Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Economics Page 26 of 90

How Covid Will Play Out in America

By

On May 11, 2020

Comments

Almost every day this blog publishes the John Hopkins Covid-19 numbers. They are undercounts of both deaths and cases, but they give the trendline. Recently the trendline has very slowly started to move down.

Meanwhile, Trump and many governors have started to move to ease isolation requirements. This map shows that only five out of 50 states (and Puerto Rico) aren’t easing.

There are three problems here.

First, the curve hasn’t been crushed. In fact, in some states, it’s still increasing.

Second, even once a curve has been crushed, to keep it under control without a vaccine, you need to test and trace. The US would need to hire hundreds of thousands of tracers to do this, and would need many more tests than are currently available. If you don’t test and trace, one person can infect many other people, and then all those people infect many other people.

Third, Covid-19 takes about two weeks from infection before people show symptoms, and two weeks more before they start dying. During that asymptomatic period, carriers are contagious.

What this means is you can have a significant outbreak going on and not know it is happening. That’s why countries that got Covid-19 under control crushed it into the dirt, then put everyone coming in from outside the country into quarantine, and they test like mad.

Humans are really bad at making decisions where the consequences are delayed. (See Change, Climate). Even a two week- to month-long delay is more than the decision makers in many countries, including the US, can handle.

So, the numbers seem to be in decline, and there will be removal of restrictions, and then the numbers will start increasing again in two to six weeks. Because infection rates will be moving off a larger base, they will create a second wave where people start dropping like flies–much larger than the first wave.

This is acceptable to the people who run the US because they have jobs where they can work from home, and if they don’t, like in the White House, they can test every day. It is the lower class who will be forced to go back to work and to die.

That’s not a problem for American elites; killing unimportant people for money is pretty much what they do for a living.

It’s possible this narrative can be cut off if those states which are handling Covid properly close their borders to non-isolating states, presumably by calling up the national guard. There is also some hope because Americans are generally not flocking back to venues like restaurants–even in States which have re-opened.

But overall, this looks like the first wave passed its peak, is slowly declining, before the second wave comes in and culls the poor for the rich. Numbers of deaths will be in the hundreds of thousands at a minimum. If this is bungled completely, it could be that 80 percent of the population will have to get Covid-19 to create herd immunity, and that a little under one percent will die. The rich will isolate and test throughout all this, of course.

This is a worst case scenario, and many mocked the possibility even two months ago. Surely, they said, American elites couldn’t fuck this up that much?

They can, and they are. But it isn’t fucking up. They’re now isolated and in little danger. They’ve bailed themselves out, given themselves even more control over the economy than before. If ordinary Americans get sick, die, or can’t pay rent and go hungry, well, why should American elites care? It doesn’t effect them.

That’s their bet.

As for you, do what you can to prepare. We may get lucky and get a vaccine earlier than expected, but if not, the US has made the choice to let Covid-19 continue to wend its way through the population.

And remember, Americans, if you decide you’d rather not die so the top one percent can own more of the US, they have names and addresses.

Never riot in your own neighbourhood.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

How Neoliberalism Destroyed Capitalism

By

On May 7, 2020

Comments

During the 2007/8 financial crisis, the Federal Reserve and other central banks printed trillions of dollars to support banks and big businesses. They prevented capitalism from working: While some firms that had nothing to do with the crisis should have been bailed out, those that caused the crisis by allocating money badly should have been allowed to go under.

This is supposed to be the virtue of capitalism: If people allocate resources (which we count with money) badly, they are supposed to lose the ability to allocate resources in the future. Those who allocate resources well are supposed to receive more resources. This has a lot of flaws (what makes money isn’t always what improves human welfare), but at least it’s a feedback loop.

It’s the GOOD thing about capitalism.

The Fed broke what was left of capitalism; there is very little that is good left when the allocation system doesn’t work– even under capitalism’s own terms.

It was clear that the central banks had decided that their primary purpose was to make sure that the rich stayed rich, no matter the cost to others. If they had let those firms go under, the economy would have fallen faster and recovered far better for over 90 percent of the population.

They patted themselves on the back for saving the world, and when Coronavirus hit they did the same thing.

At this point, the world economy–and especially the US economy–only works as long as you keep it hooked up to a ventilator, and it works badly.

I had been curious to see how this would be played out. As I have said many times, “there is a real economy.” There are people who make or grow things or provide actual necessary services (not your tax accountant, the people being labeled “essential workers” right now + farmers, factor workers, designers, and so on).

So, since the rich and powerful have decided that under no circumstances would they allow their class to lose money or power, no matter how badly they did their jobs, the question has been, “What are the effects of this?”

One of the effects is the complete bungling of Coronavirus in the US and the UK, the heartlands of neoliberalism. Another effect is suggested by this:

More than 40 percent of the U.S.’s 30 million small businesses could close permanently in the next six months because of the pandemic: Chamber of Commerce survey.

The stock market is doing fine, because it was bailed out. Small businesses aren’t, because they weren’t.

Covid-19 is no one’s fault, but how to deal with it is a policy decision. That policy decision reveals that the folks who run our economy will take care of the parts of the economy from which they directly benefit, and won’t help other parts of the economy.

Meanwhile, the US couldn’t make ventilators, couldn’t produce PPE, couldn’t track and trace infected people, and so on.

The effect of central bank and legislative policy is simple: There is a real economy, and the policies pursued by the elites will contract it. There’s a lot of bullshit around inflation stats, but the simple fact of the matter is that, for over 50 years, the cost of things people must actually have has risen faster than salaries. The BLS figures don’t show this, but you can’t run a middle class family with a 60s lifestyle on one middle class income today.

There is a real economy, which produces food and items people need or want. There is a financial economy, which produces financialized returns which are almost wholly disconnected from the health of the real economy. Billionaires pile up more billions as the economy gets sicker. The stock market is supported in the middle of a pandemic while actual businesses, comprising the real economy, are allowed to die.

So this is the future of neoliberal states: Elites will continue to produce “money” for themselves while damaging the real economy. At some point, a stressor will hit the economy which the actual production and logistics chains cannot handle. Elites, completely unable to do anything but manage financial numbers, will not be able to handle it, and there will be an actual economic collapse. Meanwhile, for most of the people in the US, the UK, and other neoliberal states, the long constriction of actual standards of living will continue.

If you want a good life, and you want to avoid, not disaster (like Coronavirus or huge wildfires) but absolute catastrophe, these elites and their entire supporting apparatus have to go.

If they don’t, they’re going to kill a lot of people–certainly including people you know.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

 

On the Causes and Consequences of the Oil Price Crash

By

On April 23, 2020

Comments

Image by Yuan2003

So, we had a crash of oil prices, where some futures contracts were actually negative, which means that sellers had to pay people to take oil off their hands.

Obviously, oil use has dropped during the Covid-19 crisis, and before that, prices had already decreased in an attempt by non-US producers to reduce prices low enough to crush US shale production.

Oil is a real thing: It takes up storage. Storage space is running out, and it’s not clear when demand will recover, so oil that is to be delivered now-ish is an expense–you have to pay to store it. Thus, the negative prices.

There was a bounce Wednesday, ostensibly due to Trump saying he had ordered the US Navy to blow up Iranian boats if they continued to hassle other ships. (If they do this in the Gulf, and it goes to shooting, Iran will win the initial confrontation. They have a lot of missiles.)

One could equally say this is a dead-dog bounce.

At any rate, even double digit prices are below most people’s production costs for oil, and they are above the price every major government that relies on oil needs to balance their books. This means Saudi Arabia, the four gulf oil states, Iraq, Iran, Russia, and so on. Ironically, Iran, having been under sanctions already, will be in better shape than most of the others.

It is also, obviously, low enough to make US (and Canadian) shale oil production completely uneconomical: generally that needs at least $60/barrel, and much of it needs more.

So we have countries and companies with bleeding treasuries. The US has the ability to print money, presumably it will do so to keep Shale oil around in Zombie form. Countries which cannot print money and have other countries accept it could be in trouble. This depends mostly on how long this goes on. A couple months, even three or four, uncomfortable, but no big deal.

If this crisis bubbles on for a year and a half of shutdowns, partial relaxations, then more shutdowns, we’re into some very dangerous territory. I’m not sure the House of Saud, for example, can survive that scenario (it couldn’t happen to a nicer country, etc.).

The world has been in a very long economic relationship, in which the most important commodity has been oil, and the producers sold it in dollars, so the US and the swing producers all benefited. Obama and Trump more or less broke the deal with the promotion of shale oil, and China has increasingly been insisting on buying oil in Yuan, but the relationship had stumbled on, even though it meant enabling countries that the US has been treating as enemies, like Russia.

Trump wanted to force Europeans to buy more American oil and less Russian oil: This was a major part of his economic plan, such as it was. Trump likes to find a place where he’s more powerful, and push that as hard as possible, and things like sanctions against Russia, Iran, and Venezuela were–and still are–situations in which he has unilateral power that no one else has been entirely able to get around (though China has somewhat). The EU has proven unwilling to stand up to the US in the case of sanctions.

Right now, there’s no particular reason to think this can’t continue. The US can still print infinite dollars, because foreigners will still accept them–even though the US is no longer the most important manufacturing state. So the US can bail out shale oil. Oil producers, who do not have hegemonic currencies, do not have infinite rope.

This changes only the major producers of things the US needs cease to be willing to trade in US dollars. China and the EU could (but I very much doubt will) cut the US’s throat if they ever chose to act together. Perhaps China could even do it alone. The problem, of course, is that there would be a lot of collateral damage to them. US oil is expensive, but the US can produce it. China and the EU need to import it. If they want to make such a change, they have to secure strong supply guarantee from other nations.

This is theoretically possible, but the problem is simple: Any nation that did this would then fall under (even more) US military threat. Bombs are very good at ending oil exports, and neither the US nor China is willing to go to war over this. Perhaps China could move troops and nukes into vulnerable countries, but that would trigger a new cold war, and the Chinese don’t want that–at least not yet. China is working on their own trade area, to compete with the US-led trade area (which the US is abandoning anyway, as it shits on the WTO it created), but it is not ready yet (the Belt and Road Initiative is China’s name for this trade restructuring).

The current collapse of oil prices is unexpected; while a pandemic has always been possible, knowing when it would happen was not. The pandemic has simply revealed the current production’s costs and dynamics. Saudi Arabia has been moving towards vast danger for ages because of its over-reliance on oil; this simply means the consequences may hit sooner. Oi-consuming nations have been maneuvering to reduce their dependence on imported oil in general, and unreliable oil in particular, but they were not yet ready to make any big moves. Almost everyone has been chafing under the petrodollar and under the current world payment system, which the US has abused with its constant sanctions. Despite this, no one has created a viable alternative and been willing to take the hits necessary to move off the dollar and the US/eu payment system (“EU” is in lower case deliberately).

Most oil producing nations, including the US and Canada, are generally bad actors on the international stage: with crimes ranging from moderately bad to invading oil producing nations regularly and sanctioning other ones constantly, or to being the world’s premier supporters of fundamentalist religion and terrorists.

So don’t cry too much for oil producing nations, nor even for their customers, who have enabled them greatly. But beware that the game is changing: Covid-19 has highlighted existing issues and if it continues long enough it could precipitate changes which have been desired by many, but remained unimplemented because people have been unwilling to bear the costs and risks.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Is America Going to Have a Covid-19 Apocalypse?

By

On April 17, 2020

Comments

The Course of Empire by Thomas Cole

The Course of Empire by Thomas Cole

Covid is one of those disasters which tests whomever it happens to. Countries like Vietnam and Taiwan and even Germany stayed on top of it, or got ahead of it, and are doing fine. Those who mishandled it are taking some hard hits.

This isn’t primarily about deaths, though those are awful, it is about the mishandling of the economy. In Canada, there’s a benefit of $2,000 dollars per month for which most people who lost their jobs qualify. Other countries have done even better: freezing mortgage payments, rent, and so on, and organizing food delivery.

In the US, we have predictions of a 30 percent unemployment rate. I just saw that less than half of Los Angeles county still has a job.

The bailout for regular people is $1,200. In a place like Los Angeles, that won’t even cover most people’s rent.

There’s been a vast bailout, mainly–though not exclusively–through the Fed, for the rich. Basically, as much free money at the trough as they can gorge on.

But small businesses are toast. A third of households, at least, are on the verge of not just homelessness but not being able to eat.

Meanwhile we have a lovely display of typical US business incompetence. The US’s logistics system is a wonder of the world, but it was created in the 80s and 90s by people who are retired or dead now. Meat packing plants are shutting down because of multiple cases, truckers and warehouse workers are getting sick and scared. Farmers complain of problems getting workers. The price of beef for farmers has crashed through the floor, but they can’t get the animals to consumers.

Meanwhile, multiple states have not instituted isolation, and there are “protests,” backed by Republicans, to reopen states that have.

Not isolating nationally means there are pockets of plague which are still expanding exponentially, and which can reinfect the areas which did isolate. Coming out of isolation too soon will mean that cases will explode again a month to a month and a half after self-isolation ends.

The job issues mean trouble. People who can’t afford food become violent. Food riots bring down nations.

Assuming these storms are weathered, or that Americans are so beaten down they won’t riot even when starving, when the economy does re-open, many of the jobs will be gone. People who did not earn during the time down will still have to pay back-rent. At best, their spending is crippled, at worst they get evicted.

Many landlords will lose their property in any case, many small businesses will go bankrupt and never re-appear. The likely scenario, longer term “after” the Coronavirus is another ten-year depression, except this one is likely to be a deflationary depression: No one but the rich has money, and no one is spending.

But imagine the fairly standard scenario of multiple waves of coronavirus with multiple waves of self-isolation. No national policy, so some states stay open as others are closed. People in warehouses keep getting hit, logistics people get hit, migrant workers get hit or can’t even get into the country.

The system, already drawn tight to extract maximum profit and efficiency, starts breaking. Prices surge, there are actual shortages in many places.

This is some months out, I’d guess, although this is the sort of scenario that goes from “eh, it’s OK” to BOOM very, very fast when it does go.

The US is fragile. The choice to not freeze mortgages, rent, interest payments and so on, and to not bail out ordinary people as I instructed is going to explain to the rich that it is everyone else who makes the actual economy run.

There is a real economy, Virginia, and if it freezes up, there will be hell to pay. Logistics workers need PPE and they need them now. Freezes of rent, mortgages, interest payments, and so on, need to be done now. If a complete idiot wasn’t running the country, taking national control of when states close and reopen should happen now. I would suggest that if Americans don’t want their country in a new great depression, that they find a way to depose Trump now, and if Pence won’t be competent, ditch him too.

There is a chance that the US will fumble through, as governors and mayors who aren’t complete incompetents (and the rare, actual competent governor, which doesn’t include New York’s Cuomo), plus the rare competent CEOs, manage to hold thing together–barely.

But right now, this is looking like an epic clusterfuck.

Remember, however, when the riots come, if they do, if you won’t just die quietly for the peace of your masters, to go to where they live, or where the Fed employees live, and riot there. Explain to them about what people do to fat, happy, rich people when they can’t eat.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

 

The Transition to Capitalism

By

On April 16, 2020

Comments

One of the most important things to understand about industrial capitalism is that the lower classes didn’t want it.

Peasants did not leave the land voluntarily. They were forced off, often violently, in a series of enclosures, through which their millennia-old rights to use the land were taken together.

This was a vast, albeit “legal” (because bills were passed that made it legal), seizure of property rights. Property is just rights, and those rights were taken from the peasantry and free farmers and given to the lords.

The justification for this was that “enclosed lands are more productive,” but detailed study has found this was only somewhat true: Commons fields were about 80 percent to 90 percent as productive, and their productivity increased at the same rate as enclosed fields. For some crops, common fields were more productive.

With the the fields enclosed, the peasantry lost control of capital (land is capital). They couldn’t grow their own food, raise sheep for wool, chop down trees for fuel, and so on.

They were thus forced off the land, into the city slums, and had to work for industrialists, six and a half days a week, 12 hours a day on average. They died younger, there was far more disease, they were maimed often, and they lived worse.

They knew this. They resisted. They hated.

Capitalism, among the many things that it is, is the concentration of capital in the hands of a few people. That means access to capital is removed from most people. Most people must now work for someone else. In some times and places that work is nice, at others it is not, but it is a loss of control and choice.

Peasants and free farmers in Britain had far more control over what they did and when than factory workers. In fact, they had more control than most modern American workers do today.

Yes, they had to engage in demeaning status rituals from which we are largely exempt, but they had a type of freedom most wage slaves don’t.

The choice for most people today is to choose their master, not to choose to have no master. The local gentry or nobles did not supervise the peasants most of the time, they let them get on with their work, took their share of the proceeds, and got a certain number of days of work from the peasantry.

But they were not close-supervising them.

Again, we tend to compare today with then, but this is the wrong comparison. The comparison is then (peasant/yeoman) with then (factory worker). The first was so far superior to the second as for there to be no comparison.

Was all of this disempowerment, this removal of capital from everyone but the few, necessary for industrialization and its benefits? Did people have to be forced off the land and into satanic mills, where they worked like dogs and died young?

Or was there a better path, which we did not take?

And what are the results today? The results are, in fact, that fewer and fewer people have control over capital or the means of production, and the rest of us have to do what those people say, not just for a month or two every year and here’s a share, but for five or more days a week, with intrusive monitoring and micro-managing bosses.

They control the capital. We do what they tell us to, negotiating only who wields the whip.

That’s capitalism.

Did it have to be that way?

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Why Western Elites Are So Incompetent and What the Consequences Are

By

On April 2, 2020

Comments

The Course of Empire by Thomas Cole

The Course of Empire by Thomas Cole

The coronavirus has been striking for the fact that Asian societies have mostly handled the crisis competently (though there’s been variation in how competent), and Western elites, with some exceptions (Germany, for example) have not. At the extreme incompetence level are the US and the UK.

Let’s chalk this up to aristocratic elites. Aristocrats, unlike nobles, are decadent, but don’t stop with that word; understand what it means.

Elites who are not aligned with the actual productive activities of society and are engaged primarily in activities which are contrary to production, are decadent. This was true in Ancien Regime France (and deliberately fostered by Louis XIV as a way of emasculating the nobility). It is true today of most Western elites; they concentrate on financial numbers, and not on actual production. Even those who are somewhat competent tend not to be truly productive: see the Waltons, who made their money as distributers–merchants.

The techies have mostly outsourced production; they don’t make things, they design them. That didn’t work out for England in the late 19th and early 20th centuries and it hasn’t worked well for the US, though thanks to Covid-19 and US fears surrounding China, the US may re-shore their production capacity before it is too late.

We also have a situation where Western elites are far removed from the actual creation of the systems they run. This is most true in in the US, and to a lesser extent in the UK, which did not suffer the massive bombing and destruction of most of the rest of Europe (the Blitz was minor compared to the bombs dropped on Germany, for example). Of course, reconstructing bombed societies is not the same as pulling oneself out of poverty.

The best handling of the coronavirus crisis in the world was possibly Vietnam, who are run by a generation that just pulled themselves out of poverty. Other excellent handling has happened in societies which still remember times of poverty or which were conquered and set free (Japan/Germany). China’s Xi, probably the most incompetent, also managed the crisis badly, but still better than the US/UK: Once he got serious, he got really serious. Xi, while a princeling, had a hard early life and was forced to work on the communes and so on.

This is all standard three-generation stuff: The first generation builds, the second generation manages, and the third generation wastes and takes it for granted because they’ve never known anything else. Sometimes that extends to four generations or more, but that requires a system which properly inculcates its elites, plus something to force the elites into at least some of the same experiences as the peons. We do not have that kind of a system.

Nobles, as Stirling Newberry explained to me years ago, are elites who make a point of being better than the people below them: better fighters, better farmers, and so on. Aristocrats are people who play court games, which is what financialized economies supported by central banks and bought politicians are. These people aren’t even good at finance. They were actually wiped out in 2008, but used politics to restore their losses and they were/are wiped out by this crisis, but are using politics (the Fed/Congress/the presidency) to restore their losses. The Fed is doing one trillion of operations a day.

So our elites are fantastically incompetent even at finance. The vast majority are completely disconnected from actual production, at best they are distributors. All they are good for is playing court games, i.e., politics. They can’t manage the real economy, they don’t run it, they don’t live in it, and they aren’t subject to its rigors. They live in a Versailles, almost completely disconnected from society except in crises, when they print money to save themselves, and download costs onto the peasantry.

A society such as this cannot survive in this form. Eventually there is an existential crisis which cannot be papered over by the printing of (virtual) money. Perhaps it is a real economic collapse, perhaps it is a natural catastrophe of near-Biblical proportions, or perhaps it is simply the peasants revolting and paying a visit to Versailles.

The vast spread of guillotine memes over the past four years should alarm our elites, but mostly, they seem to feel invulnerable and are still working to preserve their position in the system rather than fix the system and the society. You can see this in how Democrats are standing up a clearly senile Biden and denying the peasantry health care, even in the face of pandemic.

An elite which refuses to manage the economy will either cause its own end, the end of its country’s prosperity and dominance, or both.

Often both.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Economic Consequences of the Pandemic

By

On March 25, 2020

Comments

Or, I should say, rather, of the Fed and Congress’s actions.

The Federal Reserve has spent one trillion a day for 30 days (when this is over, they’ll have spent more) to prop up markets and financial firms. They’re buying debt, and making non-recourse loans (non-recourse means there is no penalty for not paying the loan back).

Congress’s deal, includes $350 billion for small businesses, and $1,200 for individuals, +$500 per child, and some excellent provisions for laid off workers–but this is a one time payment, and if things go on, how many more be passed when business has their bailout? It also has some fairly stringent restrictions on stock buybacks and executive compensation.

But most of the bailing out, in this crisis (as in 2008), will be done through the Federal Reserve, whose operations dwarf those of Congress and the Treasury department.

Assuming this crisis goes on for months, in waves, which is what the science seems to say, predicting the end result is simple: A lot of small businesses will go out of business. A lot of people will lose their homes, and a lot of small landlords (not large ones) will lose their property.

Companies which are bailed out, and companies and individuals with strong cash positions going in, like private equity, will then do what they did after 2008: They’ll buy up distressed assets for dimes on the dollar and wind up owning more of the economy than they did going in. Industries will consolidate, as smaller firms go under, and the remaining companies will be even too-bigger-to-fail.

Must it be this way? No. Will it be this way? Assuming the policies continue as they are, yup. But there’s a lot of road to go, and when people start dying in droves the calculus may change if the politics change. In particular, if people truly can’t afford to eat or pay rent, in large numbers, things may get nasty. It’ll be interesting to see just how whipped Americans are: Are there circumstances under which they’ll actually revolt in a way that hurts elites?

A lot of this depends on how the pandemic plays out. If Trump and idiot governors can be convinced to stick out isolation, probably they’ll be able to slide by. If not, things will get ugly.

Much will also depend on whether Republicans want more bailouts through fiscal policy for corporations. If they don’t, they will resist sufficient money for ordinary people, which will make things worse (and cause people to break isolation).

It’s going to be an interesting few months.

But basically, nothing has changed in ruling lass ideology: Every crisis is to be used to increase the share of the economy, national wealth, and the income that the rich control.

So for this crisis is no exception.

(Update: Matt Stoller reports there’s trillions more dollars of giveaways:

So that’s the stuff that’s been reported. Here’s what hasn’t, and why the bill goes up in value to $6-10 trillion.

  • An additional $4 trillion from the Federal Reserve in lending power to be lent to big corporations and banks.
  • Authorization to bail out money market funds, multi-trillion dollar unregulated bank-like deposits for the superrich.
  • Authorization for the the government through the Federal Deposit Insurance Corporation to guarantee trillions of dollars of risky bank debt.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

How to Save the Economy and Not Kill Millions

By

On March 24, 2020

Comments

So, Trump and others, including New York Governor Cuomo and Thomas Friedman (possibly the most overrated public intellectual alive today), are musing about restarting the economy to “save” it.

The Lieutenant Governor of Texas put this more clearly, if inaccurately:

“No one reached out to me and said, ‘as a senior citizen, are you willing to take a chance on your survival in exchange for keeping the America that all America loves for your children and grandchildren?’” Patrick said. “And if that’s the exchange, I’m all in.”

First, people younger than 60 or so do die from the Coronavirus, especially if they have any health problems. Viral load also matters: The more of the virus you have the more likely you are to die, and this can kill people even in their twenties. The morbidity charts we have are based on China, where after some initial fumbling, they went hard into isolation.

If you send people back to work too soon in the US you will kill millions, and they will not all be old, not that Americans are necessarily willing to kill their parents and grandparents.

Second, as I noted yesterday, this misunderstands the economy.

The economy is the people in the economy, not the numbers in ledgers. It is people who make and consume every single service and product. Capital goods and real-estate are not killed by the coronavirus.

If you want to protect the economy what you do is protect the people. If the people are still there at the end of the pandemic you can have the economy back, if they aren’t, to that extent, you lose the parts of the economy which relied upon them as consumers and producers.

The ledger numbers are easy to manage. You simply freeze all normal payments: mortgages, loans, rent, interest, etc., until the end of the crisis. Give a UBI to people sufficient for them to pay non-payment expenses. The Federal Reserve or other central banks can keep other markets going as necessary, and a few targeted bailouts can be offered.

I want to talk a bit more about what is actually happening to the economy, and what it is going to mean in the future, but I’ll leave that for a later article, perhaps tomorrow.

For now: People, land, and capital goods (what we use to produce goods and services) ARE the economy. The coronavirus will not kill capital goods or land (mortages, leases, rent) unless we decide to let the ledgers run when we don’t have to. It will, however, kill people if we send them back to work in a misguided attempt to “save” an economy which will actually be killed by people dying.

This sort of category confusion is constant: Money is a fiction. We made it up. It’s a convenient fantasy used to keep track of the economic “game.” We can change how we use money any time we want to, in any way we want, for as long as we want. (Yeah, there are some consequences to the changes, but the fundamental precept remains true.)

Right now we should be halting a large chunk of the money game, then giving people the money they need so they can isolate and not get dead.

Money exists only to serve the needs and promote the welfare of humans. We already die for it far more than necessary, but sacrificing ourselves to a pandemic to “preserve” it is insanity. Money is a fiction, humans are real. Save the humans.

(I know this is in part a repeat of yesterday’s post and I apologize, but as this “save the economy by killing millions” idea gets traction I felt the fact it’s stupid and does the exact of opposite needs re-emphasis.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Page 26 of 90

Previous

Next

Powered by WordPress & Theme by Anders Norén