Will the Coronavirus change the world for the better?
The pessimists are as usual out in force, declaring that the Chinese virus will destroy civilization as we know it. It is refreshing therefore to hear a different view from English libertarian Sean Gabb. He even sees the crisis as a blow against the Left and a boost for conservatives.
He has a thoroughly Trumpian respect for some trade restrictions. My background in economics still makes me idealize unrestricterd free trade but economists have always conceded that there can be rational restrictions to that and China's takeover of world manufacturing does generate some concerns.
I am afraid however that I do not see as likely the revival of England's industrial North that Sean hopes for. The product of the North was never first quality and we are fortunate to be rid of it. British manufacturing is still strong in parts but it was prosperous as a whole only while the rest of the world took time to catch up with and surpass the advantage the British had of being the first in the field.
Chinese quality is also mostly low so far but they rule the roost because of their very competitive prices. The prospect of the British worker accepting Chinese wages is however non-existent. There probably are some areas however where the Chinese advantage is not great and a tariff would bring that production back home.
Britain has long had a significant pharmaceutical industry so that would seem an early prospect for promotion and encouragement. On grounds of quality assurance a tariff to support local manufacture would seem advantageous for pharmaceutical manufacturers
Lastly, I want to endorse Sean's skepticism about the hysteria that the Chinese virus has produced from governments.
With 217 deaths in the USA at last update, the Wuhan virus is a very minor cause of death. It would not even be a blip in the record of the number of people who die from various illnesses every year.
The panic over it is therefore hugely disproportionate and destructive. The panic is clearly causing more harm than the disease. The virus is primarily a lung disease so ensuring widespread availability of oxygen was all that needed to be done
I have no particular knowledge of medicine or the natural sciences. However, I remember the Aids panic of the 1980s, when we were told there would be two million deaths by 1990 in this country alone. I remember the Mad Cow Disease of 1996, when we were told that a million people would turn into zombies by 2016. There have been a dozen lesser panics the details of which I presently forget. The Coronavirus may be a modern equivalent of the Spanish Flu of 1918-19. But I have reason to be sceptical. Indeed, if ignorant of medicine in any practical sense, I do know a lot about the bubonic plague pandemics of 542-4 and of 1347-51. These exploded among populations severely weakened by hunger, following downturns in global temperature. The Spanish Flu took hold because of the dislocations produced by the Great War. The human race now has never been so well-fed and so well-provided with medicine. It seems that most victims of the Coronavirus were very old or already in poor health. I do not, of course, welcome any death. But I shall need to see much higher rates of infection and many more deaths – and much and many more outside those groups presently most at risk – before I regard this as other than some collective madness.
This being said, there may be more to be said. Far above the ravening sheep in the supermarkets stands a new political establishment that cannot really be as stupid as its apocalyptic warnings make it appear on first inspection. I begin to smell a conspiracy – and a most unusual conspiracy, so far as its main victims may be the kind of people who do nicely out of the new order of things that has emerged since about 1990, and particularly since 2008.
I have read the Guidance Notes of the British Government’s Coronavirus Bill. Except the proposals go absurdly beyond the needs of the outbreak as it seems to be, it is a broadly proportionate response to the outbreak as it is said to be. I do not see the powers to close public gatherings and lock away the plainly infected as a blueprint for any more of a police state than we already have. The final Act may smuggle in provisions to outlaw cash or to censor the Internet. But I doubt it will. The other responses – shutting down all the schools, subsidising wages, deferring tax payments – are costing or losing the British State a lot of money, and none of this, so far as I can tell, is going to the usual special interest groups. Though grossly disproportionate to any reasonable view of how severe this outbreak is, the Johnson Government’s response is the opposite of the Brown Government’s response to the 2008 financial crash, which involved handing over a mountain of our tax money and the future growth of our savings and pensions to the very rich.
So what is happening? One possibility is that the outbreak is a convenient excuse for at least the British and American Governments to do in a state of emergency what they want to do, but would have trouble doing in the normal course of politics. What they may want – and this is congruent with the promises made by Mr Johnson and Mr Trump – is a deflation of the financial sector and a shortening of supply chains and a tightening of borders, all in the interests of greater security and equality for ordinary people. They have confected a panic, or gone along with an autonomous panic. This has brought on a wholly self-inflicted supply shock. The British Government in particular is taking large new financial liabilities. But this is a supply shock from which recovery should be fast and complete. The financial liabilities put money directly into the pockets of those most immediately harmed by the shock – and the ceiling of £2,500 per month on the wage subsidy will involve a progressively greater loss for those earning more than the average.
The usual suspects are asking for a delay to our full departure from the European Union. This is probably not on the agenda, as it goes against the underlying principle of the emergency measures. This includes a real tightening of border control and an encouragement of domestic manufacture. Again, ordinary people will benefit from the raising of wage rates. As a libertarian, I am not supposed to approve of anything that looks like protectionism. On the other hand, using China as a giant sweatshop is almost certainly not the outcome of any clean market process. More likely, the current pattern of world production and trade has nothing to do with Ricardian comparative advantage, but is the outcome of various hidden subsidies and prohibitions that mainly benefit the rich and well-connected. Removing these and allowing the emergence of shorter supply chains might improve the lives of ordinary people.
And improving the lives of ordinary people might be good for the cause of liberty. After 1979, the Government kicked the bottom out of the world for the working classes. Millions were thrown out of work. Millions more eventually found employment in menial and insecure jobs. One result was to end the threat of trade union militancy. Another was to remove people from some connection with scientific rationality – even the lowest industrial labour is a kind of applied science – and to leave them open to every stupid superstition and moral panic the media cared to promote. Restore something like the broad industrial economy of the past, and we might see a rebirth of liberal opinion in the old sense of the words.
As for the gathering financial collapse, the wage subsidy will protect ordinary people from the worst effects. Its most notable effect may be the liquidation of the debt and credit bubble that was blown up after 2008 and that has now become unsustainable. I doubt we shall reach the point where those glass towers that disfigure Central London are remade into flats and workshops. If that were to happen, though, it would be no cause for regret – except to those enriched by the present order of things.
And so, I do not fear the Coronavirus – not yet, at least. I moderately fear the shortages in the supermarkets. I am keenly interested in the possible emergence of an England in which the Northern working classes will be proud to be seen voting Conservative.