Given a global choice, who would you hire to run your country's COVID response

Valuation metrics — COVID response results — bid up or crash share prices


Lester Golden

3 years ago | 12 min read

Originally published on medium.

The USA as The Big Short, or who would you vote for to run your country’s COVID response?

To find out, try a thought experiment. You’re a derivatives trader at a NY Christmas party in 2019 and you meet a brilliant environmental scientist who studies wildlife habitat destruction and viruses that jump species.

She goes on and on about a new virus that originated in bats sold in Chinese wet markets, a term you’ve never heard before.

Even better, she’s a public health policy expert and tells you in exquisite technical detail how governments around the world will deal with the imminent pandemic based on their prior experience — or lack thereof — with SARS, MERS, Swine flu, H1N1 and Ebola, and their health care and political systems.

She’s utterly convincing and it feels like the insider trading opportunity of a lifetime — without the SEC enforcement risk. How would you trade it?

Imagine importing competence, exporting incompetence by freely trading government policies and leaders

Add an imaginary speculative twist to our experiment. Instead of trading stocks or derivatives using her unique insights and legal information not yet on any trader’s radar, let’s trade a different asset class: governments and leaders. Normally we can vote only in the elections of states we’re citizens of and for leaders of our own country.

But what if we, as citizens, could widen the choice and hire better institutions and leaders from abroad, like the Brits and Italians outsourcing management of their train networks to the French or the Germans. It’s been done before. Indonesia hired a Swiss company to run its customs service to eliminate corruption.

Most of Africa, Latin America and South Asia has outsourced part of its public health management to the Gates Foundation.

Place Your Bets….

From your new scientist friend you have unique, deep research and insight into each government’s future prospects in an imminent pandemic.

Which would you go long (buy) and which would you sell short, betting it’s value would crash? The WHO’s last report on nations’ pandemic preparedness was long on the US. How did that bet turn out? Would you bet on Dr.

Trump and the US or physicist Chancellor Merkel? Would you gladly exchange Merkel for Trump to manage the US pandemic preparedness and response? Would you prefer Trump’s daily briefings or New Zealand PM Jacinda Ardern’s live at home in sweatshirt Facebook chats? Would you trade Trump and his Pence-led task force for Singapore and its early reopening and second wave of COVID cases? Ask the same question for South Korea and its highly efficient testing and contact tracing: stick with Trump or outsource to South Korea and get as many of Seegene’s testing kits as you need?

…..on governments and leaders tradeable in a market

Imagine a trading market like Predictit to hypothetically trade governments and leaders and it’s glaringly obvious which would parabolically rise and which would crash like Lehman in September 2008, and which would be somewhere in between.

The purpose of our thought experiment becomes clearer as we develop valuation metrics for leaders and the governments they head.

Obviously, quantitative metrics for government practice and performance will be more quantifiable and objective and less subjective than for leaders.

Unlike our imaginary derivatives trader, COVID offered the rest of us no lucrative BIG SHORT. But our thought experiment can show us which leaders, and consequently, governments, live in the reality-based community — and which not.

Valuation metrics — COVID response results — bid up or crash share prices offered for governments and leaders

Just as bond investors evaluate bond covenants and company leverage ratios (debt/equity, debt/EBITDA), our hypothetical trader of governments and leaders will weigh their investment’s social contract with citizens — provision of public goods such as health care, its financial and social resilience.

Competent COVID response will lead to lower per capita infection and death rates, shorten lockdowns, lessen a country’s drop in GDP and enable faster reopening. Incompetent COVID response will lead to higher infection and death rates, lengthen lockdowns, lead to second and third waves of infection, political instability and risk and delay recovery.

Which government and leader merits paying a higher multiple of GDP (Warren Buffett’s favorite way to value stock markets)?

Investors making long term macro bets on currencies look at a country’s governance, interest rate and growth prospects, the presence of an independent central bank being key to the governance part.

Our hypothetical investors in governments and leaders as tradable assets will evaluate a country’s governance by whether a leader respects science and scientists’ independent voice.

What is the population’s level of trust in government guidelines and science? Is the leader a science-denier — climate or COVID — who promotes quackery and superstition? Since governance is a two-way street, what percentage of the population traffics in conspiracy theories, disinformation and science denial? High social capital and high trust societies obtain higher levels of voluntary compliance, a key to successful crisis management.

Valuation metrics: Weigh each element of governance and the leader’s execution

Just as equity investors look at a company’s earnings and its price to earnings (p/e) ratio and level of debt, our hypothetical government/leader investor will measure the comps between countries’ COVID death/confirmed case ratio, per capita case rate, per capita testing rate, PPE provision and contact tracing stats and how long each government took to implement each pandemic preparedness measure with the lead time it had after China admitted it had a COVID epidemic.

Assign a percentage of valuation coefficient to each factor and created a weighted average to arrive at a total valuation for each government and leader.

For example, South Korea flattened the curve with massive testing and contact tracing even though it had precious little lead time due to its proximity and close travel and commercial ties to China.

This evidence shows a government’s grade on testing and contact tracing would appear to merit a high weighting in determining its share price.

New Zealand was more successful in terms of absolute case numbers, but benefitted from much more lead time and distance. Singapore was initially successful in bending the curve, partially reopened, and then saw a second wave of cases emerge in its migrant worker housing.

Singapore appears to merit a high rating on testing and social distancing, but falters in one high impact provision of public goods part of governance. Singapore’s valuation drops by its ignoring that, In public health, everybody wins or nobody wins.

How much would you pay to trade away Dr. Trump? Trade for Merkel? Buy South Korea’s contact tracing?

Starting with the premise of governments and leaders as tradable assets, who’d trade Merkel and Germany’s COVID response systems for Trump and the American COVID response system? Not hire Finland and its young female PM over rat pack era Trump and his HHS secretary Azar’s dog breeder crony who ran the HHS’ COVID response before Pence? What kind of government puts a former dog breeder with zero public health experience in charge of a public health agency with a trillion dollar budget? Answer: the world’s richest failed state.

It should be obvious to anyone with even the most tenuous link to reality that trading Merkel or Ardern for Trump to deal with COVID is as likely to be a winning trade as investing in a Trump casino in 1990. Melinda Gates said as much, though in more diplomatic language:

Melinda Gates gives Trump administration ‘D-minus’ for coronavirus response The co-chairman of the Bill & Melinda Gates Foundation cited a lack of national coordination…. She said governors were stepping up with “50 different homegrown state solutions,” instead of a national response coming from the top. “

You know, if we were doing the things that the exemplary countries are doing, like Germany, we would be testing…..We would be testing, first, health care workers and then the most vulnerable, and you’d be doing contact tracing.

And we would be able to start thinking about slowly, slowly reopening places in society in safe and healthy ways, but we have a lack of a coordinated effort. That’s just the truth, across the United States.” (

Even most Trump supporting Americans would view a German who’d trade in Merkel for Trump as the leader of Germany’s COVID response as certifiably insane.

We should therefore imagine the reverse scenario and view any American who would not trade in Trump and his Pence-led task force for Merkel and her interdisciplinary team of 26 science-based experts as equally departed from reality.

When government authority and reality divorce, it’s time to end our marriage with that government.

Don’t agree? Please accept Dr. Trump’s offer of a dose of hydroxychloroquine or disinfectant to treat COVID when you get it.

Long lockdown enables speculative thinking, to imagine policy ideas that, if adopted, transform governance for the better. COVID has exposed spectacular state failure in pandemic response, in places as different as Brazil, Belarus, the USA and the UK. Proper diagnosis of state failure and success, and its consequences, must precede solutions. Among them:

· Pathogens grow exponentially, while human governance and its responses are linear. Humans can close this gap only with automated contact tracing and testing at scale.

Failed states with low redundancy healthcare systems fail at contact tracing and testing. Low redundancy, degraded public goods are the result of political choices. States with effective testing and contact tracing, such as South Korea and New Zealand, have citizens that demand, and receive, high quality public services.

· States with successful pandemic response ask and precisely answer a single big question: what human behaviors does the pathogen exploit? The answers must be strictly science-based with the scientists out front answering, with the politicians standing solidly (and silently) behind them.

In Seattle the epidemiologists controlled the city’s COVID response, while in New York, feuding politicians produced a delayed response and a catastrophically higher death toll.

· States that fail to quickly ask and then just as quickly implement science-based answers have political and economic structures that the pathogen ruthlessly exploits — the institutional inertia toward business as usual.

In 19th century NY this produced 80 years of catastrophic epidemics before effective public health agencies — a government-financed public good — stopped them before the advent of modern antibiotics.

Who’s fragile, who’s antifragile?

The states most successful at COVID response are what Black Swan author Nassem Taleb calls, Antifragile. Taleb points out that fragile has no antonym in the dictionary, which illustrates how foreign is the idea of institutionally organizing our institutions so that we gain strength from disorder.

But empirically, we’ve seen which countries have gained geopolitically in soft power, legitimacy, global admiration — if not yet practical emulation — from their COVID response.

The big winner, geopolitically fragile in a NE Asian hotspot, is South Korea. Seven weeks ago South Korea had the same number of COVID deaths as the USA, new cases were doubling every few days and the country the target of multiple travel bans. As of May 6 South Korea had 300 and the USA 70000+ COVID deaths.

How did South Korea go from 800 new cases/day to fewer than 100/day in just the first two weeks of March? Fast, competent response by antifragile institutions strengthened by pandemic disorder.

This narrative shows the scale of the impending catastrophe South Korea avoided through fast and competent response by high redundancy, antifragile institutions:

On February 16 a 61-year-old woman with a fever entered the Shincheonji Church of Jesus in Daegu, South Korea. She touched her finger to a digital scanner.

She passed through a pair of glass doors and proceeded downstairs, to the prayer hall, where she sat with approximately 1,000 other Seven weeks ago, South Korea and the U.S. had the same number of virus deaths.

Today, South Korea has fewer than 300, and the U.S. has more than 70,000 worshippers…Hours later, she exited the building and left behind a trail of pathogens that would lead to thousands of infections, triggering one of the largest coronavirus outbreaks in the world.

By the end of February, South Korea had the most COVID-19 patients of any country outside China. New confirmed cases were doubling every few days, and pharmacies were running out of face masks.

More than a dozen countries imposed travel restrictions to protect their citizens from the Korean outbreak, including the U.S., which had, at the time, recorded an official COVID-19 death toll low enough to count on one hand.

But just as South Korea appeared to be descending into catastrophe, the country stopped the virus in its tracks. e government demanded that the Shincheonji Church turn over its full membership list, through which the Ministry of Health identied thousands of worshippers. All were ordered to self-isolate.

Within days, thousands of people in Daegu were tested for the virus. Individuals with the most serious cases were sent to hospitals, while those with milder cases checked into isolation units at converted corporate training facilities.

The government used a combination of interviews and cellphone surveillance to track down the recent contacts of new patients and ordered those contacts to self-isolate as well.

Within a month, the Korean outbreak was effectively contained. In the rst two weeks of March, new daily cases fell from 800 to fewer than 100. This morning, the nation of 51 million reported zero new domestic infections for the third straight day. (

Pandemic chaos has actually strengthened its institutions, with its president just comfortably reelected, its soft power and geopolitical position.

Competent COVID response has done the same for Greece, rehabilitating it from its prior reputation as a debt-ridden example of corruption and cronyism.

The big losers are the incumbent geopolitical or demographic giants: the USA, China, India, the UK, Indonesia, Brazil, Mexico. They’re the 21st century versions of 1918 Philadelphia: business as usual, hold the parade (China’s tardy pivot to lockdown notwithstanding).

Consciously evolving competent governance in a pandemic future

We live on a microbial planet in which 70% of viruses come from wildlife. With habitat encroachment we build the highways pathogens travel on from wildlife to infect us.

Cholera travelled on the Erie Canal in 19th century NY. Human immune systems, evolved during the 95–97% of our species’ existence in tribal bands of 50–150 people that preceded agriculture and cities, were not designed for civilization at its current scale and connectivity.

Technology and a partial reversal of habitat encroachment allowed by unlimited national sovereignty over ecosystems is the only available workaround in this new era of planetary pandemics that make wall-building useless.

But the problem in getting from where we are to where we need to go is a glaring a divorce between competent governance and geopolitical power.

Melinda Gates’ reference to the US not doing what the “exemplary countries” like Germany are doing points to this problem. With Germany a possible exception, the most competent governments and leaders are geopolitical midgets, while the geopolitical giants are incompetent, dysfunctional, corrupt or all three.

What does this mean for building a viable planetary COVID response and recovery so the cliché “we’re all in this together, the virus respects no borders” becomes a reality? Separating competent from incompetent governance is now a life and death matter; essential to designing a new world adapted to survive planetary pandemics.

I designed this thought experiment in viewing governments and leaders as tradeable assets to begin the process of closing the gap, at least psychologically and conceptually, between competent pandemic response and governance and the geopolitical power of the financialized capitalist low redundancy states blocking our way forward to an antifragile future.

We now know which antifragile (high redundancy, defensible public goods) policies and institutional structures work to survive our planet’s microbial future. It is structures of power — political, cultural, geopolitical, financial — that block our way.


Created by

Lester Golden







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