Leaders in the public and private sector in advanced economies, typically highly credentialed, have with very few exceptions shown abject incompetence in dealing with coronavirus as a pathogen and as a wrecker of economies. The US and UK have made particularly sorry showings, but they are not alone.
It’s become fashionable to blame the failure to have enough medical stockpiles and hospital beds and engage in aggressive enough testing and containment measures on capitalism. But as I will describe shortly, even though I am no fan of Anglosphere capitalism, I believe this focus misses the deeper roots of these failures.
After all the country lauded for its response, South Korea, is capitalist. Similarly, reader vlade points out that the Czech Republic has had only 2 coronavirus deaths per million versus 263 for Italy. Among other things, the Czech Republic closed its borders in mid-March and made masks mandatory. Newscasters and public officials wear them to underscore that no one is exempt.
Even though there are plenty of examples of capitalism gone toxic, such as hospitals and Big Pharma sticking doggedly to their price gouging ways or rampant production disruptions due to overly tightly-tuned supply chains, that isn’t an adequate explanation. Government dereliction of duty also abound. In 2006, California’s Governor Arnold Schwarznegger reacted to the avian flu by creating MASH on steroids. From the LA Times:
They were ready to roll whenever disaster struck California: three 200-bed mobile hospitals that could be deployed to the scene of a crisis on flatbed trucks and provide advanced medical care to the injured and sick within 72 hours.
Each hospital would be the size of a football field, with a surgery ward, intensive care unit and X-ray equipment. Medical response teams would also have access to a massive stockpile of emergency supplies: 50 million N95 respirators, 2,400 portable ventilators and kits to set up 21,000 additional patient beds wherever they were needed…
“In light of the pandemic flu risk, it is absolutely a critical investment,” he [Governor Schwarznegger] told a news conference. “I’m not willing to gamble with the people’s safety.”
They were dismantled in 2011 by Governor Jerry Brown as part of post-crisis belt tightening.
The US for decades has as a matter of policy tried to reduce the number of hospital beds, which among other things has led to the shuttering of hospitals, particularly in rural areas. Hero of the day, New York’s Governor Andrew Cuomo pursued this agenda with vigor, as did his predecessor George Pataki.
And even though Trump has made bad decision after bad decision, from eliminating the CDC’s pandemic unit to denying the severity of the crisis and refusing to use government powers to turbo-charge state and local medical responses, people better qualified than he is have also performed disastrously. America’s failure to test early and enough can be laid squarely at the feet of the CDC. As New York Magazine pointed out on March 12:
In a functional system, much of the preparation and messaging would have been undertaken by the CDC. In this case, it chose not to simply adopt the World Health Organization’s COVID-19 test kits — stockpiling them in the millions in the months we had between the first arrival of the coronavirus in China and its widespread appearance here — but to try to develop its own test. Why? It isn’t clear. But they bungled that project, too, failing to produce a reliable test and delaying the start of any comprehensive testing program by a few critical weeks.
The testing shortage is catastrophic: It means that no one knows how bad the outbreak already is, and that we couldn’t take effectively aggressive measures even we wanted to. There are so few tests available, or so little capacity to run them, that they are being rationed for only the most obvious candidates, which practically defeats the purpose. It is not those who are very sick or who have traveled to existing hot spots abroad who are most critical to identify, but those less obvious, gray-area cases — people who may be carrying the disease around without much reason to expect they’re infecting others…Even those who are getting tested have to wait at least several days for results; in Senegal, where the per capita income is less than $3,000, they are getting results in four hours. Yesterday, apparently, the CDC conducted zero tests…
[O]ur distressingly inept response, kept bringing to mind an essay by Umair Haque, first published in 2018 and prompted primarily by the opioid crisis, about the U.S. as the world’s first rich failed state
And the Trump Administration has such difficulty shooting straight that it can’t even manage its priority of preserving the balance sheets of the well off. Its small business bailouts, which are as much about saving those enterprises as preserving their employment, are off to a shaky start. How many small and medium sized ventures can and will maintain payrolls out of available cash when they aren’t sure when and if Federal rescue money will hit their bank accounts?
How did the US, and quite a few other advanced economies, get into such a sorry state that we are lack the operational capacity to engage in effective emergency responses? Look at what the US was able to do in the stone ages of the Great Depression. As Marshall Auerback wrote of the New Deal programs:
The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown. It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.
What are the deeper causes of our contemporary generalized inability to respond to large-scale threats? My top picks are a lack of respect for risk and the rise of symbol manipulation as the dominant means of managing in the private sector and government.
Risk? What Risk?
Thomas Hobbes argued that life apart from society would be “solitary, poor, nasty, brutish and short.” Outside poor countries and communities, advances in science and industrialization have largely proven him right.
It was not long ago, in historical terms, that even aristocrats would lose children to accidents and disease. Only four of Winston Churchill’s six offspring lived to be adults. Comparatively few women now die in childbirth.
But it isn’t just that better hygiene, antibiotics, and vaccines have helped reduce the scourges of youth. They have also reduced the consequences of bad fortune. Fewer soldiers are killed in wars. More are patched up, so fewer come back in coffins and more with prosthetics or PTSD. And those prosthetics, which enable the injured to regain some of their former function, also perversely shield ordinary citizens from the spectacle of lost limbs.1
Similarly, when someone is hit by a car or has a heart attack, as traumatic as the spectacle might be to onlookers, typically an ambulance arrives quickly and the victim is whisked away. Onlookers can tell themselves he’s in good hands and hope for the best.
With the decline in manufacturing, fewer people see or hear of industrial accidents, like the time a salesman in a paper mill in which my father worked stuck his hand in a digester and had his arm ripped off. And many of the victims of hazardous work environments suffer from ongoing exposures, such as to toxic chemicals or repetitive stress injuries, so the danger isn’t evident until it is too late.
Most also are oddly disconnected from the risks they routinely take, like riding in a car (I for one am pretty tense and vigilant when I drive on freeways, despite like to speed as much as most Americans). Perhaps it is due in part to the illusion of being in control while driving.
Similarly, until the coronavirus crisis, even with America’s frayed social safety nets, most people, particularly the comfortably middle class and affluent, took comfort in appearances of normalcy and abundance. Stores are stocked with food. Unlike the oil crisis of the 1970, there’s no worry about getting petrol at the pump. Malls may be emptying out and urban retail vacancies might be increasing, but that’s supposedly due to the march of Amazon, and not anything amiss with the economy. After all, unemployment is at record lows, right?
Those who do go to college in America get a plush experience. No thin mattresses or only adequately kept-up dorms, as in my day. The notion that kids, even of a certain class, have to rough it a bit, earn their way up and become established in their careers and financially, seems to have eroded. Quite a few go from pampered internships to fast-track jobs. In the remote era of my youth, even in the prestigious firms, new hires were subjected to at least a couple of years of grunt work.
So the class of people with steady jobs (which these days are well-placed members of the professional managerial class, certain trades and those who chose low-risk employment with strong civil service protections) have also become somewhat to very removed from the risks endured when most people were subsistence farmers or small town merchants who served them.
Consider this disconnect, based on an Axios-Ipsos survey:
The coronavirus is spreading a dangerous strain of inequality. Better-off Americans are still getting paid and are free to work from home, while the poor are either forced to risk going out to work or lose their jobs.
Generally speaking, the people who are positioned to be least affected by coronavirus are the most rattled. That is due to the gap between expectations and the new reality. Poor people have Bad Shit Happen on a regular basis. Wealthy people expect to be able to insulate themselves from most of it and then have it appear in predictable forms, like cheating spouses and costly divorces, bad investments (still supposedly manageable if you are diversified!), renegade children, and common ailments, like heart attacks and cancer, where the rich better the odds by advantaged access to care.
The super rich are now bunkered, belatedly realizing they can’t set up ICUs at home, and hiring guards to protect themselves from marauding hordes, yet uncertain that their mercenaries won’t turn on them.
The bigger point is that we’ve had a Minksy-like process operating on a society-wide basis: as daily risks have declined, most people have blinded themselves to what risk amounts to and where it might surface in particularly nasty forms. And the more affluent and educated classes, who disproportionately constitute our decision-makers, have generally been the most removed.
The proximity to risk goes a long way to explaining who has responded better. As many have pointed out, the countries that had meaningful experience with SARS2 had a much better idea of what they were up against with the coronavirus and took aggressive measures faster.
But how do you explain South Korea, which had only three cases of SARS and no deaths? It doesn’t appear to have had enough experience with SARS to have learned from it.
A related factor may be that developing economies have fresh memories of what life was like before they became affluent. I can’t speak for South Korea, but when I worked with the Japanese, people still remembered the “starving times” right after World War II. Japan was still a poor country in the 1960s.3 South Korea rose as an economic power after Japan. The Asian Tigers were also knocked back on their heels with the 1997 emerging markets crisis. And of course Seoul is in easy nuke range of North Korea. It’s the only country I ever visited, including Israel, where I went through a metal detector to enter and saw lots of soldiers carrying machine guns in the airport. So they likely have a keen appreciation of how bad bad can be.
The Rise and Rise of the Symbol Economy
Let me start with an observation by Peter Drucker that I read back in the 1980s, but will then redefine his take on “symbol economy,” because I believe the phenomenon has become much more pervasive than he envisioned.
A good recap comes in Fragile Finance: Debt, Speculation and Crisis in the Age of Global Credit by A. Nesvetailova:
The most significant transformation for Drucker was the changed relationship between the symbolic economy of capital movements, exchange rates, and credit flows, and the real economy of the flow of goods and services:
…in the world economy of today, the ‘real economy’ of goods and services and the ‘symbol economy’ of money, credit, and capital are no longer bound tightly to each other; they are indeed, moving further and further apart (1986: 783)
The rise of the financial sphere as the flywheel of the world economy, Drucker noted, is both the most visible and the least understood change of modern capitalism.
What Drucker may not have sufficiently appreciated was money and capital flows are speculative and became more so over time. In their study of 800 years of financial crises, Carmen Reinhart and Ken Rogoff found that high levels of international capital flows were strongly correlated with more frequent and more severe financial crises. Claudio Borio and Petit Disyatat of the Banks of International Settlements found that on the eve of the 2008 crisis, international capital flows were 61 times as large as trade flows, meaning they were only trivially settling real economy transactions.
Now those factoids alone may seem to offer significant support to Drucker’s thesis. But I believe he conceived of it too narrowly. I believe that modeling techniques, above all, spreadsheet-based models, have removed decision-makers from the reality of their decisions. If they can make it work on paper, they believe it will work that way.
When I went to business school and started on Wall Street, financiers and business analysts did their analysis by hand, copying information from documents and performing computations with calculators. It was painful to generate financial forecasts, since one error meant that everything to the right was incorrect and had to be redone.
The effect was that when managers investigated major capital investments and acquisitions, they thought hard about the scenarios they wanted to consider since they could look at only a few. And if a model turned out an unfavorable-looking result, that would be hard to rationalize away, since a lot of energy had been devoted to setting it up.
By contrast, when PCs and Visicalc hit the scene, it suddenly became easy to run lots of forecasts. No one had any big investment in any outcome. And spending so much time playing with financial models would lead most participants to a decision to see the model as real, when it was a menu, not a meal.
When reader speak with well-deserved contempt of MBA managers, the too-common belief that it is possible to run an operation, any operation, by numbers, appears to be a root cause. For over five years, we’ve been running articles from the Health Renewal Blog decrying the rise of “generic managers” in hospital systems (who are typically also spectacularly overpaid) who proceed to grossly mismanage their operations yet still rake in the big bucks.
The UK version of this pathology is more extreme, because it marries managerial overconfidence with a predisposition among British elites to look at people who work hard as “must not be sharp.” But the broad outlines apply here. From Clive, on a Brexit post, when Brexit was the poster child of UK elite incompetence:
What’s struck me most about the UK government’s approach to the practical day-to-day aspects of Brexit is that it is exemplifying a typically British form of managerialism which bedevilles both public sector and private sector organisations. It manifests itself in all manner of guises but the main characteristic is that some “leader” issues impractical, unworkable, unachievable or contradictory instructions (or a “strategy”) to the lower ranks. These lower ranks have been encouraged to adopt the demeanour of yes-men (or yes-women). So you’re not allowed to question the merits of the ask. Everyone keeps quiet and takes the paycheck while waiting for the roof to fall in on them. It’s not like you’re on the breadline, so getting another year or so in isn’t a bad survival attitude. If you make a fuss now, you’ll likely be replaced by someone who, in the leadership’s eyes is a lot more can-do (but is in fact just either more naive or a better huckster).
Best illustrated perhaps by an example — I was asked a day or two ago to resolve an issue I’d reported using “imaginative” solutions. Now, I’ve got a a vivid imagination, but even that would not be able to comply with two mutually contradictory aims at the same time (“don’t incur any costs for doing some work” and “do the work” — where because we’ve outsourced the supply of the services in question, we now get real, unhideable invoices which must be paid).
To the big cheeses, the problem is with the underlings not being sufficiently clever or inventive. The real problem is the dynamic they’ve created and their inability to perceive the changes (in the same way as swinging a wrecking ball is a “change”) they’ve wrought on an organisation.
May, Davies, Fox, the whole lousy lot of ’em are like the pilot in the Airplane movie — they’re pulling on the levers of power only to find they’re not actually connected to anything. Wait until they pull a little harder and the whole bloody thing comes off in their hands.
Americans typically do this sort of thing with a better look: the expectations are usually less obviously implausible, particularly if they might be presented to the wider world. One of the cancers of our society is the belief that any problem can be solved with better PR, another manifestation of symbol economy thinking.
I could elaborate further on how these attitudes have become common, such as the ability of companies to hide bad operating results and them come clean every so often as if it were an extraordinary event, short job tenures promoting “IBG/YBG” opportunism, and the use of lawyers as liability shields (for the execs, not the company, natch).
But it’s not hard to see how it was easy to rationalize away the risks of decisions like globalization. Why say no to what amounted to a transfer from direct factory labor to managers and execs? Offshoring and outsourcing were was sophisticated companies did. Wall Street liked them. Them gave senior employees an excuse to fly abroad on the company dime. So what if the economic case was marginal? So what if the downside could be really bad? What Keynes said about banker herd mentality applies:
A sound banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.
It’s not hard to see how a widespread societal disconnect of decision-makers from risk, particularly health-related risks, compounded with management by numbers as opposed to kicking the tires, would combine to produce lax attitude toward operations in general.
I believe a third likely factor is poor governance practices, and those have gotten generally worse as organizations have grown in scale and scope. But there is more country-specific nuance here, and I can discuss only a few well, so adding this to my theory will have to hold for another day. But it isn’t hard to think of some in America. For instance, 40 years ago, there were more midsized companies, with headquarters in secondary cities like Dayton, Ohio. Executives living in and caring about their reputation in their communities served as a check on behavior.
Before you depict me as exaggerating about the change in posture toward risks, I recall reading policy articles in the 1960s where officials wrung their hands about US dependence on strategic materials found only in unstable parts of Africa. That US would never have had China make its soldiers’ uniforms, boots, and serve as the source for 80+ of the active ingredients in its drugs. And America was most decidedly capitalist in the 1960s. So we need to look at how things have changed to explain changes in postures towards risk and notions of what competence amounts to.
_____
1 One of my early memories was seeing a one-legged man using a crutch, with the trouser of his missing leg pinned up. I pointed to him and said something to my parents and was firmly told never to do anything like that again.
2 The US did not learn much from its 33 cases. But the lack of fatalities may have contributed.
3 Japan has had a pretty lame coronavirus response, but that is the result of Japan’s strong and idiosyncratic culture. While Japanese are capable of taking action individually when they are isolated, in group settings, no one wants to act or even worse take responsibility unless their is an accepted or established protocol.
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Ian Walsh has a good take on it – he ascribes it to a new aristocracy, which has all the vices of the old aristocracy.
I think there is also a lot to be said for historical (and current) memories of crisis. Both South Korea and Taiwan are countries on a near permanent war footage – both have genuine reasons to fear an external attack (this is particularly visible in South Korea – bomb shelters and warnings everywhere). They are simply at a higher level of alert than most countries and take civil defence very seriously. Much the same applies to Vietnam.
I’ve noticed here that so far as I can see, the response in Ireland has been significantly better than the UK, despite the NHS being a far better system than the rickety, unequal, and notoriously bureaucratic Irish system. I’ve noticed that a lot of the official response has revived old protocols for TB and Polio – both diseases that ravaged Ireland into living memory – most old doctors of my acquaintance here will tell you horror stories and I grew up knowing people crippled from polio. While in the UK its fair to say I think that such horrors have slipped out of bureaucratic memory. People talk about the War, but in reality they have no real memory of the horrors of seeing neighbours die. So I think there is a lot to be said for simple institutional memory and practice allowing some countries to respond that big quicker. And with this virus even just 2-3 weeks extra preparation could have made all the difference to a country or region.
And they don’t have to live where they are from anymore. When Tony Blair wants positive attention, he jets off to the US or Israel. Claire McCaskill lost a statewide race when the same electorate passed a minimum wage increase and legalized at least medical Marijuana. She now opines on Comcast PR about elections.
That does make a difference. After the Celtic Tiger crash in Ireland, the PM (Bertie Ahern) who was largely responsible ended up banned from his regular pub where he was well known to have a pint every evening after his day job. The owner explained that if he didn’t bar him, he’d lose the rest of his customers.
Mind you, like all the others he still makes a living on the public speaking circuit and his chiklit writer daughter got a mysteriously large book deal from a Murdoch owned publisher..
The Irish case is interesting, because the performance of the state in recent times has been anything but competent. The bank bailout and the cervical cancer cases allowed by the botched testing program are examples. I remember a Morgan Kelly lecture where he said, “We don’t do competence in Ireland. You start holding people responsible and you might get some of the ‘wrong’ people.”
The Irish leadership stratum so far looks as if it has done a better job than even the US. Your point about the living memory TB and Polio — in the 50s, my aunt and uncle, visiting from the US, were advised by the priest not to go to mass because of the danger of picking up TB — rings true. I wonder if the recent fails by the state, that seem to have left the public abidingly angry (the bailout) and aghast (authorities letting women die of cervical cancer ) have shown elites that they have no political room to fail this time, and that they must show tangible success.
Plutonium Kun: Thanks for re-posting the Ian Welsh essay, which was posted at Naked Capitalism a couple days ago–and which has been on my mind since I read it then. I recall that when I was living on the North Shore, the belt of rich suburbs north of Chicago, on a whimsy for a few years, the prevailing stance in dealing with others was a kind of genial incompetence. Shortly after, I returned to Chicago for some grit and consequences.
I woke up this morning thinking of this example of the decadence (a term Welsh describes): The serious person Hillary Clinton opining on something or other. Where is serious person, and vision of competence, Hillary Clinton these days? Why isn’t she advocating for the little people? Or at least for her slobbering fan club? Or hoping for another soft-ball interview that doesn’t ask what it was like to be Bill’s bag-man all those years as they raked in the moolah?
https://www.cbsnews.com/news/hillary-clinton-single-payer-health-care-will-never-ever-happen/
Unfortunately, in Italy, the Hillary Clinton of Italian politics, Matteo Renzi, hasn’t taken heavy hints to go away.
It is hard to distinguish between incompetence and fraud.
I personally believe much that looks incompetent conceals fraud.
It’s not that hard. Follow the money.
The incompetence is a symptom of a morally-degenerate managerial class Infected with bad ideas and having no sense of responsibility to anyone other than themselves. They plan out quarter by quarter, loot their companies instead of investing in them, and lie habitually. This is CORRUPTION. Consider that the ex-CEO of GE, with all his hundreds of millions garnered by cheating GE employees and offshoring their jobs, looting company funds to enrich himself and his co-conspirators, was also a tax cheat, buying art for his NY city palace but claiming it was for his abode in NH and evading NY sales tax. Committing fraud to evade his fair share. A better model for what ails US America cannot be found than this scum.
And note that Boeing moved its headquarters to Chicago “to be more like GE”. Well they’ve destroyed the company to be more like the looters and liars and cheats. Nice work if you can get it.
This post is not just about the private sector. State and local governments are primarily responsible for public health.
Your theory does not explain Jerry Brown killing the Schwarznegger emergency response apparatus.
Nor is it adequate to respond to the general idea that “never attribute to malice that which can be explained by incompetence”. Even though it is obvious that America has a lot of corruption, you omit the notion that a lot of stupid will also explain much of what we are seeing now.
Thank for your article – due to that we humans tend to compare us to each other, we are prone to error. Why shouldn’t we do, what the others do?
And that’s were the incompetence gets it’s grip on. Here in Germany we just avoided the closure of smaller hospitals, because they are not efficient enough – now we are the lucky ones with the higher number of beds and ICU’s and ecma and so on.
That’s not only luck, but the preachers of the neoliberal agenda have a hardship nowadays – and ‘we, the people’ have a minimum of two years to redesign our societies.
Maybe the Dead Kennedys had it right about Jerry Brown in California Über Alles…
They did have it right!
But remember, too, that Brown showed in his first term, in the 70s, that he was a textbook case of being one of Stoller’s progressive post-Watergate Democrats that set aside New Deal programs and regulation. I remember his deregulation of intrastate trucking from that time, which the highly unionized truckers opposed. Come quietly to The Gap…
I think one of the problems is that financialization and securitization of everything has effectively separated the managerial class in both private and public sector from knowledge and experience of actual logistics and execution.Transferring securities with the push of a button is not the same as getting an industrial plant or phone center built, trained, and running efficiently. Companies and organizations with a history of doing this well can completely undo that capability in only a couple of years (e.g. CDC, FEMA, numerous companies taken over by PE). While my examples below are US-based, I think a lot of the same thought processes have been going on in much of the OECD (e.g. Brexit debacle).
Once everything is measured in dollars with a maximum of a 1 to 5 years window, then it becomes really easy to just focus on the little ball needed to become really “efficient” without thinking about the bigger societal picture. I think the generations that grew up in WW I, 19189-19 Flu, Prohibition, Great Depression, WW II had a much bigger picture of life and society. In some respects, things like Vietnam, were an over-reaction (like immune system going haywire) but on the whole, there was a big focus for 50 years on the potential for really big, bad things to happen. Once the Berlin Wall fell, much of that dissipated and so the shocks that come are generally responded to with a combination of bewilderment, lack of general interest unless it personally impacts you, or the immune system going wild (Iraq invasion, torture).
As a result, you get bulls*#t like this from people like Fed Governor Bullard: https://www.marketwatch.com/story/feds-bullard-says-there-is-good-news-for-those-worried-about-the-economys-future-that-universal-covid-19-testing-will-help-restore-economic-health-2020-04-05?mod=home-page
He wants universal daily testing of all Americans to prove daily they can be out and about. This is in a country that can’t figure out how to have half the country vote without standing in lines for hours or hasn’t been able to figure out how to even get sick people tested and waiting a week or more more for the test results to come back. Granted, the 15 minute tests mean that it might be possible to set up a lemonade stand at the entrance to every subdivision or subway station for people to get their daily test. The logistical undertaking to do this would be mammoth, although there are at least lots of unemployed people who could get several months of training to learn how to do such a test.
Once everything is measured in dollars with a maximum of a 1 to 5 years window, then it becomes really easy to just focus on the little ball needed to become really “efficient” without thinking about the bigger societal picture. I think the generations that grew up in WW I, 19189-19 Flu, Prohibition, Great Depression, WW II had a much bigger picture of life and society. In some respects, things like Vietnam, were an over-reaction (like immune system going haywire) but on the whole, there was a big focus for 50 years on the potential for really big, bad things to happen. Once the Berlin Wall fell, much of that dissipated and so the shocks that come are generally responded to with a combination of bewilderment, lack of general interest unless it personally impacts you, or the immune system going wild (Iraq invasion, torture).
I am a design engineer and I have found it is really difficult to get people to engage in real discussions of potential risks and solutions. Generally the only thing that anybody wants to know is “What will it cost to be prepared?” Almost nobody wants to talk about low probability, high impact events because that generally would not show up in the 1-5 years time limit people care about.
low probability – high impact events and human nature. We just went thru a surprising 5.6 earthquake – I’m pretty sure we were ground zero because it not only shook the house like a hurricane for 4 seconds, there was also the sound of a very loud explosion. Sometimes earthquakes make booms like that. If it had lasted another 2 or 3 seconds the roof would have come down; the gas lines would have pulled apart; the plumbing would have been disabled and etc. But we just went, Well that was interesting. Lucky there was no damage. Probably not worth taking out earthquake insurance – it’s so expensive.
You cite “financialization and securitization of everything” and Yves cites “a widespread societal disconnect of decision-makers from risk”.
I’d just add that I think we’ve fairly successfully isolated capital market participants from the consequences of their risk management decisions for a couple of decades and this immunity devolves down from “money” to “the real economy”, everywhere and always. I’d peg the real start of that with The Maestro’s bailing out of LTCM in 1998. The destruction of Glass-Steagall put the nation’s money and the nation’s financial speculators back in their unholy alliance, putting us all at risk but risking less and less from their POV.
The price of money sends risk managers the most important key signal about the potential consequences of their actions. Once you completely adulterate it that critical signal is gone.
The second big mechanism of course is price discovery of assets in an open marketplace. This is supposed to be the gladiatorial field of combat with winners triumphing and the corpses of the losers being dragged out of the arena.
Once you invent an uber-mechanism where all distressed assets, for whatever reason, can be privately quarantined so we can pretend they are not on life support, and where they are not subject to the swift justice of the gladiatorial arena, then the risk management decisions that brought them to that condition are nullified and forgotten. Certainly there are no consequences for the risk managers that put them in that condition, who allocated scarce capital to them. Au contraire there are handsome bonuses.
So of course the rational conditioned response to this by risk managers is gay abandon. There’s a dumping ground with “unlimited” capacity (to quote Mario Draghi) where their horrible business mistakes can go to die with the drapes shut, out of view, and because the price of money is completely debauched they no longer have any way to tell if an investment is sound in the first place.
The CARES Act ties this all up in a neat bow, where the consequences of stupendously bad decisions by risk managers can fall squarely and entirely on the tax base as a whole, not just on that portion of it engaging directly in capital markets activities. Eventually all companies will simply be zombified hulks with no business rationale whatsoever standing them up, only political favoritism funded by taxpayers. And in a final filip, the people and companies benefiting most from these arrangements (Bezos and his class) are removed from any consequences because they pay no taxes.
State and local government ARE responsible for public health. The local people running those agencies do not control their budgets. With insufficient funds their experience and qualifications are wasted by scrambling for stop-gap methods. The political leaders (Governors, mostly.) are most to blame. So the next time folks are choosing at the ballot box remember that public health needs vigoroous funding.
As for the incompetence of “managers” and the credentialed, it occurs everywhere in organizations in America, and beyond. A paycheck is essential while “speaking up” is dangerous. See: Captain Crozier. Most folks are neither secure enough financially or academically to voice a contrasting observation.
Yves, this was an excellent post. Decidedly pointed. There are few who dare to take this challenge. That is why NC is so important. Stay safe!
Are you sure you don’t mean Dennis Koslowsky (spelled something like that) who was a CPA from New Jersey and ran Tyco? At least he did some jail time. The smart ones figure out how to cheat legally by hiring the well connected white shoe Ivy League lawyers. That is not to say that GE was not mismanaged but it really was done in by the finance crisis because Jack Welch bet the company on it which worked really well for a long time until it did not which covered up the fact that manufacturing in the US is essentially impossible secondary to the legal system and the health care system, or lack thereof.
If only it was as simple as saying that services operated by the state were fine, it’s private capital where the problem lies.
It’s not. This is a societal and cultural problem.
There are employer “pushes” towards the deskilling and degrading of levels of operational competence. One is employers (both public sector and private sector) do not want to pay for training and to retain a body of experienced employees because both of these cost money up-front with a payoff (in the form of competent, knowledgeable staff) that comes only slowly, later. And a churn of staff is seen as the sign, wrongly, but this is what the MBAs sell as snake oil, of a dynamic, healthy organisation which is bringing in (through a process which never seems to be adequately explained) new talent. Plus, of course, most obviously, younger and newer employees are cheaper so your average headcount cost is lower which is usually a management metric — often one which is incentive-ised through reward.
There are also employee “pulls” — and again, these are not just observed in the private sector. You see them in medicine, academia and even, most bizarrely, the arts. An example of these employee-instigated causes of a reduction in capability is that it becomes in-cultural-ated that if you spend too long in the same place, you’re only doing so out of necessity because you’re so useless, no-one else will employ you. So even if don’t really want to move onto a different organisation or a different field of work outside your skillset, you feel you have to, in order to avoid looking “stale”, “resistant to change”, “stuck in your comfort zone” or any other of the myriad of thought-crimes which you don’t want, in today’s job market, to be seen to having evidence of committing. And also, as collective union bargaining has gone the way of the dinosaur, more often than not, if you want a raise you have to threaten to quit to get one. But again, more often than not, your current employer will call your bluff and let you leave. So you have to have another job lined up to to go to, if you’re not to fall into a trap of flouncing off in a huff but having no other work to walk straight into. While your current employer might not, if they were honest, want to lose you, the dynamics of the workplace being what they are, neither side can then climb down from the ultimatums they’ve just served.
Yes, there are some notable poster-children of how private enterprise has committed suicide through the wanton bloodletting of its skilled employees (Boeing being a recent case-in-point). But even if you cast your gaze in the direction of public employers, this same phenomena can be found in universities, colleges and K-12 schools (where faculties are no longer bolstered by a strong bench of tenured staff, contract and non-tenured hire-and-fire disposable staff are now the norm, I won’t even go there on the effect of charter schools) healthcare (even in the UK’s entirely public sector NHS, there is huge reliance on contract and agency staff which the COVID-19 crisis has highlighted and the government is trying, belatedly and without any clear indication it can do so in the short term to redress this and avoid being price-gouged). Or federal and state regulators which now simply do not understand the businesses they are supposed to be regulating and have to buy-in external “expertise” (and merely exacerbate the revolving door problem).
In summary, I wish it were so simple to merely say “private sector bad, government good”. But the rot has set in from top to bottom across all aspects of how we manage our shared organisational maturity (or, should I say, now, fix our shared organisational immaturity) and whether or not it started in the private sector, it has well and truly spread to infect the public sector, too. This was the unmistakable point of the post, so it bears re-reading it again with a particular emphasis on understanding why this is the case.
devolution by automation. the dystopia we didn’t see coming. can’t help believing that automation itself – even though it has often been, or seemed to be, beneficial – hasn’t undermined and/or destroyed what should be a collective human intelligence and contagious creativity that is the real thing that makes us thrive. But it takes a long steady progression and we’re all too impatient.
We are not getting automation, at least not in the shiny agit-prop sense of The Movies*.
What we are getting is flow-charts, then work-flow systems and digital surveillance which is effectively turning employees into automatons. People who follow the programming, and if someone doesn’t, they are replaced with people who will. Smart, goal-oriented, people will figure out how to follow the programming without doing most of the work. This is especially the case with ‘knowledge workers’, where objectives are wool’y to begin with and hard to quantify with numbers (which work-flow systems, and even HR relies on, so disciplinary actions over ‘performance’ on the ‘knowledge worker’ floors are quite rare.
While someone does get canned occasionally at my TBTF-place, it is almost always over harassment or drinking/drugs/pr0n while at work. The only person that I know of, who was sacked over ‘performance’, he stopped going to work at all and he was still ‘bought out’ with a lump sum as per Programming – in this case the HR’s ‘out-boarding program’).
When the programming breaks because of sudden new externalities like Covid-19, even the supposedly smart people are left floundering because years of sloth have rotted their minds.
And, never mind The Leadership: In a fully automated organisation, they are ‘leading’ in the same way that a kid using an iPad is said to be doing ‘programming’: They see colours and they can make them move and change almost at will, but, they have no understanding of the millions of hidden instructions, and their quirks and dependencies, that makes all this happen.
*) We are not getting any ‘golden automated cities of the 1950’s cartoons’, because actual robots have all of their life-cycle costs accruing onto their owners, whereas for people only wages need to be paid. The other costs, like: Programming, Maintenance, Recycling, Re-programming, Power Supplies, Storage and Down-Time that falls onto ‘people’ and ‘society’ – which is also ‘people’ because only employees actually pay any taxes.
By using actual people and IT-enhanced bureaucracy to simulate automation, the owners can eat their cakes and have them too!
Terrific comment, Clive.
In my experience working as a lawyer in government service for 34 years, I saw this obsession with “new blood” and “innovation” flooding the system with lawyers — and judges — who were breezily ignorant of the law, yet supremely confident in their own cleverness.
University faculties dominated by TA’s and adjuncts; charter schools taught by 6-week-wonder TFA’s; warships piloted by teenagers; Presidents with no experience in government… The list goes on and on.
I blame the instant and consequence-free ego gratification of television-watching for this phenomenon.
100% on the employer pushes. I’ve seen this plenty in my 25 years of working in engineering and manufacturing businesses. And no matter how many “systems” and “quality functions” they put in place, experience matters. In has happened several times that even with great and detailed documentation, when a particular machinist retires, a product line starts having quality issues. Several times we’ve had layoffs for some reason or another and they have to bring particular individuals back because there was some function they did that no one else is qualified or able to do. Also, because we run lean, cross training is difficult…no one has the extra time.
And attitude: Do I ‘make the numbers’ or Do I ‘make the work’? That is too often the choice today.
Good Engineers tends to lose out rapidly to the ‘make the numbers’ people. Then they either quit their jobs or they ‘fit in’ and become bad engineers, of the kind that writes 2000 pages of ‘System Requirements Specifications’ in preparation for the procurement of 1500 lines of code or a 400 pin circuit board (and this is for stuff that is not going into space or anything exciting).
Prior to the advent of neoliberalism and through it child mortality rates have been much higher in the U.S. than other OECD countries.
https://www.cnn.com/2018/01/08/health/child-mortality-rates-by-country-study-intl/index.html
It is very heavily concentrated among the poor.
The refusal to provide public goods is capitalist class relations 101.
It is disappointing to see these early comments ignore the framing of the post and go for simplistic takes.
I said at the top that this post was about advanced economies that had poor coronavirus responses, not just the US. That includes Belgium, France, and the Netherlands, all of which have much higher fatalities per capita than the US. None of those countries have high rates of infant mortality.
Try again.
That’s a bit optimistic.You could argue Belgium and the Netherlands have already plateaued in terms of new cases and deaths. For France the numbers are not as clear thanks to a one-day spike in reported nursing home cases. But the US has shown clear exponential growth in both new cases and deaths thru today. I don’t think the data is in.
For the last week the US has reported 20-30k new cases a day which means the deaths won’t hit for another 1-2 weeks. The number of tests is comparable to the other countries you listed, so it isn’t a matter of overdiagnosis. The East Coast is the only region in the US doing meaningful testing.
It’s not farfetched to think the US will experience a uniquely bad result in terms of health care and economic outcomes because of its uniquely bad health care system and elite indifference. Never attribute to malice or indifference that which can be adequately explained by indifference. Malice is too difficult to prove, and when it comes to enriching themselves, elites are demonstrably competent. What they are, is indifferent. They simply don’t care about long term outcomes or their population. For them, everything is consequence free. Coronavirus is just another example in the litany.
The countries I listed have still have bad outcomes, even if America’s will wind up being worse. That alone disproves “class warfare” as having much explanatory power.
China had just about the highest Gini coefficient of any large economy and a higher child mortality rate. China has become vastly more unequal as it has gotten richer:
https://www.pnas.org/content/111/19/6928
So how to you explain their aggressive response?
Possibly that the Chinese government is afraid of the people whereas US governing elites simply aren’t because they’ve so thoroughly fixed elections, the media and so on that it’s hard to see where a challenge could come from. Which means when the system does eventually break, the implosion will be all the greater.
I owe this thought to Chris Hedges who observed in a talk some years ago that, in his opinion, Nixon was the last democratic (with a small ‘d’) president because he was the last one who feared the people. Hence, for example, his environmental legislation that would be unlikely to pass today.
If the US had at least a proportional representative system, such as a parliamentary one, some signs of the elite losing grip would come sooner. But it hasn’t. So yes, I expect the US fall to be harder than most.
2 models dominate the informed universal health care coverage debate: 1) a purely public (state) model, as in the UK and Italy, in which financing for health care costs is located in the federal budget where it is allocated from a stream of tax revenues and financing sources; and 2) a highly regulated non-profit (non-state) model, as in most of Scandinavia and central Europe, in which financing is located in a pool of premiums and when needed, e.g. for the very young, poor, elderly who cannot afford to pay premiums, state subsidies.
A variation on 2) is a hybrid of non-profits and private, profit-oriented insurers, as in Germany and the Netherlands, in which the mix is critical and is subject to regulation. Something like 90% non-profit, 10% private is IMHO OK though in Germany it might be more like 70/30.
The EU has been blamed for the devastation caused by Covid-19 in Italy. The argument goes something like, the austerity imposed by the Germans forced Italy to reduce health care capacities. The Frankfurter Allgemeine argues today that ECB imposed austerity is not to blame. Rather the purely state model of financing for health care coverage is at fault. The fact is that in the Italian model many stakeholders want a share of the stream of tax revenues and financing sources from which funds for the provision of health care are also drawn. The FAZ notes that Italian state retirement benefits have risen substantially in recent years while funding for health care has been level.
The rise of the FIRE sectors as a percentage of GDP has been obvious. We are over-financialized. All this has done is over lay a very expensive layer of debt and interest payments on the real economy. This is the bubble the pandemic pricked.
Again, this post is not about the US. It is about trying to develop theories as to why some countries responded reasonably well to the coronavirus crisis and others not.
Italy’s banking sector, even with its dud loans not written down, is 1.5 trillion euros v. a GDP of about 1.9 trillion euros, or 79% of GDP. Unlike the US, Italy does not have a ginormous securities market nor a big asset management business, so its banking industry is pretty much the only game in town except for government bond issuance. By contrast, in the US, banks are a way smaller proportion of financial activity (they represent <15% of non-farm private loans) but even banking assets alone are a higher % of GDP, 94%.
Your explanation does not fit key facts. Italy, one of the very worst hit countries, is not heavily financialized. It is also dominated by medium and small businesses
Besides the new aristocracy aspects and a general lack of accountability, I do wonder about rates of foreign elites being “educated” in the US. When my parents go to Boston, all they do is complain about how nice it is, but they remember when the nice areas were where regular people lived. Like US tourists think all Europeans take high speed trains to work, how much of Euro attitudes by seeing the rise of enclaves in the US?
I’ll use UVA and Charlottesville Virginia, but if you never go beyond Preston Ave (gentrification may have shifted it) away from Grounds, why would a student see poor people or any lower class employees beyond UVA employees who aren’t making a living wage? Charlottesville has the highest rate of wealth inequality in the state.
It seems to me one major difference between the US and Taiwan/ROK is the level of accountability for the elected chief executive, and just a generally stronger political opposition.
For example, President Chen Shui-bian was considered a hero by many in Taiwan for his years of struggle against the old single party KMT regime. His wife suffered an assassination attempt during the days of single party rule and was paralyzed for life. However, in Chen’s final term in office, prosecutors discovered evidence of Chen’s financial crimes including money laundering. After leaving office, prosecutors brought charges. After a protracted series of legal proceedings, Chen received a 19 year prison sentence in 2009. He served 6 years of the sentence and authorities released him on medical grounds, though he apparently still is under various restrictions. Taiwan also has a strong civil society. In 2014, student protesters later known as the Sunflower Movement stormed the Taiwanese legislature. Though a policeman received serious injuries at the hands of the protestors, they held the legislative chamber for almost a month. Afterwards, people involved in the Movement founded a political party (Taiwan has more than two political parties that win elections), the New Power Party, and at least one member won his election campaign, the death metal rocker (!) Freddy Lim.
In South Korea (ROK) , the legislature impeached President Park_Geun-hye, and the Supreme Court confirmed it, forcing her from office in 2016. The ROK legislature impeached her because she allowed her assistants to take large “donations” from some of the major industrial conglomerates in the country, known as chaebol. Legislative action happened after months of protests, known as the Candlelight Revolution. Starting off with small demos, eventually there were days where at least a million people marched in the streets. Protesting in South Korea is no joke, during the 80s and 90s protestors would have epic battles with the police where people would die or receive serious injuries on both sides.
Contrast Taiwan and South Korea with the United States, where not a single president has ever gone down on criminal charges. Not one time. The US has a culture of executive impunity and that same elite contempt trickles down to lower levels of the elite pyramid. Also, the tolerance for expressions of dissent is higher in both countries. Can you imagine student protestors storming Congress and living to tell about it, if not receiving decades long prison sentences if a police officer were to receive so much as a bruise?
Thank you. You analyze it. For years I have called it “playing video games”. Years ago I knew a guy who said it did not matter of what but he had to be a manager.It was some sort of prestige thing for him. Took him out of the common herd in his way of looking at things.
Yesterday, I read Paul Johnson’s short biography of Winston Churchill. Churchill did not like desk work according to Johnson and every new task he undertook, he went out and learned the ins and outs of it. He was a relentless inspector and questioner. He taught himself how to lay bricks. He learned by doing and led from knowledge. He made mistakes. He took responsibility. Certainly he was not a typical person, but neither did he sit in an office assuming he knew it all because the model said he did.
That is why Boris Johnson is no Churchill. Churchill was in a lots of was a dilletante, but he was an informed dilletante. He had hunger to learn, maybe too much of it to be good at anything.
Johnson’s hunger is just to be in the news, to make a history. I do wonder whether he still believes it worth it now, or in a short future as he’s being sedated for intubation (which would not surprise me).
this, and several other comments…including Yves’ in the OP…made me think of my paternal grandad.
after The War, he jerry rigged a little sheet metal shop into a moderate player in the Houston economy.
he knew how to do everything that anyone in the shop did…made a point of it.
and he also took care of “his people”…always there with a wad of cash when a welder(or the floor sweeper) had an emergency.
and they loved him for it.
he is where i got a lot of my autarky thinking…he hated the idea of outsourcing and offshoring.
he’d rather pay a bit more for in-house…or in-country…work…because of dependency.
when i read things like this, about the MBA infestation…and the almost universal habit of purposefully mistaking the map for the territory…i think about him.
I remember when i was working there, there was a new, young accountant guy…brimming with the New Dispensation(in retrospect…i didn’t know anything, then).
he kept insisting on re-jiggering everything from payroll to AP/AR to lower the tax bill. Grandad finally had enough one day and lit into him…”who’s gonna pay when you miss a line and the tax man comes? We will pay what we owe and that’s that” etc…grandad LIKED paying taxes,lol…so not Reaganish…
I fear that we’ve gone so far down TINA’s briarpatch path that lessons will not be learned from this debacle…the ability to learn from mistakes has been driven out of the “leadership” classes.
the Depression and the War informed everything my grandad did, and how he did it.
our Bosses will try(are trying) to just restart the System that caused this mess.
we shouldn’t let them, this time.
“Failing Upward” is stupid
we need new bosses.
excellent post, Yves.
lots to chew on as i go now and pull weeds.
I do not really have much to add to what you write Yves. The “we lost sense of danger” is something I have thought of for a long time. IMO, every system that loses feedback will crash, sooner or later. We have worked really hard to remove not just the feedback, but any traces of the feedback.
Everyone who asks for *real* feedback is looked at as a weirdo. We need to know shit happens, we need to have bad shit happen to us now and then (speaking as one who had some really bad shit happen).
One place you can learn about society is how it treats its kids. Most of the kids today are way more cosied that even I ever was, and it’s getting worse. We want to remove any and all dangers, and we go to anyone who promises us that, even if we really know it’s not possible.
But we have to be very careful there. I believe that claims “we need suffering” are bulshit, because most of the time they want to say that suffering is good for us. It’s not. It _may_ be necessary to remind us that bad stuff can happen, the same way as pain does. But it doesn’t mean we’d use it to excuse suffering.
: Grand strategy, according to Boyd, is a quest to isolate your enemy’s (a nation-state or a global terrorist network) thinking processes from connections to the external/reference environment. This process of isolation is essentially the imposition of insanity on a group. To wit: any organism that operates without reference to external stimuli (the real world), falls into a destructive cycle of false internal dialogues. These corrupt internal dialogues eventually cause dissolution and defeat.
[John Robb, globalguerrillas.typepad.com/globalguerrillas/2004/05/journal_boyd_on.html]
Taleb Nassim on Skin in the Game:
For the central attribute is symmetry: the balancing of incentives and disincentives, people should also penalized if something for which they are responsible goes wrong and hurts others: he or she who wants a share of the benefits needs to also share some of the risks.
. . .
And in the absence of the filtering of skin in the game, the mechanisms of evolution fail: if someone else dies in your stead, the built up of asymmetric risks and misfitness will cause the system to eventually blow-up.
[medium.com/incerto/what-do-i-mean-by-skin-in-the-game-my-own-version-cc858dc73260]
Taleb’s skin in the game ignores the disincentives the skin-in-the-game creates, which are often fat-tailed.
Feedback is not the same as skin-in-the-game.
I read your use of feedback as >reference to external stimuli (the real world).
With Taleb, I’m reading disincentives as penalties, and that lack of penalty/punishment warps the selection process of evolution. With respect to the post, that has created a lack of respect for risk by those who make decisions.
It can be taken a step farther, that the selection process has created perverse incentives. For example, the bailouts from 2008 made the FIRE sector qliphotically antifragile. In that scenario, risk becomes rewarding.
I want to be careful here about using the word feedback, its ambiguities could be confusing. Given that, I’m interested in knowing what you mean about ignoring the disincentives skin-in-the-game creates. Could you please expand on that?
Feedback as reference to external stimuli is ok.
My problem with Taleb’s skin in the game is that, as he well knows, it’s hard to distinguish luck (good or bad) and skill. How can we punish for luck though?
Think of a judge, who gets, through his skill, 99 out of 100 cases right. But the 100th – which, by pure luck, could be really large case – he gets wrong.
Or, even simpler. Technically, if you do one decision a day, and have 99% success rate, every three months you get somethign wrong (1-0.99^60 = 0.54) more likely than not. Should you be punished for this? If we yes, then people will start takin decisions where alternate history is hard to prove, i.e. you create a selection bias towards “do nothing”. You can then be punished for “doing nothing” but most of the time “do nothing” is a safe choice. (it’s a specific case of “go with the crowd”)
Also, in decision making, context is extremely important (which is why courts go to super lenghts to establish it in judical cases). Taleb should know it, and he should also know that unless context is taken into account _in_full_ then the skin-in-the-game will not be seen as fair. But the problem is, the context can never be fully established, and rarely w/o the participation of the major decision maker. Who will have no incentive to participate. Which will hamper learning from it.
Skin in the game makes sense when you can clearly separate luck and skill, and clearly establish context. Even one of those is rare occasion, both is extremely so.
That said, you can often establish post fact when someone blew up (this is what the various enuiries do). And then you’d treat accordingly. But that’s not skin-in-the-game, because again, the enquiry can establish that you acted in good faith, as most people would act at the time – and so assign no blame. So you may “fail honourably”.
Skin in the game does not let you fail honourably – because it’s not skin in the game anymore (because it can let you game the system again, via doing just enough to pass any future enquiry as “more could have been done, but there’s no clear knowing dereliction of duty).
TLDR; skin-in-the-game is an attempt at simplictic solution to a complex problem. Taleb should know better.
Thanks, vlade. I shall ponder this.
I admit that I am baffled by this ‘skin-in-the-game’ framing. Life is not a game, and all of my skin is in it.
Moral hazard is a related state.
“Most of the kids today are way more cosied”
I’d like to expand on this a bit, as I think it’s deeply related Yves’ point on risk and perceptions of risk. Far as I can tell, notions about parenting changed very drastically in the 80’s when
1) mainstream media companies discovered that endlessly replaying (and sometimes plain inventing) lurid tales of horrible things happening to children was good for ratings and required no real journalistic effort or talent.
And 2) I’m not exactly sure how to describe what I’m trying to say, but somehow both responsibility for rare and terrible tragedies along with childrens’ and young adults’ agency got transferred to their parents. As if everything that happened to a child or that a child did resulted directly from the adequacy of parenting received.
So rather than cozied (which I think of has having all one’s needs met and being protected from awfulness – a good thing), I think many children are micromanaged, isolated from authentic social interactions, and perhaps worst of all, taught that profound questions of morality and existence are best ignored (lest they cause distress). This, along with cultivating an intense desire for approval from authority, seems to have become the default mode of preparing children for membership in the privileged classes.
Somehow though, at the same time, we were also taught that our life situation is also wholly the result of our qualities as people. Wondering about a person’s station in life? We were taught not to ask “what happened” but “what kind of person are they?” Are they smart or dumb, cultured or trashy, attractive or loathsome? Unnattractive and trashy but rich, they must be really really smart.
I think this combination of dramatically limiting children’s opportunities for growth in competence, confidence, friendships, independence, morality, worldview, and all the other things that go into discovering who you are and where you fit in the world, combined with relentless meritocratic mythologizing have raised a couple generations now that are both terrified of risks yet somehow often heedless of the consequences of their decisions. We’re terrified to speak up in a meeting, but if the result of that meeting harms a lot of people, well, not our fault, just how the world is.
All that said, there aren’t many power brokers I can think of under the age of 65, so maybe all this generational analysis is beside the point. Have the powers that be always been so old?
The powerbrokers are (often) elected by the people. Who may be looking for a father figure, rather than anything else. Someone who would take the responsbilities for them, because they are too hard to bear (you’d argue that some poor don’t vote because they don’t feel the need to offload their responsibilities on others, but it could be a bit overconvoluted – I think most humans want to dump responsiblity elsewhere).
How to truly accept responsibility for ourselves is IMO one of the most important things we’d teach out kids, and that we’re failing to do so (myself included). It’s hard, and paradoxicaly, our society made it harder.
I think all I described has been hard on parents too. IMO, parents are only the primary teachers of children in the early years before peers and society take over. To the extent neoliberalism has a pedagogical philosophy, it’s that we can’t control things we do have power over, and can control things we don’t have power over. Love and accept your kids, treat them with respect, listen, help them when you can, and make sure to laugh together from time to time, and you’ll be a parent I’d envy the children of.
“notions about parenting changed very drastically in the 80’s”
– Brings to mind a long ago article regarding children raised in hunter-gatherer units, was it Papua New Guinea? who were from toddler stage spared much of the parental policing now considered appropriate. Allowed to play with the machete and roam free around the open camp fire they emerged with far less anxiety and perhaps a more practical and functional risk assessment process than modern kids.
Playgrounds today are foam buffered and accident proofed as much as possible, football and hockey helmets and padding are designed to absorb the shock of contact. Automobiles are seat belted, air bagged, AI driver assisted with back up cameras. Airlines and aircraft manufacturers rely on ever advancing auto pilot systems, a trade off that dispenses with higher salaried experienced pilots for lower paid, less flight tested, dial tenders.
“the too-common belief that it is possible to run an operation, any operation, by numbers, appears to be a root cause.” -YS
I believe quantum physics has largely, by numbers alone, drifted off into string theory and multiple universes, all fascinating but of a highly extenuated and dubious relation to anything real.
We have lost touch with consequences through the intermediary remediation of technology and virtual modeling, great tools but they have unintended consequences on human behavior.
Yves piece was very good. I dont have a good argument for why some did well and others didn’t but my suspicions is the long long term absence of skin in the game, and a failure of the systems which are critical for guiding an efficient state failing.
The victory of form over substance.
Which is why I attach to your comment, because I thought it closest to my own ill considered musings.
The genetic map of England (outside the major cities) is essentially unchanged since the Anglo-Saxon invasion.
https://www.theverge.com/2015/3/18/8252797/uk-genetic-map-reveals-invasions-regional-identity
As a decades-long American ex-pat living in London, it’s taken me a long-time to realize, that despite its modern trappings, England remains a feudal society. The way ordinary individuals feel a lack of agency and still look up to the aristocracy and Oxbridge graduates for guidance rather than trusting their own skeptical instincts and standing up for those such beliefs is astonishing.
The fact that “forelock tugging” (an act of deference to a passing lord) remains a phrase in common usage says it all.
Ps. “bedevils”
I’ve felt that the only thing that enforced competence was the elites credible fear of communism after world War II. They had to do some things for the public lest their wealth be seized by the public. And propaganda was used right up to the fall of the USSR. I was fairly shocked that we then looked to China for all our outsourcing needs. The myth was that capitalism would make China an open democracy. Whoops! We enabled them to become a great power without any credible plan to make them any kind of ally beyond some mutual threat of dual self destruction if a trade war erupts. China is credibly working to become independent of the US with heavy state planning while we bail out and reward failed financiers and abandon all public planning to rent extractors. What I wonder is if people will start to look to another way that will credibly threaten the standard elite disaster capitalism approach that has been the norm for decades now.
A sound banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him. Keynes via Yves
The problem is that the payment system, besides grubby coins and paper Central Bank notes (e.g. Federal Reserve Notes), must work through private depository institutions or not at all.
How then can we have a sound economy when it is held hostage by “sound” bankers?
And are not the banks a form of rentier – who rent the Nation its money supply?
Then where are the proposals of the MMT School to euthanize those rentiers?
Please reconsider!…Euthanasia is supposed to be kind!; not appropriate in such a case!
Right out of college, I got a job at a commodities trading firm on a recommendation from my “Political Economics” prof. This was just when the PC started getting incorporated into technical analysis. I learned one of the programs pretty quickly and made a few fortuitous currency trades for some weird clients. One of my thoughts was, “what if you could just make this program run and trade automatically?” I think a lot of people had the same thought. Where has this laziness taken us? (I left after 6 months go to law school but that’s another story).
I see this thought trap how to be more lazy as sort of an alienation that happens when you don’t have to think about what you’re doing anymore but how to get around it, and that gets passed on to others who see that you don’t really have to “work” but that it’s more about being clever enough to come up with a solution that pushes the whole process of being responsible, reflective and hard working on to something – or more likely someone – else.
I sometimes think we live in a world like Jerry Lewis in the Disorderly Orderly where he’s the only sane one in the asylum, constantly tripped up by insanity from doing the job of an orderly.
As of incompetence… the Brits bought some corona-tests which were just crap. Seven-And-A-Half million tests just for the bin.
That’s were the incompetence has it’s home nowadays: 10 Downing St. If everything goes according to plan, the Brits will be redeemed from the incompetence reigning there in these days.
Well, so did Spain. Everyone knew they might not work — the question is whether, if they turned out to work and you’d done nothing, the tradeoff would have been worse than if they turned out not to work and you’d spent money on them. Viewed in that light, the answer was easy: buy them, just in case, because the upside is so large. (Also: it was only a provisional order of extremely new untried antibody tests — greatly needed, but only later on, to figure out when to lift the lockdown and whether and if it needs reimposition — only a few have actually been made, and work is ongoing to improve them, while the tests Spain bought were just contaminated junk: the few thousand that had arrived were physically sent back and the order, for over half a million, cancelled.)
Given the ongoing costs of the lockdown, this would have been a good buy even if it cost a billion quid (it didn’t, not remotely). I’d have done the same thing.
Which is worse, out-of-control greed or rampant stupidity? What’s wrecked America is a combination of the two. Thanks for the read.
On “The Rise and Rise of the Symbol Economy”:
I think you hit some critical points about “spreadsheet models” and their disconnection with reality. Unfortunately, it’s not just the business and finance world that’s struggling here. I’ve seen serious failures along these lines in science and engineering as well. Unfortunately even experts in those fields (who should know better), routinely interpret model results very uncritically.
Like with business and finance, I believe the availability of computers for calculation and plotting has made scientists and engineers a lot more prone to misinterpreting their results or the results of others. I believe visualization of data via plotting software may actually facilitate uncritical interpretation of that data. (“Seeing is believing”. ) Before computers, technicians had to construct plots by hand, which often involved close study of the raw data to determine the best design for conveying that data.
Then there’s also the problem of romantization of computation. Particularly recently, a great many people (technical or otherwise) erroneously assume that a more complicated model or a model that relies on a broader range of data input will produce more accurate results. In reality, models involve *abstraction* of real things into data, which often requires making assumptions and/or discarding information. Proper interpretation of the model results requires taking the process of abstraction into account, but this is rarely done properly and is often impractical when complicated models or heterogeneous data sets are involved.
Yet another problem is that scientist and engineer livelihoods often depend more on abstract deliverables like “peer reviewed” papers (academia), reports, presentations, demonstrations, etc. The target audience is typically either a non-specialist manager or a specialist who doesn’t have enough time to give proper critical attention to the work anyway. Hence, there is great incentive to produce “results” for their own sake and typically fewer negative consequences to the person (in terms of career / money) for “getting it wrong” than for “failing to deliver”.
For me these things are fundamental to the reason that I’m not in a satisfying technical career. I could have made a whole career out of doing sciency bullshit. I had a very successful and well-connected Ph.D. advisor and could have been one of a lucky few to score a “tenure-track” position without doing post-doc work. Unfortunately every time I raised concerns about the integrity of the methods, he would blow me off with “we can talk philosophy another time”. All he wanted to talk about was how to present the “results” for maximum “impact”. Success in that and many other “scientific” fields depends on marketing over integrity, and someone such as myself who values integrity will struggle to match productive output (in terms of prestige and career development) with those who just want to “win”.
I should clarify that I don’t believe all scientific fields (or sub-fields, really) are incompetent as I describe above. I know many aren’t. And it’s a bit of a mystery to me why some are very tight and others are full of nonsense. I don’t have a good answer.
When the dust settles I do think the scientific establishment will have a lot of hard questions to answer. The response from official science bodies and advisors has often been terrible (not just with the face mask debacle). Among other issues, I think a fake form of ‘scientism’ has taken hold whereby models based on dubious assumptions are treated as a form of reality.
Nicholas Nassim Taleb has a paper out on the topic of models. His maths is way beyond my poor skills, but the general point he is making is that there are fundamental problems with models that extrapolate from past events poorly – in particular the often inbuilt assumption that the worst case scenario is the worst previous event. There is an entertaining explainer from a maths teacher in this article.
This is not an easy issue. If one is to review the scientific literature, there was no lack of risk warnings from specialized scientific sources on the possibilities of new SARS-like outbreaks. I also believe there were scientists that from the very beginning worried about this. Once we saw how the outburst in Hubei evolved and watched coming data, surely many could go and check that we were confronting a new guy with a very different epidemiological and clinical behaviour compared with SARS. I am not at the forefront in science but i recall commenting this a couple of months ago here, so I can guess some many others did exactly the same. I don’t think we were short on scientists able to do a good job on risk assessment. Particularly scientists working in public institutions. What’s the problem then? I believe part of it is that we collectively turn a deaf ear to them. I noticed from the very beginning a focus on the clinical aspects of the disease but almost full blindness regarding the analysis of the epidemics. I think it possible that authorities in Western countries took HC experts for advice to their tables but these experts had no idea on epidemiology so they could barely give counseling on the dynamics of the outbreak and couldn’t predict the speed of the spread. If someone tried to notice this would have been received with disbelief as all here were in negationist mood. Still many are. Also, I believe tha many thought this was a Chinese thing and felt comfort on the fact that Chinese authorities seemed to control it. Control, hah!
Yes, I should clarify that I’m not criticising ‘scientists’ as such – my criticism is of the advisory levels within government and established scientific bodies, who I think were far too slow to raise the alarm, and too often hid behind WHO recommendations.
I think there has been too much of a bunker mentality in some fields, and at times scientific communication with the public has been awful. From some of the messaging I’ve seen, there seems a general view among some scientists that the average citizen is a complete moron.
Experts? Who needs experts?
At the best, we get someone like Brian Cox or David Attenborough in the UK (which is, TBH, pretty good, but still simplified. Cox has trivial mathematical errors in his quantum physics book for example, once I got there, I stopped reading because he’s supposed to be a quantum physics professor, so should know better. Yes, it’s a laysperson book, but if you think that particular bit is too hard for a layperson, just don’t put it there).
“In 1348” [https://www.lrb.co.uk/the-paper/v42/n07/james-meek/in-1348]:
“And in the Europe of 1348, of course, there was no healthcare system, no concept of public health as we understand it, save a preoccupation with ‘corrupted air’ and an interest in how best to suppress bad smells, and little grasp of the principles of the spread of epidemics. In 1349 a doctor in Montpellier explained that plague vapours could be spread simply by a sick person catching the eye of a healthy one.”
Today we call miasma or ‘corrupted air’ or plague vapours — aerosols consisting of droplets some of which may travel up to 6 feet before falling to the ground or may float in the air and fill a poorly ventilated room but we aren’t entirely sure. The best way to prevent getting COVID-19 is to wash your hands with soap and water at least 20 seconds so there is plenty of “friction”. How much have we advanced in our knowledge about dealing with plagues? New words, and we know about virus particles and can read their DNA or RNA; we can guess what they do inside the people they infect; we can make vaccines … after a while. But how much more do we really know about how to deal with the spread of a plague than the authorities of 1348?
We have the best Science money can buy. But money didn’t ask many questions about the spread of plagues.
We know how they spread much better than feudal Europe ever did, but that’s not the same as *stopping* them spreading. Exponential growth is a horror — but even so, several incipient pandemics have been stopped in the last few decades. We don’t have any experience of severe zoonotic pandemics in living memory (this is the first thing called a “pandemic” *ever* that was not an influenza strain) or in the period of history covered by modern medicine, so of *course* we are largely making it up as we go along or relying to a great degree on models of dubious reliability. What’s the alternative?
There is a parallel in union organizing. Old school organizers do their workplace charts, listing every employee, their relationships to one another, and tracking their support for the union, by hand. Doing so helps makes the organizer retain this “map” in their head. Younger organizers (myself included) tend to substitute databases and spreadsheets for the old hand-drawn version. Not saying these are entirely ineffective–I can speak from experience that they are not. Rather that the pervasiveness of the technological change is across many boundaries. Woe to the revolutionaries who use a google sheet!
A lot of useful things have already been said, not least by Yves, and I won’t repeat them. But if you think about it there are a whole series of different issues here, and it’s important not to mix them up. For example: how the virus got started, why it spread so quickly, whether it should have been anticipated, whether it was prepared for, what was assumed about it, what was done, how quickly it was done, whether the consequences (especially economic) were foreseen etc. etc. If you’re going to argue incompetence (which I think there has been) you also have to have some idea of what would have constituted a competent reaction. Simply comparing countries doesn’t really help, because there are too many variables, especially political and administrative ones: the US and China would not and could not have reacted in the same way, for example. So Italy, for example, has always had a weak state (to the point where many Italians have seen the EU as their salvation) and this is probably a more important factor than many more technical ones.
If there’s a common thread that links all of these elements, it’s dissociation from reality, which is also the cause of the incompetence on display. Globalization, for example, responsible for the speed of the spread and much of the economic dislocation, could only have been forced on the world by people who did not know about, or were indifferent to, the likely consequences. Some of this dissociation comes just from wealth and power of course (how to travel the world and see nothing) but some of it comes from ideology. For globalists, and neoliberals generally, the idea that the market will adjust to meet any short-term requirements (like masks) is not a simplification in a textbook but a statement of belief. So, even if globalists were aware that masks, testing kits and ventilators were no longer made domestically, they would have replied that it didn’t matter because the market would provide.
A corollary of the above is that, if the market will always provide, then there’s no real reason to plan or provision anything, provided you can buy it fast enough when you have to. Thus, all organizations should concentrate on being as small and “flexible” as possible, doing only those things that are essential, and thus in turn the stifling obsession with process and organizational change to the exclusion of actually, you know, doing things, which is the characteristic of our MBA-ised culture.
And finally, popular and political culture is no longer about anything. Children’s books and TV are purged of anything that might seem threatening, and even adults demand a life free from even the possibility that something might happen that upsets them. We no longer have the vocabulary and cultural references to handle collective grief and trauma. Our elites, for the first time in history, have no personal experience of genuine crisis or deprivation, and, since the 90s politics and PR have become effectively indistinguishable. Politics has degenerated into a classically Liberal struggle for power between groups, and political society is divided into smaller and smaller warring tribes, defined by skin color or genital arrangement, competing for the spoils.
There’s a lot more that could be said but I won’t presume any more on the patience of others. Essentially, though we have been living in Dreamland, and, for all that our elites may think they’ve been cleverly manipulating us, they have been faster asleep than anyone. Our elite and popular cultures, in other words, have long been full of shit. And that mess you see is what happens when it hits the fan.
Thats a hell of a meaty post, lots to chew on there and I’d agree with all of it. This virus really has identified the weak spot of so many institutional systems. Its a genuine game changer in so many ways. It will be fascinating (and not a little terrifying) to be able to observe this in real time.
Great post!
David:
Thanks for this:
I belong to some playwrights groups (one is a kind of old-fashioned list-serv). Many of the writers are waiting for this to blow over, so that they can go back to submitting the same old, same old. Then they may get a production in which the playwright’s background is made much of. The work of art matters much less than the world of P.R. that now surrounds the typical rising U.S. writer, playwright, or painter.
What so many of these people don’t get is that the New Rococo is over. As you say, “Our elite and popular cultures, have long been full of shit.” It has been fifty or more years of Rococo paintings of doilies and flourishes and word-salad on stage.
I have these days been writing on a theory that is flying around like an evasive butterfly on the conditions that may have been at the root of this and other recent outbreaks. I am replying to your comment because this is the first question in your well organized set of questions. I think this post touches many points that merit an in depth view and I like yours as well as many other comments here that add more insights. It seems to me very few are dedicating a single neurone to these arguments or at least I can only find them at NC.
As for the origin of Covid-19 I have read a solid narrative that says the origin could be the vulnerabilities of industrial farming practices in China. The world’s largest producer of pork meat suffered in 2019 a devastating African swine fever outbreak that decimated hogs and very much reduced the most important source for meat production in China. Whether this resulted in a significant increase in wild animal farming and traffic is not clear because China doesn’t provide data on this. Anyway it could be the case that such hidden practices, that I think were encouraged by Chinese leadership, could have increased by a lot during 2019 becoming an important business by itself and a relevant source for food in Chinese markets. This could have increased by much the possibility of a zoonotic outbreak like this.
thanks david (“our elite and popular cultures …have long been full of shit”). I’m thinking we are far too aggressive as a species to stop to examine our equally aggressive fantasies. What we do best when we are not daydreaming is fight, usually without thinking it through. (So what happened to that instinct when it comes to fighting a virus? We couldn’t switch back from the daydream in time?) We are either in some bloody confrontation or we are indulging ourselves in escape. We are totally bipolar. Economically as well. I recommend mandatory therapy, starting with members of Congress. And it wouldn’t hurt to use our instincts as capitalists right now to do a government sponsored program to produce testing equipment that is reliable and can be distributed to every household. (Why is Capitalism so AWOL? It doesn’t look like the fault of capitalism, it looks more like the absence of capitalism.) Likewise for first treatment – if it’s hydroxychloroquine every household should have a current supply. We really shouldn’t rely on our schmoozer-in-chief to jet off to India at the very last moment and cut a deal for drugs – which promptly get confiscated by the Indian Government. I mean… duh.
FYI – re your comment on PCs and Visicalc
I deal with a lot of computer modeling, but am also old enough to know how it used to be done with design charts etc. before computeres were available. The design charts were developed using human computers like shown in “Hidden Figures”. So I spend time with the junior engineers and scientists teaching them about how the entire infrastructure that they use daily was designed before computers were even available.
The first thing I look at when somebody gives me calculations is how many significant digits they are reporting the answer to. If there are more than 1 or 2 after the decimal place, I go through the entire thing with a fine tooth comb, because that means they don’t understand significant digits and the inherent limitations of modeling and are just regurgitating whatever the computer spits out at them. There are often significant errors.
If somebody gives me something to look at that has a detailed computer analysis reported to one or two decimal places and checked with a simple design chart to ensure order of magnitude correctness, it is much easier to check and is invariably more than likely to be usable.
Italy has an historical weakness with the national state structures, and if we look at national stereotypes we are supposed to be naturally messy and disordered.This is reflected in our own expression “fare le cose all’italiana” ( to do things the italian way ) , which is used when somebody acts in a range of ways going from messy , to corrupt ,to shallow ,to disorganised, to tricky.
As for our political and practical management of the Covid crisis, I see now rolling on the usual controversies among the factions of decision-makers, such as the ping-pong of blame between the Lombardy governor and the central government. The issue below ,in my view, is that NHS was regionalized , hence making it difficult a real joint effort and a joint national policy, and any decision on the ground was the result of a political wrestling between them .If there is some link with the article issue is that I tend to think that all the fundamental policies that have been implemented and publicized in the last decades in Italy were based on the idea and ideology of the external constraint . If you go on saying that whatever you are actually doing as a ruling class is because of some external constraint, you are saying that in the end you are not really responsible of you do in front of your citizens.This has little to do with the economical structure, or if it has something to do I don’t see it at first sight.
I stopped a long time ago to try to understand whether or not the death count criteria were worldwide standardised, so I apologize if I’m saying nonsense with the following : when in my country death toll was approx ten times less than now, I remember that Italian HPA came out with the official digits that , with 1266 deaths of people with Covid, 2 deaths were with Covid alone.
A simple and probably useless idea is the effect the jet airplane and it’s compression of time has had an effect on top dog thinking, creating an illusion of being able to simply avoid risk by running from it. We might also have hit a fulcrum point with financioneers running out of countries to easily exploit and razzle dazzle…although traditional legacy media may have hit a ditch in the road…the googoylemonstyr is simply still just a glorified electronic yellow pages and bookfaze is the excuse used to explain bad and failed systemization in media operations… There are many outlets for information gathering and most people outside the oecd have been imf-ed in recent enough history to not be so easily mesmerized by promises of some mythical sparkle pony happy ending…
Finally perhaps also the eloquent ignorance of your correct observation of the notion one can simply PR problems past the newshole and blurb past the facts. There are more lobbyists and PR flax then have ever existed in most parts of the world.
Lastly, and perhaps it is just new to moi, but it would appear, despite the facts most countries outside the big three have multi party parliamentary systems, most have adjusted to a simple two party system with the hand offs then followed with a loud and proud but “loyal approved” opposition…
Same old stale bread…
My two cents in this 3 penny opera…
Interesting about the apparent current lack of philosophical diversity even in a parliamentary system. TINA has triumphed over everyone – so far.
“In the remote era of my youth, even in the prestigious firms, new hires were subjected to at least a couple of years of grunt work.”
I think this is hugely important. I’m a big fan of Lave and Wenger’s theory of legitimate peripheral participation: basically that becoming an expert at something requires apprenticing to a community of practice possessing large amounts expertise, and doing increasingly consequential tasks until one gains expertise.
I think one major – perhaps the major – casualty of the symbolic economy was that there isn’t any simple way to quantify the years (and in some cases decades) of apprenticeship it takes to become highly competent at a highly complex, highly consequential set of responsibilities. Expertise is obviously highly valuable, but let some other suckers or universities do the training, or substitute a credential, amiright ;)
I’m curious to hear from those of a certain age who are experts at something or other. My guess is that you can all name a handful of people without whom you never would have attained your current level of expertise, and that you cannot name a comparable number of young people that you have similar opportunities to mentor.
Absolutely this! “In the remote era of my youth, even in the prestigious firms, new hires were subjected to at least a couple of years of grunt work.”
I worked in accounting for several SME’s and had contact with many CA’s (that’s CPA’s to USians) and lawyers. In those professions here in Canada, new practitioners were required to clerk or article at an established firm before full accreditation. Back in those days, a new young CA or LlB would get hired at a firm and have the benefit of a year, or two, or even three working at the very ground floor but the path to senior and then partner or, alternatively, solo practice, was pretty well assured. That was before the passion for mergers and acquisitions saw huge professional conglomerates. My friends whose small and middle-sized accounting firms were swallowed up by Arthur Anderson and KPMG no longer had a future, they would be cubicle slaves forever. Senior management was remote and middle management was helicoptered in from Harvard and Yale. Working up to partner? Forget it! The accounting firms senior contact people, the ones who spoke to the company owners and VIP’s, would urge their consulting services, which in turn involved counseling ‘professional management’. I mean, what are they gonna do, tell a guy who has been making nails for 40 years a better way to make nails or a kthird-generation caterer a better way to plan events? I saw several cases of the swallowed firms surplus senior and middle mgmt offloaded onto SME’s who had no real need of them.
I have seen similar in many, many professions and industries. It does not go well.
Perhaps the most telling thing is that firms that make real things become directed by people who have no love for the thing they make.
Hi , H.F.!…Competent and skilled personnel in *acquired* business are seen as challenges, threats, potential whistleblowers, and /or knowledgeable observers who are aware of both the lack of investment of the new management, and their intentions to tighten the noose, and crack the whip on those now under them…under the pretext of *maximizing shareholder value* Sacrifices of key individuals is a way to impress on the *survivors* that they better toe the line. See no evil, hear no evil, speak no evil!!!
The stamp of the New Ownership is done through targeted elimination of talent, critical thinking, intelligence, and drive.
To get ahead as part of the PMC you need two attributes, ethical flexibility and a taste for eating shit.
Being a psychopath is also helpful.
In many ways I think this virus has been adept at exposing the weaknesses in nearly every countries system. In China, the policy of governing by way of top down directives, interpreted in varying ways by local governments ensured that the initial response was to suppress news of the outbreak rather than deal with it aggressively. In South Korea the problem was stubborn religious extremists. In japan, a sclerotic and over-rigid bureaucracy. In the US, all three.
Plutonium Kun: Agreed.
There are six fundamental questions to which there are two fundamental answers; or there are 479,001,600 permutations that might describe a given circumstance. Taken one at a time, each permutation is partially correct, 1/479,001,600. Your thoughts here avoid the error of examining the errors made in dealing with the pandemic by examining one error at a time and focus on the factor set that drove the errors. There is no simple single factor to be altered. There is a factor set that consists of several risks ignored. There is no benefit, at this moment, in fault finding. Here and now, we need massive testing, we need at least one reliable treatment regime, and most importantly we need a vaccine. Once we have those things we can then examine who decided what and hopefully we can examine what we need to do to preserve protect and defend the grand American experiment in political economy. Our Constitution calls for a Federal Republic that employs democratic means to achieve a representative government of, by and for, the people. As my high school civic teacher taught, you have to read all the words and a multifaceted thing cannot be described by citing only one of the facets. Consider the recent event, Hillary won the vote and lost the election. Your thoughts here address much of what we should be contemplating as individuals and as a society. One might differ with you with respect to one or more of the components; but, taken all together, you point to a cancer that needs to be eradicated. Thank you.
Ultimately, it’s a case of power corrupts. Thinking through all of the above, it was all enabled by people in power thinking they could get away with something, trying it and then knowing they can do whatever they want. The power they held let them put greed first, and the lack of real potential deprivation or threats led them to make money (as opposed to self-sufficiency or equality or sustainability) the new god. After all, since when has money not delivered? This is the first time in a long time that money can’t buy safety. As Stoller has said on Twitter, the Fed can’t print a vaccine.
The corrective is accountability, or as vlade said, feedback. Elites can’t just sit in their offices, mansions and private jets all day and fail upward, or sideways at worst. We had a little crisis not 12 years ago, but there was no accountability. So here we are.
A remark about SARS and South Korea:
Their preparedness did not come from SARS, but from MERS in 2015. That one ended up killing 30 people, not much these days but enough for a large scare. It included hundreds of school closures and the like – it looked much larger at the time. There was also a huge scandal, when it turned out that medical institutions had been hiding infections, and this added to the scare.
The current Korean epidemic response system was set up after that – it’s just a few years old. It is not deeply rooted in their history or culture or something
Yes, I’d agree with this – in fact, this is precisely what the Koreans authorities themselves are saying. There is a lot of nonsense being talked about ‘confucian values’ and so on – the reality is that South Korea was on much higher alert because of its recent history (similarly with Taiwan, Singapore and Vietnam). This isn’t to dismiss the excellent quality of the response which reflects very well on their government institutions and people, but a lot of outsiders are reading far too much into it.
Perhaps another Minksy-like pro-cyclical flaw in our current system is underestimating the marginal cost of incompetence. We can socialize the cost of the occasional minor disaster made worse by incompetence. Ditto for socializing the occasional cost of a parasitical rentier class. As with all short term thinking, it works until it doesn’t.
As you point out, things like offshoring further undermine our ability to assess costs (ex. to the local workers, environment). Out of sight, out of mind.
I want to say that a portion of the electorate bear some responsibility here. In addition to the moneyed influencers, enough of the electorate agreed to put these officials in office. In the calculus of what the voters thought they stood to lose or gain, they believed they came out ahead.
Great post. My dad used to say “nothing beats experience” and when I was a younger know it all–lover of books and libraries–I scoffed. But now I know he was absolutely right. “No battle plan survives first contact with the enemy.” The people making the decisions are divorced from the results and the real world that most citizens live in–from experience. And so we’ve gone from a country with a genius for the practical–“heroic materialism” Kenneth Clark called it–to one where the elites are going through the motions until it all falls in. It may be falling now.
I think this comment is absolutely spot on.
I’d like to throw a perspective that could be seen as CT onto the barbie, grill away.
This is a use of Howard Becker’s Machine Trick: Design the machine that will produce that result your analysis indicates occurs routinely in the situation you have studied.
This assumes that results are (at least in part) due to the machines functioning exactly as intended. National differences of responses are a result of different de-facto policies.
I. The Big Picture.
Rule #2: Go die!
There is a actuarial perspective that letting people die has a net benefit.
Image: facebook.com/photo.php?fbid=10222313535613412&set=a.1528083088162&type=3&theater
The Greeks and Malthus were aware of overpopulation problems. 1972’s Limits to Growth showed that famine was not the trigger for population crash, pollution was. They modelled a crash date of 2055. The climate crisis is quickening.
The elite case for lowering life expectancy has been established:
: Tobacco Giant’s Analysis Says Premature Deaths Cut Costs in Pensions and Health Care : Critics Assail Philip Morris Report on Smoking
[nytimes.com/2001/07/18/news/tobacco-giants-analysis-says-premature-deaths-cut-costs-in-pensions-and.html]
Note that COVID-19 targets the same demographic that the Philip Morris report does. Targeting high-energy_usage high-capital_liability individuals give good ROI both in climate and financial terms. This brings in
II. The Middle Shark
Actions speak louder than words. Those with access to elite information behaved differently within the US. Feb 28 the President used the word Hoax, four days later the Fed put the crisis on the same level as 9/11 and the Lehmann fall.
Rule #1: Because markets.
Suppressing the response, both in public perception and in ER’s, gave time for the decisionmakers behind the politicians to array their responses. The selfless perspective is this is a geostrategic eruption that must be tended. The venal symptom is elites had time to dump their stocks.
III. The Immediate Threat
A nanoscopic enemy, less than half the size an N95 shield targets. Asymptomatic invisibility, the false negative/positive problems of tests (if you can get them), the horrors of the ventilated. A real threat.
I had previously said that, with the obfuscation and miscategorization systematically skewing downward the perceived incidence of an already blurred enemy, we would have to look at all-cause deaths to really understand the proximate and ultimate mortality. I did not see falling death rates coming. In a complex world there are paradoxical effects. So any evil geniuses are gonna get really frustrated when their plans go awry.
We can already see the opportunistic authoritarians hard at work. I’ll close with a couple paragraphs of Boyd, but first a reminder. This comment is a perspective on why some countries had a less-lethal response to this virus than others. In a complex world, simple explanations are incomplete. Boyd:
Remember what I said, without a crisis, they don’t have an operation. They’ve got to have that crisis. Remember what I said last night? Without anomalies, no mismatch. No mismatch, no
crisis. Without a crisis, no change.
Remember I said that crisis is important to them because then they can insert, work the propaganda, tear apart, generate these many non-cooperative centers of gravity.
What was it Buttegig was saying on the campaign trail? “Chaos is a ladder”? Whose ladder, to what goal?
Yves, you say leaders are showing their incompetence managing two jobs, their medical response to Coronavirus and their management of countries’ economies. I suggest that perspective can be gained by stepping back further and looking at a bigger job than those two tasks. How well are humans managing the planet’s response to the threat of potential human extinction caused by extreme planetary warming (too quickly returning to PET-M).
Where I’m headed: collectivism vs. individualism.
It appears to me that an adequate planetary response (If it isn’t already too late. That’s a separate discussion.) to the threat of potential human extinction would require a giant collectivist response. Almost all countries would need to be collectively acting together. E.g., efforts would fail if a major economy like China or the U.S. continued its polluting ways.
However, it appears most of our leaders are not collectivists. They appear, instead, to be individualists who have fought their way to the top by competing against other highly competitive individualists. Is it in the nature of individualist leaders to seek and join collectivist activities? Are our leaders actively seeking to join an adequate (rather than symbolic) collectivist planetary effort to reverse climate change?
Instead, it appears our leaders aim to be among the “winners” who will win by being among the survivors in their bunkers…in the Hamptons or New Zealand.
I’m wondering about how much the culture of collectivist action, collectivist values, in various countries’ medical systems has played in managing their response to Coronavirus. How much has (predatory) individualism contributed to the incompetent management of economies?
We humans have it in our nature to seek narratives, stories, that “explain” what we are witnessing. Stories simplify explanations. Stories give comfort to our minds. We crave that comfort. The two heroes in your two stories are 1.) losing sight of risk and 2.) using symbols to separate leaders/actors from reality. IMHO those are excellent heroes.
Is it reasonable to expect successive generations of individualist humans/leaders to maintain a focus on risk after previous generations appear to have insulated them from previously known risks? I suggest that a collectivist culture would be much more vigilant about identifying risk and preparing for it. For example, the collectivist U.S. military has done considerable work recognizing and preparing for the risks of climate change.
Is it reasonable to expect individualist (predatory) leaders to competently manage the economy of a country when they’re so busy preying on their respective parts of the economy? Individualists have found a giant tool, symbols substituted for reality, to exploit/prey on the economies they live in. Is it reasonable to expect those individualists to give up their competitive predatory tools to embrace collectivist ways to manage economies for the benefit of all people in their respective economies?
Thanks for this great post, Yves. Managers, CEOS, and politicians losing any sense of risk or real dangers sounds right. Promoting people incompetent or unfit for task isn’t a problem if there is no risk or danger. They’ve become the managerial/political equivalent of the anti-vaxers: they believe no danger can touch them because no danger ever has (so far).
As a young person starting out in the work world, I was as said above, given the opportunity to do “grunt” work. Put another way, like the old world apprentice system, I was given the opportunity to understand the mechanics of work before moving on to such things as planning and strategizing.
Early in my education I had troubles with math. Someone told me to think of numbers as things, or put another way, every number stood for something in the “real world”. Once I understood this, every math problem could be visualized as a real world thing/concept. After learning this I learned to love math, and to apply it well. Word problems referred to real things. Logic and problem solving, thru math, was real. Moving forward to the work world, and with the move from mainframe computers (which I worked with), to PC’s, I became proficient in very complex spreadsheets, creating them, maintining them, and undertaking complex analysis with them. But, and someone above hit on this well, unlike today where the numbers are the thing, or end product, I always envisoned them and understood them, each and every one of them, as just being a representation of a real thing in the real world. This I think sets my work generation apart from how things are done today. The loss of connection between numbers and real things is I think what Yves is referring to as how people have become distanced from risk and by default, it almost becomes “not risk”.
Lastly, when I was younger I always had a need to understand the real world aspects of anything I did. I had a job in analytics/logistics at an Oil & Gas company, one aspect was gasoline blending. It wasn’t good enough to get reports from the field for me, I had to go out to the field and see, touch and discuss the actual work. I loved going to manufacturing plants (refineries), and to the oil rigs. I had to understand everything because how else can you do the “administrative/planning” side of things if you don’t have an intimate relationship with the actual thing?
Anyway, great post. It isn’t the USA, it isn’t capitalism, it is a deeper change in society that knows no boundary or ideology.
kinda like there should only be one number, lets call it 3, and the size of it tells us everything about the world we live in – so a big 3 is extremely important and requires mobilization in some way, whereas a little 3 can be dealt with on a smaller scale ;-)
An old (both ways) friend took up CNC work at a local maker space a while back. After a year or so he is good enough at it to be able to take orders for custom parts, but is now getting to the ‘real world’ of numbers. He is, to his indignation, awe, and utter delight, grappling with calculating the rate of taper he needs for some part, “Cotan, sine, tan — it’s trigonometry!”
There is simply no risk in the game for elites. Trump was slow to act because his risk was that the stock market would be hurt by his action. He was free to wait because the stock market would get a bailout in the end. The lives of the public were less important and still are. The opinion polls of the voting class are all that matter.
The elites have very successfully bought off the voting class by making them small and insignificant players in the game via the 401(k). They readily take the risk off of elites because they are taking it off of themselves. They identify with elites and see them as their protectors.
I think that the dereliction of duty by state actors is a something to be examined in depth. Unfortunately, I am not today in the mood for doing the thinking effort this post merits. I would have wanted to think on one of the symptoms of failure (widespread denialism) and contrast it with the many good observations made in the post. The quarantine and some personal stress has lately been a shock for me. Unfortunately some of my worst worries have come true. I was writing something that could be interesting on the conditions that favoured this outbreak but now I am not sure I can finish it.
Please take care. I am pretty sure I will still need this site to check for some common sense, good, sensible and critical thinking plus relief from the too abundant disingenuous widespread disinformation. So I insist, you gals and guys take a lot of care for yourselves.
you too Ignacio; I agree with your “dereliction of duty” – what else could we possibly call it?
Thank you, Ignacio. Know that your writing has been a great help to my understanding.
Widespread denialism is not hard to figure. Contemporary ruling classes and attached elites have no regard for honesty and truth, so they lie to the people as default practice. The people for whom they have so much contempt are smart enough to figure out that they are being lied to. Given that the authorities cannot be trusted, one might as well believe anything one wants.
Take care yourself, Ignacio. Check back in with us tomorrow, please. ¡Vaya con dios!
+1.
Why the Czech Republic isn’t bottom of the barrel, I certainly wouldn’t hold us up as exemplary case either. There are problems with protective equipment as everywhere else, the testing regime is grossly lagging, contract tracing is nonexistent and just today the leading epidemiologist and sort of top state science guy for this whole thing floated the idea we should let 70 % population who are low-risk contract the virus without explaining how he thinks this could be done without everyone else catching it too.
I would not depict you as exaggerating about the change in posture toward risks. This was a very good essay. The change in posture about risks was enabled because typically big political donars (smallish minority) get bailed out of their troubles while those with lessor political influence (the working poor and middle class) get crushed.
BTW, seduction is the one thing Pres. Trump is really good at. Every news conference of his I happen to catch (not my objective), it is marvelous, fascinating to watch how he operates to seduce. It is what he does, even more fundamental than lying.
The lack of investment in public health has been so long standing that it is not the least surprising to me that the USA has done poorly in pandemic preparation. I knew we had deeply compromised capacity to respond. I am rather surprised by all the valient fighting for lives now going on by many health care workers and a few politicians. To me, I feel there is a mustard seed of humanism and hope in this world because we’ve purposely crashed our economies to try and slow transmission, save lives and health care from imploding totally. It is not a uniform sentiment, but it exists. It surprises me and am glad for it. Still, the disadvantaged are going to fare worse, suffer worse on account of the risks that others neglected.
The change in posture about risks was enabled because typically big political donars (smallish minority) get bailed out of their troubles while those with lessor political influence (the working poor and middle class) get crushed.
After the 2008 subprime mortgage crash, brought on by tbtf banks lending on the riskiest loans and subprime mortgages, and the following 2009 bank bailout, every single top banker in the tbtf banks kept their top jobs. They even got bonus moneys, paid for with bailout moneys. (Nevermind the handwaving.) No risk to them to wreck the economy. They should have all been fired, at the least, if not prosecuted.
I see something very similar happening in academia. We align our identities with our institutions and think in very a short-term, metric-based fashion, seeing “success” (for instance) in terms of student recruitment (tuition fees paid in). Moreover, we’re encouraged above all to be global in outlook: we look forward to our perennially “busy” international conference seasons and we emphasise the global and the transnational over the merely local or national (denigrated as narrow, provincial, and ideologically suspect). We like to see ourselves as mobile subjects, bodies in constant motion, our minds Romantically untethered from the confines of any one nation state.
So our identities as academics are unavoidably embedded in a form of neoliberal hyperglobalisation. We rely on unrestricted flows of (wealthy) bodies across borders. Our institutions (or many of them) have become dependent on international students and their superior fee-paying ability compared with merely “domestic students.” We might agree in principle with ideas of a GND, say, or take an ecocritical approach to a novel or a play, but we’re certainly not going to cut back on the number of international conferences we attend. Indeed, many of us go further. We see this form of globalisation, and the benefits that accrue to us and our institutions from it, as a form of moral necessity: something it isn’t possible even to argue against in good faith. Hence our loud assent to principles like open borders and always-on mass migration. We have to keep those lucrative international students flooding in, after all. (Not that we’d ever put it in terms as crassly material as that; after all, we don’t work in university administration.)
Our commitment to the global as a form of moral mission has left us completely unprepared for what’s currently unfolding. We are utterly unused to considering the material constraints of the economy our livelihoods depend on; that globalisation might come back to bite us; that the very aircraft that carry us across the world to conference destinations and field work sites would one day turn off the spigot of endlessly mobile bodies our careers and identities depend on. Hence the reason why a lot of my colleagues are so lost right now. They’re so used to living on a purely symbolic (or moral-symbolic) level that the materiality of this virus and its consequences seems like a crude insult. Many stubbornly hold on to their old commitments, unwilling to admit that the world might have changed. In this respect, I think of this post over at Crooked Timber, where John Quiggin (an economist I have a great deal of respect for) simply cannot bring himself to confront the possibility that the open borders dream might be dead.
Where we go from here, I have no idea. But the fact that international and Erasmus students might be gone for the foreseeable future, and the major implications this will have for the financial viability or our universities, seems to be slowly sinking in. But the fact that the “export education” model was a disastrous wrong turn will take much longer to be accepted, I think, because of the widespread commitment I’ve been talking about here to the principle of the global as a form of moral necessity.
Brilliant disquisition on modern US academia’s mental and moral dilemma. Thank you.
Thank you for your observations about an academic culture unfamiliar to me. You describe a culture which appears to fit Yves description of “removed.” Removed from what? Realizing the risks of globalism?
All cultures are insular, removed. Even though your community/culture draws from universities throughout the world, inescapably it is insulated from many thousands of other cultures which thrive along side your culture and mine. Many of those insular cultures also are comprised of people and organizations scattered over the planet.
You offer many ideas and observations I’d love to discuss with you. But my comment mostly is intended as a complement for sharing your unusually self-aware observations about your academia and offer the following high complement:
You appear willing to seriously consider the possibility everything you know may be wrong. I always hope academics begin from there. In the 18 years I spent at University (long ago) I encountered few academics who did.
I worked as a support tech for a large french-canadian university for 31 years and what you describe fits our university mindset to a T.
Thanks, all. I should point out that I’ve had these thoughts lingering on my mind for a long time, but the COVID-19 crisis has brought them into focus. Yves’ observations about the chronic discounting of risk across multiple institutions really spoke to me and moved me to comment.
My institution is not greatly vulnerable to the budget crashes that will occur when international students don’t enrol in the coming academic year, but I have friends at universities that will be so exposed. Nevertheless, I’ve seen what the “export education” model has done to my alma mater. What was 25 years ago a university with great Arts, Social Sciences, and visual and performing arts departments is now essentially an Engineering school with a Business School adjunct, geared primarily towards the wealthy international student market. I don’t think that’s a great result, frankly.
Intriguing question and hypothesis regarding the reasons behind the variability in coronavirus infection and mortality rates among nations.
Variable coronavirus outcomes by nation could suggest a combination of elite incompetence, poor individual judgment, a lack of appreciation of risk in all its Rumsfeldian forms, corruption, a desire by oligarchs for autocratic control and being insulated and divorced from actual operations; or underlying cultural and economic factors. It could also suggest that other factors either singularly or in combination played a role, including intentionality based on misjudgment of the agnostic nature of the virus regardless of demographics, economics and social class; or simply denial of an emerging public health threat by political leadership that reflected their own psychological characteristics and cognitive biases that led to a two month delay in implementing containment and control policy measures.
While they played a role, don’t know that blaming the variability among nations entirely on a narrow set of insular public and private sector leaders who relied on computer spreadsheets to assess ROI, NPV of alternatives, payback periods, cost vs. benefit analysis, JIT inventory management of PPE; and the guidance of financial markets is an all-encompassing answer. Why exactly did they rely on those spreadsheets?…
My own view is that we can trace the root cause of policy failure back to the dominant values of leadership and the values of the society/culture which spawned them regarding the relative importance of money in determining policy choices regarding public health and safety.
Unfortunately I expect the social and economic effects of this pandemic and the policy choices that increased its severity are going to be with us for some time.
This was a almost a sleeper, Yves. Thank you, great analysis and the comments were good – I can feel the harmonics already. I wish we could do an ongoing, not necessarily regular monthly, weekly, discussion on what the hell went wrong.
Yes, definitely, as with the GFC, we cannot simply patch everything up and carry on like nothing had happened. Holding a post morgen (bad metaphor and a little tasteless but it also is somehow fitting) is going to be even more difficult because, unlike the GFC, where there was a definite sense that how things had gone on was blatantly fraudulent, corrupt and obviously an accident waiting to happen, with COVID-19, it is entirely natural and understandable to want things to go back normal.
Who doesn’t want to be able to take a trip to visit family, grab a coffee and danish to tide you over the commute on a packed train (yes, I’m even missing that!), go to the local landmark for a mill around on a day off (I always try to visit Stonehenge just a few miles away to see the sunrise on the Summer solstice but I suspect that will still be impermissible)? And so on. I’m sitting here, looking at the hair clippers I bought and fretting about how disheveled I need to look before taking my disquiet in hand and having a go at a DIY haircut.
So who doesn’t want things to go back to how they were and try to forget the whole sorry saga?
But as you rightly say, we must overcome that urge and not cease until we’ve got to the bottom of, as you put it, what the Hell went wrong.
little tip for do-it-yourself hair cuts: (my hair grows like a weed so I could never afford a “beautician” – funny word) – and every so often I’d sit down after a shower and comb all my hair forward , no snarls, and slide my fingers across may scalp and just use regular scissors to cut above my knuckles all over my head. And voila! I didn’t look scalped – I got away with it. ;-) Also just heard Boris got put in ICU – I’ve criticized him with relish but I think he’s got potential and I hope he makes it.
I went to the University of Dayton from 1967-71 and I can tell you for a fact that Dayton was a blue-collar town to the hilt. It was the third biggest GM city in the nation (after Motown and Flint). Inland Tires, Frigidaire, and the big cat, NCR, which was a city in itself. and 50 miles down the road International Harvester Now? All gone, gutted and hollowed out. Except for Harvester which long ago changed its name to Navistar
Thanks, Yves, this is interesting and thought-provoking. It is closest in spirit to an observation a friend of mine made about how post-WWII the relationship between management and labor got its “we’re all in this together” attitude from the shared experience of wartime enlistment — once those from that era were gone, those attitudes disappeared with them.
I will have to think further upon the “habitual cluelessness about risk” — that’s sort of a new one for me. I’m better acquainted with the dangers attendant to “disassociation from reality/confusing the map for the territory.”
I will also have to think about government incompetence more carefully — my instinctive reaction is how do we distinguish this from supreme competence on behalf of their paymasters at the expense of society at large?
In my limited but direct experience with federal government incompetence, and by this I mean at a lower level than the political appointees at the top, is that the incompetence is a feature not a bug. The way the hiring is done now, is to hire only young and cheap – because that is all Congress allows them to do. Couple that with no one ever being fired and you can see immediately the consequences: people who were hired for X, but because of attrition and seniority, now are doing Y, which is over their head. The normal way would be to hire skilled people in Y, but those are locked out. Given the thinning of the ranks, Y often involves overseeing contractors. But to do that well, you need even more to have some understanding, some experience at what the job involves. Etc., etc. Hopefully one lesson to the next civilization after ours is just to hire more federales and less contractors.
I disagree with the assessment this post makes of our public and private sectors. They have not been incompetent or particularly stupid. Determining competence implicitly assumes a criterion for judging competence. By the criterion of Public Good our Governments and Businesses are indeed incompetent — almost beyond mere stupidity or lack of ability.
But Public Good? — there is no Public Good. Public Good has not existed since the 1980s.
Judged by other criteria our governments, at least the U.S. Government, does not look quite so inept. The flows of dollars out of the FED to grease the the wheels of commerce is breathtaking for its scope and the speed and efficiency with which it was executed. And consider the CARES Act — a few months after it was plain the COVID-19 virus was at our door 380 pages of legal jargon and allocations of trillions of dollars appeared ready to receive the unanimous support of the Senate, and quickly pass into law. Little people are promised some small relief, some of which is most unfortunately delayed in reaching those of them who might receive it — and they get a temporary reprieve from rent and mortgages [credit card interest?] — on properties with Federally guaranteed loans; small and medium businesses are promised some relief — though too little, poorly allocated, and coming with strings of uncertain strength; and trillions are heaped upon our Corporate Cartels so they can take advantage of the many buying opportunities as equities crash enabling them to exploit those opportunities for further consolidations.
What of businesses? They are doing very well at maximizing their short-term profits and exploiting the opportunities the COVID-19 pandemic brings. Judged on the criterion of maximizing profits they appear competent — although recent events will mean a few adjustments after Corona. Businesses — Big Businesses — have no reason to care about the lack of resilience in any of their supply chains or in the many cross-coupled networks supporting our way of life — our highways and bridges, our electrical Grid, our water and sewer, our storm drainage, our public transit … — some smaller businesses may fail and be swallowed when there are failures but that just means the bigger businesses can grow. True Corona requires some imagination in extending the term for profit-taking, but with promises of vast gains beyond mere profits they can justify taking a slightly longer view.
But what of our Moneyed Elites? They are indeed very incompetent by many measures. They have lost control over the Corporate Cartels and Government Agencies and Actors now wholly owned by the Corporate Cartels. They are learning that they too are fit meat to eat and though they hide — no bunkers will protect them from the monsters their greed built and empowered.
Oh, my dear Mr. JG, you say:
I disagree with the assessment this post makes of our public and private sectors. They have not been incompetent or particularly stupid. Determining competence implicitly assumes a criterion for judging competence.
But competence toward what end? If the competence selected for is competence for the narrowist, most short sighted, singular private profits, how is this different from incompetence wrt to the broader nation’s interests, to the duty to the larger country’s interests? If you claim competence at the expense of the larger community/country’s interest is not, in fact, incompetence in the larger sense, then I must disagree. For, you know, the ‘market’ rides on the strength of the country, in its whole workings, not the reverse.
Best. etc.
I greatly fear our Government and Corporate Cartels do not care about broader national interests or even the broader long term interests of the Empire. Our Government and Corporate Cartels care neither about their own long-term existence nor that of Humankind … and they appear to act beyond individual human control.
No one had any big investment in any outcome.
… Except for the swarm of bankers, lawyers and consultants with a strong interest in making fat fees with the investment or transaction going forward, with little to no stake in whether or not it subsequently came unglued.
All of these ‘experts’ only too happy to force-fit the model inputs using abstract market comps, ‘best in class’ benchmarks, synergies (body count), etc. in order to massage the base case to hit the desired hurdle, risk sensitivity be damned.
Great piece, Mme. Yves, and some very important comments too. I have reread the entirety twice now.
Is it incompetence or a clear indication that Arnold, Israel and South Korea know the first rule of a crisis? The first rule of a crisis is to overreact. In the case of Arnold that is what action heroes do. In the case of Israel and South Korea, as Yves points out, these countries live every day with the potential for death and destruction at their doorstep. They are small and isolated countries that know no one can get there in time to save them. They need to defend themselves and the governments understand the safety of their people is their job.
So why didn’t a man prone to overreact and is a supposed germophobe not overreact in this instance?
According to the research by Michael Woodley the average general intelligence falls with a rate of 1 point per decade. (eg. book “Our wits end”).
The peak was about 1870s, measured by current standard at about 115. Because of the fall in capabilities the contemporary (European) population is comparable to the one in 1650, but with larger numbers.
So part of the fall in competence is modern people being relatively stupid compared to the previous generation, while living in a world run by systems designed with previous (relatively more intelligent) people in mind.
Seems like it might be important to get an answer to this question (“why” and who) even if the New Yorker couldn’t. Any NC readers heard anything?
Talking of incompetence.
Let’s use the time productively and work out why globalisation was always going to hell in a hand cart, then we will have some idea of what we are doing when normal service resumes.
I am just reading “Dark Money” by Jane Mayer.
A lot of rich people, like the Koch Brothers, didn’t like the New Deal and sort to roll things backwards to the way they had been before.
A lot of rich people really didn’t like the New Deal at all, and Hayek was already busy at the London School of Economics in the 1930s trying to put a new slant on old ideas.
At last in the 1970s, Keynesian ideas started to go wrong and they were all ready with a whole set of new/old ideas.
They wrapped it in a new ideology, neoliberalism, so no one would notice the 1920’s neoclassical economics that lay at its core.
What could possibly go wrong?
They hadn’t worked out what went wrong with neoclassical economics in the 1920s and all the old problems were still there.
The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.
Globalisation would be characterised by debt fuelled booms followed by financial crises.
Adair Turner took over at the FSA when Lehman Brothers collapsed and this gave him the incentive to find out what was going on.
https://www.youtube.com/watch?v=LCX3qPq0JDA
Adair Turner has looked at the situation prior to the crisis where advanced economies were growing by 4 – 5%, but the debt was rising at 10 – 15%.
This always was an unsustainable growth model; it had no long term future.
After 2008, the emerging markets adopted the unsustainable growth model and they too have now reached the end of the line.
Adair has realised debt rising faster than GDP is unsustainable.
World leaders found out the hard way.
At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
What Japan does in the 1980s; the US, the UK and Euro-zone do leading up to 2008 and China has done more recently.
The PBoC saw the Minsky Moment coming unlike the BoJ, ECB, BoE and the FED, by looking at private debt-to-GDP ratio.
Steve Keen saw 2008 coming in 2005 by looking at the private debt-to-GDP ratio.
It shows you when bankers are using bank credit to inflate asset prices.
Look at the US in the 1920s, debt is rising faster than GDP as bankers were using bank credit to inflate asset prices.
Adair has realised debt rising faster than GDP is unsustainable, the US found out the hard way in 1929.
That’s the problem.
One by one, countries were forced off the Au standard in the early 30’s as they became targets for countries that had embraced the fiat lifestyle and could mount raids on good money.
I suspect we’ll see just the opposite soon…