I want to step back from the immediacy of this global crisis around Coronavirus, to examine political, social and economic possibilities down the line.
How long will the immediate crisis last in the UK?
Expert opinion varies. Some say many months or even years, but one Nobel Prize-winner, previously proven correct, believes that we are talking about a shorter than generally expected duration: https://www.independent.co.uk/news/world/americas/coronavirus-michael-levitt-china-italy-a9422986.html
If he is correct, this might be over by early Summer.
Professor Levitt points to Wuhan itself, where, amazingly, only 3% of the population became infected; he also mentions the quarantined ship Diamond Princess. Even on that ship, the infected proportion of all those aboard was only 20% by the end of its journey. More people than expected may have natural —full or partial— immunity.
The professor distinguishes Italy on the basis of its communal social life, tradition of physical contact in everyday life and its very high proportion of elderly people.
The bottom line, as far as the UK is concerned, is that the country may be out of the purely medical emergency by July or even June.
China
As said, global crisis. China is, it seems, emerging from the immediate medical crisis in the Wuhan city and surrounding province, and much of China has not seen large-scale infection. That, however, does not mean that China can return to pre-Coronavirus normal.
China has, since the 1980s, based its economy on exports. If the rest of the world is in recession and stops buying Chinese goods, the Chinese economy falls off a cliff. Is that a serious problem for China or for the West? Both, I suppose.
Even in my own lifetime, i.e. since 1956, the world has seen China go from Soviet ally with typical Soviet-style economic policies, to the misconceived Great Leap Forward and then, in the 1960s, the Cultural Revolution which set China back for decades.
The death of Mao in 1976 was followed by more internecine conflict, personified by the Gang of Four and characterized by the migration of millions of starving peasants to the cities. Even after all of that, and after China started to rise industrially, the attempts of a relatively few students to force the Communist Party to give in to their demand for Western-style democracy led to the late 1980s crackdown.
China, though still socially-backward, has made huge strides economically and technically. If the rest of the world stops buying Chinese goods, that progress may stop. China then will have to either restart large-scale exports or re-orientate its economy to a domestic consumption model. That would be a very hard thing to do.
If China becomes unstable, almost anything could happen. Pressure from the huge Chinese populations on the thinly-populated Far East of Siberia (former Soviet Far East) would become unstoppable. Even now, there has been a gradual and permitted infiltration into Russian Siberia by Chinese farmers, businessmen etc.
On the international stage, China is now somewhere between a regional player and a superpower. Its navy has not far short of 900 large ships (the UK equivalent is about 20), for example.
Russia and USA
Putin’s Russia is famously dependent on hydrocarbon sales. If the world slips into recession, demand for oil and gas reduces. At the same time, the price of oil and gas is already at a low level. Russia’s economy will buckle. That will lead to domestic retrenchment and political instability. The likely outcome is a more aggressive stance in terms of foreign policy. In recent years,the Russian military machine has, like that of China, been significantly upgraded.
The Soviet Union was often derided by foreign diplomats as “Upper Volta with rockets” [for younger readers, Upper Volta was the “state” now known as Burkina Faso]. The point was often taken to be “the Soviet Union is like Upper Volta”, a bit of a joke in other words, whereas the point often missed was “with rockets“. The Soviet Union had the capacity to obliterate most if not all of Western Europe and, indeed, most if not all of the USA. All the military targets and urban centres of importance, for sure. That still applies.
We often think that it matters that the USA has 2x, 5x (or whatever) the nuclear-destructive power of Russia. In fact, in real terms, all that matters is that Russia can land quite a number of missiles on the USA should it see the necessity. Yes, an equal and probably greater number would hit and hit harder the lands of Russia, launched from US bases or submarines, but that fact would not help the unfortunates of New York, Philadelphia, Washington, LA, Houston, Chicago etc.
From the nuclear deterrence point of view, the only important distinction is between states capable of launching an effective targeted long-range (another important distinction) nuclear missile and those without such capability. That is why the USA is desperately trying to stop or at least delay the missile programmes of Iran and North Korea.
Military men tend to think in military terms. In that sense, a few nuclear missiles landing on various cities in North America may not be seen as strategically determinative, whereas in the real world of human society, let us say in the USA, a missile landing on New York City, one on Washington DC and one on Los Angeles collapses the society, pretty much.
We saw what happened during Hurricane Katrina. The USA was unable to deal with a situation in part of one city. Could the USA deal with the destruction of its hundred most important towns and cities? I think not.
UK
As I write, the UK is approaching its most testing time for about 80 years. The Government has mandated the closure of effectively the whole of the economy apart from supermarkets and other parts of the food sector.
At the same time, the Government has decided to support the pay of “furloughed” employees, up to 80% of what had been their pay (I presume net pay), at least for now, and up to a maximum of ยฃ2,500 a month. The scheme will last for 3 months, so until the end of June, but may be and probably will be extended. Other support (loans and tax breaks) is targeted at businesses themselves.
The self-employed are so far left out in the cold, though it seems clear that the Government will offer something to them. Whether that help reaches even to the ยฃ2,500 per month cap applicable to employees on PAYE is unclear. Probably not.
In any event, it seems that no-one, whether PAYE or self-employed, will get anything at all until sometime in April.
A selection of tweets about these questions:
https://twitter.com/TheMendozaWoman/status/1242479888935895040?s=20
https://twitter.com/chimeralockyer/status/1242518904389369856?s=20
First thoughts
- “Austerity” is dead. The emergency package rolled out by Rishi Sunak proves beyond all doubt that what the critics of the “austerity” nonsense said was correct: that “austerity” was a purely political choice by the Conservative Party, and particularly by the part-Jews David Cameron-Levita and George Osborne. The whole scam has been exploded by the opening of financial floodgates by Rishi Sunak.ย The Universal Credit minimum is going to be ยฃ20 a week more, thus increasing cash income of many by about 30% at a stroke.
- The huge economic stimulus now made available should have been tried back in 2010 or 2012. Countries that stimulated their economies rode out the downturn far better than Britain did under the idiotic Cameron-Osborne “austerity” policies.
- Has Sunak’s giveaway been motivated mainly by a fear that simply to let the economy collapse would be to invite public disorder? Is that why Sunak arbitrarily (?) put the Universal Credit minimum weekly stipend up to ยฃ95? A kind of Danegeld?
- This would be a good moment to inaugurate a Basic Income. I have often blogged about Basic Income in the past: https://ianrmillard.wordpress.com/?s=basic+income
The frozen economy
What has happened is that the real economy has now been put into deep freeze for a period the duration of which is unknown but may last for several months. Economic activity is all but zero outside the food sector (and to some extent within it, eg the restaurant and takeaway industries). At the same time, the revenues of both central and local government have been hit by the dropoff in tax revenues: income tax, VAT, business rates etc.
The unspoken reality is that government revenue reservoirs are now not being replenished by the taxes and imposts paid during normal times by those persons and enterprises active in the economy. The governmental apparat and everything done by government is now running purely from “borrowing”, though at historically-very-low interest rates. Bar that, the State is running on empty.
The shutdown of almost everything will wipe out a huge number of businesses in the UK. In fact, that was already happening even before the Coronavirus situation, which then made the situation far worse: Laura Ashley, Primark, Toys R Us, HMV, House of Fraser, Mothercare, Wrightbus, Thomas Cook, Debenhams, to name only the best known. Most of those I have known since childhood. Many others have also become insolvent, such as Jamie’s Italian (restaurants) and Patisserie Valerie. Incidentally, it might be thought that a company such as Patisserie Valerie employed relatively few people. It depends what you mean by “relatively few”, though (900 in the case of Patisserie Valerie).
We see now that the entire “High Street” economy is closed. Much of it will not reopen. The same may be true of much of the rest of the economy.
I think that we can see now why the “emergency measures” in the Coronavirus Bill or Act are drafted to last for (so far) 2 years, not for a few months. We also see why that Bill contains “national security” clauses. The System is afraid.
I wonder how many small or even larger businesses will “furlough” their employees? Many will simply lay them off permanently or sack them. Not every big businessman is as disgusting as Tim Martin of Wetherspoon’s pubs, but many, and especially the smaller businesses, will simply become, in short order, unviable and so insolvent.
In my view, the correct answer would have been to offer former employees, the “self-employed” and others a Basic Income, but not to guarantee 80% of the income of furloughed employees and certainly not to throw money at businesses. Better to give what money there is to give at
- individuals, via Basic Income;
- real infrastructure projects on a vast scale (once the medical emergency has passed).
New businesses would then start, fuelled by the money the population would have via Basic Income.
Politically?
Discontent will grow if this situation is not resolved within weeks or, at most, a couple of months. We already see both ex-employees and insolvent “self-employed” (many of whom are not in business but simply doing what would once have been an employed job but now on a “self-employed” basis) crying because they are being asked to live on ยฃ95 (cash income) per week. Many of these were Conservative Party voters in 2019, 2017, even 2015 and 2010. They thought that the unemployed and disabled did not “deserve” even ยฃ95 per week (or even ยฃ75…). Well, “what goes around comes around”.
Basic Income is the right thing for the UK, and I note that that horrible bastard Iain Dunce Duncan Smith opposes it on the basis (the incorrect basis) that it acts as “a disincentive to work”. So says a part-Jap freeloader who has never done a day’s work in his miserable life!
One can see that confidence in the Conservatives is low, but confidence in Labour is even lower! This must open the ground for social nationalism soon.
There must emerge a proper social-national movement. The time is, even now, not yet right, but it may well be by the end of this year.
Notes
https://www.independent.co.uk/news/business/analysis-and-features/coronavirus-government-loans-grants-wages-support-how-to-apply-a9420386.html
https://www.theguardian.com/commentisfree/2020/mar/24/pandemic-britains-self-employed-ignored
https://www.bbc.co.uk/news/business-51969192
https://www.theoccidentalobserver.net/2020/03/21/how-covid-19-will-test-the-west/
Ian Robert Millard 