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Salesforce COVID-19 Scenarios | Salesforce

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Regain confidence in spite of today's unprecedented uncertainty with the latest Salesforce COVID Scenarios, created by renowned futurist Peter Schwartz and his team -- Mick Costigan, Noah Flower, and Angela Gleason.

COVID has thrust all of us into a realm where our carefully honed expertise and judgment suddenly feels inadequate, and we've all had to make choices in the past six months in fear of landing ourselves and our organizations in dire straits. We can’t run away, but the problem feels too vast to understand. What if you had a reliable map to help you navigate with confidence?

Our scenarios offer exactly that: we break down the crisis into three time periods, three uncertainties, three ways to control the virus, and three tensions to manage, all of which lead to three scenarios that might come about in your country or region.

By using these scenarios as your guide you can quickly grasp the realistic prospects and move quickly back into doing what you do best: pursuing opportunity. There is a “next normal” already coming into view on the other side of this storm, and if you keep it in your sights, you can be one of the ones who not only arrives but thrives. #Salesforce

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Salesforce COVID-19 Scenarios | Salesforce

  1. 1. COVID-19 Scenarios v8 Salesforce Scenario Team Version 8 | August 13th 2020 1
  2. 2. 2 Topics Introduction How could the world change after the crisis? How has the health crisis developed to date? What scenarios are visible? What can recent experience teach us about the coming nine months?
  3. 3. Humanity is experiencing profound health and economic crises that few were prepared for and which touch us all, at great personal, social, and economic cost. With uncertainty now at levels unseen since the Great Depression, it is easy to fall victim to analysis paralysis. However, even as the crises rapidly evolve, leaders are challenged to interpret events, to offer guidance to their people, and to make hard choices. To provide clarity, we lay out a framework of three critical uncertainties that highlight the key public health, economic, and sociopolitical dimensions of the crisis that we are all navigating. This framework can be applied by public or private-sector leaders to any state, country, or larger epidemiological region such as the Indus Valley or the American West Coast. We describe three broadly applicable scenarios for the next nine months that show how the interplay of the critical uncertainties could result in different “curves” for the impact of the virus and the loss of GDP. That near-term horizon is the point beyond which a vaccine may arrive, and we offer several separate possibilities for that development. This crisis is the most severe of most of our lifetimes. Many of its possibilities are troubling. Yet, creativity amidst (and after) the destruction will be required to reimagine and then reinvent how we live and work in the “Next Normal” to come. For a complementary 3-5 year time horizon, we also recommend the longer-range scenarios, built in partnership with Deloitte and external futures experts. 3 The Salesforce Scenarios Team (Peter Schwartz, Mick Costigan, Noah Flower, and Angela Gleason) August 2020 A tool for navigating unprecedented uncertainty AS YOU READ THIS DOCUMENT, CONSIDER... ● How might differing impacts in countries and regions affect your business, your customers, and ecosystems? ● How well-prepared is your organization to sense the evolution of the crisis, to monitor key indicators, and to quickly respond? ● How could you use these scenarios to spur bold and creative ideas about how your organization can reimagine and reinvent itself in the Next Normal?
  4. 4. NewcasesGDPloss Time Governments are intervening to mitigate it Suppression created an instant economic crisis Source | The supply side matters: Guns versus butter, COVID-style, Richard Baldwin, VoxEU.org, 22 March 2020 Suppression policies GDP loss with effective suppression + sizeable economic stimulus (death toll low, recession minimized) Effective Suppression Suppression policies introduced “In war, governments spend freely. Now, too, they must mobilise their resources to prevent a disaster. Think big. Act now. Together.” Martin Wolf | Economics Editor Financial Times, March 2020 Effective stimulus GDP loss with effective suppression + no economic stimulus (death toll high, deep and persistent recession) 4
  5. 5. The worst recession ever Many advanced economies are now forecast to experience their worst recession ever in 2020 ● The IMF downgraded its 2020 forecasts initially in April and again in June. ● Mainstream economic forecasts for 2021 assume no more lockdowns and a strong recovery in economic activity in 2021. ● However, continuing downside risks exist for the rest of 2020 and into 2021. ● Economic policy uncertainty remains at levels unseen in this century, and perhaps since the Great Depression. Sources | IMF World Economic Outlook June 2020; Salesforce analysis 7 6 5 3 2 1 4 0 -2 -3 -4 -1 -6 -7 -8 -5 -9 -11 -12 -13 -10 IndiaFrance JapanUKUSA AustraliaCanada Germany Italy BrazilSpain Oct ‘19 Apr ‘20 Jun ‘20 Real 2020 GDP Growth Forecasts China S. AfricaMexico
  6. 6. NewcasesGDPloss Time The crisis is shaped by three sets of uncertainties In a given country*, three phases of the crisis precede the emergence of a Next Normal 6 Societal Cohesion Phase 0: Losing Control Phase I: The Hammer Phase II: COVID Normal Notes | * Given that transmission dynamics are locally-specific, and suppression policy choices are often decentralized, it may be more relevant to look at sub-national units, particularly in the U.S., to understand the dynamics of the health crisis. Economic policy responses are more national and international. The Next Normal Health Economy
  7. 7. How has the health crisis developed to date? 7
  8. 8. A few Asian countries quickly contained the virus Rapid deployment of stringent containment measures crushed the curve and kept it down 200 Aug NEWCASESPERMILLION Mar Apr May Jun Jul 100 0 300 400 500 <50 allows for precision containment without lockdowns EXAMPLES: China, Japan, New Zealand, South Korea, Taiwan, Vietnam ● Rapid and muscular response prevented a large outbreak. ● Keeping the spread very low allowed for containment without sustained lockdowns. ● A culture of mask-wearing and prior exposure to other coronaviruses likely contributed to their success. ● Chinese strictness set the template and established the benefit of prioritizing public health above all else.
  9. 9. Masking to reduce transmission. Physical distancing to reduce transmission. Restricting mass gatherings to reduce transmission. Public hygiene (hands and surfaces) to reduce transmission. Ventilation/filtration of indoor air. Public education to promote adherence. Restricting travel into the country to keep re-introduction to a minimum, enforced with meaningful penalties. These successes set the standard for containment Each country used a mix of the same methods to reduce transmission and keep it controlled Tomas Pueyo | Author The Hammer and the Dance March 2020 Lockdown (the “Hammer”) flattens the curve and containment (the “Dance”) keeps it there Three elements are key to containment (the “Dance”) New focus: “lockdowns” are used not society-wide but for targeting high-risk areas (towns or neighborhoods) or high-risk types of locations (clubs, live events, restaurants, etc.) Efficient and timely testing to identify all infected. Contact tracing to identify all potentially infected. Quarantining all potentially infected. Isolating all known infected. KEEP OUT the virus PREVENT infection CONTAIN the spread 1 2 3
  10. 10. Much of Europe was late to react but learned quickly After losing control, they used a strong Hammer to crush the curve and are learning to Dance 200 100 0 300 400 500 <50: floor below which lockdown can be avoided EXAMPLES: France, Germany, Iceland, Ireland, Italy, UK NEWCASESPERMILLION Range of cases among the examples and other similar countries ● Reticence to follow China in curbing liberty contributed to initial delays. ● Turnaround was possible by applying the practices proven elsewhere and sustaining discipline. ● Strong fundamentals made it possible to get to the green zone: governmental competence, public health capacity, economic resilience, and societal cohesion. AugMar Apr May Jun Jul
  11. 11. 200 100 0 300 400 500 Learning continues for those that reopened too quickly Spain and others demonstrate how difficult it is to maintain control given pressure to reopen the economy EXAMPLES: Spain, Israel, Serbia, Ecuador NEWCASESPERMILLION <50: floor below which lockdown can be avoided ● After a slow early reaction, lockdown proved effective. ● This success created a public impression of victory and a chance to relax precautions. ● But the subsequent reopening was too rapid and without key containment elements in place, a worrying resurgence is now emerging. AugMar Apr May Jun Jul
  12. 12. 200 100 0 300 400 500 Northeastern U.S. states initially suffered massively But after some of the world’s largest spikes, the same methods proved effective EXAMPLES: New York, New Jersey, Connecticut, Delaware, Massachusetts NEWCASESPERMILLION <50: floor below which lockdown can be avoided ● Americans’ high value on liberty created challenging initial conditions for prioritizing public health. ● Governance gaps, a tardy lockdown, and insufficient testing capacity allowed the virus to spiral entirely out of control. ● But renewed leadership, improved testing, and public adherence enabled a remarkable turnaround within two to three months. AugMar Apr May Jun Jul
  13. 13. 200 100 0 300 400 500 The U.S. shows how a failure to Dance can be disastrous Politicizing public health complicates both containment and achieving turnaround NEWCASESPERMILLION EXAMPLES: Arizona, California, Florida, Texas, S. Carolina <50: floor below which lockdown can be avoided ● Voluntary distancing and partial lockdowns worked initially, allowing economy-focused leaders to promote reopening, despite lack of containment capacity. ● Infection spread rapidly after an early and hasty reopening, creating crisis conditions. ● While the current wave is cresting, getting below 50/m will be extremely challenging. ● A full lockdown now would speed up recovery but has become politicized and will be difficult to impose. ● This experience illustrates the risk of failing to convince the public that fighting the virus requires accepting limits on liberty. AugMar Apr May Jun Jul
  14. 14. 200 100 0 300 400 500 Economic constraints are hurting the developing world Stringent lockdowns have proved impractical for many countries with large populations of urban poor NEWCASESPERMILLION EXAMPLES: Colombia, South Africa, Brazil, India, Mexico <50: floor below which lockdown can be avoided ● Initial stringent lockdowns proved difficult to maintain due to economic pressures of a population that must earn to eat daily, leading to a de facto sacrifice of public health in service of reopening. ● In many cases, populist leaders undermined societal adherence and failed to develop containment capacity. ● Lack of testing capacity and accurate data continues to obscure the true picture. ● Even as the situation worsens, it’s unclear how governments can regain control. ● Significant international support is likely required to prevent humanitarian disaster and debt crises. AugMar Apr May Jun Jul
  15. 15. What can recent experience teach us about the coming nine months? 15
  16. 16. Keep Open Businesses, Schools, Borders, etc. Protect Public Health Preserve Individual Liberty & Privacy 16 Using the Hammer and Dance puts these three goals in tension, forcing difficult trade-offs among them. While some countries value some over others, none can be fully ignored. To date, countries that have succeeded in controlling the virus have prioritized public health over other goals. This is harder to achieve for some countries, given constraints in resources, culture, and capabilities. Success involves a constant re-balancing. The quickest path through the crisis will involve different trade-offs at different points in the journey. The crisis puts three policy goals in tension, requiring a constant balancing act by governments Developing scenarios for the coming nine months
  17. 17. Protect Public Health 17 Virus trajectory is path-dependent over 1-2 months, but dramatic turnarounds and resurgences are possible beyond that. Responses required vary by situation. In the red zone, you need an effective Hammer to buy time while you learn to Dance. In the green, you need to Dance. Failure to Dance or Hammer effectively when required allows greater spread and erodes social discipline, making it harder to get into the green zone. The virus does not respect national or state borders. Where the epidemiological region cuts across jurisdictions and coordination is weak, transmission is harder to control. Faster testing innovations are emerging, which could dramatically improve containment effectiveness. A vaccine would be a game-changer but contains many uncertainties and is unlikely to have an impact until later. Evidence suggests a primary focus on virus dynamics, given difficulties controlling spread Developing scenarios for the coming nine months Preserve Individual Liberty & Privacy Keep Open Businesses, Schools, Borders, etc. Constraint: ability to cushion economic pain
  18. 18. Protect Public Health Keep Open Businesses, Schools, Borders, etc. 18 Broad-based economic recovery requires staying in the green zone. Above this level, fear of infection reduces economic activity regardless of policy. Increasing pain is being felt in high-contact sectors and small businesses, with front-line workers bearing the brunt. Less-exposed sectors can reach near-normal operating levels. Fiscal and monetary stimulus can cushion economic pain, for countries with the capacity to do so, which in the OECD is projected to cost 20-30% of GDP. Governments without the capacity to support the economy face impossible trade-offs, unless they receive international support. Societal cohesion will be increasingly challenged where the health and economic crises persist, as the crisis spotlights long-standing inequities and tensions. Economic recovery requires success at the Hammer and Dance, which is only in reach for some Developing scenarios for the coming nine months Preserve Individual Liberty & Privacy Constraints: governmental competence and public health capacity
  19. 19. Protect Public Health Keep Open Businesses, Schools, Borders, etc. 19 Emergency authorization to ignore privacy in the interests of high-speed contact tracing was activated in several East Asian countries with SARS experience. Chinese disregard for personal liberty associated lockdowns with authoritarianism. Populist leaders used this to fan public discontent, despite the growing scale of the problem. Contact tracing apps highlighted privacy concerns, particularly in Europe; Google and Apple enforced higher standards, forcing countries to revise plans. A “don’t tread on me” attitude in the U.S. is driving aversion to mask-wearing and any return to lockdowns, even where transmission is out of control. Lock-in to failing on the other two goals may be a result of over-emphasis on this goal. Early disregard for liberty created a narrative that is complicating lockdowns in the West Developing scenarios for the coming nine months Preserve Individual Liberty & Privacy Constraint: public willingness to accept temporary trade-offs
  20. 20. What scenarios are now visible? 20
  21. 21. BASE CASE Maintaining a crushed curve allows confidence to return. Full recovery is delayed until a vaccine allows greater openness to worse-affected regions. Scenario 1: Stamping Out the Hotspots TIME Aug Oct Jan Apr 20212020 + Sep Nov Dec Feb Mar Tight control Major reconstruction Rapid rebound Virus fears are replaced by new-found hope, the economy reopens, and GDP quickly returns to baseline. Policymakers pursue an ambitious new vision, taking the opportunity to push through significant structural changes. Society + Economy + Next Normal / COVID Normal NewcasesGDPloss 50 cases/m: no lockdown + Rapid rebound 21 New Zealand Health + Tight control Very few new clusters emerge and each is quickly contained through aggressive testing, tracing, and isolation. New York State
  22. 22. Health + Maintaining a crushed curve allows confidence to return. Full recovery is delayed until a vaccine allows greater openness to worse-affected regions. Scenario 1: Stamping Out the Hotspots TIME Aug Oct Jan Apr 20212020 + Sep Nov Dec Feb Mar Gradual halting return - DOWNSIDE Tight control New resurgences Major reconstruction Tight control Rapid rebound Very few new clusters emerge and each is quickly contained through aggressive testing, tracing, and isolation. Virus fears are replaced by new-found hope, the economy reopens, and GDP quickly returns to baseline. Policymakers pursue an ambitious new vision, taking the opportunity to push through significant structural changes. Minor repairs New resurgence Gradual halting return Clusters keep popping up, and containment measures are not fast or effective enough to stamp them out. Confidence and growth returns but it is moderated by caution on the part of those at greatest risk. Minimal support is offered to households and businesses to retrain and rebuild, but it is enough for most. - Economy +- Next Normal / COVID Normal - Society + NewcasesGDPloss - 50 cases/m: no lockdown + Rapid rebound 22 Japan BASE CASE France
  23. 23. Imperfect containment A mix of focused and broad suppression measures reduce transmission, but the the risk of losing control persists Scenario 2: Beating Back the Spread Recovery begins Repeated resurgences elude control, despite renewed suppression measures. The risk of losing control keeps the economy well below capacity. 23 Piecemeal re-opening and significant government aid enables a slow but halting return to growth. A wide range of support services are effective at getting many struggling households back on their feet. Partial gains TIME Aug Oct Jan Apr 20212020 Sep Nov Dec Feb Mar + + Imperfect containment NewcasesGDPloss Society + Economy + COVID Normal Partial gains 23 Health + BASE CASE Spain N. Carolina
  24. 24. BASE CASEDOWNSIDE Scenario 2: Beating Back the Spread Recovery begins Repeated resurgences elude control, despite renewed suppression measures. The risk of losing control keeps the economy well below capacity. 24 Piecemeal re-opening and significant government aid enables a slow but halting return to growth. A wide range of support services are effective at getting many struggling households back on their feet. Partial gains TIME Aug Oct Jan Apr 20212020 Sep Nov Dec Feb Mar Partial gains + + Imperfect containment NewcasesGDPloss Society + Economy + COVID Normal Up and down - Losing control - Rising anger & desperation Losing control The pain felt by the hardest-hit begins to boil over. Protests swell as unemployment and bankruptcy climb. The surge overwhelms insufficient suppression and flagging social discipline. Economic losses mount as uncertainty rises and high-contact sectors suffer. Up and down - - Imperfect containment A mix of focused and broad suppression measures reduce transmission, but the the risk of losing control persists Health +- Georgia (U.S.) Indonesia
  25. 25. Sickness, unemployment, bankruptcy, and debt take their toll. Protests, and crime are on the rise. Widespread desperation The virus persists in elevated rolling waves, destroying the economic recovery. As a depression takes hold, economic damage and societal tensions rise. Scenario 3: Burning Out of Control 25 Wildfires rage Depression Political leaders effectively give up on attempting containment and choose to re-open while awaiting a vaccine. Fear of the rampant virus hits a new high. The economy “re-opens” but the majority remain cloistered. TIME Aug Oct Jan Apr 20212020 Sep Nov Dec Feb Mar Wildfires rage - - Crisis / COVID Normal NewcasesGDPloss Economy- Society- Health- Depression (See: “The Pandemic Depression,” Foreign Affairs July/Aug 2020) BASE CASE Brazil Florida
  26. 26. BASE CASE UPSIDE Sickness, unemployment, bankruptcy, and debt take their toll. Protests, and crime are on the rise. Widespread desperation The virus persists in elevated rolling waves, destroying the economic recovery. As a depression takes hold, economic damage and societal tensions rise. Scenario 3: Burning Out of Control 26 Depression Fear of the rampant virus hits a new high. The economy “re-opens” but the majority remain cloistered. TIME Aug Oct Jan Apr 20212020 Sep Nov Dec Feb Mar Crisis / COVID Normal NewcasesGDPloss Economy- Society- + + Finding your feet Stability holds Up from below The spread is curbed by a new commitment to lockdowns, cluster-busting, and social discipline. As cases drop, confidence and growth ticks up, buoyed by substantial government aid. Government and civil-society support is just enough to keep households afloat for the short-term. +Finding your feet Up from below + Wildfires rage Depression (See: “The Pandemic Depression,” Foreign Affairs July/Aug 2020) - - Wildfires rage Political leaders effectively give up on attempting containment and choose to re-open while awaiting a vaccine. Health- + California Chile
  27. 27. 27 TIME Aug Oct Jan Apr 20212020 Sep Nov Dec Feb Mar STRICTLY CONFIDENTIAL - SALESFORCE INTERNAL 3 3 1 2 2 1. Stamping Out the Hotspots 2. Beating Back the Spread 3. Burning Out of Control Crisis | COVID Normal | Next Normal NewcasesGDPloss Maintaining a crushed curve allows confidence to return. Full recovery is delayed until a vaccine allows greater openness to worse-affected regions. Repeated resurgences elude control, despite renewed suppression measures. The risk of losing control keeps the economy well below capacity. The virus persists in elevated rolling waves, destroying the economic recovery. As a depression takes hold, economic damage and societal tensions rise. Tight control Rapid rebound Imperfect containment Partial gains Wildfires rage Depression In advance of a vaccine, we will see a broad range of outcomes The scenarios point to persistent uncertainty 1
  28. 28. “Long March” Later timing Harder challenge Game players An effective vaccine is approved in Q4 with a traditional and inexpensive design. The US administration brokers licensing deals that allows a rapid ramp-up of manufacturing around the world in Q1 of ‘21, and distribution runs smoothly, allowing even lower-income countries easy and timely access. Thanks to unified leadership messaging and OECD investment, public trust in the vaccine is high and herd immunity is reducing transmission by early ‘22. “Fever Dream” Sooner timing Easier challenge Fair players Sooner Fair players Easier Later Harder Game players “Sharp Elbows” Sooner timing Harder challenge Game players Surprisingly, it is China and Russia who emerge first with claimed effective vaccines. They gain soft power by giving access to developing countries in rolling outbreaks. In the West, societies divide on whether to accept the poisoned chalice of questionable help from frenemies or to wait for “our vaccine.” The vaccines prove challenging to deliver, requiring a functioning cold chains. As efficacy worries mount, finger-pointing ensues. When Western vaccines do arrive a similar soft-power game occurs. With misinformation rife, fears slow uptake enough to risk not reaching herd immunity. After repeated disappointments that exhaust the public, an effective vaccine is finally approved in late 2023 from an unproven U.S. startup. Being a novel mRNA design, it is both challenging and expensive to produce, and manufacturing can only be done on a limited scale. The U.S. government asserts control over distribution, using access as leverage to drive hard bargains throughout the Global South in its quest to combat Chinese and Russian influence. Between limited quantities and strong public skepticism (especially in the U.S.), herd immunity takes nearly a decade to achieve. I. Timing of availability of an effective vaccine III. Vaccine producers’ posture How geopolitics, competition, and favoritism plays into vaccine distribution II. Challenge of getting the vaccine into people’s bodies ● Cost and complexity of production, distribution and delivery ● Public acceptance and uptake Given diverse possible outcomes, it is useful to sketch alternative scenarios as a function of three critical uncertainties Vaccine prospects seem positive but highly uncertain
  29. 29. How could the world change after the crisis? 29
  30. 30. Time Sectoral paths through crisis and recoveryHealthcare Government New Media/Gaming Online Retail Grocery Household Tech Hardware & Software Home Entertainment Material & Process Transportation & Auto Commercial Real Estate Travel & Hospitality Energy Small Businesses Manufacturing Financial Services Telecoms Old Media Food & Beverage Growing Pressured Vulnerable +35% Lululemon +18% Siemens -47% GE +77% Tesla - 20% GM Growth Crisis hits -11% YoY: U.S. mfg. production in July. -20-30% YoY: U.S. transport and automotive activity in July. +30% YoY: Share of online retail activity vs. offline in July. The gap between winners and losers will accelerate: A longer crisis will see more divergence, including business failures in vulnerable sectors The crisis is exposing sectors & laggards within them Sources: BCG; McKinsey; Salesforce analysis Stock price changes from 2/14 to 8/10 -57% Macy’s
  31. 31. We must reinvent and reimagine the Next Normal Challenged to sacrifice personal freedom for public health, some citizens have rediscovered common bonds, putting new energy into communities. This solidarity may endure, as in previous shared experiences of overcoming a crisis (e.g. Londoners in the Blitz), particularly in Crushed the Curve. De-globalization E.g., a new premium on supply chain redundancy, and countries forming “travel bubbles” Remote everything Widespread working from home for knowledge workers and learning from home for students ● The longer the crisis endures, the more previously-unthinkable policy proposals will become popular. ● These proposals may relate to the crisis and response, but may also touch on wider policy areas. Examples include: Sustainability Long-term drops in travel and commuting leading to lower emissions 31 Popular Sensible Acceptable Radical Unthinkable Digital transformation Online customer engagement becomes standard By identifying emerging signals, we can intentionally design the new world we wish to see Accelerating Trends Increased Openness to Change POLICY Wartime- level govt. stimulus Eliminating institutional racism Virtual-first education Active industrial policy Universal basic income Economic and political isolationism Strict border controlsGovt. tracking of citizens Lessons from the Crisis The crisis offers a unique “natural experiment” in governmental competence. Some early successes and failures have already been exposed, shifting soft power leadership positions. Those who learn from others and adapt will also be recognized. Governmental Competence The essential services provided by businesses and their workers, including SMEs, have been recognized. Business leaders are being challenged to serve society rather than just shareholders, and many are responding. If this shift endures it could reframe business’ role in society and catalyze action on climate change. Business Purpose Societal Solidarity Shifts from pre-crisis to August 2020
  32. 32. The Next Global Depression Is Coming and Optimism Won’t Slow It Down Ian Bremmer, August 6 view → How the Pandemic Defeated America Ed Yong, August 4 view → A Vaccine Reality Check Sara Zhang, July 24 view → Covid-19 Will Hit Developing Countries Hard Martin Wolf, June 10 view → 12 People in a 3-Bedroom House, Then the Virus Entered Conor Dougherty, Aug 2 view → How the pandemic might play out in 2021 and beyond Megan Scudellari, Aug 5 view → We Need to Talk About Ventilation Zeynep Tufecki, July 30 view → The Pandemic Depression Carmen Reinhart and Vincent Reinhart, September/October issue view → 32 The Long Shadow of the Future Nils Gilman and Steve Weber, June 10 view → The Coronavirus Is Never Going Away Sara Zhang, Aug 24 view → Further Reading (@ August 7, 2020)

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