I’ve been brainstorming about what might happen with this year’s election. Here’s one of the more interesting (but not likely) scenarios that I’ve imagined:
Most parts of the US are experiencing their second or third wave of the pandemic. Two of the more heavily funded vaccine trials have just been declared to be failures. No US or European company expects to have a vaccine ready for FDA approval before December. Prediction markets say Trump’s chances of re-election have dropped to 20%.
China announces on October 27 that Sinopharm Group has a COVID-19 vaccine that meets China’s safety and effectiveness standards, and can deliver about 1 million doses by November 2.
China offers to allocate half of this initial batch of vaccines to the US, on the grounds that the US is a relatively needy country, and Donald Trump is currently a close friend of China.
Why, I hear you wonder, would China treat Trump as a friend?
China is strong enough that the government can afford to tolerate Trump’s annoying trade wars, and they maybe even see some benefit from reducing China’s somewhat excessive dependence on the US. It’s important to keep in mind that democracy is one of the larger threats to the Beijing regime (h/t scholars-stage). 2020 has proven to be a good year to mount a campaign to demonstrate that socialism with Chinese characteristics is superior to US-style democracy. I’ll leave as an exercise for my readers to figure out how many ways the idea of democracy could be discredited by a Trump re-election.
Why would a Chinese company be faster than US/European companies at producing a vaccine? My initial guess was differences in regulatory red tape would favor China, but my attempt to find evidence for such a pattern turned up nothing. My current guess is that differences between countries in who volunteers for a vaccine trial will have important effects on how quickly the control groups get infected. Trials in some countries may attract only people who are sufficiently risk-averse that the control groups are slower than expected at getting infected. Please don’t assume that I have any useful expertise here; I’m mostly just guessing.
I also wondered whether willingness to do human challenge trials would determine who verifies their vaccine first. I have vague intuitions that China is more likely than other countries to try that, but I haven’t found evidence to confirm those intuitions.
How would voters react to this scenario? My best guess is that the election would be surprisingly close, but Trump would still lose.
The stock market would rise due to the vaccine benefits. There would be no good way to infer the market’s opinion about the election until the results are announced. I’m still confused as to how this scenario should affect my investment strategies.
P.S. – China and Sinopharm aren’t willing to predict when they’ll able to submit the forms needed for FDA approval, and ask that the US consider the approval of China’s NMPA to be good enough evidence of the vaccine’s safety and effectiveness. How does the FDA react?