The perfect economic killer virus

The novel coronavirus appears almost perfectly fine tuned to wreck a globalized, capitalist economy

The Black Death. Smallpox. Spanish Flu. By now we have all read how these pandemics ravaged humanity, leading to death tolls in the tens of millions. We have also seen how they raved the human body in gruesome, graphic ways. The bubonic plague caused black pustulent swellings that give the disease its nickname. Smallpox deforms the body with thousands of blisters. The Spanish Flu had many symptoms, some of which included uncontrollable nose bleeds and cyanosis, a darkening of the skin into a blue-black hue due to lack of oxygen. In many cases it was so swift that people feeling fine in the morning were gone by the end of the day, often simply dropping dead. More recently we have seen the scourge of Ebola, a hemorrhagic fever, that not only has death rates of 80% among its most lethal strains but also kill you in a horrifying manner, effectively liquefying your insides and bleeding them out from every orifice.

Compared to that, the novel coronavirus known as SARS-CoV-2 (or specifically, the disease that it causes which is Covid-19) that is currently affecting the planet is remarkably unremarkable in terms of its lethality and gruesomeness. Death rates have been widely quoted as being around 3%, give or take depending on a country’s demographics as well as general levels of health and preparedness, but they are far lower when all of the untested, asymptomatic cases are considered. Certainly worse than “just the flu” but considerably lower than some of its corona-cousins like SARS (1-in-3 dead) and MERS (2-in-3 dead), the latter being by far the most deadly of the bunch and up there in lethality with most hemorrhagic fevers. And although the clinical description of what Covid-19 does to so many parts of the body is nightmarish, it is all mercifully hidden under the skin. A Hollywood summer blockbuster disease this is not.

Which leads me to believe that although Covid-19 may not be an apocalyptic “perfect killer” disease, it is quite possibly the most perfect destroyer of a modern globalized economy. In fact, if one had to design a disease to bring global capitalism to its knees, it would probably be this. Continue reading

The rentier class always wins

Once again, taxpayers will end up paying the bill while rentiers escape unscathed

As the battle for our lives against the novel coronavirus pandemic rages, another battle is being ready to be fought: for the economy. It is not an exaggeration to say that that the second quarter of 2020 will see the most severe decline in global economic activity in the history of human civilization, and the question is whether we can come up with the right policies to ensure that the this does not deteriorate into another great recession or worse, another great depression.

For starters, let’s understand the scale of the carnage. Entire sectors of the economy like restaurants, hospitality, and travel have already collapsed. Entirely collapsed. The millions of workers that are now unemployed or which will be soon unemployed as a result of this will require a social safety net of epic proportions in order to survive the 3 or more months of lockdowns, with no guarantee that their jobs will still be there when the crisis is over. For countries that have pushed forward a comprehensive package of corporate lifelines and worker’s support (pay guarantees, moratorium on interest, utilities, mortgages, and rent, etc.), it is estimated that these may end up costing as much as 10% of GDP (maybe even more), putting further strains on national finances which in many cases have not yet recovered from the 2008-09 crisis. And for developing countries, with masses of informal workers and lack of social safety nets, the outlook could end up being as apocalyptic as the virus itself. Continue reading