TiB 106: Coronavirus and the clash of civilisations, the end of the the sovereign individual; and a glimpse of the brave new world of massive fiscal stimulus

Now all coronavirus, all the time: Coronavirus and the clash of civilisations; the end of the sovereign individual; the new policy radicalism of massive stimulus; and more…

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The world is effectively conducting a huge natural experiment in pandemic containment strategies. The UK’s is perhaps the most controversial - I don’t have expertise to add, but I will point you here, here, here and here for some of the smarter analyses (though it looks like they’re pulling back). It’s an interesting question whether it’s also a broader test of competing ideologies. Bruno Maçães says yes, in this provocative piece on “Coronavirus and the clash of civilisations”.

Maçães’ core argument is that there is a distinctive “Confucian cosmopolis” response to the outbreak (in which he includes China, South Korea, Singapore and Vietnam) that may be more effective than anything the US can pull off (more here). I’m not sure I buy the argument (“China and Italy are discovering, perhaps to their surprise, a shared cultural substratum” seems self-refuting), but it’s interesting - and one we’ll hear more of in future.

I’m more persuaded by Tanner Greer’s idea of distinctive national ”social scripts” - that is, that Asian societies have more societal practice from SARS and MERS. The question of how to develop effective social scripts in advance of likely risks is an important one. It’s also true that governments’ responses are shaped by their political system at a quite granular level. Polarisation may play a role: coronavirus, remarkably, is a partisan issue in the US (but not in the UK, yet). And then there’s the question of international coordination, where no one is covering themselves in glory to put it mildly.  

Twitter is full of photos of empty shelves on the toilet roll aisles in supermarkets. But panic buying is the mere entry level of planning for the apocalypse and I’m reminded of this superb long read from 2017 on how the super rich “prep” for worst case scenarios with underground bunkers and New Zealand boltholes. 

This tweet from the weekend, though, is an useful reminder of the futility of this strategy:

I would like to get Healey’s follow-up line - “There is no escape from the division of labour” - printed on a t-shirt. I suspect that what’s true for the individual is also true for the nation state, despite some calls for the coronavirus to be the moment we make autarky great again. 

It’s striking to see how the pandemic is forcing much of the libertarian right to re-evaluate its ideas. It wasn’t long ago that The Sovereign Individual was the cool book to recommend at Silicon Valley parties. Today, the most unusual suspects are calling for massive collective action. Just as there are no atheists in foxholes, perhaps there are no libertarians in pandemics. 

Speaking of which, the demand side shock from the global reduction in economic activity will be unlike anything in recent memory. What can be done? Emmanuel Saez and Gabriel Zucman - best known for their work on wealth inequality - have a very short and very radical policy proposal: have government step in as the “customer of last resort” and cover the shortfall in demand.

This would be a gargantuan stimulus. Saez and Zucman talk about a 40% decline in demand for three months (roughly $2 trillion in the US - though other estimates are lower). The idea is to keep fundamentally healthy enterprises in business and prevent the devastating impact of mass layoffs. The authors position it as a new form of “social insurance” - fairer than a loan and better targeted than universal cash transfers.

There’s lots to argue with here, even from the perspective of Saez and Zucman’s allies on the left. Jason Furman - Obama’s Chairman of the Council of Economic Advisers - has a good list of concerns here. I doubt that anything like this would get through the current Senate (or maybe it could?). But who knows? I suspect a global pandemic coinciding with the ability to borrow effectively for free may lead us down to some policy paths that would have been unthinkable even a couple of months ago. 

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Until next week,

Matt Clifford