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‘The rational risk-taking of the restless caveman’

Let us return to the Stone Age.1 For the past few weeks our Neanderthal ancestor has stayed almost exclusively within the safety of his modest limestone cave. Against his natural libertarian instincts our caveman reluctantly agreed to assiduously limit his outdoor activity to brief forages for wood and fresh water. The tribal elders insisted on these rules: they argued that it would buy time for the community to better understand the unfamiliar fresh external threat. But if they now knew more, this was not being widely communicated. Some of the tribe were even suggesting that all Neanderthals would all have to stay in the caves indefinitely, or at least until it could be verified beyond all reasonable doubt that the alien menace had left the valley. But there was a risk that this could never be known.

Our paleo-alpha was beginning to wonder whether the true risk of dying from the unfamiliar predator as opposed to those whom they already knew well like bears, hyenas and sabre-toothed tigers had been exaggerated. These familiar foes had always brought the risk of death, but they had never previously resulted in confinement to a subterranean existence. Our caveman was now restless: soon his family would run out of food, so he needed to hunt. The rest of the settlement, particularly the most vocal, did not seem to fully understand that the trade-off they had collectively chosen was not rational: that if they continued to avoid any risk with the unknown then they in fact only ensured that their collective outcome would be certain doom.

Our caveman’s concern will now of course be familiar to readers today and leads to a wider debate about rational risk taking versus irrational avoidance of any risk. The UK government has just extended the “lock-down” by at least three more weeks. Although the original aim of ensuring that the NHS could cope has now been fulfilled2, it has added further conditionality for its termination: a sustained fall in mortality rates (how sustained?); the rate of infection decreasing (how do they know without widespread testing?); supply of testing and PPE to meet demand (so far eluding the procurements procedures of healthcare bureaucrats3) and finally, no risk of a second peak (which seems impossible to fulfil given that the virus is likely to mutate and return?). This is the action of a government that is utterly disorientated by its own propaganda and has lost its ability to lead. According to its own estimates the “lock-down” is currently costing the UK government £50bn (2% of 2019 GDP) a month with up to 30% of the workforce furloughed. If sustained this will result in one third of GDP being lost4. This not a rational trade off: if it can now be quantified that COVID mortality risk is largely confined to vulnerable demographics, by refusing to take any mortality risk with the entire population, government policy simply destroys society by other means.

An additional 5.2 million Americans just filled for unemployment, pushing the four-week total to a staggering 22 million (from 3.5% to 17% of the workforce). This sets a post-war high surpassing the 10% unemployment rate of the Great Financial Crisis and the previous post-war apex of 11% in the Volker recession of 19825. Until recently the Spanish flu pandemic of 1918 which killed almost 1 million Americans was just a footnote of twentieth century history, but everyone knows about the Great Depression and its 15 million (25%)6 unemployed at peak in 1933. The abnormal prolonged pain brought by severe economic dislocation has lived longer in the memory than the grief of mortality.

The causes of the Great Depression have been long debated but it is uncontroversial to conclude that they were infinitely more complicated than the current self-induced economic disaster7. We have previously written about advances in modern monetary theory and our confidence that large scale central bank asset purchases - if done in necessary size and involving riskier assets - can always prevent a deflationary bust: “ There is a very simple reason why we will avoid a second Great Depression: if central bankers are conjurors and money an illusion, magic tricks have improved immeasurably since the 1930s”8. However, apocalyptic scientists with their “rubbish-in, rubbish-out” models appear to still be in control of all government policy. With public opinion also roused to avoid all mortality risk indefinitely at all costs, the result could be a nation in unnecessary prolonged hardship and poverty, paralysed by its own propaganda.

There continue to be a wide range of epidemiological opinion and potential public health outcomes. However, it seems that the more benign conclusions of medical experts are chronically under-reported, presumably because they contradict the current group think. Research from Stanford’s Prof Ioannidis suggesting that the disease is no more threatening to under-65s, with no pre-existing symptoms, than driving a car, has been ignored9. Around 80% of all virus cases are now thought to be asymptomatic,10 but Dr Fauci’s earlier conclusion in the New England Journal of Medicine that, assuming a large number of infected people displaying no symptoms, “the overall clinical consequences of Covid-19 may ultimately be more akin to those of a severe seasonal influenza,” has been conveniently disregarded.11 Even though it is widely accepted that UV light kills the virus,12 the police have decided to move on those without a garden benefitting from the spring sunshine. “Lock down” society is a world of thoughtcrime and groupthink, chillingly reminiscent of George Orwell’s “1984”.

All mortality is anecdotally tragic. However, doctors routinely make life and death decisions over healthcare resource allocation. As such it should not be taboo to compare mortality from COVID-19 to other causes of death or to the economic cost of saving lives. The official estimate for UK deaths from the virus is now 20,000, down from an original figure of over 250,000.13 This should be compared with an average 20,000 deaths per year from flu (note this year flu deaths are close to zero, usurped by the new coronavirus) and 165,000 from cancer, which tragically may now increase this year owing to crucial hospital treatment being postponed.14 Prof Ferguson will no doubt claim that his original mortality estimate would have been valid without “lock down”. But this is now counterfactual: it is a thesis that can only be tested by comparing mortality rates in countries such as Sweden15 which has so far avoided shutting its economy. “Lock down” enthusiasts, simmering with illiberal intent, now scour the Swedish statistics in the hope of finding an abnormal rise in its COVID mortality: the more rational question is how much worse should the Swedish public health crisis need to be for it not to be deemed a relative success? How many more Swedish deaths justify its avoidance of economic destruction necessary for superior quality of life? Politicians in the UK are too cowardly to enter this debate.

Any investment involves calculated risk as the future is always unknown and unquantifiable. But we are not immune from the irrational intolerance of risk that results in poor decision making. Now after the steepest market decline since 1929 and an unprecedented policy response, most stock investors are unable to block out apocalyptic noise and embrace selective cyclical risk, despite nearly all historic examples demonstrating this should be bought cheaply in times of stress, in advance of recovery and then sold on normalisation. Fund buyers commonly pay a premium for supposedly active funds that cluster around the passive benchmark; they over-pay for low volatility, sacrificing return and the diversification benefits of non-correlation with other assets. Rational risk taking is not just relevant to public health policy: in most walks of life it is a pre-requisite for consistently successful outcomes.

It is now hoped that the “lock down” may end on the May 8th bank holiday that will celebrate the 75th anniversary of Victory in Europe during World War Two. We must now ask an uncomfortable question: whether through irrational avoidance of any mortality risk we are now destroying the prosperity and freedom which our forefathers chose to risk their lives to save?

Barry Norris
Argonaut Capital
April 2020


1 For our previous visit to the Stone Age see






7 See for example Liaquat Ahamed “Lords of Finance: 1929, the Great Depression, and the Bankers who broke the World”




“If one assumes that the number of asymptomatic or minimally symptomatic cases is several times as high as the number of reported cases, the case fatality rate may be considerably less than 1%. This suggests that the overall clinical consequences of Covid-19 may ultimately be more akin to those of a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) or a pandemic influenza (similar to those in 1957 and 1968) rather than a disease similar to SARS or MERS, which have had case fatality rates of 9 to 10% and 36%, respective”