Is Elon Musk Right?

Originally published in Linkedin 5/7/2020

Unlike many a public company CEO, Elon Musk is not given to guarded, carefully worded statements that hint at his convictions and concerns. He simply calls it as he sees, it, and lets the chips fall where they may.

His most recent broadside at the powers that control the local area in which the main vehicle assembly plant of Tesla is situate – and at the California state government – has got him into a certain amount of hot water. He wants to restart the manufacturing of his best-selling cars again at the company’s Fremont California plant, in its quest to fulfill the lofty mission of the company: “to accelerate the world’s transition to sustainable energy.” The problem is that the authorities – state and local – have imposed Shelter in Place orders, refuse to lift them, and have forbade Tesla restarting their plant, essential to the manufacture of 70% of the company’s 2020 projected output this year.

Elon Musk has generated a tweet storm, and quite a lot of diverse comment, much of it negative. Some of it extends to “millions will die”!

The point is that some…an unknown number (probably not millions!) …of casualties would result from opening the economy. The question is what are the trade-offs, what are the alternatives?

The Alternatives

There are many people that sit on the extremes of the debate. On one side the demand is to continue the lock-down until a vaccine is deployed. On the other, to open without restriction. There are good reasons to reject either of these extremes, and we should closely examine them as they are often ignored in the noise of debate.

Continue the Lock-down Indefinitely (until effective treatment or vaccine availability)

The economic impact of the lock-down has been very serious, bordering on the catastrophic. In the U.S. government has taken a very strong initiative to provide funds for those impacted, but governments are blunt instruments, so the support is both spotty and woefully insufficient to fully meet the impact of the forced halt to the economy.

Is a vaccine coming? Dr. Fauci has sounded a hopeful note, and the politicians talk with conviction about it coming sooner than later. The hard truth is the we have never successfully developed a vaccine against a Coronavirus. Ever. In history. A good example is the common cold. This is a coronavirus that has been with us for a long time, and no vaccine has ever been found.

We believe that any policy based on the presumption of a vaccine – either sooner or later – is folly. It may be possible with the focus and the billions being spent, but to place a bet on it with the risks that we face is not serious policy making.

On the other hand, we have been more successful in developing treatments that ameliorate or completely neutralize the symptoms of coronavirus caused disease. These will certainly form part of our armory and more on that subject in due course.

In the meantime, businesses right across the spectrum are failing, and there are now 22 million unemployed, compared to less than 6 million only less than 3 months ago. A continuation of the lockdown will add many millions to this number, accompanied with a steep decline of economic activity. Such a catastrophic economic decline will have a profound and unpredictable impact on society. In historically equivalent events we have seen widespread misery, a sharp rise in crime, a significant decline in life expectancy, social upheaval, and – at the extremes – war and revolution.

Not a good option.

Immediate and complete removal of the Stay at Home regulations

Completely relaxing the regulations and lift all strictures will result in a very steep increase in mortality from COVID-19. Estimates have been all over the map, because we simply do not know.

It is this unknown that gives us pause: the upper bounds of probability could mean a potentially large number of deaths, reaching into many millions. In the 1918-1919 Influenza Pandemic (“Spanish Flu”), in today’s population numbers, the equivalent of over two million people (in current population terms) died.

While there are reasons to believe that the death toll would not be as high from COVID-19, the potential number is still unknowable. After four months of this disease being widespread, do not know enough about the disease to predict the outcome of allowing it to run its course.  

Even with Shelter in Place orders, in New York City COVID-19 proved astonishingly deadly, killing well over 1,000 people per million of population, while in largely rural states the deaths appear to be less than 100 per million (and in many states less than 25 per million) of population. Not a noticeable blip on the normal mortality rates (and in most cases, less that a bad Flu season.)

The question is what would happen across these diverse locations if the Shelter in Place orders were lifted without any restrictions. At the extreme end – NYC, for example – the results may be intolerable to society, with a resumption of the high mortality rates, and hospitals overwhelmed to the point where they become inoperable. In the more rural areas, it is possible that they escape the worst of the pandemic’s ravages, but they may also succumb. The results are just unknowable, but they are also such an extreme risk that no sensible government would permit this.

Again, not a good option.

The middle path

Which brings us to the middle path. A relaxation rather than a lifting of the Stay at Home order. This is already happening across the U.S. and expected to widen in scope over time. 

Source: New York Times, May 4, 2020 Downloaded 12:00 EST May 5 2020

That this process is already underway is well illustrated by the New York Times diagram above. Many Governors of rural states, and some of the more populous states, notably Texas, Florida, Pennsylvania, Georgia, and many – if not most – of the rural states have either relaxed or have announced pending relaxation of the Stay at Home orders. California, the largest state, has said that a gradual relaxation order is pending.

So, the great experiment has begun.

Each state will experience a different outcome, because of the difference in population characteristics, rules and regulations implemented, and the behavior of the citizens.  

This is a clearly a calculated gamble on the part of each Governor, and even of local officials, and ultimately of each individual citizen. How well each play a role will determine the outcome, down to each individual (whose behavior not only impacts her or his own fate, but that of others.)

Back to Elon Musk

The question we posed was – is Elon correct? Should we have opened earlier? Should we re-open now? Should Tesla be manufacturing cars?

Our answer is yes. It is a qualified yes, as there clearly must be some modifications to the manufacturing processes to ensure a reduction in transmission risk. Tesla is aware of these practices, as they have implemented them in their Shanghai plant with apparent success. But we believe it is time, perhaps past time, to open the Tesla plant, as well as the economies of many states and cities. In short we believe that it is good policy to open the states and cities that have successfully dampened the pandemic to a chronic, rather than a critical state, subject to some guidelines that we believe make sense and that will guard from uncontrolled resurgence.

Local Considerations

If we consider the original Stay at Home orders, their motivation was given as “flattening the curve”. The objective was to slow down the rate of infection to ensure that the available resources – hospital beds, staff, ventilators – were not overwhelmed by a massive increase in the numbers of seriously ill patients.

The notion that we would reach a 1918-1919 situation where people would not be able to be treated was anathema, and while we reached pretty critical situations in several hot spots, and situations that were dire, with an immense strain on the healthcare systems, we were in large measure successful in damping down the peak and never experienced the complete breakdown of the healthcare system that occurred in 1918.

We have thus succeeded in the primary aim. Here are some clear proof points.

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The above graph is supplied by the CDC, evidencing “excess deaths” during the past three years, based on a rigorous, locality by locality analysis of death rates compared to historic norms, and adjusted for statistical reporting errors and appropriate data variables, up to the week ending April 25th, the latest published to date. We can see the 2018 Flu season impact, which notably had a greater impact than the COVID-19 deaths (detailed by the blue bars) in recent months. We also see the dramatic reduction in the absolute mortality rate as well as the COVID-19 mortality rate in recent weeks. Georgia was the first state to lift the Stay at Home orders, and this graph points to the reason why.

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Turning to Florida, in the above graph we see a similar, relatively benign impact of COVID-19, before, during and after the peak of the COVID-19. This provides clarity around the state’s reluctance to impose Stay at Home orders, and the rapidity in the lifting of those orders. The impact was relatively mild, and indications are that there is little to no potential of the healthcare system being overwhelmed in that state.

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Compare the previous examples of Georgia and Florida with New York City. It is very clear that the officials from that City (and its State) would be, should be, extremely reluctant to lift any crisis-based orders…they are, in this graph, still in the middle of battle. They are still some way from “flattening the curve”.

We can understand why the Governor of New York said on May 4th: ““How much is a human life worth? That’s the real discussion that no one is admitting openly or freely…”

The Value of a Human Life

In fact, everyone is aware that this is the dominant issue in determining the way forward. It is clear than many more will die from COVID-19 in the future. That is a fact, and there is no government or policy that can protect us from this reality. The emotional perspective on this question will differ, depending on the locale of the respondent – whether in a rural, lightly impacted State, or a primarily urban state, still in crisis.

The question is how many will die from COVID-19, and how can we prevent as many deaths as possible, and perhaps even more importantly, can we prevent what happened in hot spots like NYC, New Orleans and Detroit? Can we continue to maintain the level of infection below the critical point while we revitalize the economy? Notice that we are not asking that the disease be eliminated…that is an impossible requirement as long as no vaccine exists. While hoping against hope, we must assume that will continue to be the case for the foreseeable future.

Cost is also a factor: no society can afford, nor does it try, to save every single life, no matter the cost.

As a society we accept that all human activity is attended by many risks – we drive our cars every day, though around 50,000 people are killed on our roads each year. We place the onus on preventing death on the roads on a set of laws, and behavioral expectations on drivers. We don’t sequester ourselves in Flu season, although that illness takes the lives of between 30,000 and 80,000 people a year. Again, we place an onus on people to behave responsibly, sequester themselves if ill, and we teach ourselves hygiene. We understand that to halt a functioning society to prevent the potential death of 30,000, 50,000 or 80,000 people per year is not acceptable. There are innumerable examples of how we factor risk into our social behavior, our mores and our laws

The question is how to operate economically – and socially – while ensuring that this disease does not re-invigorate itself to a point that overwhelms the health system and ensure that we protect those most vulnerable to the disease.

What about the Long Term?

This disease is now an inescapable fact of life, and will remain so until, or if ever, a vaccine is found.

“It’s tough make predictions…especially about the future”, so we won’t. We will say that the advent of a vaccine in a matter of months would be an almost immediate curative to the situation; however, we have already pointed out that we have never succeeded in developing a coronavirus vaccine, so we must discount that as an immediate probability. We have been somewhat more successful in developing drugs that cure, or significantly ameliorate the symptoms of the disease. It would be extremely helpful if that occurs, and there are currently several promising lines of development. The pipeline for a new drug for this disease will probably prove extremely short due to the urgency of the situation.

But the reality is that we can and must create a livable world, in which we society can function and thrive, even with the presence of the virus. In the immediate term there really is no alternative, however much the politicians will pose and protest.

It is time to begin.

Policy Implications

We have flattened the curve through extraordinary means – how do we return to economic activity without risking a rise in cases that again threatens the health system?

Public Behavior

We can start by looking at the means to limit the disease as far as possible, and to protect the most vulnerable amongst us. We already know that social distancing, wearing masks in public, hand washing, avoidance of face touching, sequestering the infected are the minimum behavioral changes we will have to implement. Modified work processes, office floor plans, and cleaning/disinfection process will all have to be initiated. Seniors, and those who are medically compromised may do best to shelter for a significant period. We need rules to be promulgated, and citizens continually educated and guided in these best practices, with community reinforcement, and where necessary, enforcement.

Testing, testing, testing

If there is any single major failure of policy and implementation of the science at the CDC, and at every level of government, it is in the area of testing.

The disastrous bugs in the protocols and testing kits in first months of the incipient pandemic was just the first failure: the ongoing lack of industrial scale testing on a scale at least equal to, but preferably far exceeding, that of Germany is a scandal.

The facts are simple – U.S. had its first identified case of COVID-19 on January 21st.

Germany had its first recorded case of COVID-19 on  January 27th

Despite starting later, as at today, Germany has tested about 33,000 citizens per million of population, compared to the U.S., who has tested about 24,000 per million of population.

This is a scandalous situation. Nothing will contribute more to the management of infection and the evolution of the science than widespread testing: right now for infection, but as soon as practical, for anti-bodies. There are numerous reasons this is important. Germany has shown how testing is an important component of the fight against mortality from the disease; The scientist really can’t get a grip on the infection rate, and consequently the mortality rate, without far more data, of which testing can provide the main component. Testing saves both lives and resources.

Opening of Businesses

Given the facts we have enumerated above, good policy should permit Tesla to open their plant under the current circumstances in California. Of course, there should be rules under which they should operate in the circumstances, relating to protection of the workers (distancing, protective clothing, testing, contact tracing, and the like). Similar relaxation of the regulations should be extended to a wide range of enterprises and industries, and the authorities must look to aggressively seek ways to enable businesses to operate within safe strictures. Not doing this would be an abrogation of their responsibilities to their electorate and the publics they serve.


We believe that Elon Musk is correct, the Tesla plant can and should be opened, and that the data – which we have been following closely in these columns – support him.

In expressing these findings in other fora, we have been told “you are not scientists, you have to listen to the scientists.” That is reasonable advice, but the truth is that the scientists do not yet agree amongst themselves! We have heard opinions on both sides of the argument from a wide range of scientists. Both sides have theories that sound convincing.

The data is all that we have as reliable guidance, and the most important data points are actual experience. Here we point to the graphs in the above column, showing California as having a low rate of mortality, and one that is within normal bounds. This is a very good indicator for a return to economic activity.

Also, and perhaps most importantly, we can point to the experience of Germany, who have successfully kept its manufacturing operations open through the whole course of the pandemic. The Wall Street Journal reports on May 7: “German authorities, unlike those in Italy and Spain, gave all factories the option to stay open through the pandemic. More than 80% of them did so, and only one-quarter have canceled investments, according to a recent survey conducted by the Institute for Economic Research, a Munich think tank”

Again, we point out that Germany is experiencing only 40% of the mortality rate per head of population than the U.S.  California, with an even lower rate of mortality than Germany, should be equal to that same policy.

California has shown great leadership in its handling of the pandemic – it now needs to lead the way into managing a future in which COVID-19 is another fact of life.

Larry Goldberg

Cary, 5/7/2020