Synopsis

As was the case with Economics in Two Lessons, I’ve been struggling with the material for my book-in-progress, The Economic Consequences of the Pandemic. But I’ve now managed to put together a synopsis I can work with. I’d very much appreciate comments, including but not limited to: topics I should be covering; issues raised by the brief summaries; and useful references. Thanks for comments so far, and thanks in advance for more.

21 thoughts on “Synopsis

  1. I would think about leaving out a lot of the first section, on the aftermath of World War I. It’s a distraction, and contested (most historians would now agree that the problem was not that Versailles was harsh, but that key German elites remained committed to lebensraum in the east, dominance in the west and no social democracy at home).

    Better to start with the 30s, the New Deal and – particularly important – the way that and World War II restructured western societies and economies. They key point being that it mattered not just that governments spent their way out of depression; it also mattered what they spent on (electrification, oil and transport infrastructure, the new electronics and aircraft industries, massive industrial training, education…). It better supports your later arguments.

  2. I’ve not fully digested this yet, but two disconnected first observations.
    1. The opening section contrasts the settlements after W

  3. .. WWI and WW2. The book needs to wrap up with a look at our current institutions. The relative climate success and trade failures suggest the world is at the limits of traditional multilateralism. But what else? Hegemony and technocracy are unattractive and global mass politics infeasible.
    2. There is an unresolved tension between the narrative “fall of the goods economy” and that of “climate emergency”, since the energy transition takes place in the physical goods economy.

  4. A more apt descriptive title for the contents so far seen may be something like:

    The Economic Consequences of the Pandemic… in/for the…

    Developed World, or

    Advanced Economies, or

    Global North, or

    etc.

    What are the consequences for other places? How will consequences there affect the ‘developed West’, and vice versa?

    Also, again pertaining to encompassing the globe:

    “By the beginning of the 21st century however,” – the goods economy hasn’t gone away in any sense other than it has been greatly offshored to poorer ‘undeveloped’ countries.

    etc

  5. I tried to comment,but it woukdn’t work for me. I wrote a comment like this:

    Please keep the World War1 bit. I dispute that arguement that Versailles did not matter. That “sole guilt” clause, combined with the decision for harsh compensation (even if that compensation was not paid), gave the NAZIs a springboard for their movement.

    I think that effect of media is too often ignored. Revolutionary new media enabled the NAZI regime to push forward an eventually suicidal German war economy.

    Then it was radio. Now it is “Social Media”

    Sincerely Noel (Christina Macpherson) Wauchope

  6. 1. I agree with Peter Thompson at comment 1. It would be better to start with the Great Depression and the New Deal. That limits the scope of the book to a manageable size and the ideas of Depression and (Green) New Deals are still very much with us; well in the public consciousness and still very relevant. WW1 Imperialism and (Colonialism) are important too of course but they are step too far back for many people who are not specialist historians or specialist political economists. The book is really about looking forward, not back (Consequences of, not Preludes to) and thus this would fit the theme and schema better.

    2. One of the major consequences of the pandemic has been and will be the massive, seismic, tectonic (choose your adjective) shift in global economic power. This is happening and ongoing. Relatively, or differentially, this is nothing less than the collapse of Western economic power, and thus of Western military and strategic power, on the one hand, and the now meteoric rise of China on the other. The USA was the economic and geostratgic power which “distorted the world”. From now on, the new geotstrategic, and almost uni-polar power, which will “distort the world” will be China. This will have profound consequences for the world and as such cannot be ignored as a consequence of the pandemic.

    It became a consequence of the pandemic because of the extraordinary success of China in suppressing the virus in China and the extraordinary and egregious failure of the West (apart from N.Z. and Oz) in dealing with the virus. This Western failure illustrated and fully exhibited the final, complete failure of fundamental neoliberalism and its “zombie economics”. The neoliberal economies were exposed as “slow zombies”. Moronically shambling on to the same rules and imperatives no matter what and totally incapable of adaptation or changing self-harming or other-harming behaviors.

    The cinematic horror of “slow zombies” is the shambling, automatic and relentless way in which they press on in droves so that the remaining quick and intelligent are relentlessly pursued and given no rest The quick and intelligent have nowhere to turn in the end and are finally dragged down in exhaustion beneath the pullulating mass of slow, blind, unseeing, moronic idiocy of the capitalist money system which is assailing them.

    The United States of Zombies stumbled on, infecting each other as fast as humanly possible. This was and is the end-game of neoliberalism. It is also very likely the end of the West as an agenda-setter for the world. The West has been the rule-maker for hundreds of years. We are now about to be rule-takers as China dictates or at least semi-dictates the global order. It’s going to be a profound change and we in the West are not going to like it. Our position of wealth and privilege is rapidly crumbling.

  7. Further thought – The section on the for extensive government investment needs a sub-section on where the limits to borrowing are and shifts in taxation. You might reference Saez, the amount of untaxed wealth sloshing about, and ideas for regaining control (wealth taxes, but also taxes on turnover or transactions at source).

  8. Without hurting your basis thesis, keep it relevant. You are so well known that a lot of non-economists will read your book. They may not see the fundamental validity of flaws exposed by the Treaty of Versailles. Besides John Maynard Keynes has said it all before; so that part can be left out. Mention the impacts of the Spanish Flu on the two richest nations of the 1920s. Therein lies some valuable reassurances and some stark messages. Great Britain went into both World War I and the Spanish Flu pandemic as the richest nation on earth. The parallels with the USA today; its self proclaimed Wars on Terrorism; and its failures during the current pandemic are very instructive. This is particularly so for non-economists. I guess I am saying you have to decide which audience you are addressing. Your appeal is to the wider public. They will outnumber the economists that read your book. But in the end this book will bear your name. So you have to make the hard calls.

  9. Agree with 1, starting with the wars is a distraction – I started thinking was it the WW2 settlement or the destruction and suffering from the bombing and invasion of Germany, the sending of POWs to Siberia, the division of Germany for decades…

    “A huge need for public investment in public healthcare expenditure.“
    – I thought it a commonly held view how striking it was that wealth and high expenditure on health care was not determinative of competence or success against covid. Public /private will alter that somewhat, but it is the willingness to act quickly, without half measures, to use the military and police, to put up borders and enforce and accept them (social cohesion), social distancing, isolation, WFH, wear masks, etc that has been key. OTOH hard to argue against spend on contact tracing.

    – I like the social capital reference- but not sure which items this refers to.

    Supply chain resilience needs improving – domestic mask manufacture capacity, and non medical goods and services.

    Post pandemic we will be still be pre pandemic, (next one) – worth stating the obvious.
    Reduction of connectivity on a permanent basis is a rational response to this risk.

  10. Insight Ikon..
    “The book is really about looking forward, not back (Consequences of, not Preludes to) and thus this would fit the theme and schema better.”

    I feel better about it. Thanks Ikon.

    War is never a footnote. Never say never.

  11. As I have written elsewhere—four years ago—Trump’s rise to power and the arc he has followed have many parallels with the Hitlerian rise to prominence. In both cases, long standing and on the face of it, quite reasonable grievances, were held by a substantial slab of the population. In both cases, the dudes exploited these fracture points, and they intuitively lent on the fracture points in the political power base, thus taking it over. While Hitler could point to the reparations as an insult, he also used his understanding of ethnic division, and cast Jews as the easy bogeyman. My reading of “Mein Kampf” makes me fairly certain that this was also a visceral hatred he had developed, possibly from his school history teacher, possibly from his early years in Vienna. He pushed the notion of war for gain of soil, the Lebensraum depiction of the need for “living room,” as justification for military build-up and use. Hitler probably had in his head some notional love of country, and of people, only he had a hard heart to those that failed to meet his criteria for elevation to that mythical race. If any lesson is to be taken away—in a Pandemic—I would say it is this: leaders really matter. A generally shit leader who means well, they’ll be supported by the edifice of the institutional people and functions, perhaps not to the extent of being good, but not outright, flagrantly, destructive. A person at the top who is determined to destroy institutions, that is an entirely different kettle of fish.

    If the economics of the year of the pandemic have anything to teach us, it is that major events like a pandemic have real impact upon an economy, of course, but also that the quality of leadership really matters, as to the recovery of an economy from a shock due to a pandemic. The lesson is that fairly aggressive behaviour towards closing down the means of infection advancing, that pays results. The skill is in not opening up an economy for fear of a few more days of being closed, for if the calculus is even a bit wrong, the virus goes exponential, and a bigger, more damaging, set of shut downs is the result. We seem to have heeded that lesson, at least for now.

    In Australia, we have so far dodged the worst, through a combination of luck, and of governments paying proper attention to the advice of the public health officials. I think the current mob in power are a pack of so and so, but I don’t doubt that they tried, at least at the cabinet level, to prevent a travesty from occurring. We can argue over the various cruise ships, and the failures with quarantine protocols, training of staff, etc, but the main thing is that our governments actually did something about these problems. The US is the absolute opposite of what we went through, and that isn’t to cheapen our experience. I honestly can’t imagine the fear and anger that must be bubbling up in places in the US, as people are forced to grapple with being lied to, or at least given mealy-mouthed platitudes instead of concrete help.

    As a final comment, I have seen more and more people willing to wear masks. That doesn’t mean masks are bullet-proof, but it does show that Aussies don’t seem so bothered by other people wearing a mask. We aren’t jumping up and down and labellng somebody as being a Commie for wearing a mask. In fact, we can’t damn tell the political leaning of someone, based on them wearing a mask. In the US, it sounds like it is very different. This is politics influencing public health measures, and in turn influencing the kind of damage inflicted upon the economy of the country. Leadership is at the fulcrum.

  12. One issue that doesn’t emerge from the synopsis is the uncertainty of the present moment. It’s as if the Versailles and Bretton Woods conferences were still in session. The neoliberal consensus has taken another severe shock, as pandemic policies (where successful) have been textbook Keynesian, shading into war socialism. It isn’t just Greta and friends calling for a major green shift in the pandemic recovery. We don’t of course know how much the landscape has changed, but you do get the sense that Overton windows have been blown open and a gale is blowing through the cobwebs. Look at the platform and Cabinet picks of Joe Biden, faithful friend to the American credit card industry.

  13. John Quiggin,
    Re your section: “Energy transition – decarbonizing the economy will need both direct public investment and support for private investment”

    I’d suggest a discussion on the energy transition without a discussion on ERoI is incomplete and inadequate. Higher ERoIs mean a higher living standard – see/hear Professor Hall discussing the concept of society’s hierarchy of ‘Energetic Needs’ in the embedded YouTube video. Too low ERoIs mean a collapse of our energy hungry society.
    See my comment at: https://johnquiggin.com/2020/12/01/the-path-to-decarbonization/comment-page-2/#comment-231386

    Last year, before COVID-19, Nate Hagens presented a keynote address at The Resilience Gathering 2019 titled “Can we avoid Civilization Collapse”. Below is the YouTube titled “The Resilience Gathering – Keynote Address “The Human Predicament” by Nate Hagens”, published by NewSchoolCommonweal on 1 Jul 2019.

    Nate Hagens said from time interval 0:12:58:

    “And we are biological organisms, with finite lifespans, and for that, and may other reasons, we immensely care about the present, more than the future. The future; we can use our neocortex – our intelligent brain – to think about and to imagine the future, but emotionally, behaviorally, we are still mammals that react to today. We care about today much more than tomorrow, tomorrow more than next week, and so we have this inherent time bias which is a mismatch to some of these challenges that Michael introduced. OK, energy. Energy is the big topic that is not often discussed. In fact, ah, I made an video series for my students called ‘Energy Blindness’. Our culture is energy blind. We think of our progress in terms of money and technology. We don’t realize how energy underpins everything in our modern civilization. A few hundred years ago, we puzzled out how to extract fossil carbon that had been compressed, heated and stored, and refined over hundreds of millions of years. We’re pulling that carbon out ten million times faster than it was sequestered, and it’s powering our modern society.”

    That’s just a sample – IMO, well worth seeing/hearing Nate Hagens to become more aware of our time bias and cultural energy blindness.

  14. After the pandemic –
    They will have to contend with…

    “Why we can’t have nice things 
    “In 2018, the US spent $3.7T on health care – 17.6% of national GDP. In the preceding 20 years, the industry spent $4.7B on lobbying – a giant number, but also a stellar ROI. That’s a $233M/year spend to generate a $3.7T return.

    “The recipients of this spending represent a rare example of bipartisan cooperation, with Dems and Repubs alike staggering away from the trough, showing the telltale hectic flush of chronic overconsumption.”…
    https://pluralistic.net/2020/12/10/borked/#bribery
    ****

    Lobbying Expenditures and Campaign Contributions by the Pharmaceutical and Health Product Industry in the United States, 1999-2018
    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7054854/

  15. “issues raised by the brief summaries”

    From WW1 on to post this current pandemic, on into the 21st century, and all without mention of the tremendous interlinked rates of population increase, energy consumption increase, natural renewable (ailing) and non renewable (peaking) resource consumption and depletion increases!

    The prime stuff human society runs on, Energy, Natural resources, and Population separately and together present quite different prospects going forward today when compared to the early 20th century, WW2, and golden age periods. It’s been said that history never repeats though it sometimes may rhyme. From here on without hurried and radical change to the storyline run to date history is likely to turn to a far worse rhyme than that with which this period under scrutiny began.

    https://psmag.com/magazine/fallacy-of-endless-growth

  16. Savante and Geoff Miell,

    We are wasting our breath, or rather our keystrokes. Most folks, including nearly all conventional economists and politicians, don’t get this concept. What one would think is one of the simplest concepts in the world, the limits of growth in a finite system, is Sanskrit to people trained in the anti-logic and anti-physics of conventional economics. The problem is that conventional economics is a faith and a prescriptive discipline. It is not a science, nor a descriptive discipline. Most conventional economists can no more conceive that growth is not endless than a medieval scholar can conceive that there is any problem with his thesis that as many angels as he likes can dance on the head of a pin.

  17. Ikonoclast,
    You state: “We are wasting our breath, or rather our keystrokes.”

    One doesn’t know unless one tries. Perhaps some parts of the message will sink in?
    One can lead a horse to water, but can’t force the horse to drink.

    You state: “Most folks, including nearly all conventional economists and politicians, don’t get this concept.

    It’s encouraging to see SMH economics editor Ross Gittins in his latest op-ed headlined “Productivity is almost magical, but don’t forget the side effects”, includes:

    “Second, economists, econocrats and business people have been used to talking about the economy in isolation from the natural environment in which it exists and upon which it depends, and defining “economic wellbeing” as though it’s unaffected by all the damage our economic activity does to the environment.

    As each month passes, this not-my-department categorisation of “the economy” is becoming increasingly incongruous, misleading and “what planet are you guys living on?”.”
    See: https://www.smh.com.au/business/the-economy/productivity-is-almost-magical-but-don-t-forget-the-side-effects-20201210-p56m6r.html

    At least Ross Gittins recognizes the dependency of the human economy on the natural environment, but fails to mention that energy drives everything.

    You state: “The problem is that conventional economics is a faith and a prescriptive discipline. It is not a science, nor a descriptive discipline.”

    Indeed, as Charles A. S. Hall said in the YouTube video titled “Peak Oil Postponed? – Charles A. S. Hall” from time interval 0:31:38:

    “I wouldn’t accept conventional economics from a freshman, because it breaks the Laws of Thermodynamics, the boundaries are wrong, and it’s not put forth as testable hypotheses, but as givens as no different from going to church.”

  18. Well, I wasn’t quite good enough at math for it to make sense to become an economist. Having said that, I’m not convinced that we are in a post-goods stage. I think that is just in terms of Wall Street valuations. But, those valuations seem disconnected and untrustworthy to me. (Fe, I have seen what seem to me to be very low values put on California agriculture … but just imagine if it failed.)

    And having just experienced what might have been lifethreatening shortages for the first time, I am not that happy with my economy right now. I guess we could call the pandemic a grounding experience, even if one didn’t catch it (seen from the most positive view).

    I agree though that at least in the US where I live, our leaders *act* as if we were post-goods. Little attention is paid to manufacturing, trade deficits, apprenticeships, working wages, etc etc. Both parties are guilty of it.

    Maybe this is off-topic, but to me the enormous social/cultural differences between countries seem important vis-a-vis the pandemic. I haven’t thought much about what they mean economically though.

    Also it might be good to indicate when the post-war Golden Age ended (which I understand as referring to the time when all boats were rising). Here I think it was in the 70s?

    If I could just speculate … I don’t think the virus has changed us nearly enough. And I think we’ll probably go right back to where we were, mostly. I do hope that we will focus more on climate change though.

  19. A good footnote :

    “Chris Christie Details ‘How Wrong’ He Was To Not Wear A Mask In New Ad

    “You know, lying in isolation in ICU for seven days I thought about how wrong I was to remove my mask at the White House,” says Christie. “Today, I think about how wrong it is to let mask-wearing divide us, especially as we now know you’re twice as likely to get COVID-19 if you don’t wear a mask. Because if you don’t do the right thing, we could all end up on the wrong side of history. Please wear a mask.”
    https://huffingtonpost.com.au/entry/chris-christie-wear-a-mask-advertisement_n_5fdb77f4c5b610200988737f

  20. “All-Cause Excess Mortality and COVID-19–Related Mortality Among US Adults Aged 25-44 Years, March-July 2020

    “Results
    From March 1, 2020, to July 31, 2020, a total of 76 088 all-cause deaths occurred among US adults aged 25 to 44 years, which was 11 899 more than the expected 64 189 deaths (incident rate ratio, 1.19 [95% CI, 1.14-1.23];Table).

    Nationally, excess mortality occurred in every month of the study period and overall in every HHS region (Table and eTable in theSupplement). Among adults aged 25 to 44 years, 4535 COVID-19 deaths were recorded, accounting for 38% (95% CI, 32%-48%) of the measured excess mortality.” …
    https://jamanetwork.com/journals/jama/fullarticle/2774445

  21. JQ, I assume this may be of interest.
    (I wonder about how medicos productivity is measured, expanded since March, and why they don’t get a pandemic bonus.)

    “Productivity and Costs, Third Quarter 2020, Revised

    “Transmission of material in this release is embargoed until USDL 20-2215 8:30 a.m. (ET) Tuesday, December 8, 2020
     https://www.bls.gov/news.release/prod2.nr0.htm

    Via:
    “Did Covid Lockdown “Solve” Productivity Mystery?

    “Which makes the past few months of outsized productivity gains even more fascinating fodder for discussion. Consider the details from the latest Bureau of Labor Statistics release* on Productivity:

    – Nonfarm labor productivity increased 4.6% in Q3 2020

    – Output increased 43.4%

    – Hours worked increased 37.1%

    – Nonfarm labor productivity increased 10.6% in Q2 2020

    – Unit labor costs decreased at an annual rate of 6.6% in Q3 2020 (hourly compensation fell 2.3%;

    – Trailing 4 quarters productivity increased 4.o%, reflecting a 3.4%-decline in output and a 7.1% decline in hours worked.

    “One of the accidental results of the pandemic lockdown was the creation of a natural experiment in productivity ( calculated by dividing an index of real output by an index of hours worked by all persons).”…

    “Consider”…
    https://ritholtz.com/2020/12/covid-lockdown-solves-productivity-mystery/

    Via nakedcapitalism. Thanks.

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