The Trouble With a Premature Vaccine

What happens to the global economy if the medicine ends up harming those it’s meant to cure?

By: Alex Berezow

Hope is beginning to fade that the world will have a safe and effective coronavirus vaccine before the predicted “second wave” arrives that will further suppress economic activity and recovery. Despite an unprecedented global effort, a deliverable vaccine might still be months away.

Almost certainly it won’t be ready by October as many hoped. Dr. Anthony Fauci, head of the U.S. National Institute of Allergy and Infectious Diseases, said November or December would be more realistic.

It is understandable that governments and politicians are trying to be optimistic. The global economy was pummeled in the first wave, and it is hardly in shape to receive another devastating blow if the second wave materializes and lockdowns are reinstated.

As economies open back up, some countries that were able to control the spread of the virus are now experiencing a resurgence of cases. In France and Spain, for example, the number of new infections is higher now than it was in March during the peak of the first wave.

Failure to control the coronavirus has put economies and political careers in jeopardy. It’s little wonder why President Donald Trump is under enormous pressure to have a vaccine shipped before Election Day in the U.S.

As public confidence in the medical establishment wanes, leading U.S. pharmaceutical companies have pledged that they will not release a vaccine until they are certain of its safety and efficacy. The question of who assumes liability becomes critical to the timing of a vaccine.

Why Vaccines Take Time

Unfortunately, the process of vaccine testing can only be rushed up to a point. Clinical trials that assess the safety and effectiveness of vaccines take a certain minimum amount of time. No government stimulus or political influence can expedite this process and ensure that basic safety and efficacy standards are met. The reason is that large clinical trials are logistically difficult, often enrolling tens of thousands of volunteers and employing dozens of medical centers across the world.

The testing itself is likewise time intensive. Once volunteers receive their vaccine (or placebo), they are then monitored over the course of weeks or months to determine if they develop the disease or a potentially dangerous side effect. Scientists can reach a conclusion only after enough data has been collected. Occasionally, trials can be cut short if the data is overwhelmingly convincing, but that is not the norm.

Vaccines are not like other pharmaceutical drugs, which are usually administered to patients who are already sick. In the case of a severely ill patient, the primary concern of an experimental drug is efficacy over safety; after all, it doesn’t really matter if the drug harms the patient because he or she is about to die anyway.

But the reverse is true for vaccines; because they are given to potentially millions of healthy people, including children, safety is the far bigger concern. Even if the vaccine works, rare but serious side effects could harm thousands of people. (This is one reason that we do not vaccinate against smallpox.

The vaccine has killed people. Though it is theoretically a biological warfare agent, the risks of a mass smallpox vaccination campaign greatly outweigh the risk of a bioterrorist attack.)

Other vaccines have also harmed people, or worse. In 1966, a poorly designed vaccine against respiratory syncytial virus killed two kids and worsened the illness in many others. One decade later, a vaccine against pandemic swine flu triggered a rare type of paralysis known as Guillain-Barre syndrome in 450 people. It happened again following vaccination against the 2009 H1N1 pandemic influenza.

Measure Twice, Jab Once

Now liability becomes critical. If a vaccine against the coronavirus produces nasty side effects, it would deal a catastrophic blow to public confidence in major institutions across the board. Everyone has a stake in the production of a successful vaccine. Yet, there are legitimate concerns that a coronavirus vaccine, especially one developed under rushed conditions, may not work as intended.

A vaccine developed against the original SARS virus made the disease worse in animal models.

And a clinical trial for a coronavirus vaccine produced by AstraZeneca in collaboration with the University of Oxford has been paused because one volunteer is thought to have developed a severe adverse reaction.

It is difficult to overstate the potential damage that a rushed coronavirus vaccine could inflict on confidence in the biomedical community. This is why several major pharmaceutical companies have pledged not to release their respective vaccines until they are shown to be safe and effective by the standards of the U.S. Food and Drug Administration.

They may have realized that a premature vaccine deployment is a gamble that may not be worth the financial, reputational and legal risks. After it announced that the clinical trial was paused, AstraZeneca’s stock price fell. Pharmaceutical leaders know that the fallout from releasing a bad vaccine could become an existential threat to their companies and want to avoid being liable for such a scenario.

On the flip side, it is equally difficult to overstate the economic damage of not having a vaccine in the next few months. The longer the pandemic continues, the longer the global economy suffers.

The public will become angry, and they will direct their anger toward the institutions they believe failed them. World leaders, therefore, may hope that a vaccine is deployed as soon as possible in order to save their countries’ economies (and, by extension, their own jobs), even if it comes with some risk.

Many of them believe the economic consequences do more harm to the population as a whole than the virus. Already being held accountable for economic damage, the governments want the introduction of a vaccine without assuming the liability for that as well.

Stuck in between is the general public that simply wants an end to all this. Over the past six months, the public has been bombarded with contradictory information and vociferous debates over shutdowns and school reopenings. Misinformation, particularly on social media, is rampant.

While the public trusts scientists and doctors in general, its trust in a coronavirus vaccine is minimal. Two-thirds of Americans say they won’t be first in line to get the vaccine when it comes out. It’s hard to blame them. Just imagine the public backlash if the media depicts children with a vaccine-induced illness because the jab wasn’t tested sufficiently.

One way to interpret the pledge co-signed by several pharmaceutical companies is as an appeal to the government to assume liability. Perhaps behind the message is a subtle hint that they would be willing to release a vaccine that is “good enough” if governments shouldered all the risk. But that’s unlikely to happen.

Until the clinical trials are completed, the public will just have to wait while the government and pharmaceutical companies remain in a standoff that runs against an economic clock and mounting social pressure.

China’s Rapid Shift to a Digital Economy

China may well be the only major economy to achieve positive growth this year. It owes this, in no small measure, to a decade of commitment to heavy investment in technology-driven structural transformation.

Zhang Jun

zhang45_Shen DongbingVCG via Getty Images_chinadeliveryworkers

SHANGHAI – Despite taking a serious hit from COVID-19 lockdowns, China’s economy has proved resilient. It has not, however, fully bounced back: some activities, especially in the service sector, simply cannot be revived. Yet, unlike most of the world, China seems unlikely to become mired in a long recession, not least because of its rapid digital transformation.

China’s digital economy was growing strongly before the pandemic. In 2018, it already accounted for CN¥31.3 trillion ($4.7 trillion), or 34.8% of GDP. While this is only about one-third the size of America’s digital economy, it represents years of growth that outpaced that of nominal GDP. The COVID-19 crisis is set to reinforce this trend.

As the pandemic has destroyed some businesses and industries, it has also greatly accelerated the uptake of digital technologies. Unable to leave their homes, households embraced applications like, Meituan, Eleme, and Pinduoduo, which enabled them to purchase food, oil, vegetables, and daily necessities online.

Moreover, within a month of closing their classrooms and evacuating their campuses, schools and universities moved online – a shift that spurred the rapid development of online conferencing and learning platforms. Likewise, companies took advantage of digital tools – from communication platforms like Enterprise WeChat and DingTalk to e-contracts – to keep their businesses running. More than 20 million online meetings, with more than 100 million total participants, have been initiated on DingTalk in a single day.

Just as technology helped life go on during lockdowns, it has enabled China to roll back restrictions without risking public health. A growing number of local governments are implementing Alipay Health Code – a mobile-phone application that assigns users a color code indicating their health status. That way, they know when they should be quarantined, when they can safely visit public spaces, and when they can travel.

This also lets authorities track – and mitigate – risks. If a person visits, say, an airport or hotel, they must show their personal QR code. A quick scan will show whether they have visited a high-risk area within the last 14 days. Such tracing – not only during travel, but also in schools, offices, and other contexts – is essential to avoid another COVID-19 outbreak and further economically damaging lockdowns.

But the health applications of new digital technologies extend much further, and are transforming China’s entire health-care industry. Beyond the rise of online medication purchases, 5G-based remote medical-consultation platforms, such as Ping An Good Doctor, have been flourishing, laying the groundwork for a new industrial model.

During the initial outbreak in Wuhan, when local hospitals were overwhelmed with COVID-19 patients, such platforms enabled people to consult with medical experts from Beijing via video. As China’s 5G network coverage improves, such remote consultations – including diagnoses, hospital referrals and appointments, and health-management services – will become even more widely accessible. This will be particularly valuable for households that currently lack easy access to better medical resources, say, because they live in remote areas.

Technology is also propelling research and development in health. For example, Huawei’s medical-intelligence app EIhealth is being used for viral genome research, anti-viral drug development, and medical imaging and analysis. It has accelerated the search for COVID-19 treatments and vaccines, and improved virus detection. And, thanks partly to algorithm-assisted screening, frontline hospitals in China have already conducted more CT scans in 2020 than in all of last year.

A similar digital transformation is sweeping China’s financial industry. With 562 million users, China’s mobile-banking apps were the third-largest category of apps by customer base – after short-video and shopping apps – at the end of March. Chinese mobile-banking apps now average 50 million monthly active users.

Beyond making banking more convenient, digital technologies have enabled financial institutions to expand and improve their services. For example, using big data, cloud computing, artificial intelligence, and distributed-computing architecture, commercial banks have vastly improved their ability to serve small and micro businesses and ordinary households.

Financial technology firms have made similar strides. Credit-based financing for small and micro enterprises has long posed a challenge to institutions. Yet, with the help of Alipay and online-banking services, Ant Financial served more than 16 million clients and extended CN¥2 trillion in credit last year. And it is not alone.

The growth of China’s digital economy has been a boon for employment as well. The China Information and Communications Technology Academy reports that in 2018, the digital economy created 191 million jobs and accounted for one-quarter of overall employment – an 11.5% increase year on year.

Among the main beneficiaries of these new jobs are young, educated Chinese, who now have more opportunities to work as independent professionals in a new kind of gig economy. The increased labor-market flexibility brought about by digitalization is likely why urban unemployment hasn’t increased significantly in recent years, despite the decline in GDP growth.

Though China still lags in some key technologies, there is no denying the tremendous progress in its digital transformation. This process is set to continue and even accelerate in the coming years, not least because of the government’s planned investments in new infrastructure, including 5G networks and data centers.

China may well be the only major economy to achieve positive growth this year. It owes this, in no small measure, to a decade of commitment to heavy investment in technology-driven structural transformation.

Zhang Jun is Dean of the School of Economics at Fudan University and Director of the China Center for Economic Studies, a Shanghai-based think tank.

JPMorgan in talks to settle spoofing claims for $1bn

Payment and deferred prosecution agreement would resolve investigation by multiple US agencies

Laura Noonan, US Banking Editor

JPMorgan earlier this year said it faced allegations including ‘unjust enrichment and deceptive acts’ relating to trading of precious metals and Treasuries © JUSTIN LANE/EPA-EFE/Shutterstock


JPMorgan Chase is in advanced talks with US authorities to pay $1bn to settle allegations it manipulated metals and Treasuries markets using a technique known as spoofing, according to people familiar with the situation.

The proposed settlement would allow the bank to avoid prosecution over the alleged activities, one of the people familiar with the situation told the Financial Times.

Two former JPMorgan traders — Christian Trunz and John Edmonds — have already pleaded guilty to criminal charges of placing thousand of false orders to manipulate the prices of precious metals between 2007 and 2016.

JPMorgan’s former head of metals trading, Michael Nowak, and two other former traders and one ex-salesperson are contesting federal racketeering charges over their alleged role in what prosecutors described as a “massive multiyear scheme” to manipulate metals markets.

A settlement would end investigations by the Department of Justice, the Securities and Exchange Commission and the Commodity Futures Trading Commission into the bank’s culpability for spoofing by its traders in gold, silver, other metals and US government bonds.

In its annual report published in April, JPMorgan said it was “engaged in discussions with various regulators” about allegations including “unjust enrichment and deceptive acts” relating to the bank’s trading of precious metals and Treasuries.

Two people familiar with the situation said that the settlement would not result in any restrictions on JPMorgan’s trading or operations. One of the people said the bank was negotiating a deferred prosecution agreement, which allows banks to continue with their activities as long as they fulfil certain conditions.

The $1bn figure for the size of the proposed payment was first reported by Bloomberg. 

JPMorgan declined to comment. The SEC declined to comment. The DoJ had no immediate comment. The CFTC did not immediately return a request for comment.

Criminal penalties for spoofing were introduced under the Dodd-Frank regulations that were brought in to clean up Wall Street after the 2008 financial crisis.

Other banks, including Deutsche Bank, UBS and HSBC have been fined for spoofing precious metals markets.

In the case of JPMorgan, the DoJ has alleged that Mr Trunz “learned to spoof from more senior traders, and spoofed with the knowledge and consent of his supervisors”.

When the charges against Mr Nowak and the other three traders were brought in 2019, Brian Benczkowski, then assistant attorney-general, said his department would “follow the facts wherever they lead . . . Whether it’s across desks or upwards into the financial system.”

Additional reporting by Kadhim Shubber

The boomers’ last stand

Younger Americans feel their voting weight

After years of elder-power, a new generation may well decide the election

This has been a year of the young. The protesters against racial injustice have mostly been in their 20s. The average age of demonstrators arrested since mid-June in Portland, Oregon (one of the centres of activity) was 28. The young have not suffered as much as others from covid-19 itself but were hardest hit by the consequences of the virus.

More than half of those between 18 and 29 lost a job or took a significant pay cut in April, or live in a household where that has happened. About two-fifths of those aged 50 to 64 have experienced the same thing. Young people are the most likely to work in jobs vulnerable to closure, such as waitressing or retail.

And 2020 will be a year of the young in one more important respect. Electorally, it will be the last stand of the baby-boomers (born between 1946 and 1964) and the first poll in which voting will be dominated by generations younger than 40, especially millennials, defined here as those born between 1981 and 1996.

As Bill Frey, a demographer at the Brookings Institution, a think-tank, puts it: “America is moving from largely white, baby-boomer-dominated politics and culture in the second half of the 20th century to a more racially diverse country fuelled by younger generations: millennials, Gen z-ers and their juniors.”

Boomers have dominated American politics since the 1990s, when they became the largest living generation and started to cast the largest number of votes. (Boomers and millennials have an official status, since the Census Bureau uses those terms; all the other generations are private classifications.) Since Bill Clinton’s election in 1992, six of the eight presidents and vice-presidents have been boomers (Joe Biden, the Democratic candidate, is one of the exceptions, being too old). So are most of Congress. Since 1998, the median age of congressional representatives has put them in the boomer class.

But boomers lost their status as the largest generation in 2019, when millennials overtook them in absolute numbers. That year, there were 72m millennials aged 23 to 38, according to the Pew Research Centre, 500,000 more than boomers (then 55 to 73).

For the first time in 2019, more than half of Americans were millennials or younger (meaning members of the generations that came afterwards, called Gen z, born between 1997 and 2012, and post-Gen z, born after 2013). The three younger groups made up 51% of the population in 2019, compared with only 41% the beginning of the decade.

The electoral impact of these demographic shifts has been muted so far because most Gen zs are below voting age, and because millennials have a reputation—not entirely deserved—for being apathetic about politics. But things are changing. “Millennials and Gen z will comprise almost 40% of the electorate in 2020,” says Carolyn DeWitt, head of Rock the Vote, an electoral-mobilisation group, “giving them enormous power.” The two youngest voting-age groups are likely to have more votes than the two oldest, boomers and the so-called silent generation born before 1946 (see chart 1).

The shift towards the young has occurred surprisingly swiftly, not in tiny steps. In the 2010 mid-terms, boomers and older people outvoted the younger generations almost two to one. As recently as 2014 a disparity remained: boomers cast 57m votes; younger voters, 36m.

Four years later, the three younger generations (which now include a few Gen zs) outvoted the older ones. Not by coincidence, the 2018 mid-terms were a blue wave, in which Democrats regained the House.

Younger generations differ from their elders in attitudes, ethnicity and education. According to Pew, millennials and Gen z-ers are the most likely to say governments should do more to solve problems, that same-sex marriage is good for society, that climate change is caused by human activity and that blacks are treated less fairly than whites.

They are also more likely to say fetters should be put on capitalism, says Pew’s Richard Fry, perhaps because both generations started looking for jobs during recessions, the Great Recession for millennials, the covid recession for Gen z.

Pushing up Zs

They are also more likely to be from minorities themselves. As a simple rule, the younger you are, the more likely you are to be black, Hispanic or Asian. Mr Frey calculates that almost three-quarters of 60-somethings are white. Half of those under 20 are not. The impact of young minorities is especially great in sunbelt states. In Texas, 44% of eligible voters are Hispanic or black.

But among voters under 40, the minority share is over half. In Arizona, Hispanics are 31% of all eligible voters but 44% of those under 40. In eight states, including Georgia and Florida, over half of voters under 40 are non-white.

These are places that Democrats have a shot at winning for the first time in a generation. They are also the people most likely to be galvanised by the killings of George Floyd and others.

Millennials and Gen z-ers are better educated than their parents and grandparents (though not necessarily wiser). The Pew Research Centre looked at the educational attainment of 25- to 37-year-olds in each generation. For boomers, roughly 25% had a college degree or higher. For millennials, the share was 39%. The leap has been especially great for women. Among boomers, more men than women have degrees.

Among millennials, 43% of women have degrees, seven points more than men. The Republicans’ disastrous performance in 2018 in suburban counties, former strongholds, owes much to the revulsion felt by college-educated millennial women for Mr Trump.

Education and race are among the most reliable predictors of party affiliation. African Americans vote for Democrats by ten to one or more; Hispanics and Asians by about two to one; 53% of college graduates identify with Democrats, only 40% with Republicans.

Put all this together, and it is hardly surprising to find that millennials and Gen z-ers are far to the left of boomers. Younger voters identify with issues, not parties, but they tend to vote Democratic (see chart 2). In 2016, calculates Mr Frey of Brookings, people aged 30 to 44 (older millennials) voted for Hillary Clinton by ten points (55% to 45%); voters aged 18 to 29 (younger millennials and Gen z-ers) by 19 points. Millennials form the bedrock of support for the progressive left, who have done well in Democratic primary contests this year.

But will they turn out? This year, admits Ms DeWitt, “the top of the ticket won’t be a motivator.” Voters under 30 have always voted less than older ones anyway, often by large margins, though this may owe as much to political parties as to voters themselves.

In 2016 two-thirds of young voters said they had not been contacted by any party before the election, probably because parties concentrate their get-out-the-vote efforts on those who have voted before (making low turnout among the young a self-fulfilling prophecy).

“Young people are issue-based voters,” says Wisdom Cole of the naacp. “We’re not going to turn them out by just saying, ‘Go Vote! Go Vote!’.”

Pew’s Mr Fry says, “how the pandemic affects turnout is anyone’s guess.” Our guess, based on crunching Census data and polls from YouGov, is that the turnout rate for the under-30 cohort might be 11 points lower than for the other generations this November. That sounds poor, but for comparison we reckon that gap was 20 points in the 2016 election.

Turnout among voters aged 18 to 29 almost doubled between the 2014 and 2018 mid-term elections. Anecdotally, say election organisers, Gen z activists are more engaged in the 2020 campaign than older voters.

Rock the Vote’s online voter-registration platform has processed 900,000 registrations so far this year, compared with 500,000 at the same stage in 2016. It seems likely, thinks Ms DeWitt, that anger about the death of George Floyd and others will be a wake-up for the young. Disgust at Mr Trump may transcend generations.

Democrats are understandably cautious about Joe Biden’s opinion-poll lead. As 2016 showed, leads can shrink and the electoral college can let a candidate lose the popular vote but still win the White House.

But from a generational point of view, it is no surprise that the Democrat should be out in front. It reflects not only Mr Trump’s personality and record but shifts in the tectonic plates of electoral demography.

Erosion of nuclear deterrence makes India-China relations critical

Countries with nuclear weapons are moving closer to military confrontation

Gideon Rachman

James Ferguson illustration of Gideon Rachman column ‘Breakdown of nuclear deterrence makes Xi-Modi relations critical’
© James Ferguson/Financial Times

My generation grew up in the shadow of a possible nuclear war. I was born a few months after the Cuba missile crisis — the closest humanity has come to nuclear Armageddon. The Campaign for Nuclear Disarmament was a big political force as I was growing up.

My children’s generation are much more likely to demonstrate against climate change than nuclear weapons. Leading politicians also no longer worry so much about nukes. Nuclear arms-control negotiations, a staple of the cold war, have fallen into abeyance.

But this relatively relaxed attitude is having a paradoxical effect. It seems to be making countries armed with nuclear weapons more willing to risk military confrontation with each other.

There are three international rivalries where tensions between nuclear-weapons states are reaching dangerous levels. The biggest current risk is on the China-India border — where recent clashes have led to 21 Indian fatalities and an unknown number of Chinese casualties.

Military tensions are also rising between China and the US in the Pacific. Meanwhile, the crisis in Belarus has led to fears of Russian military intervention, which would put Nato on alert.

The erosion of nuclear deterrence gives rise to two distinct, but related, risks. The first is of a conventional war, which could happen if two nuclear-weapons states believe they can fight each other without the risk of nuclear escalation. The second is of a nuclear war, which could happen if a conventional war escalated unexpectedly.

During the cold war, the US and the USSR were too conscious of the dangers of nuclear warfare ever to risk striking each other directly with conventional weapons. But the Chinese leadership has taken the risk of killing Indian troops, despite India's possession of nuclear weapons — and New Delhi is pushing back.

The deadly clash in the Himalayas over the summer was only the second time that two nuclear-weapons states have fought. The first was the Kargil war between India and Pakistan in 1999.

That confrontation did not go nuclear. But it left world leaders profoundly shaken. Bill Clinton, the US president at the time, called the frontline where the two sides had clashed “the most dangerous place in the world”.

There are fewer nuclear-alarm sirens sounding this time around. Most experts take comfort from the fact that India and China both have a policy of “no first use” of nuclear weapons. But if Beijing and New Delhi’s confidence that the other side will not use nuclear weapons persuades China to press home its military advantage, then India may be tempted to alter its policy in an attempt to restore deterrence. Some experts point to the possibility of India deploying tactical nuclear weapons in the Himalayas, or formally renouncing its no-first-use policy.

Threatening to use nuclear weapons is always tempting for a country that fears it might lose a conventional war. Pakistani military doctrine envisages an early resort to nuclear weapons, in the event of an invasion by India that would otherwise lead to defeat.

Western analysts have long feared that, for similar reasons, Moscow will threaten to use nuclear weapons early in any conflict with Nato. This strategy is known as “escalate to de-escalate”. Nato planners sometimes point to a 2009 Russian military exercise that reportedly ended with a simulated nuclear attack on Warsaw. The Russian scenario was centred around a conflict over Belarus — where current civil and political unrest has led to discussion of Russian military intervention.

American concern that Russia might use smaller, tactical nuclear weapons, in any conflict with Nato has led the US to develop its own new generation of low-yield nuclear weapons. These were deployed for the first time on submarines earlier this year. They are said to be smaller than the bomb that devastated Hiroshima in 1945 — an idea that is apparently meant to be reassuring.

As well as modernising its nuclear arsenal, the US is withdrawing from its existing nuclear-arms control agreements with Russia. The Intermediate Range Nuclear Forces treaty was allowed to lapse in 2019. The Start treaty, which governs intercontinental nuclear missiles, is unlikely to be renewed next year.

A major reason that the Trump administration has given for not renewing existing arm-control treaties with Russia is that they do not limit China — which is the country the US now regards as its most dangerous rival.

Even when Barack Obama was president, I heard senior American strategists predict that there will eventually be a military confrontation between the US and China — probably at sea. Their expectation was that any confrontation would be quickly brought under control through diplomacy.

The risks of such a clash are now rising, with Washington and Beijing taking actions over Taiwan and the South China Sea that the other side regards as provocative. The obvious danger in a clash is that diplomacy fails to calm things down and the conflict escalates.

The fact that any confrontation would be seen as a symbolic struggle for primacy in the Pacific means a clear defeat might well be unacceptable to both Beijing and Washington. That increases the risk of military escalation between two states that possess considerable nuclear arsenals. No one should be complacent about how that might play out.