I set out to write about the state of humanity today, and as I began to outline that essay I realized that it was too broad a topic for a single post. However, an essay that fails to cover everything may still be of some use to readers.
I am writing this on Feb. 29, 2020; let us start with the coronavirus. It is almost certain to become a pandemic, although some relatively isolated places may be spared the full impact. Some countries are certainly under-counting; Egypt has only one reported case, which is like having only one mouse in your basement—-the others will turn up soon.
Italy is already reporting a critical shortage of hospital beds, and yet 8 or 9 days ago it had only 3 known cases; today it has over 1100. What will California be like in 8 or 9 days?
As with a traffic accident, it is hard to turn away from the details of this epidemic—horror has its fascination.
But we must turn away to consider the broader implications. When a person is quarantined, it is as if they are unemployed. Some people may be able to work from home, of course, but manufacturing workers must clock in. In China, nearly half the population is under some form of quarantine; some may be able to leave the house, but they have to stay in their immediate neighborhood.
Not surprisingly, February production in China is at a record low. In fact, it was lower than the worst month of the Great Recession.
And it’s reasonable to assume that China is prioritizing manufacturing, trying to keep that vital sector going as much as possible. The retail and service sectors must be mostly shut down, except for health care. Farming is probably untouched so far, but when it’s time to plant there may be shortages of fertilizer, equipment and spare parts, and possibly labor as well—seasonal workers may be unable to travel.
How soon will it be before productivity in China returns to 2019 levels? When will the epidemic end?
Although the coronavirus isn’t influenza, flu epidemics may shed some light on this question. When flu epidemics end, it’s because the virus has run through everyone that lacks resistance to that particular strain, including people with weak immune systems to any infection. In other words, most people have some prior resistance to (or vaccination against) that particular flu—or a similar one—and they either don’t get sick or they get a mild case.
In the case of COVID-19, nobody has a resistance to this particular virus, because it’s brand new. So this pandemic may be around for quite a while, probably until a vaccine is developed and administered to everyone. That could take, in round numbers, two to three years.
China’s economy right now is worse than the Great Recession in the US, and not as bad as the Great Depression, but only because demand hasn’t completely collapsed yet. Italy is already in recession and South Korea is not far behind. California could be in recession in weeks. Chinese officials say that their situation is stabilizing, and that may be true—-that is, the epidemiological situation may be stabilizing, as long as the quarantine is maintained. The economic situation is a different story.
Economic productivity will take a big hit globally. This is the “supply shock” that some analysts have mentioned, likening the drop in Chinese production to the oil shocks of the ‘70s. That’s a fairly good analogy—if China has the biggest manufacturing sector in the world, and if that sector loses 30% to 50% of its productive power in a short period of time, the rest of the world will be feeling the resulting shortages for some time to come, just as with the oil shocks. Unstated is that we may see real inflation again.
But there are a couple of missing pieces in that analogy—first, it appears that the entire world will be in China’s boat shortly, and second, what about demand?
Let’s say, with rubber gloves and heavy masks and lots of disinfectant and air filters, China can get most of its manufacturing workers back on the job. And let’s say they get back to 80% of 2019 production, maybe even 90%. But what’s happening to those workers when they go home after their shift? The COVID-19 is still out there, and there will very likely be inter-city travel restrictions. Will people be going out, spending money, having a good time? Buying cars and motorbikes, going on vacations? Splurging on jewelry? Of course not. People are going to be avoiding public spaces until a vaccine is developed, and that won’t be just China, either. And they will be hoarding cash, as well, spending money only on necessities. Their confidence in the economic system will be low.
The global economy will not recover until a vaccine is developed and widely available. Those two to three years could be worse than the worst of the Great Recession.
I will leave it to the reader to imagine the political, social and spiritual consequences. The merits of globalization will probably be discussed at length, particularly trade and travel with China. It will be a golden age for conspiracy theorists.
Now, could this all have been avoided? Both SARS and MERS are coronaviruses, so it was clear that coronaviruses had “learned” to make the jump to human hosts. What distinguishes COVID-19 is its long, asymptomatic incubation period, perfect for taking a leisurely trip through multiple airports with no more than a sniffly nose, infectious as all hell every step of the way.
I am certain that scientific teams were studying the coronavirus and modeling its mutations—not COVID-19 itself, but the ones we knew at the time. Someone must have asked the question, “what if SARS had had a longer incubation time?” and realized this would have meant a destructive pandemic.
And in fact the world did—in retrospect—have a close call with SARS, which has an even higher mortality rate than COVID-19. Travel to and from China was much less common in 2003 than it is today.
But this study had no effect at the policy level. China did not shut down the wildlife meat markets, and it didn’t even prohibit the sale of bats (the source of both SARS and COVID-19). Trump has been reflexively shutting down government teams which track possible pandemics and attempting to cut the CDC budget. The US government has never warned US citizens against visiting areas where bats are consumed.
If there was an effort to develop a vaccine against SARS then that experience might have been useful in developing a vaccine against COVID-19, but I never heard of any such effort.
Both the Chinese and US governments were asleep at the switch, and their dreams were untroubled by pandemics and economic collapse. The jump of coronaviruses to humans was a momentous evolutionary event, as we are finding out now, and our governments simply ignored it.
What were we doing instead, in the period between 2003 and 2019? Oh, we were definitely busy, busy bees: concentrating wealth into as few hands as possible, developing Collateralized Debt Obligations (CDOs), which enabled the financial collapse of 2008, fighting wars in Iraq and Afghanistan, attempting to crush the serpent of socialized medicine, discoursing on Obama’s birth certificate at endless length, cutting taxes on billionaires again and again, threatening to lock Hillary Clinton up, learning to pray after mass shootings, and so on.
But we never gave coronaviruses a second’s thought. And that single instance of inattention should make us doubt the legitimacy of our entire system. If the system cannot protect us from foreseeable pandemics that will kill us and destroy our economy, then change is clearly required.
It would have been trivial to prohibit the consumption of bats in China. “For want of a nail…”
The Socialist Investor 