Thursday 11 June 2020

Post Covid Prices and Revenues - The Moral Panic Effect

The Moral Panic Effect 


So, following that short theoretical introduction, let's look at why it means the pundits are wrong. First, its necessary to look at what is happening, and how it affects market prices in the short term. The social lockdown, imposed by some governments, has meant that the demand for the output of certain industries was artificially destroyed by government diktat. As Wodarg argued some weeks ago, there is every reason for those so affected to claim compensation from governments for inflicting this economic damage on them, in the same way that banks have had to pay our reparations for PPI. 

The removal of the right to free movement, along with the lock down of social interaction, combined with massive misinformation about the nature of the virus, destroyed demand for many businesses. For example, we know from the actual scientific data that COVID19 is a disease that only seriously affects about 20% of the population, i.e. those over 60, or who have underlying medical conditions, such as asthma or diabetes, which weakens the immune response. The other 80% of the population suffer either no symptoms or only mild cold like symptoms. That is not surprising, because COVID19 is a coronavirus, which is one of the viruses that causes the common cold, which millions of people contract every year. The latest data on deaths provided by ONS confirms that this is the case

There was no reason why this 80% of the people could not have continued life as normal, going to work, to the pub, the gym, the hairdresser or on holiday and so on. But, a global moral panic was created, first on social media, and quickly followed by the mass media, which saw the potential for sensationalist headlines, and stories to boost its ratings. As a result, governments, particularly populist governments, found themselves bounced into taking big, bold, visible extreme measures so as to be seen to be doing everything possible to defeat an insidious external enemy, and, indeed, the whole moral panic was framed in wartime analogies. Opportunist opposition parties saw easy pickings by claiming that, however illiberal and draconian the measures being undertaken, they were never enough. 

So, all social interaction was outlawed. That had an inevitable impact on a range of businesses. Pubs, gyms, sport clubs, hairdressers non-food stores and so on were ordered to close. Rules on physical distancing made it impossible for others to operate, such as plumbers, electricians and so on doing jobs in people's houses. Car showrooms were closed, meaning that orders for new cars ceased, leading to car production being closed down. Hotels were closed, airlines stopped flying etc. All of the labour employed by these businesses thereby stopped, and all of the new value that would have been created by that labour also did not get created. That is what accounts for the 30% or so drops in GDP that many developed economies have witnessed. 

But, the fact that GDP fell by only 30% rather than 100% was an indication that clearly not all labour, or even the majority of labour had ceased, despite talk of a lockdown. GDP is a measure of the new labour undertaken, and of the value it creates. That new value is divided into revenueswages, profits, rents, interest and taxes. In other words the components of National Income, which is also equal to final consumption. It does not equal total output, because that includes the value of the constant capital consumed in production, which is replaced directly out of that production, i.e. it is consumed by capital. The fact that GDP fell by only 30%, meaning that 70% of labour continued, shows that talk of a lockdown was largely a farce. There was a lockdown of free movement and social activity, but not of production. And, that was necessarily the case, because capitalism is a system based upon a total social division of labour. It is impossible to continue production in even one major sphere without production continuing in many more. 

Although the government reduced hospital usage, by cancelling operations and treatment for a range of conditions, including cancer, so as to avoid further contagion, and to provide resources for COVID19 patients, it clearly could not close hospitals themselves. But, if hospitals continue to function they need electricity, which means power stations have to continue to function and power workers to work. The hospitals require water, meaning water workers must work. All of these industries supplying the hospitals, themselves require inputs, meaning the producers of those inputs must also continue to work, but those industries also require inputs so the suppliers of those inputs must continue to work too. Bin men continued to work, meaning council administrative staff had to work, and so on. 

So, although social activity was made illegal, to prevent people being in contact in pubs, clubs, gyms etc., it was perfectly okay for millions of them to be together at work, and to stand cheek by jowl on public transport in order to get to work. That showed that the lockdown itself was a farce and largely for show, and although millions of workers continued to be in contact with each other at work, and on public transport, they did not succumb to the virus precisely because, the large majority of these workers were not in the 20% of the population actually at serious risk from it. They are largely under 60, and not suffering from underlying illnesses. It was not these millions of workers that became seriously ill or died, though we will undoubtedly find out later that many of them contracted the virus without knowing it. On the contrary, those that died were from amongst the 20% of the population actually at risk, primarily from amongst the over 80's (54% of deaths are people over 80, 47% over 85), but also the over 60's (39% of deaths are people over 60, but less than 80), and those suffering underlying medical conditions (7% of deaths are people under 60, but who have underlying medical conditions). Many of those were themselves people who were “locked down”; they were from the large concentrated populations of people in care homes, or in hospitals!

10 comments:

George Carty said...

Why does Britain have the worst Covid-19 death toll in Europe, and the third-worst in the world (now that Bolsonaro's Brazil is in second place)?

Returning infected patients to care homes from hospitals (probably due to fear of the NHS being overwhelmed, driven by the Imperial College model and the harrowing scenes from Lombardy hospitals) was clearly a disastrous mistake, but it is one hardly unique to Britain.

One thing that is notable about the UK is that the whole country has been badly affected, whereas other countries have been hit (often even harder) in just a few specific areas. For example, the USA was hit badly in New York City and Washington State, while Italy was hit horrifically in Lombardy, but only mildly in the central and southern regions.

In France most of the deaths were concentrated in the greater Paris region as well as the east of the country. The latter cluster was caused by a 2000-strong Christian Open Door gathering in Mulhouse in February: doubtless they were singing hymns there, and singing is an especially effective way of spreading the virus (as was also shown by the outbreak associated with the Skagit Valley Chorale near Seattle).

Don't these tragedies mean that large gatherings will have to remain banned for a long time to come (IIRC even Sweden has banned gatherings of more than 50 people)?

I can think of three possible reasons why the disease spread so widely in the UK: which do you think is most likely?

1) That all areas of the country were seeded by holidaymakers returning from abroad: over 1300 incoming travellers introduced the virus, mostly from Italy (in February), or Spain or France (in March). This would imply that the failure was in neglecting to quarantine incoming air travellers in February and March.

2) That other countries more successfully prevented the disease spreading via internal travel due to harsher and/or earlier lockdowns, and that the UK's problem was that it failed to do this (and thus confine the initial outbreak where it started: most likely London due to its status as a global city).

3) That the disease was spread around the country by agency health and care workers who worked at multiple locations: yhis would implicate the austerity policies of earlier Tory governments. Mapping of deaths of people infected with Covid-19 in the community (ie not nosocomial infections contracted in a hospital or care home) – and then seeing if the geographic distribution is substantially different – would help confirm or eliminate this possibility.

Thoughts?

Boffy said...

Looking at this data, I'm not sure it is evenly spread. I'd have to look at that data in more drilled down form, which I don't have time to do, but looking at the high levels in South Wales, in Kent, Tyneside and so on, it strikes me that these places could be places where a) there is a more elderly population, including those retired to the coast, b) there are old industrial towns with both an elderly and a more deprived population, and so one that suffers greater ill-health, and has more susceptibility.

A also think you have to take all numbers with a bit of a pinch of salt. For example, flu death numbers seem to be down this year, but that is likely because ion previous years, people who died with "flu-like symptoms" actually died with coronavirus, but no one tested for it. The Glasgow study showed that every year about 8-14% of flu-like symptoms are actually caused by coronavirus. Also, because many of those who have died have had other illnesses, particularly amongst the elderly, there has been a tendency to put coronavirus down on the death certificate, where someome had been tested and found to have it, but the actual cause of death could have been some other illness, i.e. they would have died anyway, and those numbers would have been included in the normal death stats. This is the difference between dying "with coronavirus" and dying "from" coronavirus. Every country is calculating the statistics differently so it makes useful comparison difficult.

More interesting I think is that China, South Korea and elsewhere are getting a second wave. Why is anyone surprised at this. Its what I said from the beginning. Lockdowns could never be a sustainable solution, because they do not eradicate the virus, so that as with a forest fire, any remaining embers simply start a new conflagration. You can only stop that if you have a vaccine or herd immunity, as I said at the start.

As socialists in New Zealand have pointed out the lockdown strategy was not based on solid science, but was a quick opportunist response. As Giesecke says in the interview, the only rational strategy was to isolate the 20%, and allow herd immunity to develop amongst the 80% who were at no real risk from the virus. Then the virus would have been destroyed, and the 20% would not longer need to isolate. Now we have the actual 20% at risk having been inadequately protected so that many of them have died unnecessarily, and because its gone on for sol long many of them can in any case no longer effectively maintain that isolation. That will be breaking down precisely at the point that a second wave begins, so that another large number of these elderly and vulnerable people will succumb to it.

George Carty said...

Opportunist opposition parties saw easy pickings by claiming that, however illiberal and draconian the measures being undertaken, they were never enough.

Do you see parallels with the process by which handguns were banned in Britain, with "I can ban more than you" competition between political parties, and dissenters being accused of spitting on the memory of the poor children of Dunblane?

For example, flu death numbers seem to be down this year, but that is likely because ion previous years, people who died with "flu-like symptoms" actually died with coronavirus, but no one tested for it. The Glasgow study showed that every year about 8-14% of flu-like symptoms are actually caused by coronavirus.

I can't buy that – if those deaths blamed flu were actually caused by a coronavirus, that would imply that either:

1) Covid-19 has been in circulation for a year or more longer than believed by the mainstream scientific community, or
2) SARS or MERS has struck in Britain on a large scale, and been either overlooked or intentionally covered up, or
3) One of the four "common cold" coronaviruses is far more virulent than previously believed, and this has been covered up, or
4) The deaths were the result of an entirely new coronavirus (not any of the seven coronaviruses admitted to that infect humans) that has been covered up.

Lockdowns could never be a sustainable solution, because they do not eradicate the virus, so that as with a forest fire, any remaining embers simply start a new conflagration. You can only stop that if you have a vaccine or herd immunity, as I said at the start.

Hasn't New Zealand's lockdown pretty much eliminated the virus there? The real problem with the lockdown (or test-and-trace) approaches is that they require severe restrictions on international travel of unlimited duration (or in practice until a vaccine was made widely available, as this would effectively mean a transition to the herd-immunity approach).

Perhaps New Zealand (or Australia, which has also done well in getting its infections count down, in spite of an unlovable right-wing PM) can cope with this far better than North Atlantic economies can?

Incidentally, what are your thoughts on the way the epidemiological term of "herd immunity" was seized upon in the course of the moral panic to imply that governments was pursuing an intentional policy of "thinning the herd", one of culling a elderly population that was proving too burdensome in terms of pension, health care and residential care costs?

Perhaps (in this interpretation at least) the Tories were also thinking in terms of dealing with their longer-term demographic crisis by hoping that Generation X (the children of the Silent Generation to whom most of the Covid-19 dead belong) would be so grateful for their inheritances (that would otherwise be devoured by care home bills) that they'll forgive the needless death of their parents?

It is notable that Generation X shifted significantly from Labour to the Tories between 2017 and 2019 in spite of being not as Brexity as the Boomers: perhaps they were deterred from voting Tory in 2017 by the "dementia tax" which they saw as a threat to their inheritances, or perhaps (especially in the red wall) they saw Labour's 2019 manifesto as too environmentalist and voted Tory in defence of their car-based lifestyles (this issue was also of course what led to the Gilets Jaunes in France)?

Boffy said...

On your first point. Yes. A lot of the Left fell in behind the liberal demands for disarming workers, rather than demanding a workers militia in place of the police and standing army.

Second point. I perhaps didn't express myself clearly. Not all previous "flu-like deaths" were from coronavirus. But, we know that 8-14% of "flu-like" symptoms each year are due to coronavirus.

The coronavirus has been known in humans since the 1960's. It circulates every year. SARS, MERS Covid19 are simply strains of coronavirus. Its not a matter of it being covered up, simply that in previous years no one tested those dying from "flu-like" symptoms to see exactly what virus it was they were suffering from. Its only because of the moral panic caused by the Imperial Study that has turned this particular strain of coronavirus into something to be feared more than every other coronavirus that has circulated for the last 60 years, and on that basis, because the virus was found amongst casualties, it was then actively looked for. See Wodarg's video, and accounts where he describes this in relation to the study in Glasgow.

On NZ, see today's news headlines about the embers of the virus there and how a new outbreak is erupting. Also in Beijing. It was a totally irrational strategy that was neither effective nor sustainable. The only rational strategy as I and Giesecke have said is to enable the 20% to effectively isolate, so that herd immunity quickly develops naturally amongst the 80%.

I've said long ago that the way the optics of the term "herd immunity" was used was typical of the cheap opportunist politics of liberals and sections of the Left. Herd Immunity, scientifically simply means vaccination. So, those objecting to "herd immunity" are really in the same camp as those nutters in the anti-vaccination camp. Its typical of the cheap politics based on short term opportunism of those sections of the Left, and of liberals.

I don't think the Tories look that far ahead, and I also don't think the shift of gen X between 2017 and 2019 is as you suggest. I think it was that Corbyn's pro-Brexit position simply turned them away back to the Liberals, Greens, Plaid, SNP (which of course, in total, with Labour was a majority for Remain) rather than that they went to the Tories. Some just abstained. I think Corbyn lost them on a range of issues because between 2017 and 2019 he lost one of the planks of his popularity. He was seen as duplicitous and double dealing, of continually retreating and abandoning principles, and the election campaign became a silly attempt to buy votes without any of the policies actually having been sold to voters over a long period.

George Carty said...

On your first point. Yes. A lot of the Left fell in behind the liberal demands for disarming workers, rather than demanding a workers' militia in place of the police and standing army.

The core issue with guns is that hesitation is fatal in a gunfight, because guns grant the ability to kill instantly and at a distance. An ordinary person is helpless against a murderous sociopath with a gun: it doesn't matter if you have a gun yourself if you're dead before you even realize the danger you're in!

This fact of psychology is why societies need state-run military and police forces: whenever states (and their forces) collapse, brutal amoral thugs always end up ruling the roost. Soldiers and police officers undergo very time-consuming, mind-numbing and expensive training not just to learn the mechanical aspects of using their weapons, but also to overcome their inherent reluctance to kill so that they can be a match for the sociopaths in combat. Without similar training any citizen militia would be useless (George Washington certainly thought so: unlike trained soldiers they almost always fled or surrendered when the redcoats attacked), and I can't see how a militia of ordinary workers (who by definition have to earn their living in another sector of the economy, which severely limits both the time and money they have to devote to the militia) could ever be as effective as state forces financed by taxation.

When an amoral sociopath with a gun is intent on creating carnage, he can't really be stopped even by trained soldiers or police as they can't be physically present at all locations which could be attacked. This is why Radical Reconstruction failed after the American Civil War: while the Southern white supremacists were no match for Federal troops, that didn't stop them from terrorizing the black population everywhere where the Federal troops weren't physically present. Even the certainty of being killed after-the-fact wouldn't affect an attacker (like Dunblane's Thomas Hamilton) who no longer cares about his own survival: the only way to stop them is to prevent him getting access to guns in the first place. And that brings us to an increasingly obvious parallel with Covid-19 policy: just as preventing carnage from Covid-19 means ensuring that a specific minority of the population (the 20% of old and sick of which you have often alluded to) is kept away from the virus, preventing carnage from guns means ensuring that another specific minority of the population (violent sociopaths) is kept away from guns.

I've said long ago that the way the optics of the term "herd immunity" was used was typical of the cheap opportunist politics of liberals and sections of the Left. Herd Immunity, scientifically simply means vaccination. So, those objecting to "herd immunity" are really in the same camp as those nutters in the anti-vaccination camp.

This isn't true at all. While you are correct that objective of vaccination is of course to create herd immunity, a policy of allowing the infection to spread within a population with the intention of building herd immunity is far more risky: the true analogy is with the old practice of variolation that was used to build smallpox immunity before the discovery of vaccination. Vaccination actually means building immunity against a dangerous disease by using a milder related disease (such as the cowpox later used to build immunity to smallpox, which is where the word "vaccination" came from) or by using an artificially weakened version of the disease that is unable to cause harm in its own right.

Arguably the anti-vaccination movent really are the eugenicists which opponents of lockdowns are currently commonly accused of being!

Boffy said...

George,

If you implemented a policy whereby guns should only be owned by members of a "well-regulated" militia you would reduce the number of illegal guns to begin with. Secondly, the whole point is its a well-regulated and trained militia. Even as a citizen militia that seems to work fine in Switzerland, and has the added bonus that because its designed for defence not offence, with Switzerland not sending any troops to attack other people's country, not only is it less costly, but it means Switzerland has suffered no terrorist attacks from external sources. Its main terror attacks come from domestic right-wing extremists. Similarly, community policing should involve regular training of those undertaking it. That is also the best means of stopping the psychopath example you give, because communities can mobilise much larger forces, specifically for such community protection than can any police force whose role is to protect capitalist property.

On vaccination, its not risky if you are protecting those at serious risk from the disease from being infected. If Covid19 represented a serious threat to anyone it infects, as with say Ebola or Smallpox then I'd agree, that is why I was in favour of closing borders and so on a few years ago when Ebola was spreading rapidly. But Covid19, like all coronaviruses does not pose a serious threat to everyone, only to 20%, and not even all of them would become seriously ill with it. Allowing the 80% to contract Covid, and thereby obtain immunity is like when I was a kid, before there were mumps vaccines, parents used to let their kids visit friends with mumps, chicken-pox etc, so as to get the disease, and thereby get immunity to it as kids, because it was much more serious if you got it as an adult.

Anyone like me who argues that the 20% actually at risk from Covid should be protected clearly is not a eugenicist or social-darwinist. Those that throw around those accusations simply show their true colours and lack of any actual arguments. Again its opportunism rather than scientific argument or principled politics. Because lockdowns can never protect the 20% in the long-term because lock-downs can be neither comprehensive nor sustainable, it is those that support that course of action that put the lives of the 20% at risk, and who, thereby, are the real eugenicists.

George Carty said...

If you implemented a policy whereby guns should only be owned by members of a "well-regulated" militia you would reduce the number of illegal guns to begin with.

In other words you agree that strict control of individual gun ownership (as opposed to collective gun ownership by militias) is needed to keep guns out of the hands of criminals.

Since most guns used in crimes are either stolen, or bought from intermediate stooge buyers who then themselves claim that their guns were stolen, this suggests that the type of gun control that would probably be least destructive of personal liberty would be to make owners criminally liable for any crimes committed with their guns (unless they can present the broken-into gun safe to authorities).

Secondly, the whole point is it's a well-regulated and trained militia. Even as a citizen militia that seems to work fine in Switzerland, and has the added bonus that because its designed for defence not offence, with Switzerland not sending any troops to attack other people's country, not only is it less costly, but it means Switzerland has suffered no terrorist attacks from external sources. Its main terror attacks come from domestic right-wing extremists.

Actually no – two Swissair aircraft were destroyed in 1970 by Palestinian terrorists. Swissair Flight 330 was blown up over Switzerland killing all 47 on board, while Swissair Flight 100 was hijacked and eventually blown up at Dawson's Field in Jordan.

Similarly, community policing should involve regular training of those undertaking it. That is also the best means of stopping the psychopath example you give, because communities can mobilise much larger forces, specifically for such community protection than can any police force whose role is to protect capitalist property.

Given the psychopath has the advantage of knowing when and where he plans to attack, such forces could only really work if they were truly enormous (at least one in twenty of the population would be my estimate). How much time and money would it cost to train such large forces?

Boffy said...

George,

With a militia, the guns would be kept collectively in safe storage, not individually. On Swiss Air, I don't have time to check the details, but I think its about the passengers on the flight rather than it being about Switzerland. There have been no terror attacks on Swiss soil itself by foreign terrorists.

I would envisage much larger numbers than 1 in 20. It would involve community policing being a civic duty in the same way as jury duty. It would mean that the members of each community undertake the constant policing of their communities on a rota basis, and in so doing they stop the development of anti-social, and criminal elements taking hold to begin with. They know their community in a way that a police force never can, and they act as a preventative measure rather than a responsive and reactive force. Back in 2011, I pointed out that during the riots and looting, it was not the police that brought it to a halt, but local communities that organised themselves, and went on to the streets to stop the looters.

How much time and money? Much less than is required to have an ineffective police force whose role is to protect capital not workers, and much less than to have huge military industrial complexes whose function is global offence in the interests of capital rather than defence of the population of the country.

George Carty said...

On Swiss Air, I don't have time to check the details, but I think its about the passengers on the flight rather than it being about Switzerland.

I think you're right: Swissair Flight 330 was en route to Tel Aviv when it was blown up, and the 157 passengers on Swissair Flight 100 included 20 Israelis.

Back in 2011, I pointed out that during the riots and looting, it was not the police that brought it to a halt, but local communities that organised themselves, and went on to the streets to stop the looters.

That isn't really analogous, as an untrained militia which would be useless against sociopathic criminals would still be useful against opportunistic rioters and looters.

Boffy said...

My point is that, because they are already a part of the community, they are already there, and in force, in a way that police never can be. I've suggested using existing individual police as means of providing training for such community organisations - after all we have Special Constables and so on. But, in the same way people get paid leave for jury duty, so they should get paid leave for community policing duty, and training.

I've also previously suggested that we could expand things like Town and Parish Councils as more local democratic bodies to take on the control of such activities, though I would prefer it more local than that, based on estates, in the same way that in the US they have "Block Committees".

When I worked for the local Council we promoted local communities to take control over playgrounds and community centres, for example. I favour establishing cooperative housing and estates, which itself requires forms of direct democracy of the residents on the estate. A community police force is a logical extension of that. At the present time it seems opportune with the demands being raised in a number of places for defunding the police.