There is a vast amount of hand-wringing and angst going on about how we can either save the economy by re-opening, or we can let the economy crash and save lives. Of course, the economy crashing (and the US unemployment rate will probably hit 30 percent) will cause the loss of lives also.
This is a manufactured, completely unnecessary choice.
To understand why, you have to understand three facts about money:
- Money is imaginary. It is a fiction created by humans. People are not fictions. Land is not a fiction. Buildings are not fictions and neither are physical objects. Money, even when it exists in paper form rather than 0s and 1s in a computer, is fictional. It has value only because we agree it does.
- Money is used for two things: First, it determines who controls what. Can you control land, people, or objects? If you buy land or an object, you control it for as long as you own it. If you hire a person, you control their time. Money is control of people, land, and things.
- Second, money is a feedback mechanism. If people who have money want less of what you offer, you get less money and control less people, land, and things. If people who have money want more of what you offer, you get more money and can control more people, land, and things. (What people who have no money think is of no concern.)
What Covid-19 closures are doing is providing feedback–“people with money want less of these things.” That causes the people who control businesses, or live in apartments, or have to pay mortgages to run out of money, and lose control of those things. Businesses go out of business. People can’t pay rent or mortgages or their employees.
That causes an economic crash.
This is 100 percent unnecessary. We want feedback in an economic system because we don’t want people doing things that other people don’t want or need (or, in Capitalism, other people with money).
But when a one-time event happens which does not reflect a fundamental shift in what people want (i.e., this pandemic will end) then you actually want to stop the feedback, because it’s bad feedback. You don’t want to change long-term economic arrangements because of something that is a one-time event.
So, because money is fictional, because we just create it out of thin air (central banks create trillions routinely), this means that we can do one of two things:
- We can just give people who have lost their income due to Covid-19 enough income to pay their bills
- we can freeze payments up and down the line – rent, mortgages, interest payments.
Or, of course, we can (and should) do a combination of these two things.
When Covid-19 closures have clearly run their course, we stop doing these things. If there are permanent changes (a lot of people keep working from home, or we don’t get a vaccine and restaurants aren’t going to be popular again) at that point the feedback is allowed to operate.
To allow a one-time event of limited duration to fundamentally reshape the economy means one misunderstands what an economy is. An economy is not money, it is people, land, and objects. Those are what must be preserved, not money. When the one-time event is over, if those objects still exist and are still controlled by people who can use them to create what other people want, then the economy has been preserved.
To allow people to die to preserve the economy is idiocy: It hurts the economy. People are the economy; it is people and natural resources which produce everything of value.
So, when people squeal about the economy vs. lives, understand that they don’t know what an economy is or how money works. Or, they do know how money works and what an economy is, but they are taking advantage of the situation to give themselves more money, and are good with other people dying while they get more money, because they are concerned with their relative position.
If the Fed and the government give rich people lots of money, and everyone else not much, and if assets become cheap and can be bought out, and if small businesses go out of business, at the end the economy is smaller, BUT the rich people control more of it
And that’s what they want. Too bad your grandma and your dad have to die for it, but that’s not their problem.
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Frank Stelsewhere
No, I absolutely want things to change. That 536 billionaires in the America own 98% of everything means they won the game of finance neoliberalism. And it ruined the lives of everyone else. There is no chance life will get get for 90% of everyone, forever. And then there is the unhinged climate, heating & heating everything up. Economy used to based to capital now its finance 36 million unemployed and the market goes up. People are not required.
Eugene
Yup
Mark Pontin
The key words Ian uses are “at an end.”
No human population has ever developed herd immunity to a coronavirus to date, and to some extent such viruses’ very nature — their mutation rate — mitigates against it. Anybody who knows anything about this class of pathogens knows that.
Also, there’s evidence that COVID19 — again like other coronaviruses, notably SARS — exploits antibody-derived enhancement. See forex —
‘Impact of immune enhancement on Covid-19 polyclonal hyperimmune globulin therapy and vaccine development’
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7161485/
‘Is COVID-19 receiving ADE from other coronaviruses?’
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7102551/
So if the rich — the rich in America, as nowhere else with pretensions to being a modern technological state is doing as badly with COVID19 — are counting on the disease just running its natural course (as they may imagine it), so they then control a smaller economy, the rich are fucking stupid.
Absent modern biotech synthesizing a vaccine/therapeutics, there may not be an end: COVID19 will become endemic and stick around in the U.S. for years.
In the long run, it may be likelier that the virus’s mutation rate will evolve towards less lethality (because a pathogen has a higher reproduction/survival rate, the less it burns through its reservoir fatally) before natural human herd immunity appears.
Also, from the early studies, survivors of intense cases of COVID19 with permanent pulmonary conditions, heart conditions, CNS damage and other stuff seem to be outnumbering fatalities about three to one. People who’ll be too disabled to work will outnumber fatalities.
That’s going to hit the plantation labor hard. The U.S. already has a much-reduced manufacturing base. Basically, the rich in America are only rich because the U.S. dollar retains its status as the global reserve currency.
Which means that presumably the rich in America imagine — if they’ve thought about the dollar ceasing to be the global reserve currency at all — that they’re somehow going to continue to bully the rest of the world into continuing to trade in dollars beyond the next decade by deploying the U.S. military.
In which case, they’re still fucking stupid. The U.S. military is at this point basically a welfare system for U.S. corporations to enormously expensive planes that can’t fly (the F35) or aluminum-constructed ships that’ll burn down to the waterline the first time a missile strikes them (the Littoral Combat Ship).
The rich in America not just ruthless and psychopathic. They’re morons.
Eric Anderson
Spot on Ian.
I’ve not read a more cogent appraisal of elite grifting as a consequence of the virus.
Hugh
I agree.
One point:
“To allow people to die to preserve the economy is idiocy”
No, it is criminal. And it has been going on for hundreds of years, and more recently in the neoliberal putsch of the last 40, and now with the coronavirus. And people are not allowed to die. It’s murder. It doesn’t have to be this way. It never had to be this way.
Hugh
I caught this exchange in the few seconds I watched 60 Minutes last Sunday.
After Fed Chairman Powell agreed that the Fed has flooded the system with money, Scott Pelley continues:
“But, by law, Chairman Powell’s Federal Reserve can only lend money that must be paid back. Congress, he believes, should spend money to expand its historic bailout. After all, he says, this emergency is nothing like 2008.
Jerome Powell: This is not because there was some inherent problem, a housing bubble, or something like that, or the financial system in trouble, nothing like that. The economy was fine. The financial system was fine. We’re doing this to protect ourselves from the virus. And that means that when the virus outbreak is behind us, the economy should be able to recover substantially.”
https://www.cbsnews.com/news/coronavirus-economy-jerome-powell-federal-reserve-chairman-60-minutes/
Pelley’s comment that the Fed can only lend money is marvellously simple-minded. The Fed creates the money it lends out of thin air. So it is really just a question about rates and valuations in a dynamic open-ended system. And in such a system, the money the Fed lends is pretty much the same thing as money it creates and spends. The question which remains is whom does it on and for. But we really already know the answer to that one.
Then Powell responds, either stupid or lying, about the economy and financial system being fine before the virus, overlooking all the massive Fed interventions since late last year which the Martens (at Wall Street on Parade) have chronicled so well.
All this is a long way of saying that the Fed has nearly unlimited power to underwrite or even force the re-structuring of all financial arrangements, either through itself or through the federal government, during the Covid-19 crisis leaving people and the real economy intact. That real economy could be much better than it is and changed habits from the virus could have major impacts on it but Ian’s point is that an awful lot of it can survive the Covid crisis, but probably not the financial system as it currently operates.
GlassHammer
Rich nations and rich individuals can only exist when a “flow” of cash/resources is present no “stock” is sufficient to allow them to exist for very long. What the pandemic did was break the “flow” of cash/resources.
Right now each nation is trying to use the largest “stock” it has available i.e. it’s treasury to temporarily replace the broken “flow” of cash/resources. The problem is the best “flow” of cash/resources always comes from people and their labor (there just isn’t a good enough substitute for people).
World leaders want the optimal “flow” of cash/resources back, they are just calculating the buffer required to keep people and their labor reproducing while accepting a higher die off of labor.
The U.S. being the most anti-labor of the developed world is just following a nastier version of the same plan.
Z
I agree with most of this post and I’m certainly not advocating for our rulers’ actions during this pandemic, but as a factual matter this is not necessarily true when you got an overpopulated planet with finite resources.
Z
Augusto
Thank you for a clear description of the American regime\’s response to the Covid-19 crisis, and the consequences. While I wouldn\’t place my faith on the intelligence of our \”leaders\”, I don\’t think the response is a mistake. This is all by design; and the American people, some who are so beaten down, and others just corrupted of spirit, will sacrifice themselves willingly.
While we despair for America, we should appreciate that humanity isn\’t flinging itself off the same cliff. The American response stands in sharp contrast to that of China, South Korea, Cuba and myriad other nations that understood the welfare of their citizens is the primary duty of the state. Otherwise why even have a state? That may be a question Americans may have to grapple with down the line. The pandemic may be an exogenous force on the \”economy, but the response of the regime is setting up new permanent conditions.
The solution for Americans may be to not be Americans at all.
bruce wilder
I have been preaching ineffectually against bad economics for years and rarely make any impression on anyone and here we are again.
The bogus argument under attack is that there is a tradeoff.
A tradeoff between allocating resources to suppressing a contagious disease and allocating resources to running an economy.
Tradeoffs were at the center of Milton Friedman’s argumentative strategy. It was based on Econ 101 being defined as being exclusively about allocative efficiency.
It is very dumb.
But, it seems to work like a charm.
Ché Pasa
A False Choice… “The Economy” vs Lives of So Many People
Been pondering this one for quite a while. And it’s interesting what stands for “The Economy” that we’re supposed to sacrifice all these lives for: Nail salons, beauty parlors, bars and restaurants, amusement parks… wait, whut? Nobody questions this? WTAF? This is not even close to being the economy, real or make believe. Most of those re-opening have very few customers at this point, but whether they do or not, their economic activity was and is on the whole minor, and even if they were going full out — which they aren’t and can’t — they wouldn’t be reviving an economy which has largely collapsed.
The notion that nail salons and fitness centers “stand for” the economy as a whole is absurd. And yet that’s what we’re being assured makes all the difference. To whom? And for what?
And so what if people die? They’ll die anyway, right? At least those who run beauty parlors and amusement parks will have one last fling before the final elbow.
This is very much an End Times scenario. Party while you still can, because tomorrow will most assuredly come, but maybe without you. Eventually, it will assuredly be without you.
You see on the teevee people running around crazy and behaving badly all the time, some of them essentially rioting, killing folks and threatening officials and being egged on by POTUS who’s addicted to chaos. He loves it and encourages it. The more madness, the better.
This has plenty to do with both lives and the economy. The economy as we knew it is not coming back. It can’t be revived as it was. The question is, what can or will replace it. We already see the outlines: the major players of the finance economy (the one that matters to our rulers) will be preserved, protected and defended at all costs. The “essential” parts of the real economy — the one non-participants in the finance economy depend on — will be constricted to the very basics (groceries, utilities, minimal transportation, minimal medical treatment and supplies, etc.) and “re-opening” basically won’t change it much. People who don’t have now or soon won’t have discretionary income — in some cases any income at all — can’t and won’t buy things to keep a consumer economy functioning. And from all appearances, our rulers have given up trying to sustain a consumer economy in any case.
No, their focus is the finance economy for those on top and the bare minimum for everyone else, diminishing over time.
At this point, we’re living off the surplus in the system. There isn’t much. Soon enough, there will be none. And then?
That’s what we need to think about.
GlassHammer
“but as a factual matter this is not necessarily true when you got an overpopulated planet with finite resources” – Z
Correct, labor is replaceable.
Also plenty of leaders are willing to accept a damaged and less productive economy so long as they still stay on top. Economic “harm” is defined by them so if they are fine with it then there is no “harm” just a new normal.
Keep in mind that your leaders don’t really care about losing great talents in the pandemic either. They can go awhile with no great leap forward and if they must do something they can import experts.
GlassHammer
“But, it seems to work like a charm.” – brucewilder
Narrative gave junk economics it power and only another narrative will remove it.
The problem is we have gotten really good at suppressing new narratives.
Eric Anderson
Z:
Thought you might be interested in this little ditty:
https://journals.sagepub.com/doi/pdf/10.1177/2158244017736094
The money quote:
“Population growth has slowed everywhere except sub-Saharan Africa but still accounted for almost half of world economic growth over the period 1990-2015.”
Yup.
S Brennan
Vaccine, Cure, yeah sure, very, very nice but, not what’s needed.
What’s NEEDED is an EARLY, COST EFFECTIVE TREATMENT, that keeps 99.9% of the infected OUT OF THE HOSPITAL.
Then we have a serious problem but, not an existential calamity.
To Ian, & all the commenters on here, if this effed-up society goes down it’s taking everybody with it. The people of the Palatine Hill were the richest of their time and yet not a single of their name survived the collapse of Rome, indeed, none of those fabulously rich houses are remembered except to note their collective passing into oblivion.
Let’s be different than the “other liberal blogs”, let’s focus on stop gap solutions.
Last week I was sick with what I take to be a cold, shortest cold of my life. The cold never went to my lungs as most colds do. Because I did know what I had and could not be tested in a timely manner, [and no Trump[R] had nothing to with the testing impasse], I pulled out all the stuff I can’t talk about over at MOA. Pure luck? Maybe, or maybe the science data from SARS-1 has some relevance? Dunno, b says absolutely not! From my experience, a .22lr is a wimpy round but, it beats the shit out of a sharpened stick when you are out hiking and a cougar is tracking you and your dog.
Adam Eran
This post reminds me of a conversation I had with an elderly gentleman. I was advocating honest markets, and honest finance…and he objected. “That would impair my 401K”… As scary as it is to face retirement without resources, I’d suggest a) the unregulated, unchecked market would inevitably impair his 401K with crookedness, as in 2007-8, and b) what good is a stack of dollars or stock certificates if the rest of the economy won’t supply goods or services he can purchase?
As Chris Rock says “Wealth isn’t about having lots of money; it’s about having lots of options.”
This point also echoes Alfred North Whitehead’s fallacy of misplaced concreteness–the equivalent of going into a restaurant to devour the menu rather than the food.
It also is behind the first commandment (of the ten): don’t mistake some interim symbol for something ultimate. No idols.
Mark Pontin
Adam Eran wrote: ‘This post reminds me of a conversation I had with an elderly gentleman. I was advocating honest markets, and honest finance…and he objected. “That would impair my 401K”’
“President Camacho gives Joe the impossible job of fixing the nationwide food shortages, Dust Bowls, and crippled economy within a week. Joe discovers that the nation’s crops are irrigated with a sports drink called Brawndo, whose parent corporation purchased the FDA, FCC, and USDA. When Joe has the drink replaced with water, Brawndo’s stock drops to zero and half of the population lose their jobs, causing mass riots. Joe is sentenced to die in a monster truck demolition derby.”
-Plot point in ‘Idiocracy’
Mark Pontin
During Friday’s presentation of the flag, Trump alluded to the development of a new U.S. military asset.
“We have, I call it the super-duper missile,” Trump said, explaining that it could travel “17 times faster than what they have right now.” A Pentagon spokesman was asked about the “super-duper missile” during a subsequent press call and referred reporters back to the White House.
https://www.usatoday.com/story/news/politics/2020/05/15/trump-unveils-space-force-flag-us-building-super-duper-missile/5204258002/
Some joker has already put up this page on Wikipedia…
https://en.wikipedia.org/wiki/Super-Duper_Missile
“On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”- H.L. Mencken.
I hope Space Force makes the name official. This is all quite familiar for anybody who ever read C.M. Kornbluth’s ‘The Marching Morons’ (Kornbluth of Pohl & Kornbluth) or seen ‘Idiocracy.’
S Brennan
You gotta love the learned helpless of the “left”…
Ian Welsh
Consumers are as important to a capitalist economy as are workers.
Perhaps more important, in some ways.
nihil obstet
The government can step in as the consumer. That’s been the function of the U.S. military since WWII. The ACA with its purchase insurance mandate and subsidies was about making sure that insurance consumers were there and paying premiums to the companies.
The basic rules about companies in capitalism no longer apply. They don’t go bankrupt when they fail, because they get money from the government. It looks rather as though our “capitalism” requires a minimum number of production workers and servants, but can work ways around mass consumerism. It’s more like neo-feudalism.
Mark Pontin
nihil obstet wrote: “It’s more like neo-feudalism.”
Ya think? Seen this? —
https://lareviewofbooks.org/article/neofeudalism-the-end-of-capitalism/
Henry Moon Pie
Your approach offers the best way to reason with the people who are in charge. \”The virus forces us to rearrange things very substantially but only temporarily. When it\’s over, you guys can rule as usual.\” Then when the virus is over–if it\’s ever \”over\”–it\’s time to renegotiate.
The \”job\” is the main means of social control in capitalist society. You have to report at a certain time and place and surrender control of many of your waking hours. And you\’d better watch yourself even when you\’re not \”on duty\” (or be prepared for the next employer drug test) Your income is easily taxed through your employer. Etc. The debate now among our rulers is between those who insist that this job relation be not only primary but also exclusive (Work or you shall not eat!) and those who lust for a brave, new Gattaca world where everyone is constantly tested, categorized, segregated. Anathema to both is a direct relation between the federal government as payor and regular citizens as payee, i.e. anything like a UBI. That could quickly become a relationship where the power abruptly shifts so that the citizens are able to make sure the money flow keeps coming by the force of their numbers and the clarity of the relationship. With the current arrangements, it\’s too easy to obfuscate the real power relationships and confuse the populace.
Our salvation is that neither the Republican kamikazes nor the Democrat Techno-liberals will
succeed. Consumers aren\’t interested in risking death for a Friday special at Applebees nor has the virus been kept under control enough to allow successful testing-tracing-quarantine not to mention the issues with quarantine in the U. S.
After the MoU have tried and failed at both of those, maybe they\’ll be willing to listen to other possibilities like your \”bridge policy\” framing.
Arthur
Insane times. We have people who think not wearing a mask makes them Spartacus. But is that any different than Cory Booker comparing himself to Spartacus for making a speech? I believe most people know Trump is incompetent and should be removed, but they don’t care enough to do anything about it. I believe they don’t care because they know deep down (maybe in the id, I guess) that there is no hope. Sad to think about those young people (I know a good many) who are just starting their adult lives. They will see the worst of the collapse and breakup to the United States. Anyway, my 2 cents. Stay well all.
bruce wilder
GlassHammer: Narrative gave junk economics it power and only another narrative will remove it.
The problem is we have gotten really good at suppressing new narratives.
‘rue dat.
Caitlin Johnston:
“The problems our species now faces are the result of elite sociopathic manipulators using media to exploit human cognitive glitches which enable them to control the fate of the whole. Any analysis of our plight which doesn’t account for this is a flawed, power-serving analysis.
~
“Humanity in and of itself is not the problem. The problem is that we sometimes produce humans whose brains lack functioning empathy centers, who use the advantage this gives them over the rest of us in their relationship with mental narrative to manipulate us to get things they want.
“What’s required for a healthy world is not human extinction or a mass die-off, but a change in our collective relationship with mental narrative, where we use thought as a useful tool instead of the center of all our interest and attention. This change has always been possible.
“People have been writing about the potential in humanity to awaken from the illusory nature of the mind and see reality clearly for thousands of years. What’s different now is (A) our newfound ability to share information and (B) the fact that we are now at evolve-or-die time. And we’ll either make that jump or we won’t. But we absolutely do have the ability and the freedom to transcend our unhealthy relationship with mental narrative which gives sociopaths the ability to manipulate us toward our collective doom.”
Stirling S Newberry
It was morning and I got up,
only to see the roads of black asphalt heating in the day.
Only to see the ducklings crossing on the white lines drawn in from the hand of God, with a little bit of help from a man walking with an apparatus on his back.
Only to see the dearth until all of Blossom, a huge one as yellow the next.
Only to see the grass slightly ragged in its green trimmage for mower had not come this week.
Only to see the crisp blue beliefs officer directing traffic, with the annoyed drivers bowing to his whitey-white commands on the bluety-blue while watching a sleet violet dress, undone at the sash. All the colors of the rainbow blurred into a verdant scene, as the ambulances slash to the open doors as if they had always done this. And since the hides of March, who was to say.
Mark Pontin
Bruce Wilder wrote (quoted): ‘But we absolutely do have the ability and the freedom to transcend our unhealthy relationship with ‘mental narrative which gives sociopaths the ability to manipulate us toward our collective doom.”
In the real world, one thing leads to another.
For the time being — and we are time beings living in the time-asymmetric, non-quantum world, moving from past to future, living in that slice between them called the present — cause and effect inescapably apply.
Any narrative is an account of causes and effects. So it’s silly to think we can transcend our relationship with ‘mental narrative.’ Our problem is that too many of us believe in unreal narratives that are often about unreal things.
Yes, often sold to us by psychopaths. I agree with you on that part.
Hugh
Trump and Trumpist narratives jump around a lot between past, present, and future. So if there is a negative and intransigent current reality, the narrative just jumps backward and blames it on Obama, or sometimes Hillary. It doesn’t matter that there might be little or nothing to connect them to the current event. It’s how Trump narratives go: if you want facts or coherence, you are obviously a Never Trumper so to be ignored. Alternately, the unpleasant present reality is minimized and we are told it will go away or be dealt with in a week or a month or by the end of the year, next question.
nihil obstet
Part of the problem is that we are expected to know too much — the ruling principle is that only the knowledgeable can have a valid thought. So we all have to know detailed tax law, insurance plans and contracts, the policies of any internet site we visit, medical issues, what have you. The political moral directive is that we are free by virtue of having options that we can choose from. So, states pass laws mandating that schools teach “financial literacy” rather than laws that mandate the form and information that lenders must provide potential borrowers. The great Democratic health care plan supposedly set up ways you can go shopping for medical insurance. The most recent pandemic relief House bill runs over 1,800 pages. Make a decision on that, anyone!
We’ve lost the sense that self-governing peoples should be able to understand and make decisions on values, goals, and policies, and replaced it with the requirement that each person should be an expert in the details of programs.
All beliefs are ideological, but when the experts became the bribed advocates of politicians, people quit believing them. All the engineers dancing across the hearing explaining why technically the highway has to run through the poor neighborhood, all the doctors writing prescriptions for the most lucrative drugs, all the financial consultants advising you to take on debt — why blame the general population for being more than suspicious about the experts?
bruce wilder
Mark Pontin: “Any narrative is an account of causes and effects. So it’s silly to think we can transcend our relationship with ‘mental narrative.’ Our problem is that too many of us believe in unreal narratives that are often about unreal things.”
just for record, I was quoting Caitlin Johnston, an Australian who blogs and tweets often on the theme of narrative as a matrix constructed from and by propaganda.
I will speak for myself now and declare definitely, that narratives are always fictional and fictionalize cause-and-effect. Post-Enlightenment, “cause-and-effect” can have scientific overtones, because sometimes we think in terms of functional, even mechanical relationships, but no one narrates the aerodynamics of an airplane taking off, but someone might narrate the tragedy of an airplane crash. Because narratives supply meaning. They incorporate intention, conflict, striving, suffering, moral consequences — the stuff of story.
The relation of narrative to fact and to functional relationships is deeply problematic, in no small part because of the function of narrative in creating culture and organizing politics.
We love a true story, but it should be an open question whether there can be such a thing.
Functional relationships matter and have consequences, too. But, a scientific analysis of how a virus is transmitted does not encompass anyone’s foolishness or recklessness or bad luck. Cause-and-effect in a scientific sense is almost alien to the kind of moral sequence that makes up a story.
Economics is a prime example of the mischief involved. There is in economics some interest in a positive account of how economic institutions work as social mechanisms, but the function of economics as an academic profession is mostly about supplying a myth, a kind of civic religion akin to the ritual ceremonies and auguries of the ancient Roman religion. The dominant liberal/neoliberal ideology narrates a just world, in which civic sacrifices are necessary to appease the market god the fickle behavior of which is both feared and unpredictable and regularly predicted by oracles interpreting the stock market.