469. What
can we learn from Corona?
In this blog I have been working on a series on markets, but I don’t want to ignore the Corona crisis,
so here is an item on that.
A
thing cannot be what it is not, cannot do what it can’t. From Hegel I learned that one gets to
know something in its failure or its shortcomings. That opens your eyes for the
thing’s limits. The resulting slogan is: ‘Do not waste a good crisis’. What are
we learning from the present breakdown of society, with the Corona crisis? It
is early days yet, and conclusions can only be tentative. I may come back tot
his in a later item in this blog.
There is an economic lesson. A fundamental
thesis from Adam Smith is that division of labour is a source of prosperity. But
it requires trade and that makes one dependent, as we now see, when
international supply lines are broken, which matters, for example, for health
supplies. Some 80% of medicines and its chemicals in the world are from India
and China, and we are vulnerable to disruption of its supply due to Corona or
geopolitics. People will die because of it. It is astonishing how inside
countries competition authorities monitor and block monopolies while on a gobal
scale they let things go. One can see to it that risks of dependence are
diversified and in some sectors domestic supply is maintained. After the
crisis, world trade is likely to shrink.
On-line trade does not require direct physical contact,
and is blooming now, and much of that will remain? There is an incentive to
employ robots for delivery.
What will happen to the EURO? Southern European
countries will need help from the Northern countries. Those seem to resist, and
this may lead to break-up of the EU and the Euro.
How long will banks be able to be lenient on
loans and mortgages? They now have larger buffers than they did before, due to
measures taken after the financial crisis of 2008. But those are limited, and
banks may start falling again. Will they be bailed out again at the cost of
citizens?
Who will pay for the measures taken to contain
the virus and to provide recompense? This will mostly be taxes on future
incomes, hence the young. One can think of shareholders, but many of those are
pension funds, and the elderly will protest against reduced pensions.
What is the effect on (in)equality? At first
sight one might think that the virus is indiscriminate, affecting all equally.
But protection against it is unequal. Rich people have a large house, with more
spaces to seclude themselves, and a garden as a shielded outdoors. A large
house gives more opportunity for children to do their home shooling. Also, in
many countries only rich people have health insurance, and can appropriate
means of protection, such as testing and respiratory machines. People with work
that is essential but requires contact, such as in stores for food or medicine,
delivery and care, run more risks, and
for a large part receive lower pay. It is useful to distinguish between
the direct effect of the virus and effects of measures taken to contain it.
If Marx was right, the ‘superstructure’ of
ideology is produced by the physical ‘infrastructure’, and if that is so, the
crisis will have a major impact on ideology. With many people out of work and
needing an income, a massive handout is given in developed countries, The importance of this is that the
connection between income and labour is
severed. Income is no longer a reward but a need. What will this do, if it
lasts for long? Perhaps it will eliminate the largest obstacle for a universal
Basic Income, the resistance to income without performance.
In refugee camps and slums, with cramped
quarters, narrow paths and shared toilets and washing facilities soial
distancing is not practicable. Spread of the virus will be rampant,
uncontrollable..
It is reported that the crisis enhances
other-directedness, in empathy and mutual help. I can see that, but am a bit sceptical
about it, suspecting that it is due, in part, to boredom
What manifests itself is that people are so
accustomed to work and entertaiment away from home, such as dining out, ging to
the pub, shows, sports, that they find it hard to be alone. People have a
fundamental need to interact, ‘resonate’[i], with family locked into
home, they get bored or lonely or get on each others’ nerves. A good side is
that it stimulates conversation and contact and promotes reading and hobbies as
making art or do-it-yourself, making people more resourceful and creative.
What are the long-term effects of social
isolation? Does it promote solipsism and self-orientation or the reverse: will
people appreciate and seek contact all the more?
In several countries, people rally behind their
governments and their measures, but this can easily switch to criticism.
There is a positive effect of less pollution, with
reduced CO2 exhaust, but that is weakening the effort of energy transition away
from fossil fuels.
Paucity of traffic lures wildlife onto roads,
increasing traffic victims among them, in spite of the lesser traffic.
If the crisis lasts long and recompense falls
short, how long will people resist violence to rob resources? In the US,
admittedly a special case, people are buying guns again.
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