Markets set for a bumpy ride back to inflation

Expectations of rising prices are no cause for macroeconomic worries


Fed chair Jay Powell has been explicit about treating the 2% inflation rate goal as an average over time, not an upper limit © Al Drago/The New York Times/Bloomberg

This was the week financial markets faced up to the realisation that low interest rates and subdued inflation may not be a permanent state of affairs. Around the world, bond investors have taken fright. 

The 10-year yield on US public debt — perhaps the most fundamental market price in the world — has climbed steeply. Market “break-even” expectations of US inflation over the same horizon rose to 2.2 per cent.

In truth, this is a good news story. 

The market moves reflect not so much fear or pessimism as the opposite: the expected reflation of a depressed US economy, with spillovers to the rest of the world. 

That is largely due to the enormous fiscal stimulus planned by the Biden administration, and the Federal Reserve’s determination to keep monetary conditions accommodating. 

Nominal and real rates are both going up, a healthy reaction to the economy’s faster return to full capacity. 

The absence of a rise in the dollar — often a sign of greater fearfulness — also shows the optimism at the core of the reflation trade.

Newly higher inflation expectations are no cause for macroeconomic worry. 

If inflation does indeed average 2.2 per cent annually over the next decade, it will still not make up for the past decade’s shortfall in price growth below the Federal Reserve’s 2 per cent target. 

The fact that market pricing points to higher inflation in the shorter term — the implied five-year rate is 2.4 per cent — means investors trust the US’s central bankers to keep inflation where they want it. 

Since the Fed’s update of its monetary policy strategy last summer, its chair Jay Powell has been explicit about treating the 2 per cent goal as an average over time, not an upper limit.

Yet even a much-needed reflation, and the monetary tightening cycle that will rightly accompany it, come with risks. 

Financiers have become so used to historically low rates that reactions to a higher-rate, higher-inflation regime can be unpredictable. 

Given how many asset holdings and investment structures are premised on persistently low rates, even small changes could lead to cascades of repricing.

There is no knowing how bond investors will react to a few years of inflation significantly above 2 per cent. 

Turbulence is likely, and swingeing losses possible. The task for policymakers is to ensure that lossmaking — a normal part of well-functioning capitalism — does not have systemic consequences. 

That is more a matter of regulation than monetary policy, however.

Apart from investors being caught out, past repricing episodes have exposed problems with the plumbing of financial markets. 

When asset prices momentarily collapsed at the onset of the pandemic last March, even US Treasury markets briefly struggled to function, and normal trading could only resume after the Fed came to the rescue. 

A monetary policy tightening cycle, even when it comes as part of a welcome real-economy recovery, could well trigger other nasty surprises. Again, this must be dealt with by market regulators, not interest-rate setters.

The upshot is simple enough. A faster reflation of the US economy would be a very good thing, but vigilance is needed on the way there. Investors must understand their exposures. 

Regulators must prepare to address mishaps, making sure important institutions are well-capitalised, and map where market dysfunction could be most dramatic.

As for monetary policy, the steady-as-she-goes message Powell gave legislators this week remains right. 

Indeed, by moderately tightening financing conditions, rising market rates have done some of his job for him.


The sad, quiet death of Brazil’s anti-corruption task-force

The winding up of Lava Jato is a victory for the old politics

For years it made the powerful tremble. 

The revelations by the task-force of prosecutors in Curitiba who led the anti-corruption probe known as Lava Jato (Car Wash) brought millions of Brazilians onto the streets in outrage. 

Those protests contributed to the impeachment of a president, Dilma Rousseff, in 2016. 

The prosecutors secured jail sentences for her predecessor, Luiz Inácio Lula da Silva, and Marcelo Odebrecht, Brazil’s ninth-richest man. 

On February 3rd the task-force was wound up, in near-silence. 

Its demise marks the symbolic end of an unprecedented push to reduce graft across Latin America. 

Sadly, there is little reason to think that it has made a lasting difference. 

The pandemic and the economic slump have displaced, probably temporarily, worries about crooks in suits.

Lava Jato started with a money-launderer who used a money-transfer service at a petrol station in Brasília (thus its name). 

Prosecutors uncovered a web of bribes for padded contracts issued by Petrobras, the state-controlled oil giant, over more than a decade in which Lula’s Workers’ Party was in power. 

The task-force used new tools, including plea-bargaining and the exchange of financial information with Swiss and other authorities. They found that Odebrecht, a construction firm, had set up a bribes unit that paid $800m in a dozen countries. 

The malfeasance extended to other big Brazilian firms.

In all, 174 people, including 16 politicians, were found guilty, and 26bn reais ($5bn) was recovered for public coffers. 

Three former Peruvian presidents were detained over the Odebrecht scandal; a fourth committed suicide. 

In a region where the powerful enjoyed impunity, this was unprecedented.

Yet in the end the anti-corruption drive was undone by the politicisation of justice, in two ways. 

Sergio Moro, the crusading judge in Curitiba, turned out not to be impartial. 

He sentenced Lula to 12 years for receiving a beachside apartment. 

Except that Lula neither owned nor used it. That sentence was upheld by an appeal court. There were other, more solid cases against Lula. 

But with him out of the presidential race in 2018, Mr Moro became justice minister in the government of Jair Bolsonaro, its hard-right winner. 

Leaked messages showed that Mr Moro coached Deltan Dallagnol, the lead prosecutor in Curitiba, in violation of procedure.

As minister, Mr Moro said he hoped to institutionalise the fight against corruption. Mr Bolsonaro had posed as an anti-corruption campaigner. 

In office, he scotched that agenda after prosecutors began investigating one of his sons and an aide. Mr Bolsonaro’s hand-picked attorney-general weakened the task-force before winding it up. 

Four prosecutors will continue to work on corruption and Edson Fachin, the Supreme Court justice handling Lava Jato cases, insists it “has only just begun”. That smacks of bravado.

Lava Jato promised to cleanse Brazilian politics. “It could have been as important for Brazil as democratisation in the 1980s and the [inflation-busting] Real Plan of the 1990s,” says Eduardo Giannetti, a Brazilian philosopher. 

But there was no follow-up. 

In another sign of a return to the “old politics” that Mr Bolsonaro once denounced, he backed Arthur Lira, a defendant in Lava Jato, as the new speaker of the lower house of Congress.

Outside Brazil, Peru’s prosecutors went furthest. But they have yet to prove any of their cases. In targeting some people for investigation, they appear to have political motives. 

In Mexico Emilio Lozoya, a former boss of Pemex, the state energy company, is accused of pocketing $10.5m but walks free after incriminating political foes of President Andrés Manuel López Obrador. 

In Argentina, there is some hope. On February 24th Lázaro Báez, a close associate of Cristina Fernández de Kirchner, the vice-president and a former president, was sentenced to 12 years for money-laundering. 

Attempts by Ms Fernández’s supporters to capture the judiciary have so far failed.

Lava Jato has shown that there are effective ways to take on grand corruption. 

“Some lessons have been learned,” says Delia Ferreira, an Argentine lawyer who chairs Transparency International, a global watchdog. 

Some big firms have tightened controls. But this progress has not been consolidated into greater judicial independence. 

There is no sadder example of the problem’s persistence than allegations in several countries of profiteering from the procurement of health-care supplies during the pandemic. 

In one of its biggest battles, Latin America is almost back to square one.

How America’s Vaccine System Makes People With Health Problems Fight for a Place in Line

At least 37 states allow people with certain health conditions to receive the Covid-19 vaccine, according to a New York Times survey. But a new skirmish has emerged over who will go first.

By Amy Harmon and Danielle Ivory

Waiting in line for Covid vaccines at a mass vaccination site in San Francisco. Credit...Jim Wilson/The New York Times

As states have begun vaccinating Americans with medical conditions that may raise their risk for a severe case of Covid-19, they are setting widely varying rules about which conditions to prioritize.

The morass of guidelines has set off a free-for-all among people with underlying health problems like cancer or Type 2 diabetes to persuade state health and political officials to add particular conditions to an evolving vaccine priority list.

In Royal Oak, Mich., Megan Bauer, who lives with cystic fibrosis, a genetic disease that can cause serious lung infections, said she was grateful that other people with heightened risks were getting vaccinated: health care workers, teachers, her 81-year-old grandmother. If Ms. Bauer lived in Montana, New Mexico, Virginia, Washington, D.C., or at least 14 other states, she could get the vaccine now, too. But not in Michigan.

“The wait seems never-ending,” Ms. Bauer said. “With cystic fibrosis, every day is precious, so losing this time is difficult.”

“With cystic fibrosis, every day is precious, so losing this time is difficult,” said Megan Bauer.Credit...Elaine Cromie for The New York Times

In the initial months of the vaccine rollout, states sought to balance between prioritizing older people, who are most likely to die from the virus, and people in professions most likely to be exposed to it. 

Under recommendations from the Centers for Disease Control and Prevention, people with medical conditions that have been associated with an increased risk for severe virus symptoms were slated to come next.

At least 37 states, as well as Washington, D.C., are now allowing some residents with certain health problems to receive vaccines, according to a New York Times survey. But the health issues granted higher priority differ from state to state, and even county to county.

Where High-Risk Adults Are Eligible

People with certain medical conditions are to some extent eligible for the coronavirus vaccine in 37 states and Washington, D.C. 

In several states, some medically vulnerable people are eligible only if they also meet certain other requirements, like age thresholds.

Some people with Down syndrome may get vaccines in at least 35 states, for instance, but some of those states are not offering shots to people with other developmental conditions. 

At least 30 states allow some people with Type 2 diabetes to get vaccines, but only 23 states include people with Type 1 diabetes. 

At least 19 states are making the vaccine available to some people with cystic fibrosis; at least 14 have included some people with liver disease; and at least 15 have deemed some smokers eligible.

At least 30 states have prioritized vaccines for people who are overweight or obese, according to the Times survey, though they vary even there, some setting the bar at a body mass index of 25, others at 30 or 40.

Some states require people to prove they have a medical condition, though at least 16 states and Washington, D.C., do not. And at least 12 states allow people to get a recommendation from a health professional to get a shot, even if their medical condition has not been given priority by the state.

In the absence of large, rigorous studies of the coronavirus’s effect on people with other medical problems, medical ethicists said, there are few clear principles to apply to determine a priority sequence among many conditions.

Many states are taking their cues from a list of 12 sorts of conditions that the C.D.C. has deemed to have substantial evidence for elevated Covid risks, including obesity, Type 2 diabetes, smoking and Down syndrome. C.D.C. officials have said that they regularly review the scientific literature and will expand the list as warranted.

But some medical ethicists argue that the list itself is misleading because it suggests that the risks for all diagnoses have been considered and ranked. Is a 50-year-old with Type 1 diabetes at greater risk from Covid-19 than a 25-year-old with sickle cell disease, or a 35-year-old with intellectual disabilities?

Certainly, some studies have been conducted about links between serious Covid-19 illness and other health conditions. In one study, researchers found that people with diabetes, obesity, hypertension or chronic kidney disease were three times as likely to be hospitalized with Covid-19, regardless of age. People with two of the conditions were more than four times as likely to be hospitalized as those without them. But scientists have had a relatively short time to understand Covid-19 and its relationships to other medical conditions.

“We have a long history of doing risk-based recommendations based on lots of data,” said Dr. Grace Lee, a member of the C.D.C.’s vaccine advisory committee and a pediatrician at Stanford University. “The problem with Covid is, the information is coming in now, and it’s different than it was even two months ago when we were deliberating about vaccine allocations.”

Because the vaccine rules can be set by governors — who typically consult with hospital officials and their own medical and ethical advisory groups — many appeals have taken a personal bent: “@GovMikeDeWine,” Hanna Detwiler, a bone marrow transplant patient in Columbus, Ohio, tweeted about her inability to get a vaccine last month, “Do better.”

About three dozen health advocacy groups sent a letter in late January to Gov. Andrew M. Cuomo of New York after growing concerned that the state might not explicitly include people with H.I.V. on its priority list for shots. The groups cited the state health department’s own research on H.I.V. as a risk factor for getting severely ill with Covid-19.

New York ultimately became one of at least 14 states, along with Washington, D.C., to announce that H.I.V. was on the vaccine priority list. A spokeswoman for the state’s Department of Health said this week that New York had always intended to include H.I.V. patients on the priority list.

Patients and representatives for people with H.I.V., liver disease, asthma, Type 1 diabetes, pulmonary fibrosis, cystic fibrosis and intellectual and developmental disabilities said they have started advocacy campaigns at the state and national levels, with mixed success.

In Michigan, Laura Bonnell, who has two daughters in their 20s with cystic fibrosis, said she extracted a promise from officials in her county this week that they would soon offer vaccine appointments to any cystic fibrosis patient over age 16.

“It’s about desperation,” said Ms. Bonnell, who runs a foundation for families affected by cystic fibrosis. “It’s about being heard.”

In the absence of large, rigorous studies of the coronavirus’s effect on people with other medical problems, medical ethicists said, there are few clear principles to apply to determine a priority sequence among many conditions.

In the absence of large, rigorous studies of the coronavirus’s effect on people with other medical problems, medical ethicists said, there are few clear principles to apply to determine a priority sequence among many conditions.Credit...Tim Gruber for The New York Times

A spokesman for Oakland County, where Ms. Bonnell lives, said officials wanted to protect those suffering from respiratory illness who they knew would be at greater risk. If the county proceeds, Ms. Bauer, the woman from Royal Oak, would also be eligible, though it not clear how soon appointments would be available.

Across the country, the vaccine eligibility requirements are a moving target. Ohio added bone marrow transplant patients like Ms. Detwiler to its list last week after initially offering the vaccine only to those who had received a solid organ transplant.

Next week, California, where only some counties have previously offered vaccines to people with medical conditions, will allow shots statewide to millions of people with health problems. That reversed the state’s earlier plan to prioritize shots based solely on age, which led to high-profile opposition from disabilities rights advocates who used a hashtag #HighRiskCA.

Connecticut recently flipped in the opposite direction, ending plans to expand eligibility for shots to people with pre-existing health conditions in favor of priorities based on age. 

And even some patient advocates who have pushed for inclusion are disheartened by what may be a system where the loudest voices, with perhaps the most funding or political clout, prevail.

“That is not how our public policies should be decided, on who is better at advocating,” said Kara Ayers, director of the Center for Dignity in Healthcare for People With Disabilities, which has created a vaccine prioritization dashboard with the Johns Hopkins Disability Health Research Center to help people with medical conditions track their status.

State government officials say their decisions on which health conditions to include often come down to some combination of evidence, logistics and political reality.

Maryland has permitted shots for people with medical conditions only if they are currently receiving treatment in hospitals or outpatient centers because “right now we can only offer vaccines to a subset of our highest-risk individuals,” said Dr. Jinlene Chan, the state’s acting deputy secretary for public health. New Hampshire has allowed vaccines for residents with at least two medical conditions. Smokers are not entitled to early shots in the state.

“I can’t have a 24-year-old smoker get a vaccine before somebody’s grandmother,” Gov. Chris Sununu of New Hampshire said in an interview. “Opening it up to everyone won’t change how much vaccine I have.”

Eligibility lists are likely to expand as supply catches up with demand, which the Biden administration has said could happen as early as next month. Still, bioethicists say, there is an inclination to feel that the vaccine priority list amounts to a calibration of a person’s societal worth. For people contending with health problems that also can be sources of social stigma, the uneven vaccine rollout is stoking concerns that extend beyond Covid-19.

“It feels like many of the prejudices I’ve fought my whole life I’m fighting all in one bucket to get access to this vaccine,” said Jessica von Goeler, 49, of Arlington, Mass., who has Type 1 diabetes and has started a petition to persuade her state to add her condition to its eligibility list.

In Michigan, a recent announcement was bittersweet for Ms. Bauer. This week, the state expanded vaccine eligibility to people with cystic fibrosis and other medical conditions, so long as they are over 50.

In 2019, the median age of death for people with cystic fibrosis in the United States was 32, according to a patient registry kept by the Cystic Fibrosis Foundation.

“Most people with C.F.,” said Ms. Bauer, who is 24, “may not be in that group.”

Reporting was contributed by Jasmine C. Lee, Mitch Smith, Alex Lemonides, Jordan Allen, Adeel Hassan, Brillian Bao, Alyssa Burr, Sarah Cahalan, Matt Craig, Yves De Jesus, Brandon Dupré, Grace Gorenflo, Benjamin Guggenheim, Barbara Harvey, Lauryn Higgins, Jaylynn Moffat-Mowatt, Laney Pope, Cierra S. Queen, Natasha Rodriguez, Alison Saldanha, Kristine White, Bonnie G. Wong and John Yoon.

Amy Harmon is a national correspondent, covering the intersection of science and society. She has won two Pulitzer Prizes, for her series “The DNA Age”, and as part of a team for the series “How Race Is Lived in America.” @amy_harmon • Facebook

Danielle Ivory is an investigative reporter. Before joining The Times in 2013, she wrote about government contracting at Bloomberg News. @danielle_ivory

This Isn’t Inflation’s TIP-ping Point

There are reasons to expect more inflation, but don’t take the surge baked into Treasury inflation-protected securities too literally

By Justin Lahart

There are rising expectations for how quickly the economy will recover from the Covid-19 crisis. / PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS

The Treasury market is implying substantially more inflation over the next decade than it did in the fall. 

That rise may have as much to do with investors worrying less that the world is about to fall apart than a belief that inflation is headed inexorably higher.

The 10-year break-even rate, or the difference between the yield on the 10-year Treasury note and the 10-year Treasury inflation-protected security, is often looked at as bond-market investors’ judgment of where inflation is headed. 

It now stands at 2.2 percentage points, a half-point above its level at the start of 
November and near its highest since 2014.

There are some good reasons for thinking inflation over the long haul might be higher than one would have thought back in the fall. 

With millions of Americans getting vaccinated each week and another round of government support on its way, expectations for how quickly the economy will recover from the Covid-19 crisis have stepped up. 

Even so, the Federal Reserve has remained steadfast about its intention to get inflation a bit above its 2% target—and not just for a little while, as seems possible in the early stages of reopening the economy.

Forecasters, Wall Streeters and ordinary Americans never had inflation projections quite as low as what the break-even rate implied through much of last year. 

By the same token, while they have nudged up their expectations for what inflation will do over the next decade, they haven’t done so by nearly as much.

A Federal Reserve Bank of Philadelphia survey shows that, as of this quarter, economists expect the Labor Department’s measure of consumer inflation to average 2.2% over the next decade, versus an estimate of 2.12% last quarter. 

A Federal Reserve Bank of New York survey in January showed that bond-market participants expect inflation of 1.95% over the next five years, and 2.14% in the five years after that, which compared with October estimates of 1.85% and 2.1%, respectively. 

And in the University of Michigan’s February survey of consumers, respondents said they expected inflation to average 2.7% over the next 5 to 10 years, which was close to its fall readings.

The bigger factor in the rise in the break-even rate seems to be an increase in term premiums, not higher expected inflation. 

Term premiums are essentially the extra yield investors demand over what they think is appropriate for a Treasury to compensate for the possibility their view is wrong. 

“Premium,” has become a bit of a misnomer, because while historically term premiums have been positive, in recent years they have often been negative. 

That may be because rather than worrying about 1970s-style inflationary shocks sending rates unexpectedly higher, investors now worry more about recessionary shocks that the Fed struggles to dig the economy out of.

Term premiums aren’t directly observable, but economists have come up with models to infer them. 

These show that, while the term premiums remain negative, they aren’t as negative as they were back in the fall. 

A Federal Reserve Bank of New York model, for example, shows a term premium on the 10-year Treasury of negative 0.34% versus negative 0.75% at the end of October. 

That less negative term premium makes for higher Treasury yields and a higher break-even rate.

A future with a bit more inflation certainly seems likelier now than it did in the fall, when the possibility of effective vaccines still seemed murky. 

But the more important message from the bond market is that the world seems a little less fraught now than it did then.

$1.9 Trillion Should Be Step One. More Stimulus Is Needed.

By Stanley Litow

   Spencer Platt/Getty Images

The debate over President Joe Biden’s propose $1.9 trillion relief package begins and ends with a simple question. Does the U.S. government need to spend money to stimulate an economic recovery or is that recovery well underway?

What are the facts? Some cite an unemployment rate of 6.3% for January, down from 6.7% a month earlier, as evidence of real progress. 

Closer analysis shows that the unemployment rate only reflects those actively searching for work. It also fails to recognize that millions of Americans who are working part-time do so not because they want to, but because they have to. 

Labor economist John Komlos examined a wider range of economic and employment factors and pegged the unemployment rate in May at 24.4%, with rates significantly higher for people of color, those who are low income, and those with less education. 

The Bureau of Labor Statistics was reporting a rate of 13.3% at the time.

Unemployment data alone also obscures the high level of economic distress faced by so many Americans. 

One in six are estimated to not have enough to eat. 

Small businesses, engines for economic growth, have also been hard hit. 

As a consequence of the pandemic 100,000 small businesses have already shut their doors with more closing every day. 

In one small state, Connecticut, 37% have closed. The stimulus package, though vitally needed, is by definition designed for short-term benefit.

All this reveals the severe economic distress that dictates serious and prompt action to stimulate economic growth. 

Step one is providing emergency assistance to many Americans, along with a focus on safe school and college reopenings, vaccine deployment, and a range of other emergency measures. 

While the $1.9 trillion price tag is large, it will not be enough to turn the economy around and generate the needed level of job growth.

The next funding request, and there will definitely need to be one, must go beyond emergency efforts and stimulate economic recovery. 

That is why infrastructure spending, especially with a focus on “green” and competitive jobs, must be a high priority. 

There are ample examples of how this can be successful.

Work done by the Aspen Institute highlights programs in Stockton, Calif. and Batesville, Ark. school districts that spent money to increase energy efficiency by using solar panels. 

In Stockton, their efforts resulted in $15 million in energy savings, and in Batesville the energy savings actually prevented teacher layoffs and increased teacher pay. 

A U.S.-wide investment in energy conservation focused on schools and colleges would not only create jobs, but the energy savings could be put into educational improvement. 

These efforts could also be connected directly to students having a path to employment, allowing students to engage in internships, apprenticeships, and work opportunities to prepare for these green jobs. 

Making this work would require government funding, but it could also involve matching private investment. 

Funding incentives via public-private partnerships would decrease the overall cost and expand the number of people that would benefit, especifically small businesses and those owned by women and minorities. 

The Billion Dollar Roundtable, a group of companies that commit to spending at least $1 billion on women and minority-owned suppliers, is another opportunity for shared investment. 

Excelon, the first energy company to join a group that includes IBM, JPMorgan Chase, and Merck, increased the percentage of goods and services they purchase from minority suppliers by almost 30% in just one year. 

AT&T committed to spend $3 billion with Black suppliers. 

Coca Cola committed to a minority supplier spending goal of $1 billion by the end of 2020.

This goal to expand sourcing from women- and minority-owned businesses should be how all Fortune 500 companies do their business. 

Imagine the value of adding hundreds of billions of dollars in private spending into the bottom lines of thousands of vulnerable small businesses that are women and minority-owned. 

Those who spend in this fashion deserve to be publicly recognized so they can display such praise to their employees and their customers. 

And this kind of public-private partnership can grow to include shared spending on education and skills in a host of areas, especially technology, advanced manufacturing, and health care—all areas of job growth.

This is not the time to cut corners. We need to turn the economic crisis around. The Biden stimulus spending plan is only step one. 

While it is essential and needs to be enacted, more needs to be done. 

There will likely need to be further stimulus spending in the hundreds of billion dollars. 

Whatever amount is approved, it must be directly tied to job growth and leveraged with private sector investments. 

This spending on infrastructure, green jobs, and small business growth will move recovery into a much higher gear.

Stanley Litow is a professor at Duke and Columbia universities, and serves as innovator-in-residence at Duke. He is a trustee and chair of the Academic Affairs Committee at the State University of New York. He previously served as deputy chancellor of schools for New York and as president of the IBM Foundation.

Why Mars Matters

The successful landing of NASA's Perseverance rover on Mars is about far more than scientific curiosity or national prestige. For the sake of humanity's long-term survival, it is imperative that we embrace our technological know-how to establish life beyond planet Earth.

Christopher E. Mason

NEW YORK – The Perseverance rover, which landed on Mars this month, marks a new leap toward answering fundamental questions about our solar system, including where else we might find DNA. 

The rover will roam the surface of Mars looking for signs of life, make its own oxygen, launch a helicopter, and collect soil and rocks for a follow-up mission in 2028. If all goes as planned, NASA, with the help of European Space Agency (ESA) spacecraft, will return soil samples in the spring of 2032 – the first Martian material to visit Earth.

Finding DNA on Mars would not be a complete surprise. Though Perseverance was constructed in the Spacecraft Assembly Facility (SAF) clean room at NASA’s Jet Propulsion Laboratory (JPL), even that setting cannot be made 100% free of background microbial or human DNA. 

We have known about “microbial hitchhikers” since the very first interplanetary missions in the 1960s, when scientists such as Carl Sagan highlighted the problem. It is a persistent, unavoidable risk of space science. 

Because scientists must build the spacecraft one layer at a time, shedding skin and droplets of saliva over years of construction, it is almost certain that a little bit of California DNA just landed on Mars.

As such, when the samples arrive on Earth in 2032, they will need to go through a “planetary-scale genetic filter” to rule out any DNA that might have been present in the SAF during the rover’s construction from 2015-20, as well as any other fragment of DNA observed on Earth up until the launch of the spacecraft in July 2020. 

This is an ongoing project between our laboratory at Weill Cornell Medicine and JPL. By sequencing the DNA found in, around, and on the SAF during the construction of robots, we will draw up a genetic map to avoid or minimize any forward or backward contamination (where we send genetic material somewhere else, or genetic material from somewhere else lands here).

Ever since the first two Soviet probes landed on Mars’s surface in 1971, followed by the US Viking 1 landing in 1976, some fragments of microbial and possibly human DNA are likely to have ended up on the red planet. And given the planet’s global dust storms, this DNA is almost certainly located in various places across the surface.

Fortunately, we are living in an extraordinary era for genetics. The low cost of DNA sequencing allows us to build an ever-growing genetic catalog of life on Earth, genetic maps of SAF clean rooms, and the first-ever planetary-scale genome maps (MetaSUB and the Earth Microbiome Project). 

Moreover, in a 2016 mission with astronaut Kate Rubins, we showed that we can sequence DNA in space and match it to profiles of novel organisms on Earth. Anything that can survive in space, on spacecraft, or in extreme conditions on Earth is a decent candidate for life that can survive on Mars. 

Eventually, instead of sending DNA to Mars by accident, we will do it deliberately, for a purpose.

After all, manned missions to Mars are technologically achievable. They can bring out the best in humanity, and we already have the physical, pharmacological, and biological means to pursue them. 

In my new book, The Next 500 Years: Engineering Life to Reach New Worlds, I highlight studies that we performed on dozens of astronauts, including the twins Scott and (US Senator) Mark Kelly, following Scott’s one-year mission in space. 

Based on our findings, we are now confident that humans can travel to Mars, and with some additional innovation and technology, stay there.

We need humans to be able to live on Mars sustainably, responsibly, and safely not so that we can abandon Earth, but because the best way to ensure our species’ survival is to make it possible to live elsewhere. Mars is not Plan B: it is Plan A, and always has been.

We have an ethical duty to prevent our own species’ extinction as well as that of all others on Earth. No other species (that we know of) possesses such awareness of its potential future, nor the ability to preserve life. 

Only we can perform this function; and in the long term, doing so requires that we make our way to other planets. Settling Mars is the necessary first rung on the ladder of long-term survival (not least because Venus is too hot).

To meet this imperative, however, we will need to bring NASA’s budget back to 1960s levels, when it was 4.4% of the federal budget (compared to 0.48% today). We will need more international cooperation (including with China) as well. 

To that end, my colleagues and I recently published a series of papers and launched an international collaboration on aerospace medicine that includes representatives from NASA, ESA, ROSCOSMOS (Russia), and JAXA (Japan). 

The United Arab Emirates and others have also started studying space biology, and more space agencies are working with commercial platforms such as SpaceX and Blue Origin.

Some duties we choose for ourselves. But the duty to preserve life is inextricably bound up with the awareness of our own mortality and the possibility of extinction. 

Humanity’s stewardship of life is both a selfish imperative and an innate, unique obligation. By doing what it takes to preserve life as we know it, we may yet find new life in the universe.

Christopher E. Mason, a geneticist and computational biologist, is Associate Professor at Weill Cornell Medicine, with appointments at the Meyer Cancer Center, Memorial Sloan Kettering Cancer Center, the Information Society Project at Yale Law School, and the Consortium for Space Genetics at Harvard Medical School. His book The Next 500 Years: Engineering Life to Reach New Worlds will be published in April 2021.