IATF announced its dream scenario is “to push out the peak until 2021” whatever that means. The DOH apparently resisted rapid testing which after 6 weeks is now being rushed. We have no evidence of significant contact tracing. In the battlefront there are enough nurses but not enough equipment. The DOH reportedly was initially against the ban on foreign visitors, a directive that the World Bank now believes was responsible for saving 100,000 lives. There is increasing doubt about the reliability of the death count. Despite assurances that in two weeks, and then four weeks we should have clarity, after five weeks there is still no information on where we are on the curve or even whether we have a curve at all. Absent that data it may be necessary to extend the ECQ on April 30.

Sec. Dominguez is reportedly quietly supporting the initiatives of the business sector to gradually unlock the ECQ but it is unclear where the IATF stands on this. We can only surmise they will put their finger to the wind, determine where their beloved President is leaning and go with that. The current Presidential position is he will not lift the ECQ until an anti-body cure is universally available, when nobody knows.

So Dominguez is out on a limb with no fiscal time-line and no major influence on the IATF agenda. There is also the danger of a second and third wave of infections once the economy opens up; and of course the servicing on the new debt. And then there is the rehabilitation phase. These explain his reluctance to fully open the financial spigot. He says he has the credit lines to fund what it takes after which, as instructed by the President, he should sell any and all Government assets including the proverbial kitchen sink.

It is uncertain whether the President understands the complexity and enormity of the task he has assigned his classmate. I am sure that in their private moments Sonny is gently pushing back. He is not afraid to speak his mind: Other than DND Sec. Lorenzana, he is the only one among the Cabinet Secretaries who can and will publicly do so. He opposed Federalism as economically harmful – which battle he won- and objected to a rescue for middle-income earners – which battle he lost. But for this time Sonny understands the need for a common front with the President. So he is gritting his teeth, donning his “spend what it takes” face and praying for the best.

This Is The Plan

If you want to know what your life will look like in 12-18 months, watch the video. You may not like what you hear.

I refer to the April 7 press conference of Cabinet Sec. Karlo Nograles, spokesperson for the IATF. The good news – or rather the better news since everything that followed was downhill- was that the ECQ deadline would be extended to April 30. This was the consensus among the health experts, Government officials and business. Nobody asked the 99% of Filipinos most affected by the shutdown.

Sec. Nograles painstakingly explained the reasoning behind the extension: It takes up to 14 days for the virus to incubate. The ECQ started on March 15 so March 29 was the earliest we could have clear data on the pandemic. That did not happen. However the IATF was confident we would “most likely understand the full effects” of the virus by the ECQ deadline of April 12. Hence the extension of another two weeks to examine the data and build healthcare capacity. It is as simple as that, everything is just ” too early to tell”.

Here is where it gets scary….

Nograles mentioned the Government needs the following to “fully manage” the crisis:

1. 8,000-10,000 tests per day to get better modeling. Check: Nograles said by April 13 we should have capability to test 2,600-7,000/day, by April 20 4,400-9,800 tests per day and by April 27 13,000-20,000 tests per day. (I know, with only a few days to go the vast ranges do not inspire confidence; but never mind.)  Earlier the DOH said our testing capacity would be only 3,000/day by this Monday.
2. The current social distancing measures must “remain constant.”. Check: The IACT model shows there are significant spikes in the number of infections whenever a lockdown is lifted.
3. Tests must be turned around in 24 hours. Uncheck: Our current turnaround rate for PCR testing is close to two weeks. In the U.S. it is 4-5 days.
4. We must have sufficient capacity to isolate early cases. Uncheck: That is still not the case.
5. Contact tracing and a “significant reductions in the number of cases”. Uncheck:  We are not aware of any significant tracing being done currently nor of any data to prove our progression.
6. Self-screening by the population.

And scarier….

Nograles said if all the above conditions are met we would  – and here you need to brace yourself – be able “TO MAYBE PUSH THE PEAK TO 2021”. I kid you not. I  repeat the “experts” best hope is to push the peak of the virus to next year when a vaccine should be available. This will allow our healthcare system to cope with the load in the interim. That, ladies and gentlemen, is the Plan.

A peak is defined as the top of a curve with one side going up and the other side going down. Wuhan hit its peak in 6 weeks and opened its doors in 11 weeks. Italy, Spain and New York should begin to flatten their curves in the next two weeks. Assuming no hitches, the Philippines, we are told, will endeavor its very best to hit its peak in 52-78 weeks. 

Seriously?

After all this this is the best IATF can do? And how exactly does one “push out” a peak?

So everybody understands in 18 months, in the IATF’s best scenario, we will be a scene out of Blade Runner:

1. Using NEDA estimates our economy will be down 30% or P5.4 trillion.
2. All SMEs, self-employed and most big businesses will be shuttered putting over 25 million Filipinos out of work.
3. Sec. Dominguez will be in tears.The Treasury will have spent over P1.8 trillion in relief even as tax revenues drop by P900 million.
4. Our budget deficit will go from P8 trillion to over P11 trillion and with it our credit rating and the peso.
5. Schools will lose two academic years.
6. As for the social upheaval God only knows.

What could change the dynamic?

1. Stirrings of social unrest- This is the single largest concern of the President. He talks about peace and order all the time. Interestingly, the M. Manila mayors have unanimously asked for more funding “in the interest of preserving public order”. 
2. A change in the policy driver- So far health rather than the economy has driven policy. Few doctors will take you off your critical meds. Similarly health officials – and the IATF is dominated by health officials- do not like to lift quarantines. Any easing  will require a political decision by the President based on economic and social considerations.
3. An unexpected improvement in the virus numbers- In the absence of test results, the IATF might look at deaths as the proxy for the curve. Today there are 182 deaths and 3,870 confirmed infections. The problem is COVID deaths I believe are vastly unreported (An indicator: How can I, one individual with few friends, know of more than twenty COVID19 deaths? That is over 10% of total deaths!) The under-reporting may be due to the stigma attached to COVID19; the stringent protocols on burial (mandatory cremation, relatives not allowed, etc.) and political pressure to downplay the numbers. Thus DOH Sec. Duque, Co-Chairman of the IATF, proudly boasts that “despite limited testing” and due to the “decisive measures of our beloved President” the Philippines has deaths of only two per million of population (Obviously Sec. Nograles did not get his Chairman’s memo). Elsewhere there are reports of unusual spikes in “immuno-compromised” deaths not classified as COVID19. Are the real numbers being fudged?
4. We execute smarter and better.

The new ECQ deadline will soon be upon us. What will happen then? Here are some clues:

1. Nograles said the IATF will need time to examine the data. In the meantime  “social distancing must be kept constant”.
2. The President said we must prepare for 2 years of the virus: “Let us not rush to solve the crisis”.
3. The tests will not be statistically significant. It will still be, you got it, “too early to tell”.

My bet is the April 30 will be extended. It is not a bet I want to win but it is a bet I am afraid I will win.

As for the longer term scenario let us not go there.

How Much Longer?

 “To be sure of hitting a target, shoot first and call whatever you hit the target.”

How much more pain?

That is the $64 question as we approach the April 12 deadline for ECQ. The consensus among health experts, Government officials and business is the deadline should be extended by 2-4 weeks. The main reason given is we have not tested enough to know the extent of the contagion.

I am afraid by the end of April we shall still not know the real situation given where we are in testing. There have reportedly been 16,000 tests conducted so far with 3,000/day to come by April 14. This is 27 tests per million of population. By comparison, S.Korea tests 20,000/day or 392/million of population. By end April we might have around 60,000 tests which still will not tell us with any degree of certainty whether we have conquered the virus.

What should be the metric for determining whether the ECQ is working and can be lifted? China announced the Wuhan lockdown was to be lifted once there were no hikes in new cases over a 14 day period. We do not have that measure given our limited testing.

We currently have no predictive model to tell us where we are or should be headed and our divergence from that path.  At best we are kicking the can down the road hoping the ECQ will eventually gain traction with no clear idea what this means.

To better understand let us set up a model based on the math behind a 100% ECQ.  COVID19 has an incubation period of 5-21 days or a median of 14 days. The latter is our unit of accounting. At the start of any lockdown there are three clusters of people, those symptomatic of COVID 19 (the Positives), those asymptomatic of COVID19 (the False Negatives) and those clear of COVID19 (the Negatives). By Day 14 the Positives will recover or die and possibly infect others, the False Negatives will become Positive and infect others; and the Negatives could become Positive as they are infected by the first two groups. By Day 28 we should know the true Positives and true Negatives: There should be no False Negatives.  More important, if the lockdown is 100% effective, by Day 28 there should theoretically be few or no new cases.

What does this tell us? April 12 is 28 days from the onset of ECQ.  If COVID19 is still rampant by then the ECQ may have slowed the virus but not conquered it. We will be flying blind.

Clearly the model is imperfect. First, it assumes a) the lockdown is air tight; b) there are no imported cases which will disrupt the model; c) healthcare workers do not get contaminated in quantities prolonging the chain of infections; d) the incubation period is not longer than 14 days; e) there is no recurrence of the virus among the Positives (Experts believe that is predominantly the case); and f) the surviving Positives stop being infectious within a few days of their recovery. The data on the latter is unclear, experts stating it could be between 8-37 days from recovery.

What are the policy implications of this model?

1. Extend the lockdown- Adding another 14 days to ECQ gives us an extra layer of protection in case there have been leakages in its implementation or some of our assumptions are wrong. This would take us to April 26 or 42 days from the onset of our lockdown in mid-March. Interestingly, Wuhan flattened its curve in exactly those number of days, 42.
2. Screen carefully all visitors and returning residents especially those from high risk situations- Our model is a closed model: It assumes there are no exogenous inputs to disrupt the math. Now there are over 50,000 returning seamen displaced by the cruise industry which has been a hot spot for COVID19. They should be quarantined (which they are) and tested before release (which they are not). If not they will add another layer of possible infections that will disrupt the calculations.
3. Protect our healthcare workers- We should ensure our healthcare workers are safe and do not themselves become a source of infections, adding another exogenous factor the model will have to consider.
4. Actively test and re-test and trace to narrow the observation period for incubation-We should use the military for this. If we can early detect we can reduce the 14 day incubation factor we have assumed. This will shorten the time needed to flatten the curve. Absent significant testing data, we can use the number of COVID19 deaths as the nearest proxy. Today there are 152 reported deaths and 3,246 cases or a mortality rate of 4.7.
5. Having reached our first milestone of Day 28, we can and should ease some of the ineffective and economically damaging ECQ protocols- I refer to the total ban on public transport and the checkpoints. They serve no purpose other than to impose unnecessary hardship on the poor.The Barangay and military enforcers of the checkpoints have become power monsters disrupting the supply chain and preventing Filipinos from earning a living, collecting their modest financial assistance or finding sources of food.

One word on seafarers: There has been a recurrence of COVID19 in Wuhan, S. Korea and Singapore mainly from returning residents. Our seafarers are particularly at risk because of their workplace. We need to properly certify them with quarantines and tests so they do not become an exogenous factor in the ECQ equation and can assure their communities they are safe. Having lost their jobs, we do not want them banned from returning home by their own people.

We are fighting a health issue the price for which is not only deaths but economic livelihoods, mental well being and potentially the fabric of our society. The social costs of COVID 19 are telling. Already we hear of barangays refusing returns of COVID survivors or of their otherwise being socially ostracized.

The ECQ has imposed hardships the damage of which we cannot measure at this point. So we need a model that, however imperfect can help approximate how imperfect we are. The math and the science can help us do that.

 

The Body Count

“There are truths, there are lies, and there are statistics”

My driver, JanJan, is desperate.

JanJan is married with a 9 month old child. He supports his wife and his recently widowed mother. They live in Laguna. He works in Makati and commutes every weekend to his home.

When the ECQ was imposed in mid-March I asked JanJan to return to Laguna until the end of the lockdown. I called him yesterday to find out how he was and how I can send him money. JanJan told me he is unable to leave his small Barangay to go to Sta. Cruz, the nearest community with a remittance center. He cannot buy food because all sari-saris, groceries and market have closed. He goes direct to farmers for whatever food they have to sell. There is nothing for his child.

JanJan’s plight is replicated by millions all over this country. Yet even as Government officials talk of the billions now available for the poor there is no mechanism to recognize and identify the so called “poor”. They are the faceless victims of a crisis that our decision makers and armchair pundits like myself pay token attention to; buried in the statistics, the political rhetoric and empty expressions of concern.

The DOLE announced there are now some 600,000 displaced workers in the formal and informal sectors to whom a monthly stipend will be paid. To understand, this number is less than 1% of the estimated work force of some 74 million. Anybody with any sense of perspective will tell you the real number is in the millions. The U.S. just announced over 6 million Americans have filed for unemployment insurance in the last week alone or close to 4% of the U.S. workforce. If the same figure were to be applied in the Philippines, our number would be 3 million workers out of work. For a household of four, that is 12 million Filipinos.

The DOLE is the body tasked with processing workers unemployment compensation yet they clearly have neither the numbers much less the identities of those to be compensated. The DOLE has asked employers to submit payroll sheets to bolster their data but that is unlikely to produce anything significant.

The SSS is another source of employee information but they represent only 40% of the worker universe. Only the bigger companies pay SSS contributions yet these are the companies who are not yet laying off vast numbers of people or, if they do, are adequately compensating those that are.

The BIR is theoretically a source of employee data but workers earning less than P250,000 a year or about P20,000/month; are not required to file returns. That must cover over 90% of the labor force. 

The Dept. of Social Welfare has admitted it is struggling to identify some 18 million Filipinos who will be paid P5,000-8,000/month for two months; as part of its welfare assistance. It has sought the help of local Government to identify such persons. Imagine the leakages here as local officials pad the lists. We should be happy if 80% of the real beneficiaries get to see any of this P200 billion dole out.

In short the vast majority of workers displaced by ECQ are in no Government data base. There is therefore no way for them to receive unemployment relief.

Identification is not the only problem.The ECQ has empowered mayors and barangay captains with dangerous authority and created over zealous monsters.The total ban on public transport and the artificial and ineffective intra-island checkpoints are preventing the poor and displaced from receiving much needed aid. For example, I have no means to send money to my driver because he cannot leave his barangay. Employees cannot go to work for the same reason resulting in lost production, back-ups in ports and over-flowing warehouses as goods cannot be distributed to retail outlets. Some banks have closed up to 75% of their branches because staff cannot travel to work. Banks cite this as the single greatest challenge to their business even as they are badly needed to process unemployment claims and loans to small businesses.

As a world we have become fixated by the body count, by the number and rates of deaths and infections. Yet these are so often skewed, inappropriate, inconclusive and location specific. Italy and Spain’s mortality rates are biased because of their aging demographic. China’s numbers are said to be politically massaged. Ours are limited by the lack of testing. We know the number of deaths but we do not know the real number of infections so our mortality rates are biased to the upside. 

In the meantime our Dept.of Health is resisting rapid testing (vs PCR testing) because of the danger they claim of “false negatives”. Is the truth elsewhere as increasingly claimed by many, that some DOH officials have cornered the supplies of PRC tests, hoping to sell these for a profit?

The fixation on the body count and the big financial numbers has dominated our thinking and strategy. It has made us forget the human dimension of the problem. The much touted Bayanihan Bill has led us into complacency that funding the bank account is enough. That, I am afraid, is the easiest part. All it required was a Word document and a signature.

The hardest part is getting aid to those to whom it was intended. It requires Government to unshackle the checkpoints and physical movement of people and services, grease the financial distribution points and quickly identify those unreported workers who have fallen through the cracks of our safety net.

It also requires, and this may be harder than we think, our leaders to internalize the crisis, to put names and faces to those who are desperate for help. Maybe they should get out of the comfort of their zoom meetings and air-conditioned offices and visit the countless places where these people live in anxiety and hear their personal struggles. Maybe then will they decide to act and not wait for the artificial deadline of April 12. Every day shortened is many lives saved.

I only realized the urgency of the problem when I spoke to JanJan. Members of the IATF, you should do the same, speak to your JanJans. You may be moved by what you hear.