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Michael Lewis on the U.S. Epidemic Response: Misleading Incentives


Michael Lewis “can stifle complex things like a few others.” And some of the topics in his recent book are more complex বা or more tragic চেয়ে than the U.S. response to the Kovid-1 pandemic epidemic. The Premises: A Pandemic Story.

At the heart of Lewis’s narrative is a central question: Why did the United States fail in its response?

Lewis’s answer, with which he elaborated in a detailed conversation Planet MoneyMary Childs at the CFA Institute’s recent Alpha Summit is startling and provocative: “People were actually encouraged to create an epidemic response.”

To show what he meant and to teach lessons for the financial world, Lewis focused on the experiences of the US National Institute of Public Health, the Centers for Disease Control and Prevention (CDC) and the central character in his book: Charity Dean, MD, Infectious Diseases Outbreak Specialist and Former Assistant Director of the California Department of Public Health. Dean Covid-1 was a key member of the executive team that directed the outbreak response.

“Gut checks” for the United States

The United States is in a bad position with COVID-19 cases and deaths. As of this writing, the country has recorded more than 33 million lawsuits and nearly 600,000 Americans have lost their lives. New York Times. (A new study estimates that the number of Kovid-1 related deaths in the country could be higher than 100,000.)

“4% of our world population and 20% of us have deaths,” Lewis said. “No matter how you cut it, no matter how you sort it, it’s not a good response, it’s not a good result.”

The U.S. pandemic response is “a really serious bowel test” for the nation, he said, especially since the country ranks first among 195 countries in the 2019 Global Health Security Index epidemic preparedness survey.

Was the US epidemic response devastating from the beginning? According to Lewis, it certainly looks that way.

Part of the problem was the decentralized approach to dealing with the epidemic. As Tania Lewis pointed out Scientific American“The structure of the U.S. government means that most of the epidemic response was left to state and local leaders. In the absence of a strong national strategy, states apply a patchwork of widely disorganized policies that have not effectively curbed the spread of the virus.”

For a response to be effective, it must be unified, Michael Lewis said.

“You can’t make one state do one thing, and another state can’t do another,” he said. “The lack of integration at the top probably destroyed it from the beginning.”

And Lewis points the finger directly at the CDC.

“We have an enterprise called Disease Control Center which is not actually established for disease control,” he said. “It’s a little harsh, but if you tell disease control centers in America to get the most sick because of Covid-1, they can’t behave differently from their work.”

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CDC and incentives

According to Lewis, the problems in the CDC have arisen from the wrong incentives, as institutions like the CDC have become political.

What he means is that we have to dial 1 clock around 1984.

At the time, Lewis explained, the CDC was the “gold standard for public health in the world”, run by working civilian employees, who were kept from the political process to the arm.

This means that the person in charge cannot be expelled at the behest of the President and the focus can be on protecting public health.

But then something changed: In the mid-1980s, many federal government jobs shifted from permanent career positions to presidential appointees. It has changed the structure of incentives. Now, instead of recruiting qualified candidates from a general pool regardless of politics, staff are selected from a small, politically motivated pool.

Probably the worst problem with politically employed jobs, Lewis said, is the short-term horizon:

“You’re signaling to the agency and the person who is taking the job that this leader hasn’t been there for very long, they’ll be there as long as the White House person is there, and in fact their average term is 18 months to two years.” ”

Short-term employers equate to short-term incentives.

“Who in the world would say that it’s a good idea to make a CEO who knows everyone will leave in 18 months to two years?” Lewis asked. “You’re not going to solve long-term problems.”

Key takeaways: Avoid short-term incentive structures.

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How to be a Dean of Charity

Although Lewis speaks only of thorns for the CDC, he sees a glimmer of hope in the form of Dean and a team of physicians named Wolverine who have worked at various times in the White House and have been in contact due to their efforts to fight the disease.

Dean was a team of scientists and physicians who sounded the alarm about the Covid-1 pandemic epidemic very early but were largely ignored.

As Lewis puts it, Dean came out of a turbulent time in his life as a local public health officer in California. Dean insists on telling himself that the story is a critique and that it can be summed up in one word: adventure.

Lewis said, “The story is that he is responsible, even if he is not, for what happened to him.” “He’s going to take on that responsibility and he’s going to be brave even if it’s painful.”

Dean writes inspirational messages on post-it notes and plasters them all over his house to remind himself of the importance of being brave. One of his favorite lines is “Courage is a muscle memory.”

Why is it urgent? What can others learn from his example?

If Lewis had taught a lesson “How to be a Dean of Charity “Of course, he will start with the importance of the story we tell ourselves.”[Dean can] Look at yourself in the mirror and see all the ugly parts, all the parts that he has denied, ”he said. “Instead of moving under their carpet, he has consciously held himself to the highest standards at all times.”

It recognizes what it allows him to do that sometimes what holds him back is cowardice.

“Being aware becomes an art form when you’re leaning towards a kind of weakness,” Lewis said. “It becomes a subject for which you develop a muscle memory and if I’m teaching someone how to be that, I would say develop that muscle memory.”

Key Takeaway: “Courage is a muscle memory.”

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Probability vs. statement

Risk is a topic that Lewis often searches for in his books. Whatever the character or story, one element always hits him: those who manage the risk well and disconnect from the rest of society.

“You think the markets will be more efficient,” Lewis said.

To illustrate his point, Lewis pointed to baseball, a sport he covered in his classics. Moneyball. Baseball has been played the same way for almost 100 years and players are doing their job in front of millions of people and statistics are attached to their every move.

“You can put baseball players at risk, and you could have done it much earlier,” he said. “Until someone comes to Oakland and look at the things that Bill James wrote and start thinking about it, it tells you that there is something in the human brain that is very slow to think about. In terms of this it has to think smartly about the risk. ”

The main insights that Israeli psychologists Daniel Kahnman and Amos Tavorsky had about risk, which Lewis examined Undo project, People are not “probability instruments” so most of the time what happens is that instead of calculating probabilities, people make decisions based on narrative.

And that observation could be applied to the COVID-19 disaster in the United States, Lewis said.

“America is the richest, most prepared country in the world,” he said. “This place is called our disease control center. They will handle it. ”

According to Lewis, the problem with this approach is that almost no one except Dean and Wolverines was thinking of possible positions.

“It’s a big insight,” he said. Even people whose job is to manage risk at some level – and everyone risks their lives – are not thinking in a hard, cold analytical way. They are thinking differently which distorts their verdict.

Key Takeaway: When assessing risk, calculate the probability. Don’t rely on narrative.

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Financing as a force for good

Although the economy can have a positive impact on the world, Lewis believes the reality is not so straightforward.

He explained that the financial sector has been very good at maintaining its profitability. So when innovation comes and threatens that profitability, innovation gains more time than it does outside the financial sector.

“[Finance is] A really important part of the economy, “Lewis said.” But it has an unusually hard time listening to their voices to stay well inside. “

When finance is best, usually, it’s rather annoying, he said.

For young professionals who are starting their careers in finance, who want to be a force for good, Lewis said: “Remember who you are now, because you can’t imagine what you can do three years from now. There’s a lot of money in the line. “

And in the future, when you find yourself facing a “zero-sum moment”, you have to choose between doing something that is financially in your best interest but not in the best interest of your client, not tempted by money.

For those already established in the investment industry, Lewis’ advice was simple: control your spending.

“Live a life that is humble enough that if it all goes away, it’s not a disaster, so you’re not in a position where you have to make those bad decisions.”

Key Takeaway: Remember your faithful responsibilities and live humbly.

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All posts are the author’s opinion. As such, they should not be construed as investment advice, or the opinions expressed must not reflect the views of the CFA Institute or the author’s employer.


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Lauren Foster

Lauren Foster is a content director at the CFA Institute’s professional education team and host of the Tech15 podcast. He is its former managing editor Entrepreneurial investors And co-led the CFA Institute’s Women in Investment Management Initiative. Lauren has spent almost a decade on staff Financial times As a reporter and editor based in the New York Bureau, freelance writing for this Baron And FT. Lauren holds a BA in Political Science from the University of Cape Town and an MS in Journalism from Columbia University.



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