[Note: It is with great bemusement that I read various articles discussing what various world governments are doing, or are not doing to "stop the coronavirus"...Really? Have we really reached an era in which we see the government as that powerful? Able to stop the spread of a virus or bacteria by.......By what exactly? News Bulletin: Human governments are not all knowing or all powerful, but somehow we have reached a stage in which we have been led to believe that the government can "protect" us from anything...Perhaps this is a good wake up call for many people. The government cannot stop earthquakes...hurricanes...meteorites...landslides...volcanos...tsunamis....global cooling...global warming..."climate change"... and it certainly cannot do anything to stop the spread of a virus, especially one with a 2-4 week incubation period. Nothing...nada...In fact, the government cannot even lessen the spread to any degree...We need to get over this concept completely and immediately. The government, despite its illusions of control, has no control over nature. None. There is absolutely no way to stop the spread of a virus like this. The government isn't God, nor is it substitute, but unfortunately much of the world's population has been led to believe otherwise.]
Mohamed El-Erian, op-ed via Bloomberg,
Look for this week to be full of news about governments and central banks signaling their “whatever it takes” willingness to take additional policy measures to fight the contractionary impact of the coronavirus on virtually every economy around the world. Already, the Federal Reserve signaled on Friday readiness to loosen monetary conditions in the United States while Italy announced on Sunday a “shock therapy” of fiscal measures.
As more announcements materialize during the week, it will be crystal clear that the question will not be about the willingness to act but about the effectiveness of those actions.
For the most part, the answer will be only partly satisfactory in the short term until two underlying health conditions change. Less obvious will be the need to weigh immediate benefits — partial and as necessary as they are — against the possibility of longer-term unintended consequences associated with the inevitable use of ill-suited policy tools for the task at hand. Those include more borrowing of growth from the future and even greater reliance on activities bolstered by central bank liquidity injections.
An increasing number of sectors and countries are experiencing sudden-stop dynamics as the economic effects of the coronavirus spread more widely around the world. Both demand and supply are being hit hard and in multiple ways. For example, News Corp., the owner of the Wall Street Journal, banned nonessential travel for its employees this weekend; more conferences are being cancelled around the world; airlines are reducing flights; and companies are asking employees to work from home.
It’s a dynamic that builds on itself in the short term, fueled by a “fear virus” and other behavioral traits that engender paralysis and insecurity. It also promotes self-reinforcing vicious economic cycles with adverse social, political and institutional spillover effects, amplified by the considerable risk of pockets of financial market malfunctioning.
The impact of all this will be a repeat internationally of what I called on Friday the “shock number” out of China: The manufacturing purchasing managers’ index for February not only came in well below expectations — 35.7 compared with the consensus estimate of 45.0 — but was also the worst reading on record. Several countries now face a high likelihood of recession, including Germany, Italy, Japan and Singapore, to name just a few, and some of the more financially stressed ones will experience a rise in credit risk and increasing threats of outright credit rationing.
With that, a growing number of companies will again be forced to revise downward their earnings guidance for the year or withdraw it altogether because of the exceptional uncertainties. Some, with limited cash cushions and maturing debt like their sovereign counterparts, will also have to worry about their refunding prospects, with mounting risk of higher defaults for the most exposed sectors.
In light of all this, it should come as no surprise that a growing number of countries will be announcing emergency stimulus measures. Indeed, those already signaled contain important information:
But the considerable willingness of governments and central banks to act should not be confused with effectiveness.
Does the Coronavirus Make the Case for World Government?
Jeff Deist
Sometimes terrible things happen without any human malfeasance, and the novel Wuhan coronavirus may in fact be one of those things. It is entirely plausible the virus emerged from "wet markets" in the Hubei Province of China rather than as a fumbled (or worse, intentionally released) bioweapon cooked up by the Xi Jinping government.
We may never know, of course. But easy or readily apparent answers to the question of how this could have been avoided should be viewed with the skepticism appropriate to any state propaganda. Crises of all kinds, whether economic, political, military, or health, send ideologues scrambling to explain how such events fit neatly into their worldview. In fact, political partisans often attempt to paint any crisis as having occurred in the first place precisely because their policies and preferences have not been adopted.
The Wuhan coronavirus seems tailor-made for this. Alarmists who argue for (i) much more robust and comprehensive "public health" measures by national governments and (ii) greater supranational coordination inevitably point to infectious diseases as justification for increased state power over personal medical decisions. Scary and fast-spreading viruses are perfect fodder for their busybody argument that people cannot simply be left to their own devices.
Cross-border outbreaks of illnesses are particularly well suited to the preexisting bureaucratic desire for power over populations: they make the public much more willing to accept forced quarantines and arrests for noncompliance; forced immunizations; involuntary commitments to state facilities; curfews; restrictions on business operations and travel; and import controls. They also allow public health officials to commandeer and manage efforts to find "the cure," who then take credit when the virus eventually relents. These are the sorts of things that authoritarian politicians want all the time. Crises simply provide an opportunity to ratchet up their power and also to accustom the public to being ordered around and taking cues from centralized government sources.
Three observations present themselves.
First, even the highly authoritarian Chinese national state has been unable to contain the virus, though it can cordon off whole cities by dictatorial fiat and impose wholesale house arrest over cities in a manner unthinkable in Western countries. Chinese state police literally drag people suspected of carrying the virus out of their cars, forcibly put them handcuffed in hazmat vehicles, and haul them off to what amount to prison hospitals. Chinese citizens who speak out publicly against the Xi government's handling of the crisis are arrested. So, if the Chinese government can't contain it, even with martial law and control over media, how in the world do Western countries expect to do so? Imagine trying to quarantine, say, Dallas and Fort Worth!
Second, poor countries (and China is quite poor per capita compared to the West, ranking around sixty-fifth internationally) almost invariably suffer from worse public health conditions. Sanitation, nutrition, and access to drugs, facilities, and competent doctors matter a great deal when it comes to incubating infectious diseases. Richer countries are healthier countries, and the West benefits when conditions improve and modernize in the Third World.
Third, we already have de facto supranational bodies such as World Health Organization tasked with preventing and lessening the spread of diseases like the coronavirus. The WHO has been around since 1948 and hasn't prevented a host of modern epidemics like SARS and Zika; excatly what new international agency or organization will do better?
If anything, pandemics call for decentralization of treatment. After all, the best approach is to isolate infected people rather than bringing them into large hospital populations in crowded city centers. What doctor or nurse wants to work in a hospital full of coronavirus cases?
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