Pandemic diary 2020-03-24: Toying with collapse

Lately, the President is talking up the notion that we “can’t let the cure be worse than the problem itself”. He’s toying with relaxing the suppression measures that are, for the moment, our best hope of collective survival.

Let me elaborate on that.

Too often, discussions about COVID-19 are framed in very individualistic terms. What is the true mortality rate? If X people will die, is preventing that worth a tradeoff of Y GDP?

Even on very optimistic assumptions about the mortality rate and pessimistic assumptions about economic cost, the answer to that question should be “Yes”. But that’s not what I want to write about.

COVID-19 is not just a disease that is infecting us as individuals. It has infected us as a society. The financial fallout, the flailing markets, these are the social equivalent of a mid-grade fever, an unpleasant and uncomfortable side effect of the work our society is performing to suppress and defeat the infection. There may be ways of reducing the unpleasantness without impairing the effectiveness of the response, various forms of economic stimulus or monetary loosening as a kind of social tylenol. Maybe those are worth considering. Some have been tried. But nothing would be more stupid, more suicidal, than to suppress the immune response in order to suppress the fever.

That is what ending our isolation now — what sending everybody back to offices, schools, restaurants, beaches, and bars — would amount to. It might well relieve the “fever” short term. The stock market is up this morning! But it radically increases the likelihood that the patient — our polity, our society — dies.

How would that happen? What’s the microstructure of this purported social collapse? How would putting people to work again be bad?

We desperately need people to work. All of us staying home will not save us. But some people’s work is much more critical than others’ to our society’s collective viability. We obviously need medical personnel to work. For them to work effectively, we desperately need the people who are capable of producing and ramping up production of PPE (“personal protective equipment”) to work. Perhaps more desperately, we need our agricultural and food supply chain to be producing the calories and nutrients each and all of us need to get through this. We need grocery store clerks, stockers, shoppers (for delivery and pick-up orders) to work. We need truck drivers a-truckin’. We need Amazon and UPS and FedEx, permitting us to get what we need with minimal opportunity to cough on one another. We need fire departments and police. We need the digital platforms and communications infrastructure. We need people delivering essentials to the elderly. We need the people who can develop and ramp up testing, tracking, and treatment. We desperately need people to work.

But if you are not one of these people, your staying at home — working as much as you can if you can or not at all of you can’t — is not “waste”. It is making a huge positive contribution to our society, by delaying the moment when it will be impossible to persuade a critical mass of these very essential workers to do their jobs, because many of them are sick and the rest of them are too afraid of getting sick.

Whatever the final mortality rate turns out to be in places that retain control and never let the illness rate outstrip the capacity of their health care system, even if it is “only” one percent, if the outbreak proceeds through the population towards “herd immunity” levels, pretty much everyone will personally know someone who dies, like 20 people whose illness is severe enough to at least require supplementary oxygen to keep them breathing, and four or five people who required the incredibly unpleasant ordeal of mechanical ventilation. In a peak that outstrips health care capacity, many more than one of those twenty severe acquaintances will die. They will be dropping like files, all at once. However much you shout that the individual risk for a twenty-something is low, under these conditions, most people just won’t go out. We know people are bad at weighing their risks, fearing a shark attack from an occasional ocean swim more than the much more likely auto accident during a daily commute. People you personally know suffering and dying around you will be much more salient, and much more terrifying, than any risk you have ever experienced. Exhortations by the best and brightest — who would, after all, have permitted this to happen, in whom no great trust by this point would repose — will not be effective. The factories that should be producing the equipment that might save doctors’ will be too understaffed to function, let alone increase production. The trucks will slow to a trickle. The groceries will close.

People will stay in while they can, scrounge out when they are hungry, loot closed stores or their neighbors’ shelves if that’s what it takes to survive. Armed groups will form self-protection militia, or predatory gangs, depending on how you want to look at it, depending how desperate they become. People will be very sad, each and every survivor grieving loved ones, and very angry. People who are ordinarily good will find themselves doing terrible things, because against the backdrop of what has been done to them, it feels justified.

The continent on which the United States sits will endure the pandemic. So will the majority of the population (though possibly a much less overwhelming majority than many people imagine). But the to-some-degree civilized society we have inhabited? The well-oiled economic machine the President claims he wants to save? Democracy and the Constitutional order? The unity of these United States? They may well not survive this event. And at the individual level, the mortality rate will be much much higher than 1%, Wuhan’s 4%, Italy’s 8%.

Those are the stakes.

All of this is preventable. We don’t need to let this happen.

Most of us can stay at home, and be vigilant about social distance. We can buy enough time for essential workers, the heroes of this play, to ramp up PPE, health-care capacity, and testing capacity while keeping us all fed. We can distribute resources — cash, food, however we do it — so that most of us can stay at home without starving.

Once we are prepared, we can test pervasively, and only isolate the people who need to be isolated. We can use IT tools, which even on a voluntaristic, opt-in basis can be extremely effective at tracing contacts when an infection is discovered, as long as infections are infrequent. In two or three months, we can go back to a somewhat slower version of ordinary life, if we can just keep calm and carry in now. And within a period of a six to 18 months, we can expect effective treatments and/or a vaccine to appear, and then we can get back to our ordinary, beautiful, lives. Our perhaps sadder, wiser, ordinary, beautiful, lives.

I love you.

Trade-offs between inequality, productivity, and employment

In economically polarized societies, this dynamic breaks down. The very wealthy don’t employ everybody, because the marginal consumption value of a new hire falls below the insurance value of retaining wealth.

.. Idle unemployment is a problem in societies that are highly productive but very unequal. Here basic goods (food, clothing) can be produced efficiently by the wealthy via capital-intensive production processes. The poor do not employ one another, because the necessities they require are produced and sold so cheaply by the rich.

.. The rich produce and “get richer”, but often they don’t much feel richer. They feel like they are running in place, competing desperately to provide all the world’s goods and services in order to match their neighbors’ hoard of financial claims. However many claims they collectively earn, individually they remain locked in a zero-sum competition among peers that leaves most of them forever insecure.

.. In relatively equal, technologically advanced societies, people create plenty of demand for one another’s services. But when productivity and inequality are combined, we get a highly productive elite that cannot provide adequate employment, and a mass of people who preserve more value by remaining idle and cutting consumption than by attempting low-productivity work. (See “rentism” in Peter Frase’s amazing Four Futures.)

..  We had a kind of Wile E. Coyote moment in 2008, when, collectively, we could no longer deny that much of the debt the “middle class” was generating to fund purchases was, um, iffy. So long as the middle class could borrow, the “masses” could simultaneously pay high-productivity insiders for efficiently produced core goods and pay one another for yoga classes. If you didn’t look at incomes or balance sheets, but only at consumption, we appeared to have a growing middle class economy.

.. As polities, we have to trade-off extra consumption by the poor against a loss of insurance for the rich.

.. If we want to maximize total output, we have to compress the wealth distribution. If inequality continues to grow (and we don’t reinvent some means of fudging unpayable claims), both real output and employment will continue to fall as the poor can serve one another only inefficiently, and the rich won’t deploy their capital to efficiently produce for nothing

.. Why did World War II, one of the most destructive events in the history of world, engender an era of near-full employment and broad-based prosperity, both in the US where capital and infrastructure were mostly preserved, and in Europe where resources were obliterated?

.. I think an underrated factor is the degree to which the war “reset” the inequalities that had developed over prior decades. Suddenly nearly everyone was poor in much of Europe. In the US, income inequality declined during the war. Military pay and the GI Bill and rationing and war bonds helped shore up the broad public’s balance sheet, reducing indebtedness and overall wealth dispersion.

.. The financial effect of the war, in terms of the distribution of claims in the US, was not very different from what would occur under Keen’s jubilee.

.. Although in a narrow sense, the very wealthy lost some insurance against zero-sum scarcities, the post-war boom made such scarcities less likely. It’s not clear, on net (in the US), that even the very wealthy were “losers”. A priori, it would have been difficult to persuade wealthy people that a loss of relative advantage would be made up after the war by a gain in absolute circumstance for everyone. There is no guarantee, if we tried the jubilee without the gigantic war, that a rising tide would lift even shrinking yachts. But it might very well.

Exiting the Iran deal is a blow to financial transparency and US control

the West’s dominance of global finance has meant that the US effectively controls conduits which are the lifeblood of non-Western powers like Russia and China as well. Russia, itself bitterly subject to American sanctions, hopes to escape the noose by deploying a blockchain-based parallel infrastructure for international transactions. Whether such an enterprise will prove laughable and quixotic, or whether it might pierce meaningful holes in the US-dominated conventional system, depends a great deal on how policymakers, bankers, and entrepreneurs around the world react to it.

.. However, now, specifically with respect to its enforcement of financial sanctions on an apparently compliant Iran, it is the United States that seems, even among its Western partners, to be the rogue state in need of policing. However begrudging European acquiescence to extraterritorial US sanctions may have been two days ago, it is more begrudging today.

.. More than that, the remaining counterparties of the Iran nuclear deal — China, France, Russia, the UK, and the EU — all want the deal to continue. They will be at pains to persuade Iran that it continues to enjoy significant sanctions relief relative to what it would face if it abandoned the deal. Which puts those countries between a rock and the hard-place of extraterritorial enforcement by the US of reimposed prohibitions. At a policy level, the remaining signatories now have an active interest in enabling, even encouraging, evasion of US financial controls, an interest that is morally and politically defensible. All of a sudden La Resistance among sullen French bankers isn’t just about the juicy fees foregone, but a heroic struggle to #resist Donald Trump, to prevent the renuclearization of Iran. And policymakers might agree.

.. That might mean taking some of the pressure off of European and vacation isle tax havens, reversing the recent, American-enforced trend towards transparency. It might mean partnering with China and Russia to participate in the parallel, alternative financial arrangements that those countries seek to develop. It plainly puts at risk the hard won, absolutely extraordinary, hegemony that American regulators have over global finance.

.. And for those among the US #resistance who see Vladimir Putin beneath every strand of orange hair, what Donald Trump has just done makes the possibility of a new Russian SWIFT considerably less laughable.

Interfluidity: Persuade

In my opinion, there is no substitute for actually persuading people who might not already be on our side. Could any claim be more banal than to say that politics is about persuading people? However, for a variety of reasons, I think at this political moment, it’s a claim that needs defending. There is a temptation among the most committed activists to be fatalistic about the possibility of persuasion, to imagine that all of those who are not already with us are irredeemable

.. The question of who are the authoritarians, who are the bullies, is actively contested in American politics, and not just by Rush-Limbaugh-types shouting “Feminazi!” When Trump supporters complain about “political correctness”, they are claiming that contemporary liberal norms have rendered it socially costly for them to speak freely and candidly even when they mean no harm.

.. Much of the work of Breitbart and Yiannapolis is explicitly devoted to widening the perceived incompatibility of civil rights and their supporters’ civil liberties. You can have one or the other, they suggest, a state in which men with arms protect your ordered freedoms, or one in which “those people” — liberals and Muslims and Black people and Berkeley students — are free and run roughshod over your liberties with tools ranging from accusations of racism to Molotov cocktails.

.. Persuasion is not about elegant logic or Oxford-style debates. It is about interacting, with good will and in good faith, with people who look at things differently, and working to understand how they see things so that you can help them understand how you see things.

.. Persuasion is not academic. It comes not from dispassionate observation of objects, but the interaction and interplay of subjects. Persuasion is personal. Laughter helps

.. we need only persuade the best 10% of them to put the fear of a much better God into Red-state legislators and to completely flip the arithmetic of political dominance in our country, despite its gerrymandered districts and quirky Electoral College.

.. Multiculturalism means not fearing what is ugly in other cultures

.. We take pride in embracing and respecting people who look and act very differently than we do, who follow strange creeds the substance of which we might disagree with, who follow customs that may render us uncomfortable and require an unusual degree of diplomacy when we are called to interact in any intimacy. These habits and skills, of which I think we are justly proud, are precisely what are required of us now. If we can be as open and charitable and welcoming and diplomatic across the fault lines which have snuck up within our politics as we are towards those we more easily recognize as outsiders, we have a real shot, not only to reconfigure the electoral numbers game, but also to forge a shared understanding that would transform what must begin as a pragmatic exercise in politics into an ethical enterprise after all.