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6 post-Corona Institutional questions

March 26, 2020 - 23:34 -- Admin

The mass hysteria of the corona crisis is raging, with the resulting self-isolation of whole economies and populations. The loss seems greater with every new forecast on the economic collapse than I initially thought, and the benefit of imprisoning and terrorizing the population smaller than I initially thought, leading courageous little Sweden to forego these options. High-level media and calm commentators are waking up to the longer-term implications, though the population is still too overcome by fear.

I want to share 6 areas where we should think of international institutional reform to prevent another hysteria like the one we are going through now. I don’t want to presume any answers but simply want to hear your thoughts and suggestions, so am merely laying out the challenges.

They are: i) How to diminish the normality of apocalyptic thinking, ii) How to read China better, iii) How to prevent international contagion of panic through social and regular media better, i) how to reduce the fragility of international supply chains, v) how to foster better cooperation between countries in the EU, and vi) how to regain our lost freedom and reason.

Over the fold I explain them in more detail.

 

  1. The cult of the apocalypse. This crisis laid bare that large parts of the population and the scientific community, not just epidemiologists, have really bought into some notion of extreme emergencies for which a totalitarian response is needed. Via petitions and the media have these people loudly called for draconian measures, based on little evidence that this would work or no evidence that it would do more good than bad. The world has up till now shrugged its shoulders over the various doom scenarios dreamed up by scientists, including “extinction due to climate change”, “killer asteroids”, “nuclear devastation”, “run-away robots”, and a whole host of other scenarios you might recognise from disaster movies. This time the population went along with one such story, leading to devastating losses as the ‘cure’ turned out to be far more deadly and destructive than ‘the problem’. How do we reduce the prevalence and growth of these doomsday cults?
  2. Understanding China. The Chinese government showed the world the example of how to be totalitarian about a disease, and their example proved infectious. Understanding in the west as to why the Chinese did this was extremely limited, but we looked up to them anyway and several governments simply followed their example. We need to learn how China truly operates and stop imagining they are like us. The Chinese have a long history of disastrous totalitarian projects, like the Great Leap Forward or the Cultural Revolution, and we should learn why they do this, in order to avoid following their example, not copy them.
  3. Contagion of panics via social media and the regular media. This was first and foremost the biggest mass hysteria event in history, fed by a connected media. Even in India, which is far too warm for this virus to do much damage and where there are hence almost no recorded cases, the population has become scared enough to loudly call for draconian measures, leading to the madness of locking down hundreds of millions of extremely poor people who have no savings and no income to buy food. We need to think hard about how to make contagion of these panics harder and slower, not just for pandemics but also the many other global fears (financial, military, ethnic, religious). This will require thinking about the architecture of media, the internet, mobile telephony, etc. It is not easy to see what can be done.
  4. The fragility of international supply chains. The huge recessions of 1929 in the West, and 1990 in Eastern Europe taught us that broken supply chains are very hard to rebuild in a hurry. Companies and industries make very particular investments that form a link, and if some of the pieces in the chain break, the whole chain cannot function, disbands, and very quickly loses the knowledge to re-form as parts go their separate ways[1]. We should think of what we could do to make the supply chains less fragile to disruption: how do we build more slack into the system?
  5. International cooperation. As Harari pointed out in the Financial Times, international cooperation has broken down during this crisis. Even in the EU, countries went their own way, not caring about the disruption to partners of their own actions. This is also what happened in 1929 and in Eastern Europe in 1990, to the loss of all. We have learned again that only nation states remain cohesive and take collective decisions. What to do about it?
  6. How to regain respect for freedom, privacy, private responsibility, expert advice, etc.? This hysteria has cost the West, which is the audience we on this blog overwhelmingly belong to, much of the best we had to offer the world. For the sake of fear have we loudly demanded totalitarianism, invasive top-down monitoring, top-down rules on who is important and who should do what, and adopted the fantasies of experts who had no more idea about the balance of the effects of what they proposed than anyone else. How to regain and more stringently hold on to our ideals and our reason?

I have preliminary suggestions on these but want to hear your thoughts. Also importantly, what other international institutional challenges do you see needing to be addressed once this hysteria passes and the West wakes up to the loss it has inflicted on itself?

[1Because this stuff is too hard to put in an easy macro-model (though you can do it in micro models, see here), mainstream economics hasnt managed to incorporate these lessons into its canon and has thus once again missed the importance of this when the crisis hit.]