The economy is more like a fragile ecosystem than a robust machine you can put into stasis

Sadly, our Treasury officials—and all those politicians, with their Oxford PPE degrees—have read too much economics.

Standard economics textbooks explain the economy as a vast machine. They imply that you can switch it off, then switch it back on again, and it will spring back into life.

In reality, the economy is more like an ecosystem. Remember when Chairman Mao mobilized China’s citizens to kill all the sparrows because they were eating the grain?

A plague of insects that ate the crops instead, with no birdlife around to keep down their numbers. And people starved.

Here, we shut down cafes, bars and restaurants. That hit wholesale suppliers, who had to scramble round to find new, domestic, customers. The closures led to lower footfall in towns, and within days the other shops threw in the towel. Their suppliers too are now facing disaster, as are the companies who rent offices and shops to businesses that may never open again.

Once you disrupt the hugely integrated ecosystem of markets like that, things go out of kilter very fast. Health bosses might say we need to lock down for six or nine months, but by then there will be no businesses standing to generate wealth for healthcare anyway. We need to re-open Britain: safely, but as rapidly as we possibly can.

It's an old mistake, perhaps people should stop making it?

Zoe Williams makes a very old mistake:

And there’s an overarching fallacy, that a job many people could do must be inherently low in value.

That lots of people are capable of doing the work, willing to do so, means that the supply is large. The larger it is compared to the demand for that work to be done the lower the price will be. This is why 90% of the actors in the world work buckshee. The number of those who enjoy treading the stage is rather larger than the number we wish to see doing so.

But that is, in the phrase, to know the price and not the value. Which is where that old error is. Aquinas brought it back into Western philosophic thought, Aristotle laid it out, the idea that there is some objective value that can be divined. Something that simply isn’t true.

The only people out here doing the valuations are us humans. Therefore the value is what we place upon it. It is something subjective therefore - what are we willing to pay for this thing, that service or their time and effort?

It’s still possible to go on and insist that there’s some societal value which is different from the individual. We might not think, or I or they etc, that social care is worth more than is currently paid for it but society as a whole does. Well, OK, we have a method of testing that insistence. For the market price is the summation of what we all are prepared to pay for it, whatever it is.

That is, the market price is the average of what we all think something is worth. If you desire that something be paid its true and real value then, given that it is just us humans doing the valuing, the market price is that value. Which is where that ancient mistake becomes visible. For absolutely everyone arguing that there is some true and knowable value is always, but always, arguing that it’s different from the one assigned to it in that market process, aren’t they?

We must be careful with how we value life

Today is my eldest brother’s birthday. He died a few years ago, after a long illness, having told the hospital staff not to revive him when his heart, inevitably, gave out again.

I was devastated to know we would soon lose him. Though I also knew that he had made the right decision.

They say you can’t put a value on human life. But long life is not all we value. When I see virus sufferers taken off to die in hospital isolation without their relatives being able to see them or even attend their funeral, I wonder if we have our moral calculations right. Like when I see elderly patients with other health issues submerged by machines and wires and tubes and people in protective suits. Or planes made into flying intensive care wards to take Italian patients to Germany while their families remain locked down at home.

In ordinary circumstances, doctors consider the effects on families, and on the quality of future life that their interventions might achieve. But now that saving ALL lives has become the political imperative, those values, and the other values of normal daily life, have been legislated away.

That cannot be right, neither for the patients and their families, nor for the lives and welfare of the rest of the population.

There’s hope: The emerging COVID-19 treatments

Imagine a farmer with a field of wheat. The farmer is our immune system and the field of wheat represents the cells and organs of our body. 

The farmer continuously inspects the field.If he spots any weeds or abnormal sheaves of wheat, he removes these; the field remains healthy. If the farmer ceases his inspections, pests can invade and weeds will grow. Eventually destroying the crop. 

The weeds and pests are like infections in our bodies, such as bacteria and viruses.The abnormal wheat sheaves are cancerous cells. At the other extreme, if the farmer becomes over-zealous and starts removing the healthy wheat sheaves, the field will also be destroyed.

The virus that causes COVID-19 is the pest infecting the field. In the majority of cases, the pest infects some of the wheat sheaves, but the farmer goes about his job effectively and removes the damaged crops. The pest is cleared in the process and the field returns to full health (often after a nasty fever, cough and fatigue).

However, if the farmer doesn’t manage to clear the damaged wheat sheaves in time, the pest can infect more and more healthy sheaves. The farmer becomes overwhelmed trying to clear all of the damaged plants. He recruits more farmhands to help him protect the field, but in the process they also cut down the healthy stalks and the field of wheat is destroyed.

This represents the situation that occurs in the roughly 5-14% of people who develop severe disease after being infected by the new coronavirus.  Immunologically, it seems that these individuals are developing an excessive immune response, something known medically as ‘cytokine release syndrome’, or ‘CRS’ for short.

Cytokines are the ‘messengers’ of the immune system ― the commands that the farmer sends to his farmhands to cut down stalks. If he sends too many orders like this, the farmhands start to remove healthy plants as well as defective crops. Some cytokines can be viewed as messages to the farmhands to ‘burn the crops’ ― these cytokines are particularly dangerous. CRS is the farmer sending too many orders to the farmhands to burn the field — the fire can quickly get out of control and kill the whole field.

However, doctors already have drugs that can block the dangerous cytokines associated with CRS. One such drug (called Tocilizumab, or Actemra) blocks the receptor for a cytokine called interleukin-6 (IL-6) and is currently in trials for use in severe COVID-19. It is used to treat CRS in other clinical settings, such as in cancer patients who develop CRS after receiving immunotherapies. The farmhands have switched off their mobiles and no longer receive the farmer’s messages to burn the field.

Another tactic the farmer can use is to treat the field with a pesticide. Many scientists are working on anti-viral therapies for COVID-19. One potential strategy, that has received a lot of media attention, is combined treatment with hydroxychloroquine and the antibiotic azithromycin. This approach is like blocking the messages to the farmhands and simultaneously treating the field with a pesticide. 

However, despite a few initially hopeful small-scale studies, several subsequent studies have failed to find good evidence that this strategy is effective in COVID-19. And a worrying consequence of the initial media hype could be that patients who need hydroxychloroquine for other diseases (including lupus, rheumatoid arthritis and malaria) will not be able to access this vital drug if the existing stocks are stockpile.

There’s another interesting strategy that scientists are looking at just now. Believe it or not, the BCG vaccine that is used to protect against the bacteria that causes tuberculosis might offer some protection against the new coronavirus. It’s like the farmer having recruited some trained farmhands who have helped clear different weeds or pests in the past. These farmhands are more vigilant and will chop down any sheaths of wheat that look slightly unhealthy. The new pest never gets the chance to spread and the farmer does not have to resort to burning the field.

Continuing with the farmhand analogy, if the farmer can recruit specialist farmhands who have previous experience with the pest, they will be more effective in spotting the infected crops and clearing them quickly. This could be likened to another strategy that is being trialled in patients with COVID-19, known as ‘passive antibody therapy’. Here, blood plasma is taken from those who have tested positive for the COVID-19 virus and whose immune system has now eliminated the infection. These individuals have antibodies that help clear the virus and transferring these antibodies to patients who currently have COVID-19 could help them to recover.

Finally, the best solution for the farmer would be if he can spray his field with a safe, long-lasting protective pesticide before the pest even shows up. This is akin to the vaccines that are being developed. However, there are many challenges involved in vaccine development and it is unlikely that we will have an effective vaccine for SARS-CoV-2 any time soon.

It’s still too early to know which of the treatment strategies (if any of them) will prove to be most useful in helping to manage the disease until we have an effective vaccine. The NHS is currently trialling many new approaches to treat COVID-19 patients.

What has been particularly encouraging has been the way in which scientists throughout the world have come together to tackle the pandemic. This will undoubtedly speed up our efforts to develop successful therapies for the disease.

Dr Eddie McAteer is a retired paediatric anaesthetist, with a strong interest in immunology. Dr Yvonne Bordon is a Senior Editor with Nature Reviews Immunology, world’s top immunology journal and one of Nature’s scientific journals.

These are their views of the authors. All treatments for this novel virus are under constant review and test.

For anyone interested in following the latest emerging science on this virus and disease, visit Nature’s rolling stream.

The value of fast fashion and those sweatshops

It is - sorry - fashionable these days to insist that we should not buy those products of the world’s sweatshops. That we must abjure fast fashion because of some reason or another. Which is exactly what we are doing right now to ill effect:

More than a million Bangaldeshi garment workers have been sent home without pay or have lost their jobs after western clothing brands cancelled or suspended £2.4bn of existing orders in the wake of the Covid-19 epidemic, according to data from the Bangladeshi and Garment Exporters Association (BGMEA).

Apply even the most basic logic here. Those sweatshops, that fast fashion, the absence is making people poorer. The presence in the first place must therefore have made them richer. As Paul Krugman noted decades back:

The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture. A country like Indonesia is still so poor that progress can be measured in terms of how much the average person gets to eat; since 1970, per capita intake has risen from less than 2,100 to more than 2,800 calories a day. A shocking one-third of young children are still malnourished--but in 1975, the fraction was more than half. Similar improvements can be seen throughout the Pacific Rim, and even in places like Bangladesh. These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better.

But things made by poor people in poor countries. It’s exactly and specifically the thing that makes them richer.

And when the shops are open again do your bit, as we shall be. Check the labels on the clothes you buy and if they’re made by those poor people in a poor place then buy them. Heck, buy two, three. Because buying the products of their labour is exactly what increases the value of their work, it is what enriches them.

When to ease up on the Precautionary Principle

The precautionary principle is not a real-life situation. It tells us not to do something until we’re sure it’s safe. It urges us to err on the side of caution, and not to risk new things that might be damaging. The “weak” precautionary principle rules out things that might just have unquantified risks, but the “strong” one, favoured by the EU, forbids things until they have been proven safe.

Of course, in the real world we can never be sure that anything is completely safe. Everything has associated risks, from climbing downstairs to taking a bath. We might, over time, be able to assess the risk level of innovations, be they drugs, foods, additives or modes of transport. We don’t usually then ban them once they have an established risk level. Instead we assess the benefits of the innovation and calculate if they’re worth the risks involved. This is “cost benefit analysis,” and we do it every day as we cross the road, take a drink, or eat a chocolate. 

On an individual basis we assess whether the gains justify the risk of the possible consequences. When governments take over these decisions, they tend to err on the side of caution, giving more weight to the potential risks than to the benefits delivered. They do this for political reasons, wanting to avoid the wrath of those who might be adversely affected. They tend to do “cost” analysis instead of “cost-benefit,” leaving out the likely benefits.

Many governments, in response to the coronavirus epidemic, have decided that a lockdown will have a better outcome than continued contacts. They’ve weighed up the scientific advice about possible illness and death, and decided that the economic shutdown is the preferred course. They may be right, but the shutdown will have consequences in terms of mental illness, suicide, possible domestic abuse, as well as making people poorer, which seems to increase sickness and lower the quality of life. It’s been a balancing act.

Vaccines against covid-19 have been and are being developed by several teams, and some are in preparatory testing. The process of thorough testing and regulatory approval would usually take years. But there is a strong case for softening the normally stringent regulatory requirements in order to speed up the availability of vaccines. The sooner a vaccine is deployed in large quantities, the more lives can be saved, and the quicker can be the economic recovery. 

Yes, there may be risks involved in rushing an effective vaccine through the hurdles, but the risks of not doing so are almost certainly greater and more predictable. In this case sensible cost benefit analysis should push the precautionary principle to the back seat.

Entirely true, it's the implication that matters

This is news to some:

But while we know work is drying up, there is much we don’t know about who is being affected. The data we usually rely on doesn’t become available at the pace of the crisis, but there is some evidence. A timely survey conducted by academics in Britain and Switzerland showed that the young and low earners are hit hardest. Lower earners have been twice as likely to lose their jobs as high earners, while 12% of under-30s report being unemployed because of this crisis, against 6% of those aged 40-55.

Policymakers wishing to see us through this crisis need to recognise that we face a jobs catastrophe, but one that has arrived sooner for some than others.

It’s not news to us. For of course it’s the point we have been making about the minimum wage all these years. Those afflicted by any squeeze on the labour market are going to be those most tenuously attached to it, the young, the untrained, the unproductive.

They are, as here, going to be the first laid off in times of trouble. They are also the first who won’t be hired as the price of labour is forced up above the market clearing rate. Precisely why the correct minimum wage is £0 an hour, anything higher discriminates against the very people who need to get a job in order to progress in life.

You can't believe communist numbers, go figure

It’s now clear that you can’t believe a word coming out of China.

Supposedly, the first case was detected in Wuhan on 12 December. But a Hong Kong newspaper claims that officials knew of it nearly a month earlier. They informed the World Health Organisation only on 31 December. On 6 January they rejected a request by the Centre for Disease Control asked to send experts.

By then Wuhan had already clumsily punished ten doctors for raising the issue. Some media claim that Hubei Province Health Board ordered laboratories to stop testing the virus and destroy all samples.

And throughout the New Year festivities, people continued to gather, and planes continued to fly in and out of Wuhan, spreading the virus to the rest of the world. 

China’s statistics on the disease informed global research, including the Imperial College modelling that shocked Britain into its own lockdown. But now it’s clear that the figures were fantasy—many times below the experience of other countries.

Initially, cases were reported only if victims displayed a range of symptoms, including pneumonia, AND had recently visited a Wuhan market. Now, there are reports that the number of relatives turning up at morgues outstrips the death statistics many times over. And of local officials saying that they dare not report the true figures because they would be stripped of their jobs, imprisoned, or even executed.

That is entirely plausible.  And exactly what you expect under communism, where central authority is maintained by force and intimidation, and truth comes second.

About Naomi Klein and that Shock Doctrine

Naomi Klein took a point that Milton Friedman made and turned it into a conspiracy. The point being made was that when a crisis arrives and people muse on what might be done better, differently, then the what is going to be determined by the ideas that are floating around at the time.

Klein morphed this into a conspiracy by neoliberals - that’s people like us - to impose freedom, liberty and wealth onto people whether they wanted it or not.

Now we have another crisis and we can see that Friedman was right. There are armies out there, all waving the little plans they’ve long had and insisting they are the solution to this specific problem. One example being John McDonnell:

We pay for it by introducing an immediate windfall tax on the banks and finance sector that we bailed out when they brought about the crisis more than a decade ago. Combining this with a wealth tax on the richest within our society and a tax on multinationals, we can demonstrate – just as the current government has demonstrated – that when we need the resources, they can always be found.

Coronavirus here is simply an excuse for McDonnell would recommend those three sets of taxation to cure hangnails. The same is true of the latest Saez and Zucman proposal:

This column proposes the creation of a progressive, time-limited, European-wide progressive wealth tax assessed on the net worth of the top 1% richest individuals.

Saez and Zucman have been proposing a progressive wealth tax to solve such minor problems as Elizabeth Warren’s political career. Coronavirus is again just an excuse to hang it upon.

St Milt was right, reactions to crises do come from the ideas that are floating around when the problems hit. Our task as a society more generally is to sort through those ideas to see if they actually would solve the problem that caused the crisis.

At which point we can reject taxing wealth of course. For what is the very definition of an economic slump? That wealth has diminished. Given that we’re not actually homeopaths, thinking that more of what causes the problem cures it, we can thus reject the idea.

Perhaps a better idea would be to observe what has been happening in response to current events. Bureaucratic limitations upon the economy have been lifted because they hinder action. Very well then, let’s not hobble ourselves by reimposing such hindrances then.

Welcome to joined up government

While this is about European Union rules our point is not actually about the European Union:

Supermarkets have been unable to get the names of 1.5 million vulnerable people being shielded from coronavirus to deliver food boxes because of EU data protection rules.

Grocers are waiting for a list of those self isolating for 12 weeks due to underlying health conditions so they can be prioritised for deliveries.

The details were expected to be handed over at the weekend, but insiders said they have been held up because of the European Union's general data protection regulation, which prevents mass sharing of information such as people’s names, addresses or emails.

The Department for the Environment, Food and Rural Affairs (Defra) said it must act in full compliance with laws.

Sigh. So much for action this day in times of emergency.

This is a useful example of a larger point. Our supposedly free market economies aren’t, very much. To do anything requires a plethora of reports, hearings, permissions and permits. This has significant effects.

For example, the standard Keynesian reaction to a recession caused by a lack of demand is a burst of infrastructure spending. This no longer works as that permitting process takes longer than the average business cycle - let alone recession - to get through. It also explains some goodly portion of the manner in which growth has slowed down in recent decades. Economic growth is, by definition, the speed at which we can do new things. Slow that process down and growth will be slower.

We’re seeing, in this time of emergency, a number of rules that are being waived. As with our noting yesterday that in normal times we deliberately go all out to make the NHS less responsive and more expensive by imposing import duties on medical equipment.

The idea of Caedite eos. Novit enim Dominus qui sunt eius might be seen as a little extreme these days, despite the joy it might bring. But given the examples our times are offering of bureaucracies that don’t need to be there a certain selectivity in which bureaucracies we allow to survive these times seems reasonable.