The Subcritical Compilation
The following is a compilation of essays -- remixed and lightly edited -- that were written between March and September, 2020. Specifically:
Welcome to the Subcritical Society, published May 15th, 2020
The Full(er) House: Living in Distributions, published August 14th, 2020
The Great Certainty Purge, published September 15th, 2020
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Pandemics are a crack in our preferred reality, but they are nothing new, even if many countries, like the US, lack recent experience with them.
The reality is that wildness has always lurked just beneath the surface. A combination of willful blindness, homeostasis, wishful thinking, and luck have let us skate past the holes in modernity’s ice and pretend nothing lurks beneath it. We have been making bets on smooth, thick ice for decades, and we stopped noticing, even if cracks open anytime in the thickest ice.
The subcritical society: the idea that a post-virus society is twitchingly ready to go racing off in unexpected directions at the least provocation.
Societally, we have binged on certainty for decades. And the pandemic now looks like the great certainty purge. A recent Scientific American article drives that point home: they examined the “Language of Science,” the terms the magazine had used over the last 175 years. It is increasingly clear that the only thing we are certain about is that we are less certain.
The current subcriticality is largely a function of the ongoing Covid-19 pandemic, which has frayed societal nerves, but it’s also tied to other epiphenomena, like the current US election cycle. Compulsive extrapolators have used the current societal instability to posit the arrival of a “new normal” -- a fundamental reset in how we restructure economies and societies. There is a utopian yen among “New Normalistas” to declare the past prologue to a work from home Zoom-future that, as it happens, they kinda, sorta always wanted in the first place.
This is an error, one that is causing confusion and creating new tensions. We cannot say this loudly or often enough. The New Normalistas are on the wrong side of this bet, and it will end badly for them.
To explain why, let’s start with the source of some of the current confusion. As strange as it might sound, part of the problem is that we convinced normal, non-scientists to be interested in science, especially medical science, and we did it at a bad time. While this might have seemed laudable, and even necessary in the current context, it is causing grief, for three reasons, all of which are rarely discussed.
First, medicine is equivocal at the best of times. Red wine good; red wine bad. Normal people are rarely exposed to this equivocality in such an up-front and visceral way as we have been during this pandemic. Specifically, we have watched medicine’s iterative dance toward the mechanics of Covid-19 play out in realtime, publicly and confusingly. Masks bad, masks good; airborne spread is unimportant, airborne spread is important; kids are immune, kids are super-spreaders. And so on.
Science, for all its flaws, thrives on messiness. As philosopher of science Alan Chalmers has written, “Science progresses by trial and error, by conjectures and refutations. Only the fittest theories survive”. These conjectures and refutations are essential, creating a miasma in which science proceeds, often one dead scientist at a time, to adapt Max Planck’s line. This miasma, in turn, slowly coalesces into a distribution of the possible, a distribution in which we must learn to think if we are to avoid the temptation to wrongly burn the whole edifice down for its required equivocality.
Second, and this is more insidious, but effect sizes have largely declined in medicine. This turns out to be bad timing. We have encouraged the public to be interested in medical science just as the benefits of new therapies seemed less certain and more confusing. At the same time, "parachutes" -- world-changing new therapies like penicillin -- have become scarce. Economist Robert Gordon has written about this persuasively in his excellent “The Rise and Fall of American Growth.” We are running ever-faster and more expensively to stand still, with many new therapies doing next to nothing (half-million dollar cancer drugs that add a month to life), and so people feel emboldened to think and do whatever they want, at precisely the time when we wish they'd listen to experts.
Third, people are struggling to hold in their heads the distribution of possible outcomes. As Stephen Gould wrote in his classic book on evolutionary theory, “Full House: The Spread of Excellence from Plato to Darwin,” in any complex system we need to consider the variation in the distribution of outcomes, and not just get stuck on the median of a particular parameter. While Gould grounded this in a much-cited analysis of the disappearance of .400 hitters from baseball, a modern update might include Covid-19. The virus has massive variation in outcomes, from asymptomatic spread, to long-term lung compromise, to, well, death. Getting stuck on the median of a single parameter in a complex distribution with a wide range of outcomes is, to put it mildly, hugely misleading.
The result of these three factors? People see what they want to see: They see non-working therapies that might work (Hello Hydroxychloroquine!), they discard working therapies that don’t do enough (Buh-bye masks!), and fixate on mortality when they should be thinking about the full house of outcomes (It’s only the elderly and immunocompromised!). While that might seem an intractable mess, it isn’t: All of these forces lead to a similar place. Many people feel like no-one knows anything, that medicine has no hard answers, and they should, therefore, exercise their own discretion in getting back to normal, which they will, however spasmodically and convulsively, as outbreaks rise and fall, until we have a vaccine.
This is why the New Normalistas have it wrong, at least in their broad strokes. As desirable as some of the things they want might be, and while some things will certainly change at the margin, the messy forces of humanity are arrayed against them, and these forces will not be cowed, let alone stopped. The boom, boom, boom drumbeat toward “normal” will continue, right up until there is a vaccine. There is a giant, silted, societal dam ready to burst, and on the other side is a headpond of people demanding OpenTable reservations, shopping trips, happy hours, sporting events, live concerts and cheap flights to Vegas.
But it’s going to get messier first. Because when you combine homeostasis, new outbreaks, the mistrust of medical science, and the perpetual threat of further lockdowns (in a kind of societal Hoskins effect) you are guaranteed doom-loops of opening and closing, opening and closing, OpenCloseOpenCloseOpenClose. Just as the body uses immunological memory to mistakenly apply used remedies to new infections, so too the populace at large now comes to view new Covid-19 restrictions as tried remedies that cannot and will not work. We are collectively trapped by our first response; unwilling and unable to advance through iteration and equivocation.
(Note: the following predictions were originally published on August 14, 2020. The “check marks” denote them being correct.)
Cases plateau, or even subside, into September. ✅ Whether it’s due to increased efficacy in care, or some as yet unknown seasonal slowdown in mortality, is irrelevant. Cases plateau, and we end up at a new inflammaging baseline of Covid-19 acceptability. It's the normalization of deviance, in Diane Vaughan's terms: We are shuttle launch engineers declaring small booster rocket cracks fine at low temperatures, despite it being outside the design envelope, and not realizing there is a morning launch ahead, one fine Florida morning, that will break the envelope entirely and cause the Challenger to explode.
“We overreacted; re-open faster” becomes the September default. ✅ The push to re-open schools will remain strong. As the re-open occurs, homeostatic peer pressure drives even those that are against school openings back into increased social interaction. Kids, in particular, become point masses of spread, especially college kids, as the high costs and fairly crappy consequences of on-line education play on parental fears.
In mid to late October, it all changes. A combination of new school-driven clusters, increased confidence, faster openings, and cooler temperatures leading to more time indoors causes cases to begin rising again -- sharply. ✅
November-December have the potential to be Covid-19 nightmares, with the virus roaring back, summer incidence levels exceeded, and rising mortality rates. ✅ And don’t even get us started about the consequences for the US election. We expect October through December to be rife with doomsayers and dystopias: a period when it’s fashionable to lament the fall of everything.
The first availability of one modestly effective vaccine happens in January (though there are some indications this could come sooner, we’re opting for a mid-line stance here). Shortly after that, and certainly by April, more vaccines show up, and initial ones are available in wider supply. ✅ There is the potential for an economic melt-up, an unprecedented one, both in terms of scale and global synchronization.
So, what changes? Post-pandemic, in the short-run, and contrary to many, we think very little changes, at least very little that is materially different from what we thought before. Rather than being a break with the past, we think people’s desperation for a return to normalcy—shopping! travel! work!—creates immense pressure to return to the recent past faster than anyone expects. There is inherent human-driven homeostasis, an almost inexorable need to bring things back to where they were before.
We think the biggest short-term effect will be an acceleration of existing trends. More things will go in the cloud; more things will be virtualized; more things will happen at the edge; more buying, selling, and entertaining will happen online: and so on. These trends will simply speed up.
We think a useful analysis must go deeper rather than being merely extrapolative—it must be a thick description of how people live and die. This virus has been, both literally and metaphorically, a disease of modernity. Why? Because it attacks via the vectors of modernity: trade linkages, obesity, diabetes, air travel, mass transportation, urban density, social media, etc. Understanding long-run change requires understanding where modernity itself is under threat, and whether those threats will lead to meaningful—and investable—change.
Sociologist of risk Charles Perrow, long ago warned against the catastrophic risks created by tight coupling in society. To Perrow, tight coupling was any complex system where changes in inputs rippled quickly to new and unpredictable outputs, without an opportunity for meaningful intervention. Perrow would have called this current episode a reminder of tight coupling’s risks, and a forced re-introduction to loose coupling—an attempt to make your life less easily whipsawed by abrupt changes in the world around you. In that light, we think people—and companies—will carry more inventory of everything, that the scarring experience here will turn us into proto-preppers, less willing to be caromed around by the vagaries of life. This a big change, one that will ripple through supply chains, housing, travel, technology, education, and health.
Under the surface, however, wildness will lurk—our society will merely be subcritical. This will be, of course, normal, not abnormal. Most of human history has been this way, unlike recent times, which were anomalously placid, a state that’s now ending as we return to subcriticality. We think that making this state visible and manageable will be one of the keys to investing moving forward.
There will be explosive economic, biological, and technological moves, much more explosive than in the recent past, in part because the ground has been cleared for them, but also because our new, over-excited society has collective scar tissue making it predisposed to jump sooner, further, and faster. This will lead to more rapid technology adoption, faster cycles, and great gains for investors willing to embrace the emergence of subcritical society.
To summarize, here is our current state of thinking:
In the short-run, less will change than people think
In longer-run, we will see a complete rethinking of risk, slack, and societal coupling
We are interested in investments that acknowledge, track, and even gain from the wildness and disorder lurking under the thin ice of a newly subcritical society