How To Fund The Search For A COVID-19 Vaccine And Boost The Recovery

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal, and unfortunately, my co-host, Tracy Alloway, is out today. But nonetheless, we have a great topic to go over today. So obviously, we've been talking about nonstop the crisis that is going on all around the world with both the virus and the economic fallout we've been discussing, just sort of the incredible speed with which everything has changed and shut down and what that means for the economic system and the financial system.

Today, we're going to try to have a conversation that looks ahead a little bit further about sort of what's next, maybe even potentially hopeful.

I don't know. Maybe it'll be a little bit hopeful and about things related to a potential vaccine and reopening and how we might get there and what lessons we might apply from the past to improve the situation that the world is facing today.

And the guest that I'm going to be speaking with is one that we've had on the podcast in the past. He's Bill Janeway. He's a partner and senior advisor at Warbird Pincus. He's an economist, a visiting scholar at Cambridge University. And his unique perspective as having been both on the venture capital side, so understanding innovation, as well as the sort of academic economic side. So he can really speak to the types of policies and the types of conditions that can enable innovation to flourish. And of course, that's something that we desperately need right now with the lack of a vaccine, the lack of testing at scale, and so forth. And of course, part of this crisis has been in part the coordination problem that we've seen between the government, which is obviously trying to move faster on things like testing and developing therapies and that coordination with the private sector that needs some more organizations. So without further ado, I want to bring in Bill Janeway. Bill, great to have you back on the podcast.

William H. Janeway (2:20)

Great to be back with you, Joe. Always enjoy it very much.

Joe Weisenthal (2:23)

So there's obviously numerous aspects of this crisis that the world overall is facing, to which you can speak. But I want to start off with this question of how governments or how the US government in particular could conceptualize funding and accelerating the process of innovation towards a potential vaccine or therapy. And of course, in the past, you've written a lot about the role that government spending and sort of pure government spending and research and so on has played in the development of our big tech industries, particularly Silicon Valley and how much of that came out of defense department spending and so forth.

Set out the big picture of the role that the government has to play here in terms of getting more work done faster in this area.

William H. Janeway (3:19)

Well, in a way, this is a simple one. Here's a clear target, clear set of targets.

One set of targets involve reliable and emphasize reliable tests both for the incidence of the disease and in particular, tests for the aftermath, the potential immunity. Both of these require, as usual, multiple efforts by multiple sources funded across the board with no preference to a particular potential source.

And given the global nature of this, that would argue as well for the maximum of international collaboration possible, the sort of collaboration that was available in World War II between the US and the UK, which radically advanced, for example, the development of radar, and which should be readily available today if we had leadership that was concerned with international collaboration as a necessary effective tool for accelerating the development of the needed tests and then beyond that, the vaccine. And it's not just lab work. This involves clinical trials. It involves the accumulation of lots of data from all the sources possible. This is an ideal moment for open collaboration. Unfortunately, we seem to be somewhat stalled. And in the meantime, in a way, there are two concerning resonances, two concerning echoes about what's going on and what's not going on specifically in the US during this extremely challenging time.

We've had the experience before of closing down the civilian economy. That's exactly what happened in 1942 in the US. After Pearl Harbor, when civilian production in an economy that was much more heavily manufacturing and product-oriented versus service-oriented, where manufacturing of civilian goods was radically reduced, no automobiles, for example. At the same time, there was an alternative source of demand, namely military demand, which maintained, actually reduced unemployment down. I think the low point was reached when unemployment, to the extent that it could be measured at all, was at 0.2%. So you had a high-demand-driven economy after closing the civilian economy. And the problem then was, and this is where we have this kind of ironic, curious moment, God knows there's not much demand on the economy. There should be an opportunity to allocate resources to the highest priorities, which while we are developing the tests and waiting for the vaccine, which all serious accounts suggest is at least 18 to 24 months away, we should not have any shortage at all of the kind of protective gear and the medical equipment necessary through this interim to make it possible to start reopening the civil civilian economy sooner. And that's where the utter incoherence as Governor Cuomo has been putting it day after day of having 50 states competing with each other for the needed supplies with the federal government playing no role in acquiring and allocating and distributing is bizarre.