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The coronavirus crisis is just exposing the failure of neoliberalism

The – RAID (Redundant Array of Inexpensive Disks) – technology marks best-practice in data storage and backup systems. It replaced SLED (single large expensive disk) to improve performance and insure against data loss from hardware failures. I have a series of RAID disks backing up the IT systems that I manage within my research centre. But when it comes to humanity, we do not follow this practice. Neoliberalism clearly subjugates human development and opportunity to the interests of profit. It has created a ‘Just-in-Time’ culture in manufacturing, in work (the gig economy), in our personal finances (debt vulnerability) as part of the deliberate strategy to gain a greater share of national income for profits at the expense of workers. But, in doing so, it has demonstrated a remarkable myopia and created the conditions for massive crises to wreak havoc. In this blog post, I outline my thoughts on how capitalism is now on life support and that we should end this charade forever and ‘reclaim the state’ for progressive ends and build in the essential redundancy that allows us to minimise the damage that arises when unpredictable events confront us.

The GFC was a crisis directly arising from this sort of strategy.

The COVID-19 crisis in similarly demonstrating how this ‘Just-in-Time’ culture causes massive hardship when circumstances change in unpredictable ways.

I don’t touch on the arguments here that the virus is an expression of the way we are trashing our natural environment and irrevocably disturbing the harmony of nature. I think that but I will leave it to the experts in that field to make the case.

But the crisis is further demonstrating that ‘capitalism’ is now on life support with the government central in ways that neoliberalism had tried to hide with all the ‘free market’ narratives.

In our book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017) – Thomas Fazi and I made the case that the Left bought the myth spread by the Right in the 1970s that global finance had rendered the state incapable of running independent fiscal policy to maintain full employment.

They bought the line that governments had to walk a fine line with policy to make sure they appease the interests of the financial markets.

But the reality, which the Right clearly knew all along was that all the neoliberal changes were achieved through the legislative and regulative capacities of the state.

The state was reconfigured by capital to serve its interests.

The mainstream Left still hasn’t grasped that reality and instead continue to propose macroeconomic policy narratives that reflect this deep insecurity they have about capital markets.

But what the COVID-19 crisis has demonstrated is that this ‘Just-in-Time’ culture has exploded, again.

And each time this modern variant of financial capitalism gets ahead of itself, the main players – who are usually content pocketing excessive profits – always come running back for life support from the state.

The privatise the gains, socialise the losses story. Repeated.

However, as I noted in the introduction, this time, we should end this charade forever and ‘reclaim the state’ for progressive ends and build in the essential redundancy that allows us to minimise the damage that arises when unpredictable events confront us.

This article (May 9, 2020)- ICU doctors say risk of hospitals being overrun has passed – bears on this theme.

It says that:

Intensive care doctors say Australian hospitals can safely cope with any surge of coronavirus cases caused by the reopening of the economy and a winding back of social restrictions.

Why?

There has been “a dramatic expansion of our ICU capacity” (more than doubled in Victoria alone) in recent weeks and more qualified staff have been trained very quickly.

Further, local manufacturing and engineering plants have been contracted by government to build new equipment to fill gaps that have been left by years of austerity.

There are daily reports of creative engineering activity that is producing ventilators and protective equipment.

How has that been possible in such a short time?

Government has unleashed its spending capacity as the currency issuer and adopted a ‘sort of’ whatever it takes.

The point is clear.

If we had have built that redundancy into the system by investing more in the health system, then a significant proportion of the massive economic and social losses that we have incurred as a result of the lockdown would probably have been avoided.

I don’t want anyone to think this is supporting those crazy (gun-toting in the US) characters who think we should just let the virus rip through society to gain ‘herd immunity’.

For a start, my reading of the science to date is that they do not even know whether we achieve immunity from this virus.

But the point is that the severity of the lockdown was required given the weak state our health systems were in going into the crisis after years of privatisation and cost cutting in the remaining public parts of the health system.

So once again neoliberalism kicks its ‘own goal’ and the problem now is that the losses of this folly are overwhelmingly being borne by those who also have seen their material opportunities compromised even when the economy is growing – low-paid workers, casual workers, homeless people, and those who are typically vulnerable to small changes in economic conditions.

Some years ago I read an interesting Report from the UK body Chatham House (January 2012) – Preparing for High-impact, Low-probability Events – which conducted an appraisal of the 2010 eruption of – Eyjafjallajökull – in Iceland, which caused massive disruption to international air travel and the local environment.

The researchers were interested in the way that these events in nature or human agency pose risk. They include health pandemics in their framework.

The Report focuses on the:

… particular threats to key industries – especially high-value manufacturing – and to the just-in-time business model.

They concluded that:

… governments and businesses remain insufficiently prepared to confront HILP crises and effectively manage their economic, social, political and humanitarian consequences.

Current contingency planning often assumes the return of the status quo ante after a crisis.

They talk of ‘slow motion crises like climate change” that “build up over many years, but are likely to result in a higher frequency and greater severity of shocks”.

While these ‘shocks’ expose the “vulnerabilities of globalized supply chains and particularly the just-in-time business model” the problem is that:

… for business, deviating from the just-in-time model means potentially offsetting short-term profitability. The challenge therefore for both business and governments is establishing how to balance the cost of resilience and the impact of worst-case scenarios – and who should pay.

So we see the problem.

Business wants to maximise in between these crises by cutting the opportunities for prosperity and security of their workers.

They oppose wage rises and other benefits to workers.

In the Australian setting, they have engaged in a relentless mission to get authorities to cut penalty rates for non-standard hours of work (weekends etc), which has seen incomes slashed for many casual workers and a drop in their material prosperity as a result.

Business preaches the myth that public spending needs to be cut back to allow for the lower taxes they demand, allegedly, to keep their businesses competitive.

The cut backs in public spending during more normal times then impact on the volume and scope of public services, education and research, public infrastructure, and, public health care.

Governments resist awarding cleaners and health care workers (nurses etc) pay rises.

In poorer countries, multilateral agencies like the IMF force governments to explicitly cut health care expenditure so they can cut fiscal deficits and pay back loans to the richer countries and financiers.

And then, when a crisis does come along, business seeks a handout from the state while poorly designed and inadequately funded fiscal interventions leave the most vulnerable workers jobless, without incomes and having to deal with a high risk situation for themselves and their families.

These workers get screwed in ‘normal’ times by the business models deployed by capital and when those systems blow up, they are forced to endure further hardship, while governments protect capital.

An example in the Chatham House Report relates to food insecurity.

I wrote about this issue in these blog posts (among others):

1. Ending food price speculation – Part 1 (October 17, 2016).

2. Ending food price speculation – Part 2 (October 18, 2016).

3. Food speculation should be (mostly) banned (January 18, 2012).

2. We should ban financial speculation on food prices (May 27, 2011).

The basic point is that under neoliberalism, food stocks around the world, particularly in nations that are prone to drought and where a high proportion of income is spent on food, have been compromised, in part, by escalating prices.

In turn, this has come about by deregulation and the ‘export-led’ growth mentality promoted by the IMF and the World Bank, which has undermined, previously sustainable subsistence communities.

But, another significant reason for the increased precariousness in food supply has been the increased involvment of financial speculation and the creation of derivative financial products based on food.

Food speculation is problematic because as it becomes a significant intervention in the market, the spot prices in the actual market (the physical products) will not reflect the fundamentals of supply and demand.

This becomes even more problematic when we introduce the irrational behaviour that financial markets exhibit (the so-called ‘herding’ behaviour). Planning decisions by farmers, for example, become hostage to wild swings in future prices, which undermines the supply chain.

When it comes to ‘food speculation’ we are talking about large investment banks and other financial institutions (such as, pension funds etc) adding the prices of agricultural products to the casino they gamble in.

When it all comes unstuck, the top-end-of-town have their hands out for ‘life support’ while those who have been subjected to food poverty as the investors have been reaping huge profits, endure further misery.

An Editorial in the Financial Times (April 3, 2020) – Virus lays bare the frailty of the social contract – is also relevant.

They write that the:

… the virus, and the economic lockdowns needed to combat it, also shine a glaring light on existing inequalities — and even create new ones. Beyond defeating the disease, the great test all countries will soon face is whether current feelings of common purpose will shape society after the crisis. As western leaders learnt in the Great Depression, and after the second world war, to demand collective sacrifice you must offer a social contract that benefits everyone.

The problem is that the:

The economic lockdowns are imposing the greatest cost on those already worst off. Overnight millions of jobs and livelihoods have been lost in hospitality, leisure and related sectors, while better paid knowledge workers often face only the nuisance of working from home. Worse, those in low-wage jobs who can still work are often risking their lives — as carers and healthcare support workers, but also as shelf stackers, delivery drivers and cleaners.

… Countries that have allowed the emergence of an irregular and precarious labour market are finding it particularly hard to channel financial help to workers with such insecure employment. Meanwhile, vast monetary loosening by central banks will help the asset-rich. Behind it all, underfunded public services are creaking under the burden of applying crisis policies …

… will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure.

We have already breached in fiscal terms any of the ‘thresholds’ the mainstream macroeconomists put out beyond which governments become insolvent.

That myth is gone – I hope.

Capitalism in 2020 is a parasitic system.

Global financial capital is largely unproductive. Transactions within that sector are nothing more than gambling and wealth shuffling.

Those ‘desk jockey’s who earn massive amounts and shout and scream and computer monitors full of graphs and numbers do nothing productive.

The crisis has taught us – I hope – that the really valuable workers are cleaners, nurses, school teachers, street sweepers, garbage collectors – mostly low-paid workers who protect us from sickness and death and look after our children when we work.

It has also taught us the folly of the gig economy, which is an advanced expression of the ‘Just-in-Time’ culture.

Neoliberalism through government deregulation of working conditions has created a ‘Just-in-Time’ workforce.

I wrote about this trend in several past blog posts including:

1. The coronavirus crisis – a particular type of shock – Part 2 (March 11, 2020).

2. We are all entrepreneurs now marching towards a precarious and impoverished future (June 4, 2019).

3. Why Uber is not a progressive development (August 16, 2016).

4. The New Economy cannot flourish with fiscal austerity (May 31, 2012).

So there are increasing numbers of workers relying on employment through apps without the normal protections, without proper pay, and so on.

These workers are, even in the ‘best’ of times, precarious.

I am generalising here because the scope of the gig economy has become increasingly complex with a diversity of outcomes.

But the commonality is in the distribution of risk of enterprise, which is heavily biased to the worker, in contradistinction to the normal employee-employer relationship.

The state has allowed employers to get around the complicated regulative structures that unions fought hard to achieve over many decades which protect workers from caprice and losses.

Instead, as ‘independent contractors’, the gig workers are forced to carry the liability of enterprise (occupational insurance etc), do not qualify for minimum wage protection, sickness and holiday pay, are outside most anti-discrimination law, and so on.

The defenders of this system claim the workers give up these things to enjoy flexibility that allows them to better manage ‘work-life balance’.

That phrase is one of the sickening expressions that neoliberals use to try to make out that the changes in working arrangements have benefited workers.

The reality is that there is flexibility in the gig economy but it mostly benefits the employer – zero hour contracts, split shifts, long hour requirements, etc.

And that ‘flexibility’ ensures there is no income stability for these workers.

The pay is generally low, the existence ‘hand-to-mouth’ and the buffers to allow effective risk management are absent.

There is a deep myopia operating. The workers have no real future. Everything is geared to now.

The traditional working relationship allowed workers to manage their life cycles with debt accumulation in the earlier years, house purchase etc, then increased saving in the latter years and the expectation of a reasonable pension.

The gig workers have none of that temporal security.

They cannot easily access traditional forms of credit (like mortgages) which would allow them to accumulate a modest wealth portfolio (in the form of a house that would be paid off by retirement).

They can get credit through credit card use at oppressive interest rates, which further locks them into these destructive arrangements.

The absence of buffers is the hallmark of neoliberalism.

We went into this crisis in this state:

  • Income and wealth inequality rising.
  • Precarious work with flat wages growth.
  • Elevated unemployment and underemployment.
  • Private debt levels unsustainable.
  • Education and training systems degraded.
  • Public services and infrastructure degraded.
  • Regions and communities are being left behind.
  • Indigenous poverty is unresolved.
  • Governments with ’surplus’ obsessions.
  • Social and environmental failure.

Each of these situations have made the outcomes of the coronavirus pandemic worse than it would otherwise had to have been.

What we are seeing now around the world is just the failure of the neoliberal system exacerbated by an unexpected health crisis.

The way forward is not to assume things will return to ‘normal’ but to actively demolish all the artifacts that neoliberalism has created which promote short-term gain for a few at the expense of longer-term stability for the rest of us.

The abandonment of ‘Just-in-Time’ thinking should be the starting point.

Conclusion

The point is that now the system is operating under life support, the government can clearly call the shots. All the claims about running out of money, future burdens, insolvency have been exposed by this crisis.

The challenge for progressive forces is to push this life support phase into a new phase of advocacy.

The problem is that traditional progressive political forces are still talking about ‘paying back the debt’ and all that sort of stuff.

Why not call for an end to the gig economy – now!

Why not recognise that it is better for people to also have buffers (redundant capacity) that allows them to make decisions when circumstances change that do not destroy their prosperity.

At present, neoliberalism has destroyed these buffers, and, so when things go awry, the top-end-of-town go cap in hand to access the buffers that only the government has as the currency issuer.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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    This Post Has 62 Comments
    1. One thing the JiT thinking does is that you pay when the disaster/disruption happens. It seems like the approach of no insurance policies.

      In my view the key thing the “covid lockdown” was doing (besides the obvious saving of lives – duh) is to buy time to think and organise and debate what to do.

      However we can still see the JiT mentality in the response. One example – we don’t know what the criteria are for locking down in response to outbreaks. The thinking seems to be “we’ll deal with that if/when it happens”. What would it take to lock down a suburb? what about a local council? city? state? we don’t know the nuance because we aren’t prepared enough. The advice given is “just enough” so that we have more time to think about what to do next.

    2. I always find myself defending the idiotic nature of my country here on this blog. When I actually normally spend far more time criticizing it myself. The gun thing- I’m an American and don’t have or want a gun. There are more Americans that don’t have a gun than there are people in Australia. Probably in the UK plus Australia plus Canada. We got a lot of crazy morons no doubt though.

      “Herd Immunity” is not an American idea. It is not an idea that most Americans support. Don’t blame that idea on us even though our response to this virus has been pathetic.

      The rest of your post is great.

    3. Bill,

      “But the crisis is further demonstrating that ‘capitalism’ is now on life support ………”

      This is just wishful thinking.

      Yes capitalist production has been retrenched in a big way.

      But the same crisis would have the same effect in a system of socialized production.

      The government would be bailing out production entities in either system.

    4. Herd immunity is how all virus outbreaks come to an end. Without it the human race dies out. There is enough protection from immune systems to cause the replication rate to fall away. The virus then changes via the pockets that are left and springs up again as immunity either falls away or the genetic changes are sufficient to get past defence systems. Hence why Polio, etc. still exists and we get flare ups in unvaccinated parts of the world.

      We really need to get this thing into context. There have been more Malaria deaths this year than Covid-19 victims. But they are poor people in Africa, so we haven’t stopped the planet for them.

      770,000 from HIV related illnesses per year – again largely in Africa. And let’s not start on TB…

      The response to Covid-19 has been a colossal groupthink once again driven by dubious half-baked computer models pushed forward by reputation not validity. The biggest disease of 2020 has been a massive outbreak of Premature Extrapolation.

      Having had my mother close to death in intensive care for several days during the last flu outbreak, it’s not the nastiness of Covid-19 that surprises me, but how quickly we become blasé about the other killer diseases out there in the world.

    5. One further benefit which has vanished from most working lives is the prospect of advancement and annual increments, indeed not even the prospect of maintaining purchasing power. When I married in ’69, my husband had a well paid but casual job in the London Docks. When he didn’t get ‘chosen’ the benefit system paid him an earnings-related dole. Later, when his grandad retired and he didn’t get ‘chosen’ often and he worked for Ford where they treated the men like pigs. Everything fell apart after the oil shock, house price inflation (banking deregulation) and then Thatcher.

    6. @Henry Rech

      If the government “bails out” production entities in a socialised system of production, that is business as usual. In a pure capitalist system, it is an acknowledgement of the failure of the system.

    7. …the government can clearly call the shots … well, erm, yes, but if you live in the UK you have a government comprising ex public school halfwits who have absolutely no intention of abandoning neoliberalism. The events of the past few days have revealed Johnson’s aims – get the workers back to work whatever it costs. What is a few extra lives when the companies we love and cherish are struggling to make excess profits. Sadly for the neolibs the pandemic has come a year or so too soon. They would have preferred this to happen when they’d completed the robotic transition to a human free workforce. We are not moving towards a democratic socialist state but towards a fascist dystopia. I am so cynical that I don’t believe that Johnson ever had covid-19. That was bullshit propaganda to create the impression of a sympathetic daddy figure. Things are going to get very bad in Britain and although it would have been bad with any government we have the worst possible government led by the nastiest bunch of psychopaths who have ever been elected. The worst bit is that the workers voted for this shower.

    8. Viruses don’t seem to make a distinction between modes of production?

      Kind of strange that viruses are non-political in that sense. But then there are countries that have done far better than my own in dealing with this. By any objective standard. So far. We will see what happens is where we are at now. USA remains #1 in cases and deaths- I wouldn’t emulate our response if you have a choice.

      But it hasn’t been ‘herd immunity’ as our goal or preference. No one should believe that.

    9. ” USA remains #1 in cases and deaths”

      Only on a statistically naive basis. Because it is a large country with a very good recording system.

      If you’ve been watching the rate of change adjusted for population size and density what is striking is that really only Japan has a significantly different response rate.

      What’s really interesting is that it doesn’t seem to matter what a country does, the virus follows the same path if it is able to take root. There’s no real evidence of slowdown, or speed up. No step changes when policy changes. Whatever there is, if there is anything, is lost in the noise of random variation and differences in measuring criteria.

      We can, legitimately, go around calling politicians Cnuts.

      The statistical data backs it up :-)

    10. Well, it seems you been calling me naïve for years now Neil. “Statistically naïve” almost seems a compliment in that context :)

      This virus scares me- I worry about my many older relatives even if I figure I will probably survive it myself.

      It does not seem to me that all countries are experiencing the same results so far. I have access to plenty of sources and am not totally naïve or innumerate. And am quite able to scale based on total population. I push for a more cautious path with this. To gain time. But have failed with that in my country so we will just have to see what happens and I hope it isn’t too bad.

    11. “This virus scares me”

      Why? It’s a reaper virus that kills people in rough proportion to their normal mortality rates, and as it stands not in any way exceptionally from viruses that have gone before with rather less media excitement.

      If we are concerned about cautious paths, then we’d ask for medical resources to be thrown at the excess deaths from other causes amongst men in their late middle age, or the amount of young men who tend to kill themselves in their late 20s. Both of which are persistent issues that occur year on year and pile up far more bodies.

      There is a lack of perspective with Covid-19. We have overblown reactions amongst one set of people that lack any sense of proportion with the reality that people do die every year – quite a lot of people. And then on the other side we have people who think it is just a bit of a sniffle when it clearly isn’t that either – particularly not if you have somebody close in intensive care.

      Surely there’s a Goldilocks path here – neither too hot, nor too cold?

    12. “Well, it seems you been calling me naïve for years now Neil.”

      I certainly hope you don’t feel like that. I never intend any ill will on anybody. I mean that it is always best to test the figures. If you feel them they have a tendency to lie to you.

      Don’t take my lack of fluff guards as anything other than just lack of time. I only write fluff guards when people are paying me to :-)

    13. @Jerrybrown
      Jerry, I’d recommend @offguardian and @Ukcolomn for measured, excellently sourced, analysis of the pandemic. I’m tempted to put pandemic in inverted commas here.

    14. My hospital is relatively lightly hit still we have had over a hundred in patients.
      This is unprecedented with any flu season ,HIV ,suicides etc.
      And to repeat we are relatively unscathed .
      Even in South Korea where testing has been relatively extensive over 2 % testing positive have died.
      That people are still comparing this to the flu is incredible.
      We have not achieved herd immunity for HIV Ebola Sars 1 and there is no evidence we will
      for Sars 2 but death to capita ratios are likely to vary wildly around the world

    15. Interesting comments from Neil on Covid19. There was a serious commentator on R4 today talking on same lines. The effects are different according to the state of the health and other services, as Bill is saying.

    16. The Nobel prize winning virologist who discovered the HIV virus ,Luc Montagnier, has stated that it is now clear that covid-19 is not a naturally occurring virus, but one that was made in a laboratory.
      The virus sequence contains elements common to other corona viruses but interestingly, also contains significant portions of HIV.
      He theorizes that this was the product of research on an HIV vaccine,that was somehow released from a lab. The idea would be to train the immune system to quickly recognize and respond to an HIV infection.
      Montagnier, believes that since the virus cannot possibly be naturally occurring as a product of evolution of life on earth, that it will not survive for very long, and can already been seen to be mutating toward less damaging forms.

      The great debate among various political blowhards over what country the virus originated in is probably moot, since in our globalized world, even the lab in Wuhan performs experiments designed elsewhere including the US.

      In the clinical sphere, doctors are finding that the decision to intubate or ventilate patients artificially may be doing more harm than good, by provoking a worsening the effects of the disease or simply causing other types of damage; so, much of the focus on acquiring more medical device technology has been has probably been overdone.

      The best thing coming out of this is the spirit of cooperation and open sharing of information despite efforts to muzzle them, by scientists and doctors, etc, who are taking huge professional risks to promote the public good.

    17. Bill’s got the analysis and the agenda, at least for starters. What we desperately need, to put it in American terms, is the “pen” of a Thomas Paine and the revolutionary leadership of a George Washington. As the saying goes: “Had Paine not lifted his pen, Washington would not have lifted his sword.”

    18. “The – RAID (Redundant Array of Inexpensive Disks) – technology marks best-practice in data storage and backup systems. It replaced SLED (single large expensive disk) to improve performance and insure against data loss from hardware failures.”

      I find this opening sentence of Bill’s a brilliant analogue of where capitalism has gone wrong. We’ve given up the robustness of multiple sources of supply for the efficiencies of single sources – (and exacerbated that by allowing it to go global. When the problem was simply national, we had anti-trust and patent laws that (if enforced) could regulate the situation. When we went global, we lost even that – now no one can “enforce” even if they wished.

      GDP is an accounting of the productive (ie, the production-and-consumption)_ economy. The FIRE economy is separate and apart – and arguably, the cause of this situation. I see the FIRE economy as not just NON-productive, but destructive. Perhaps we should be looking at ways to scale back that economy.

    19. It’s interesting to cross-reference the statement…………

      “Intensive care doctors say Australian hospitals can safely cope with any surge of coronavirus cases caused by the reopening of the economy and a winding back of social restrictions.”

      ………with information from these articles which suggest that Australia has not expanded it’s COVID-specific ICU capacity by much at all. This information backs up and reinforces what Bill has said here regarding the failure of the market system to ensure enough spare capacity is on hand to cope with sudden emergencies…………..

      “Hospitals are struggling to source drugs including propofol and cisatracurium, used to sedate patients before they are intubated, which are needed to take ICUs to full capacity if there is a second wave of coronavirus infections after restrictions are lifted.

      “As part of Australia’s COVID-19 response, hospitals are still on standby for a patient surge and remain concerned at the number of delayed or not-supplied orders from suppliers,” Society of Hospital Pharmacy Australia chief executive Kristin Michaels said.

      The society, which has been monitoring stock levels in recent weeks, found 18 per cent of the 60 hospitals it surveyed in early May did not have enough propofol to manage ventilated patients at full capacity for a single day.

      On average, the surveyed hospitals had enough propofol and neuromuscular blockers to run just 10 per cent of the additional ventilators sourced for a COVID-19 surge, the survey found.”

      And……….

      “Australia imports 90 per cent of its medicines, with around one-third of Australians reliant on daily prescriptions. However, the country is at the tail end of lengthy global supply chains with what the report calls ‘single points of failure.”

      And………

      ““Australia has extremely limited and diminishing manufacturing capacity across all sectors of products apart from vaccine manufacture,” the report argues. “There are some smaller industries with capacity for niche markets; however, government price regulation around the Pharmaceutical Benefits Scheme has forced the large majority of off-patent product manufacturing, where the vast majority of life-saving medicines sit, off-shore.

      “Australia has almost no capacity to manufacture any active pharmaceutical product for most of the products listed on World Health Organisation’s list of Essential Medicines.”

      I have no adjective for the situation where a nation that sits physically isolated at the end of the world willingly throws away it’s capacity to manufacture the medicines and drugs that it’s 25 million people need – in some cases to survive. “Stupid” just doesn’t do it justice.

      This isn’t limited to medicines – Australia has allowed itself to become totally dependent on global supply chains for so many crucial things that it beggars belief. We have a limited reserve of petroleum – the fact that we produce far more food than we can eat ourselves is meaningless if that food cannot be harvested or transported to the towns and cities where most of the population lives.

      And I understand that our towns and cities only have a very limited amount of safe drinking water available, regardless of how much water is in dams because we stopped manufacturing the chemicals needed for water treatment – cheaper to import.

      We are just begging for it.

      https://www.macrobusiness.com.au/2020/05/medicine-shortage-crushes-aussie-icu-capacity/

    20. Neil, your rough edges don’t bother me- I have actually learned a lot from you over the years and appreciate that.

      It is stats like this that show the total mortality rate in New York that get me scared. Quite a jump- the spike looks just like the spike in unemployment in the USA. Difference is that dead people don’t ever find new employment.

    21. “There is a lack of perspective with Covid-19. ”

      You keep repeating this Neil, even as the bodies pile up.

      It’s NOVEL – there is still a great deal we don’t know about it and we knew even less when it first emerged. The measures taken were therefore prudent – Russian roulette isn’t a particularly smart game to play.

      And there is growing evidence of lasting health damage to not-insignificant numbers of those who recover from it, including what appears to be mild brain damage.

      While it isn’t the bubonic plague, it is clearly very much more destructive than the seasonal flu to which people were comparing it. It will be more than six months before we have a tally of COVID deaths versus those of the flu for a full year and the death rate is already many times that of the flu and still climbing. AND this has occurred under quarantine-type conditions designed to slow it’s spread which we don’t bother implementing for the flu, so it seems clear that if we treated it the same as the flu, the death rate would be higher again.

      As I have watched countries losing more people EACH DAY to coronavirus than Australia lost in ENTIRE YEAR from the flu, I have to conclude that such measures were indeed the sensible and prudent course of action.

    22. Hi Bill, I worry that with every passing day we are getting further away from the ability to change political direction. It won’t be long before no one in the workforce hasn’t worked there whole life under neo-liberal frameworks. I remember when Thatcher became Prime Minister but I don’t remember much of the Callaghan era before it. My hometown, in Scotland, like many others in the 70’s, changed, in a decade, from a bustling, industrious community to a commuter town. That memory of the businesses in a medium sized town, providing the income to keep a thriving High St of independent local merchants in profit, is just so far from where we are now that it seems like a fairy tale when it’s described it to younger generations. The wealthy now influence the ‘democratic’ system to their own ends. The post-Covid environment may be the only chance for change we get.

    23. Neil,

      “It’s a reaper virus that kills people in rough proportion to their normal mortality rates, ”

      I don’t know if this is true but so what if it is?

      C19 clearly is disproportionately killing more elderly on our way to herd immunity. That’s if herd immunity is possible with this virus. No-one really knows.

      “There is a lack of perspective with Covid-19. ”

      You’re kidding. It has killed almost 300,000 people in 2 months.

    24. Neil, I’ll just say that the severity of COVID19 isn’t as much of an issue as its extremely contagious nature.

      When last I saw the numbers, at the height of the outbreak, the average person passed the coronavirus to 2.5 people, compared to 1.6 with the flu. You can do the math on the difference in propagation that takes.

      The mildness it affects some people just increases its contagious nature – there was an outbreak in a nursing home caused by a staffer coming in with a scratchy throat, which has lead to multiple deaths.

      Humans can’t pass malaria to one another, mosquitos are the vector. However, we have anti-malarial medications which are effective if treatment can be provide. Polio is spread through fecal-oral transfer, however we have a vaccine and there are ongoing efforts to deliver clean drinking water to effected regions. Influenza has both vaccines and treatment with antivirals.

      The only treatment for COVID19 is ventilation – and that has about a 50% survival rate, and its own complications. So, it’s not an “overblown” response to prevent the transmission the only way available to us – isolation.

    25. Jerry,

      “Well, it seems you been calling me naïve for years now Neil.”

      You are one of the sharpest tools in the shed (appropriate, don’t you think :-) ).

    26. dnm

      “If the government “bails out” production entities in a socialised system of production, that is business as usual. In a pure capitalist system, it is an acknowledgement of the failure of the system.”

      This is bulldust.

      It is not a failure of the system.

      It is the system under crisis, irrespective of its nature.

    27. How about the simple logic of this idea, to overcome the “It’s taxpayers’ money” delusion.

      The covid19 government rescue-packages are replacing incomes destroyed by the pandemic; therefore governments can create the money instead of borrowing it, to fund these packages without causing inflation.

    28. Henry- I think I argued I was a very poor capitalist’s tool. Poor tools are not often the sharpest. But in my naivete I will accept what I think is a compliment from you. Thanks.

    29. Ah you are fun to read Neil- never any beating about the bush or hesitation to call it as you see it. I got chided about not understanding ‘British understatement’ a few weeks ago. Never have that problem with you. Disagree sometimes but I know your position usually.

      No global warming eh? Bold claim. Not my area -climate or even environment- so I am not going to dispute it. In fact I am a little cold right now- which seems normal for Northernish US like Connecticut this time of year. Snapshot in time of May 12. Jerry thought it was cold- no global warming therefore. It snowed a couple of days ago also.

    30. “When last I saw the numbers, at the height of the outbreak, the average person passed the coronavirus to 2.5 people, compared to 1.6 with the flu. You can do the math on the difference in propagation that takes.”

      You can, but that’s the problem. The models used assume too much homogeneity, much as economic models assume a single product and a single consumer. Then you run those models too far, project stupid numbers and then the actual data that comes back doesn’t fit them.

      Which is what we’re finding. (For example in: Gomes, M. G. M., et al. Individual variation in susceptibility or exposure to SARS-CoV-2 lowers the herd immunity threshold. medRxiv 2 May 2020.)

      The HIT is achieved far earlier than predicted and the replication starts to die out.

      In other words the maths in the SEIR model is likely wrong. So why do people persist in running simplistic system dynamics models when they keep generating the wrong answer? For the same reason they keep using them in economics and in climate modelling. The use of a computer and “programming” is the new speaking in Latin and reading from the Bible. It appears impressive to the uninitiated and allows you to push your political views forward.

      If you look at the Code for the Ferguson20 model it is, as one modeller described it, “quite possibly the worst production code I’ve ever seen”. It’s a Heath Robinson mess riddled with bugs and assumptions. Yet that, along with a copious amount of BS, swayed the politicians. It’s “Scientism” at its worst.

      What all this does do is lend weight to the argument that intelligence in humans evolved to equip the individual with a greater ability to BS effectively.

      From a recent paper (Turpin, M. H., Kara-Yakoubian, M., Walker, A. C., & Fugelsang, J. A. (2020, May 11). Bullshit Ability as an Honest Signal of Intelligence. )

      “Across two studies (N = 1,017), we assess whether participants’ ability to produce satisfying and seemingly accurate bullshit (i.e., explanations of fake concepts) acts as an honest signal of their intelligence. Consistent with our hypotheses, we find that bullshit ability is predictive of participants’ intelligence and individuals capable of producing more satisfying bullshit are judged by second-hand observers to be higher in intelligence. We interpret these results as adding further evidence for human intelligence being naturally geared towards the efficient navigation of social systems. The ability to produce satisfying bullshit may serve to assist individuals in negotiating their social world, both as an energetically efficient strategy for impressing others and as an honest signal of one’s intelligence.”

    31. “You’re kidding. It has killed almost 300,000 people in 2 months.”

      A bad flu year kills 650,000 over a winter season. TB kill about 1.2 million per year – every year. HIV/AIDS 700,000 every year.

      I’m not kidding. There’s nothing out of the ordinary for this virus. It’s a very nasty one, but operating entirely within what would be described as “normal actuarial parameters”.

      Not entirely sure how actuaries do this stuff day in day out. But then it was explained to me once that to be an actuary you need the personality of a dead brick.

    32. My take on climate change is we should be transiting to a clean green economy regardless of the CO2 issue; people are loving the cleaner (and less toxic) air in New Delhi and Los Angeles, during the shutdown.

    33. “and the death rate is already many times that of the flu”

      That simply isn’t the case. It may be twice that of a bad flu year, possibly three times at a stretch, but just as likely it’ll turn out to be pretty similar to a pre-vaccine bad flu year. We don’t know for certain as the papers keep coming and going at the moment under critique.

      However the key feature of this virus is that it leaves the young largely alone – unlike flu which has a spike in deaths at the younger age range for some reason.

      Do an excess deaths comparison between what we have now and the 1998/1999 and 1999/2000 flu season – which I think is the last really bad one before the vaccine took the sting out of flu. When you time shift them, they follow pretty much the same path so far.

    34. Ok -any explanation for the New York Times reporting maybe six times as many NY City residents had died as usual? Just bad reporting? Pay no attention to the trailers with the bodies in them behind the hospital? You can try to describe it away as ‘within normal actuarial parameters’ or some such obsucfucktion all you want but that doesn’t change what has happened.

      Normal actuarial parameters- come on already. I might be a bit naïve but I’m not stupid.

    35. Overstatement by me. The New York Times article I had linked to earlier reported that up to 3 times had died as usual. Not 6 times. 3 times as many died as usually would be expected. Sorry about that error that I made. 3 times usual.

    36. Neil Halliday wrote,
      “How about the simple logic of this idea, to overcome the “It’s taxpayers’ money” delusion.

      The covid19 government rescue-packages are replacing incomes destroyed by the pandemic; therefore governments can create the money instead of borrowing it, to fund these packages without causing inflation.”
      __________________________________________________________ ____________________________________________

      I think you need to be more clear.
      The covid19 government rescue-packages are replacing incomes destroyed by the pandemic; therefore [*because* it is *just* replacing lost income] governments can create the money instead of borrowing it, to fund these packages without causing [any] inflation. [And remember, the covidvirus has already damaged the economy, some increases in prices are going to happen no matter what the Gov. does. Right now the gas price is down, but food prices are up, right?]

    37. @Henry Rech, Neil Halliday

      Thank you, Neil. You understood what I was getting at.

      “In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in financial and capital markets whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.”

      The role of the state is entirely ignored in this definition, and yet it is always vital, and in times of crisis determinative. Good leadership in government will save lives and economies. Business leaders are no substitute, and market mechanisms are even more useless.

    38. Like Jerry (only more so I think), this erudite discussion going on around me – so to speak – makes me (an octogenarian with an above-normal level of urinary creatanine, indicating raised susceptibility to kidney-failure) somewhat queasy, because it’s *personal*. OK, I can always avert my eyes and just whistle Keynes’s refrain: “in the long run we are all dead” – in my own case not a very *long* run – but I would actually like to have a rough idea so far as it’s possible what fate may have in store for me personally, so I’m a glutton for information.

      That’s the snag. WHAT information, exactly? Out there is mainly just cacophony – and this discussion isn’t helping. I have a healthy mistrust for any claims made for so-called “actual applied science with hard outcomes” which strike me as profoundly misconceived. We are members of one species living on an insignificant planet orbiting one among billions of stars in one among trillions (?) of galaxies in our (known) universe. How can any of us presume to KNOW *anything* with absolute finality? The very best that our very best scientists can do is assess the degree of probability of any statement being true. Even if we lived for ever (impossible since our solar system – and for all we know or CAN EVER know our universe too – has a finite life (and time itself is after all only relative!)) we still would not know everything, absolutely, which reduces such claims to their proper – unavoidably restricted – applicability.

    39. Steve: how about;
      ” The covid19 government rescue-packages are merely replacing incomes destroyed by the pandemic; therefore governments can create the money instead of borrowing it, to fund these packages without causing inflation.”

      I’m assuming food costs remain stable during the pandemic; the issue of farmers destroying food crops because of delivery issues is obviously avoidable with proper state management. (Farming and delivery etc are mostly solitary activities).

    40. Yes Robert- it is different between you and me. If I get it then supposedly the chances I survive it are 97 or 98 or 99%. But who really knows. It is actually possible I already had the damn thing- I’m in one of the ‘hot’ areas in the US for it. But we still know so little about this thing. I don’t know, Robert. Just hang in there a while and be as safe as possible- we will come up with some treatments and maybe vaccines fairly soon I think. Can always hope. Hope is something even if it ain’t the best thing to base policy on.

    41. Not saying that I agree with Neil – about anything;o) – but there’s a letter in today’s FT supporting his view on Covid-19, and it’s from a woman, so more authoritative;o) (however, she is from US, so not so much). It’s titled ‘Sweden deserves praise for no-lockdown strategy’. I won’t copy it here as it’s probably illegal to post on Bill’s blog, but here’s the URL: https://www.ft.com/content/73cedbb7-f2d0-41be-b30e-51ea48807ae2. I’m sure that Neil at least can access it.

      On another track, my daughter, who works in a care home, told me yesterday that all staff and residents were tested (she had to wait 6 days for her result and was mightily bored at isolating at home). No residents but 10% of staff tested positive, only one of whom had symptoms. The tests were done before they all had correct PPE.

    42. Neil,

      “….bad flu year kills 650,000 over a winter season. ”

      Maybe. But that’s without a lockdown and restrictions.

      How many people do you think would die of C19 if the authorities did nothing and let ‘er rip?

      Is there herd immunity for C19? No-one knows.

      Is there a vaccine? Not yet, if ever.

    43. dnm

      “Business leaders are no substitute, and market mechanisms are even more useless.”

      Do you think leaders of socialist enterprises are any better?

      I would argue you would be kidding yourself if you did.

    44. @ jerry brown

      Thank you for your kind words.

      Much appreciated. I shall indeed be doing my darnedest to hang in there. If fate decrees otherwise, so be it: nobody lives for ever.

      I almost feel guilty when I read about the brave much younger nurses, doctors and other carers who are dying in the line of duty

      Best
      Robert

    45. Neil,

      It’s great that we know that it’s not that deadly of a disease. But that’s in May, and after a lot of changes in procedures, logistics, stocks and so forth. It was not the reality in March, when we barely knew anything about the disease, threw doctors into a war zone, and a few affected countries had bodies accumulating in freezers and buried in mass graves. It is only now that we have the knowledge and tools to keep it tame. Because, obviously, we need to get back to some normal for all sorts of reasons, including controlling other health issues.
      The US is not spiraling because New York got it under control. Removing that state, it’s still experiencing exponential growth, and talking of re-opening without proper protective measures. Most people will be fine in either case, but accepting quite a few more deaths because of a temporary decrease in the economy, when we know it could always be fixed, is baffling.

      Also, viruses tend to mutate to a weaker version so they go undetected and out-compete the deadlier versions. Remove all attempts at controlling it and that’s unlikely to happen, or you can even get a worse version in a second wave like it happened with influenza.

    46. Paulo,

      “It’s great that we know that it’s not that deadly of a disease. ”

      It is vastly disproportionately deadly for the elderly.

    47. Kevin Harding asks of Neil Wilson:
      “Sorry Neil so you believe there is no such thing as global warning .
      However what is your take on climate change?”

      Why get caught up in either highly contested issue (although most people accept the climate does change)?
      MMT’ers have enough of contested issues to deal with already.

      Obviously we should transit to clean green economy for the sake of our own health, so we can breathe non-toxic air. Anything else is a bonus.

    48. Neil Halliday I am asking the other Neil questions to try to understand his point of view.
      He has a habit of making bold assertions and presenting them as facts .His ‘understanding’
      of the pandemic reminded me of climate change deniers ‘understanding’ of that topic so I was
      curious to see if that was indeed his outlook.
      I smell BS.

    49. Dear All

      Please keep the comments to the material at hand. While the issue of whether someone believes in climate change or not is significant, this is not the right forum to be engaging in that discussion.

      best wishes
      bill

    50. Ok Bill. I guess that is reasonable. I will do my best efforts to comply. I managed not to talk about the Nazis anymore so I figure climate shouldn’t be that difficult comparatively. I am sorry I get off track- I do appreciate your blog though very much.

      I hope you realize that to a certain extent your blog provides more than just an education in just the topic you have decided for the day. There has been at least one time where I was despairing and a comment that might of been off topic picked me up out of that. I would just ask you keep that in mind. The benefit to me was tremendous at that moment, but it is true I don’t understand the costs you suffer for things like that.

      But I will work harder to stay on topic.

    51. Yes will try and stay on topic but hard not to respond to COVID 19 is just like the flu nonsense type
      comments.

    52. Dear Kevin,

      Of course Climate Change is a thing. I live in an area where we used to have five foot snow drifts in winter. This year we didn’t have a flake.

      Since you were wrong about that, what else are you wrong about?

      When the facts change, I change my mind. What do you do sir?

    53. “and the death rate is already many times that of the flu”

      “That simply isn’t the case. It may be twice that of a bad flu year, possibly three times at a stretch, but just as likely it’ll turn out to be pretty similar to a pre-vaccine bad flu year.”

      Yes it simply is the case – why deny the facts and say that it isn’t? It’s already close to the “three times at a stretch”in the US and there is quite a while to go yet before an annual comparison can be made and even then, no particular measures are taken to do much to slow the flu – unlike the COVID-19 measures which you are constantly berating.

      It’s quite a bit higher again in other places. The poster boy for your approach – Sweden – has so far lost around seven times as many to COVID-19 as it lost to last season’s flu – does that not count as many times greater to you? And it’s a long way short of over yet.

      I can’t see any point in continual denial of the facts other than attempting to preserve one’s own ego.

    54. Lefty- I’m with you on this. But someone can reasonably say it isn’t nearly as bad as the 1918-19-20 flu pandemic so far thank God and be technically correct. So what if there is a flu every 35 years or so that is just as bad or worse- they are devastating events also. I have a hard time understanding that argument also. Especially since we can understand more about it nowadays and have far more potential to treat it or suppress it as our knowledge increases.

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