Who’s to blame for Covid-19

As the pandemic rolls on globally I expect the next few months will provoke a kind of public ‘blame game’ in which the lockdowns – and those who ordered them – are held responsible for a world economic crash.

What worries me is that the debate has been reduced to two positions: either there’s a lockdown and lives are saved, but the economy is ruined; OR there’s economic activity, a few people die, and everybody else gets on with making money.

Aside from the selfishness of putting one’s own money and comfort before human life it is, of course, a false dilemma fallacy: the reduction of an issue to an either-or position between two options, which are presented as the sole choices.

Actually, the situation is nowhere near as simple. Covid-19 is brand new. That puts it in sharp contrast with the flu, which is well known and where risks can be properly calculated. Even the range of Covid-19 symptoms and effects need time to be discovered. There’s growing evidence, now, that it causes organ damage, even in mild cases. One report I’ve read suggests that kidney failure, later, is a potential – and potentially common – downstream consequence. As yet, nobody knows. Given this learning curve, the advice from most medical authorities to be cautious – meaning lockdowns – seems sensible.

Put another way, economies recover. But you’re a long time dead. Which way do people want it? Oh, that’s right, the people wanting prosperity don’t think they’ll get the virus, or maybe it won’t be bad for them. Well, good luck to them.

In any case, it isn’t an either-or calculation. A crash was coming anyway for other reasons, as I’ll explain. The actual calculation is not economic prosperity versus a few dead: it’s choosing how large the pile of bodies is when the crash comes. In other words, a downturn is going to happen anyway. Why? Let me explain.

A temporary halt to an economy, an ‘exogenous shock’ in economic parlance – carries a swift recovery. However, that’s only true if there’s nothing else going on. And, unfortunately, there is.

First off, two generations of ‘globalisation’ and ‘outsourcing’ production to other countries has meant that supply chains and industrial production are closely interlinked. A country such as New Zealand – which locked down hard and has (so far) squashed the virus – was always going to suffer from this issue anyway, lockdown or not. In New Zealand’s case, the fact that a significant part of national income derives from tourism compounds the problem. But you can’t blame the government for closing the borders. Everybody else has too – the tourism industry was going to disappear no matter what the New Zealand government did.

There’s also a much deeper structural problem that’s been around a while and was going to hit us sooner or later, virus or not. A good deal of global prosperity in the past couple of decades has come through turning money, of itself, into a commodity. A vast range of terms have been invented to describe this ‘market’ and its transactions, in which even debts have been bought and sold. Of course it’s gossamer-fragile, reliant on skeins of transactions that depend on each other and on confidence that what’s being paid for the commoditised money is sustainable. If there is a hitch anywhere in the system, everything starts falling over.

This system – which has long entwined itself into the developed world via neo-liberal deregulation – has been ready to crack for a while. It was the cause of the GFC, a dozen years ago, at which point the world seemed headed for a second Great Depression. That was averted because one nation after another released ‘stimulus packages’ – in short, purchased their way out of it. But that didn’t fix the structural problems that had caused the issue in the first place, and there is only so far this issue could be kicked into the future.

What this means is that the V-shaped economic effect of a lockdown will likely turn into a more complex collapse for reasons that have less to do with Covid-19 and more to do with the structure of the world economic system. This was going to happen anyway: if the trigger wasn’t a pandemic it would have been something else – even a loss of confidence, which was part of the reason why the GFC happened back in 2007-10.

Of course, you can be sure the lockdowns will be blamed for the whole problem and the governments who imposed them duly punished. I find it extraordinary to think that, in return for actively caring for the lives and well-being of their people, governments around the world risk being voted out because they’re then blamed for an economic crisis that was on the cards anyway. But there you are.

Thoughts?

Copyright © Matthew Wright 2020


13 thoughts on “Who’s to blame for Covid-19

  1. Here in the USA our leading export is denial. “If we don’t test then there’s no virus.” “If we don’t count there are no deaths.” “If we open up there is no unemployment.” “As long as the stock market is rising nothing else matters.” I could go on and on. We’ve had good governments and bad governments. I never thought we’d have one run by a bunch of little boys who routinely kick and scream on the floor or put their fingers in their ears so they can’t hear the truth. Even worse are the supposedly rational people watching all this and nodding. “Yup, seems perfectly normal.”

    Yeah, until the treehouse falls and they start crying for Mommy.

    Liked by 2 people

    1. I keep thinking of the Treehouse of Horror episodes from the Simpsons… 🙂 Here in NZ the government managed to get on top of the virus for now, but it’ll probably cost it popularity as the downturn bites. And this virus is so little known that I wouldn’t be surprised if it’s been circulating beneath the radar and will spring back without warning.

      Liked by 1 person

  2. I just read an article in The New Yorker, https://eur05.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.newyorker.com%2Fnews%2Fnews-desk%2Fwhat-african-nations-are-teaching-the-west-about-fighting-the-coronavirus&data=02%7C01%7C%7C72998b9b02aa41727dc408d7f907a11b%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C637251683465301100&sdata=iP8ap4i6IbNvFuj9OSxpgQc8iRB0VldGOFOSLsNj5uw%3D&reserved=0, and it throws a little more light on the virus part of this whole scenario.
    On the economic front I completely agree we have been heading in the wrong direction for many years and a severe downturn, possibly depression, is long overdue.
    In either case playing the blame game doesn’t help. I think we as adults all need to really give our lives and expectations some serious thoughts like do I take that expensive, catered vacation just because I can? Or should I save some of that money for a rainy day and save a whole lot of pollution at the same time?

    Liked by 1 person

    1. A massive depression is not only overdue but inevitable. It was going to happen 13 years ago with the GFC but governments essentially bought time with the ‘stimulus’ packages. But those didn’t change the big-business/finance sector behaviours that had created the problem (and which were enabled by deregulation).

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  3. Sadly, very few people ‘out there’ will ever understand what’s going on because they’ve been told nothing but jingles and slogans. And most probably don’t want to know anyway. I’d like to think that something better will emerge from the rubble, but this has not been a glass half full day. Great post though.

    Liked by 1 person

    1. Thanks. I suspect there will be a generation of hardship before anything emerges. And what does emerge will indeed differ from what we have now – it’s time enough, and enough people will have suffered, to look back on the neo-liberal period as an era of selfish greed in which a few prospered at the expense of everything, including the environment.

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      1. I think you’re right, Matthew. I just wish this period of history had a different name. Neo-/liberal/ is such a misnomer. I grew up defining the word liberal as progressive rather than conservative. Instead, the word seems to have lost its meaning. Perhaps neo-liberalism will be rebranded once history moves on.

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  4. Interesting thoughts, as ever, Matthew. I’m inclined to agree that the globalised system was doomed to crash eventually. Surely there must be a move back to more self sufficient nations.
    My feeling is that when a game no longer works well (global capitalism) you have to change the rules of the game. Economics, money creation, taxation, basic human rights – all need to change. We need a new vision that people can get behind. Unfortunately, vested interests have an ‘over my dead body’ attitude. So change has to be forced in some way, and covid may be one such enforcer. Obviously climate breakdown will be another, and more drastic.
    And shame that electorates will punish lockdown governments, just as they punished Churchill for winning the war, because they didn’t trust he could manage the peace. C’est la vie!

    Liked by 1 person

    1. I think any social system humans build – of which the economy and its various fads is but one – must change inevitably, as attitudes do across generations. The problem with neo-liberalism is that its architects managed to embed it so thoroughly that no alternatives have emerged to replace it. That same embedding also means that it won’t end until something really major happens. I think the Covid-19 crisis has been an alarm bell, but I fear it’ll be ignored. And we’re likely facing a generation of chaos and hardship when things really break.

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  5. Matthew, that’s a very comprehensive picture, it needs saying again and again that Covid has only triggered what was coming anyway. I look at what I can and try to understand it. Something that stands out to me is the market indicators last year, before the virus, that indicated a recession. No-one knew what would cause it, but ‘the market’ knew it was coming. There has to be a change in the way we treat money and debt (now interchangeable!), as you say. I think there will be a stop put to some trades very soon -particularly in foreign exchange. And everybody knows how much money is offshore now, a wealth tax will be inevitable, I think.

    Liked by 2 people

    1. Yes, every economist I know was telling me that the indicators were pointing to major recession – all that was missing was the trigger. If it hadn’t been Covid-19 it would have been something else; a trade war, even a loss of confidence. And as you say, there needs to be a structural change to get away from the problem. Will that happen? I doubt it in the immediate. Alas.

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  6. COVID-19 is revealing many cracks in the system. We’ve gotten by for decades by putting lipstick on a pig and selling it as a beauty queen, but now the virus has exposed our many self-deceptions. For instance, the African-American community is encountering a higher death rate due to COVID-19 than other ethnicities. Why? The more untreated illnesses (diabetes, malnutrition, etc) you have, the more likely the virus will kill you. The African-American community cannot afford to see a doctor often enough given sky-high American medical costs, and are now paying with their lives. Our medical system has been broken in a way that the well-off never see, so of course, it’s never been fixed.

    Liked by 1 person

    1. I’ve never wholly understood the US health system, which seems to be a stand-out in world terms. From the NZ perspective it appears to have half a system: the part run by private enterprise. But that doesn’t work for the poor or those whose misfortunes are not of their own making, or who have a condition they neither caused nor wanted – but where they can’t afford to pay for treatment. Ouch.

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