Category Archives: Healthcare

Updates from Chicago Booth

India’s economic recovery from its COVID-19 lockdown
By Chuck Burke – In response to COVID-19’s rise, India ordered most of the country’s 1.3 billion residents to stop working and remain indoors starting in March 2020—the world’s largest lockdown. The government began relaxing restrictions in June, and research finds that while India’s economy improved rapidly in the following months, the outlook for a return to prelockdown levels remained unclear.

In a report for Chicago Booth’s Rustandy Center for Social Sector Innovation, Booth’s Marianne Bertrand and Rebecca Dizon-Ross, Centre for Monitoring Indian Economy’s Kaushik Krishnan, and University of Pennsylvania’s Heather Schofield examined household-level survey data to establish a more comprehensive view of India’s initial recovery than national economic indicators could provide. These charts and maps highlight a selection of their main findings. more>

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Updates from McKinsey

The emerging resilients: Achieving ‘escape velocity’
The experience of the fast movers out of the last recession teaches leaders emerging from this one to take thoughtful actions to balance growth, margins, and optionality.
By Cindy Levy, Mihir Mysore, Kevin Sneader, and Bob Sternfels – In 2019, McKinsey asked companies to prepare for the possibility of a recession. Of course, we had no idea then that the COVID-19 pandemic would be the trigger, nor that the recession would cut as deeply as it has. But it was clear then that the foregoing growth cycle was already of unusual duration. The pace was slowing, furthermore, and the potential for shocks was greater than for renewed growth. In the same article, we discussed what top-performing companies had done in the previous downcycle, the financial crisis of 2008–09. We looked at 1,500 public companies in Europe and the United States, analyzing performance on a sector-by-sector basis. Companies in the top quintile of their peers through that crisis were dubbed the “resilients.”

Once economic and business results of the second quarter of 2020 became known, we began to hunt for the clues that were contained in nearly 1,500 earnings releases across Europe and the United States. This article seeks to understand whether the shape of the next class of resilients is visible in the data, and what lessons this would hold for companies within each sector.

The present downcycle: Six times faster than the previous one

Today, we are in the middle of the deepest recession in living memory. As pandemic-triggered lockdowns took hold around the world in early 2020, economies contracted quickly. The International Monetary Fund and World Bank foresee a global contraction in economic output in 2020 of around –5 percent; the Organization of Economic Cooperation and Development estimates an even worse result, at –7.6 percent. At any rate, the drop will far exceed the last global contraction, which was –1.7 percent in 2009.

The distress has hit all industry sectors, some harder than others. Yet even in the relatively protected sectors of healthcare, pharmaceuticals, and technology, companies are seeing moderate declines in revenue. Heavily affected sectors have experienced revenue declines of between 25 percent and 45 percent. These include transportation and tourism, automotive, and oil and gas—sectors containing some of the largest employers in Europe and the United States. more>

Updates from Chicago Booth

Could the US raise $1 trillion by hiking capital gains rates?
By Natasha Sarin, Lawrence H. Summers, Owen Zidar, Eric Zwick – Capital gains taxes are a perennial issue in US tax-reform debates. Some people maintain that preferential rates on capital gains encourage entrepreneurship and capital formation, while others question whether these benefits are worth the costs.

What are those costs, exactly? It’s clear in terms of direct fairness costs: the wealthiest 1 percent of US households accounted for two-thirds of capital gains realizations in the Federal Reserve’s 2019 Survey of Consumer Finances. However, the fiscal costs, which are estimated by the Joint Committee on Taxation, are far less clear. In the parlance of policy makers, the JCT is considered the official “scorekeeper” that decides how tax legislation “scores” if implemented. The prevailing wisdom in the taxation-scorekeeping community appears to be that the revenue-maximizing rate for capital gains is about 30 percent, which is well below both current top marginal tax rates on other income and top rates currently under debate. But in a simple exercise, we estimate that increasing capital gains rates to match the ordinary income level could raise more than $1 trillion over a decade. This illustrates the need to rethink scorekeeping in the debate.

The prototypical example of a capital gain is a share of corporate stock. An individual who bought an $18 share of Amazon when it went public could sell that share today and pay taxes on more than $3,100 of appreciation.

If the revenue-maximizing rate is 30 percent, setting a rate too far above this level will actually reduce the total amount of revenue collected, as the gains expected will fail to materialize because the dynamic response of taxpayers will dramatically shrink the tax base.

Such a response could take the form of an investor retiming a stock sale to avoid realizing a capital gain event. This certainly happens, but we suspect that in most instances the investor doesn’t avoid paying taxes on that gain entirely, just immediately. The tax is simply postponed, in which case these behavioral effects are overstated, resulting in a potentially severe underestimate of the revenue at play. more>

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Updates from ITU

Regulating for resilience: Reigniting ICT markets and economies post-COVID-19
By Raúl Katz – As the COVID-19 pandemic continues its relentless spread, governments, regulators, academics, and the global information and communication technology (ICT) community keep rethinking policy and regulatory frameworks to mitigate the effects of the crisis and chart a way out of it.

The 7th Economic Experts Roundtable convened by ITU provided a platform to generate ideas and solutions to render ICT markets an even more important contributor to social and economic resilience in the face of COVID-19.

The current crisis has brought new challenges to the ICT sector. Regulatory frameworks need to be adjusted to stimulate investment while maintaining a moderate level of competition. Markets and consumer benefits are now examined by decision-makers through the lens of financial adversity and uncertain outlooks.

Amid disruption, policy-makers and regulators need evidence-based guidance that provides a solid ground for their reforms.

A new study released at the Roundtable provides fresh insights backed by authoritative data on the evolution of ICT regulation since 2007, the ICT Regulatory Tracker, and a global dataset on ICT markets economics.

The study shows that ICT regulation has had a measurable impact on the growth of global ICT markets over the past decade.

The analysis uses econometric modelling to pinpoint the impact of the regulatory and institutional frameworks on the performance of the ICT sector and its contribution to national economies.

It provides policy-makers and regulators with evidence to advance regulatory reform and address the challenges and gaps in current regulatory frameworks for digital services and applications. more>

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Here’s how Biden could undo Trump’s deregulation agenda

Biden could use Trump’s playbook to reverse his regulatory moves on pollution, worker safety, health care, and more.
By Sarah Kleiner – Cutting workplace safety inspections. Allowing subpar health insurance plans to be sold to Americans. Permitting tractor-trailer drivers to blow past previous driver-fatigue limits. Waging war on birth control.

These deregulatory actions and others taken by President Donald Trump’s administration have adversely impacted the health and safety of Americans, as revealed in reporting for System Failure, an investigative series produced by the Center for Public Integrity and Vox.

Trump’s actions may not stick. Now that President-elect Joe Biden is set to take office in January, he has a few tools at his disposal to undo some of Trump’s regulatory maneuvers. Some could be more difficult to quickly put to use with a split Congress, however.

If Democrats take control of both houses of Congress, they’ll be able to quickly wipe out regulations pushed through in the last 60 legislative days of Trump’s term, because of the Congressional Review Act, part of the Contract With America that Newt Gingrich and House Republicans campaigned on in 1994.

But, while Democrats maintained control of the House, it’s still unclear which party will hold the majority in the Senate. All eyes will be on Georgia’s runoff for two Senate seats, which will happen in early January. Neither of the Republican incumbents, Sens. David Perdue and Kelly Loeffler, garnered a majority of the votes in last week’s election, forcing a runoff with Democrats Jon Ossoff and Raphael Warnock, respectively.

If Ossoff and Warnock ultimately prevail, it won’t be clear until January when the Congressional Review Act’s 60-day period began — because it all depends on how many days Congress meets between now and January 3, when its current term ends — but experts predict it started sometime during the summer. more>

Updates from Chicago Booth

Would you trust a machine to pick a vaccine?
Machine learning is being tasked with an increasing number of important decisions. But the answers it generates involve a degree of uncertainty.
By Emily Lambert – Back before COVID-19, Chicago Booth’s Sanjog Misra was on vacation in Italy with his son, who has a severe nut allergy. They were at a restaurant and couldn’t read the menu, so Misra opened an app that translates Italian to English, and pointed his phone at the menu to find out if one of the dishes was peanut free. The app said it was.

But as he prepared to order, Misra had a thought: Since the app was powered by machine learning, how much could he trust its response? The app didn’t indicate if the conclusion was 99 percent certain to be correct, or 80 percent certain, or just 51 percent. If the app was wrong, the consequences could be dire for his son.

Machine learning is increasingly ubiquitous. It’s inside your Amazon Alexa. It directs self-driving cars. It makes medical decisions and diagnoses. In the past few years, machine-learning methods have come to dominate data analysis in academia and industry. Some teachers are using ML to read students’ assignments and grade homework. There is evidence that machine learning outperforms dermatologists at diagnosing skin cancer. Researchers have used ML to mine research papers for information that could help speed the development of a COVID-19 vaccine.

They’re also using ML to predict the shapes of proteins, an important factor in drug development. “All of our work begins in a computer, where we run hundreds of millions of simulations. That’s where machine learning helps us find things quickly,” says Ian Haydon, the scientific communications manager for the Institute for Protein Design at the University of Washington. Some scientists there are developing vaccines, and others are trying to develop a drug compound that would stop the novel coronavirus from replicating. more>

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Updates from McKinsey

Reimagining the auto industry’s future: It’s now or never
Disruptions in the auto industry will result in billions lost, with recovery years away. Yet companies that reimagine their operations will perform best in the next normal.
By Thomas Hofstätter, Melanie Krawina, Bernhard Mühlreiter, Stefan Pöhler, and Andreas Tschiesner – Electric mobility, driverless cars, automated factories, and ridesharing—these are just a few of the major disruptions the auto industry faced even before the COVID-19 crisis. Now with travel deeply curtailed by the pandemic, and in the midst of worldwide factory closures, slumping car sales, and massive layoffs, it’s natural to wonder what the “next normal” for the auto sector will look like. Over the past few months, we’ve seen the first indicators of this automotive future becoming visible, with the biggest industry changes yet to come.

Many of the recent developments raise concern. For instance, the COVID-19 crisis has compelled about 95 percent of all German automotive-related companies to put their workforces on short-term work during the shutdown, a scheme whereby employees are temporarily laid off and receive a substantial amount of their pay through the government. Globally, the repercussions of the COVID-19 crisis are immense and unprecedented. In fact, many auto-retail stores have remained closed for a month or more. We estimate that the top 20 OEMs in the global auto sector will see profits decline by approximately $100 billion in 2020, a roughly six-percentage-point decrease from just two years ago. It might take years to recover from this plunge in profitability.

At the operational level, the pandemic has accelerated developments in the automotive industry that began several years ago. Many of these changes are largely positive, such as the growth of online traffic and the greater willingness of OEMs to cooperate with partners—automotive and otherwise—to address challenges. Others, however, can have negative effects, such as the tendency to focus on core activities, rather than exploring new areas. While OEMs may now be concentrating on the core to keep the lights on, the failure to investigate other opportunities could hurt them long term.

As they navigate this crisis, automotive leaders may gain an advantage by reimagining their organizational structures and operations. Five moves can help them during this process: radically focusing on digital channels, shifting to recurring revenue streams, optimizing asset deployment, embracing zero-based budgeting, and building a resilient supply chain. One guiding principle—the need to establish a strong decision-making cadence—will also help. We believe that the window of opportunity for making these changes will permanently close in a few months—and that means the time to act is now or never. more>

It’s the most important election in our lifetime, and it always will be

We never know how important an election really is until long after it’s over.
By Ezra Klein – “There’s just one month left before the most important election of our lifetime,” Democratic presidential nominee Joe Biden tweeted in early October.

Two days later, Sen. Bernie Sanders backed him up. “This is the most important election, not only in our lifetime but in the modern history of our country,” he said in Michigan.

In 2016, it was Donald Trump deploying the cliché. “This is by far the most important vote you’ve ever cast for anyone at any time,” he said.

I won’t be coy with my view: I think the most important election of my lifetime was 2000, and I’ll defend that view in this piece. But more interesting than the parlor game is the framework of this debate. What makes something the most important election of a lifetime? How would we know?

Before 2016, the campaign in which I heard the “most important election of our lifetime” talk most often was 2004, when George W. Bush ran for reelection against John Kerry. It certainly felt pivotal. It was a referendum on the Iraq War, which was built on lies and carried out by fools, and left Iraq soaked in blood. It was also a referendum on the hard right turn Bush had taken in office, away from “compassionate conservatism” and toward neoconservatism abroad, and a politics of patriotic paranoia at home.

Kerry lost that election. And yet, in retrospect, it clearly wasn’t the most important election of my lifetime, and it may even have been better that Kerry lost it. The ensuing four years forced Bush, and the Republican Party he led, to take responsibility for the disasters they’d created. The catastrophe of the Iraq War became clearer to the country, leading to a Democratic sweep in 2006. The financial crisis, which had been building for years, exploded, leading to Barack Obama’s election and the massive congressional majorities that passed the Affordable Care Act. more>

Budget 2020: promising tax breaks, but relying on hope

By Peter Martin – Tax cuts aren’t the half of it.

The personal income tax cuts promised in the budget will cost A$17.8 billion over four years.

The measures aimed at supporting businesses – the temporary instant tax write off of capital investments, the temporary ability to use losses to reduce previous tax payments, the JobMaker hiring credit and the enhanced apprentice wage subsidy — will cost $26.7 billion, $4.8 billion, $4 billion and $1.2 billion.

That’s a total of $36.7 billion — a subsidy for private businesses without precedent.

The clumsy wording in the part of the budget that sets out strategy says the aim is to “drive sustainable, private sector-led growth and job creation”.

‘Driving private sector-led growth’

Driving private sector-led growth doesn’t quite make sense, but it’s easy to get a handle on what it means.

By itself, business isn’t in a position to drive much.

Even with the budget measures – even with the Australian Taxation Office allowing most businesses to write off everything they spend on equipment over the next two years – non-mining business investment is expected to collapse 14.5% this financial year and bounce back only 7.5% the next. more>

A Message From the Future II: The Years of Repair

Can we imagine a better future? If we stop talking about what winning actually looks like, isn’t that the same as giving up?
By Naomi Klein – Another Covid-19 lesson we wanted to highlight had to do with why the abuses that long predated the pandemic suddenly received so much more attention during it. It’s a lesson, perhaps, about the relationship between speed and solidarity. Because for those of us privileged enough to self-isolate, the virus forced a radical and sudden slowdown, a paring and editing down of life to its essentials that was undertaken in a bid to stop the virus’s spread. But that slowness had other, unintended effects as well. It turns out that when the deafening roar of capitalism-as-usual quiets, even a little, our capacity to notice things that were hidden in plain view may grow and expand.

There is no one answer or simple explanation for why we find ourselves in the throes of the deepest and most sustained public reckoning in a half-century with the evil that is white supremacy. But we cannot discount the “solidarity in vulnerability that the pandemic has generated,” as Eddie Glaude Jr. put it, while discussing his brilliant and highly relevant biography of James Baldwin, “Begin Again.” In forcing all of us to confront the porousness of our own bodies in relationship to the vast web of other bodies that sustain us and the people we love — caregivers, farmers, supermarket clerks, street cleaners, and more — the coronavirus instantly exploded the cherished, market-manufactured myth of the individual as self-made island.

For all of these reasons and more, as we searched for a unifying principle that could animate a future worth fighting for, we settled on “The Years of Repair.” The call to repair a deep brokenness has roots in many radical and religious traditions. And it provides a framework expansive enough to connect the interlocking crises in our social, economic, political, informational, and ecological spheres.

Repair work speaks to the need to repair our broken infrastructures of care: the schools, hospitals, and elder care facilities serving the poor and working classes, infrastructures that failed the test of this virus again and again. It also calls on us to repair the vast damage done to the natural world, to clean up toxic sites, rehabilitate wild landscapes, invest in nonpolluting energy sources. It is also a call to begin to repair our stuff rather than endlessly replace it in an ever-accelerating cycle of planned obsolescence — what the film refers to as “the right to repair.” more>