Below we’ve embedded an important, high-level presentation on the political reverberations of the Covid-19 crisis by Tom Ferguson, who is one of the top experts on money in politics. I wish we had a transcript, but it’s not as daunting as it looks. Ferguson’s remarks take only the first 45 minutes; the rest is Q&A.
It’s worth your time because Ferguson looks at the official responses to the Covid-19 crisis and explains things that might seem nonsensical, above all, why so many governments are “reopening” even though polls pretty much everywhere say citizens want restrictions in place longer. Ferguson cuts into the problem by focusing on worker safety as the real dividing line.
The short version is “follow the money,” as in big businesses think ending lockdowns will help commerce, when as we know, that’s not proving to be the case. Core observations (at 16:19 and 17:22):
That reinforces neoliberalism. Despite the uses of war metaphors, where combatants would set up huge new bureaucracies to mobilize resources and people, governments are making interventions in the Covid-19 crisis though existing firms. But one war analogy that is more apt is that truth is always the first casualty. Ferguson comments on the terrible and inconsistent statistics about infection levels and deaths, which are due not just from the failure to run enough tests but as many suspected, also from the far from accidental failure to do the best job of counting, particularly of nursing home deaths. One reason Belgium has had such bad-looking results is that it’s been an exception, with officials making considerable efforts to keep accurate tallies.
The split on protecting workers versus businesses is largely but not entirely on class lines, with private equity playing an outsized role in pushing for an end to lockdowns. Ferguson notes that unions representing construction workers have been quietly pushing to end lockdowns, while white collar workers who are not in a much different position than meatpackers and retail store employees (in terms of working in close, high risk conditions) like health care professional and educators, have been acting in a somewhat radicalized manner (nurses and doctors speaking out; nurses engaging in walkouts; teachers threatening a strike in New York City, which led to school closures). This parallels the at least 200 strikes chronicled by Mike Elk at PayDay Report.
Notice this pushback it taking place despite safety needs operating against protests; Ferguson drily commented on the shrinking of the public space.
Ferguson does think there’s a sensible solution, although he recognizes it’s not likely to get done despite the relatively modest cost:
Ferguson also commented that the appearance that things were kinda-sorta stabilizing at a bad new normal (if you consider 25% unemployment, properly measured, a spike in childhood hunger, many unable to pay rents or mortgages and deferrals not long term solution) was deceptive. In the 2008 crisis, where the damage was more localized, even with large sectors impaired (residential real estate in certain countries; the banking system via housing-related derivative bets), there was lots of G-7 and G-20 communication and a good bit of cooperation. Trump’s America First policy has put the kibosh on that. Ferguson is particularly concerned about the parlous state of the EU/Eurozone. He sees a not-trivial risk of national politics taking the fore, above all in Germany, leading to actions that could produce another Credit Anstalt (with the most likely blowup taking place in the Italian banking sector).
As he concludes:
There’s a lot more meat in the talk and the Q&A, so I hope you can find the time to listen to it.
Sadly, the CEO of Merck confirmed what ought to have been obvious (as your humble blogger and Lambert have repeatedly pointed out in asides in posts and comments): a vaccine in even 18 months would be heroic. The comments from Merck are even more of a dampener by virtue of Merck being a big vaccine player. From the Financial Times today:
Merck chief executive Ken Frazier has cast doubt on the 12 to 18-month timeframe to develop an effective coronavirus vaccine, describing the widely mooted schedule as “very aggressive”.
“It is not something I would put out there that I would want to hold Merck to,” the US pharmaceutical group’s chief told the Financial Times, adding that vaccines should be tested in “very large” clinical trials that take several months if not years to complete.
“You want to make sure that when you put a vaccine into millions if not billions of people, it is safe,” he said….
“Our experience suggests those are very aggressive compared to other timelines for getting a safe and effective vaccine,” Mr Frazier said when asked whether he thought the oft-repeated goal was realistic.
And Christine Lagarde confirmed that the Eurozone had taken a worse hit than in the financial crisis. Again from the pink paper:
The eurozone economy will shrink by 8 to 12 per cent this year, as the “sudden stop of activity” triggers a recession twice as deep as after the 2008 financial crisis, European Central Bank president Christine Lagarde has warned.
Ms Lagarde painted a gloomy picture of how the eurozone will emerge from the coronavirus pandemic as she told students on a live webinar that they faced “a massive economic crisis and one that was literally unheard of in peacetime for the damage it is causing”.
The ECB president, who will next week announce its latest monetary policy decision, said the “mild scenario” it outlined this month for a 5 per cent contraction in the eurozone economy this year was “in my humble view already outdated”.
She said the eurozone economy was “very likely” to end up “somewhere in between the medium and the severe scenario”, meaning the economy would contract by 8 per cent or 12 per cent. Adding that the bloc’s economy shrank 4 to 5 per cent after the financial crisis over a decade ago, she said “here we are talking about probably double that”.
As Ferguson said, “If you want a happy ending, watch a Disney movie.”
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I don’t agree that people are reluctant about reopening. Almost everyone I talk to who is working and not retired in my rural area is all-in for reopening. Sure if you are an urban person with uninterrupted income working from home your calculation may be different – but for those who make their living working with their bodies, (I guess that’s a pretty good dividing line between working class and bourgeois), the shutdown has been a disaster and they are getting very impatient with it. And the heavy-handed enforcement.
Your area is not at all representative, and/or your contacts are well off people (by local standards) or business owners.
The polls are consistently against your view. Responses are strongly stratified by income. The lower the pay level, the more opposed people are to ending the lockdowns this early. Poor people are accustomed to the deprivations of being poor. Being dead or irreparably damaged by the disease is another matter.
And you and your contacts appear to be in denial. Most people are not going to flock to bars or hop on a plane. So how do these businesses get by on at best 60% of the traffic they had before as older people (the ones with money) stay largely away? Had we gotten the infection rate way down, as they have in many countries, people would feel safe about going back to their old lives. They can’t as infection rates stay at May levels or rise, as they have here in Alabama (our worst day by far was last Friday).
I am in Alabama and I have to tell you just about everyone I meet, even in this moderately affluent suburb of a state where the biggest city is 200,000 and pretty much no one lives in the city center, isn’t happy about the reopening. At a minimum, they want it to be more gradual and quite a few want more mandatory use of masks in public spaces.
My rural area in far northern California also are pushing to open up.
Not seeing much at all in the way of push-back.
ymmv
I know some more working class people that are leery (they cancelled camping with us) – they know if they get sick it’ll be possibly house losing expensive.
And they lost their house in the Great Recession too. This would be in exoburb Madison, WI.
With the American health care system you would be crazy to risk getting very sick (death might be better :( ) if you understand your health insurance coverage.
@furies: YMMV indeed. People in my semi-rural area are also pushing to open back up. Of course, this probably has something to do with the fact that our infection rates are well below the national average. [And less than 2% of NYC’s rates.] Heck, things are so quiet here that our hospitals ended up laying off staff, having postponed elective procedures and screening exams in preparation for a COVID-19 wave that never came.
Infection rates aren’t the same everywhere, and the rates of re-opening shouldn’t be the same everywhere. In NYC there is still substantial infection, and restrictions should remain. But in my community? I’m not certain that the strict lockdowns were ever warranted. Tens of thousands of people were forced into unemployment, and we’ve had a handful of deaths in one nursing home. Instead of permitting only the essential, we need to be prohibiting only the clearly dangerous, and using masks for the intermediate situations. Well, at least in my area.
I suggest you look at Alabama and think twice. Our infection rates are spiking up and it hasn’t even been two weeks since restrictions were removed (save schools and colleges not being in session).
Moreover, the urban/non-urban distinction looks spurious. Seoul, which has a big public transportation network and is larger than NYC, has had all of two Covid-19 deaths versus over 20,000 for NYC. Hong Kong, another high density city, got the virus under control despite a bad start. By contrast, low density, low controls Sweden moved into having the highest per capita death rate in the world in the last week.
There’s no point in denying that a significant slice of the working class DOES in fact want reopening. The plural of anecdote may not be data, but anecdotes are still evidence of existence. The office workers I know are leery of reopening, but the waiter wants restaurants to open immediately. Oh, and “the virus is a hoax”, despite being married to a nurse in public health.
Acting against their own interest? Of course. Significant? Hillary Clinton didn’t think so, and then found out otherwise. When people are forced to vote with their feet, they will find a place to go.
Well it’s representative of something as the elementary schools reopened 3 weeks ago and retail mostly reopened with mask restrictions. Restaurants are open for takeout and outdoor seating. All to general approval with lines at many establishments. And small gatherings of ten people or less permitted.
I’m not a pollster and I generally take them as relatively inaccurate but I get out a lot and life goes on.
I suggest you read the post. It appears you didn’t.
1. Your local restrictions are still very severe (except for the opening of schools) compared to plenty of places. In most of the South, everything is open except schools, no mask requirements, no limits on gathering size. Some places here for instance, like some gyms and a very few churches, have voluntarily delayed opening to June 1 to get social distancing procedures in place, and I stress those are self-imposed.
2. More important, you don’t have any evidence of actual local sentiment. Your perspective appears to reflect consumer, and not worker, sentiment.
Businesses are behind the anti-lockdown pressure and media reporting will reflect government and business messaging. Have you spoken to any health care workers? Retail store employees who are in a position to speak candidly?
Many are still staying home out of fear of coronavirus, so they see the lockdown lifting as premature:
https://www.vox.com/covid-19-coronavirus-economy-recession-stock-market/2020/5/23/21268500/coronavirus-lockdown-poll-business-economy
This poll shows the shift in sentiment in the last month on reopening is largely partisan, ie pro business Republicans favor it:
https://www.politico.com/news/2020/05/21/poll-partisan-divide-273706
Workers refusing to come to work over disease fears is enough of an issue that law firms are offering advice:
https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/coronavirus-when-scared-workers-do-not-report-to-work.aspx
And workers lose unemployment if they refuse to come in:
https://money.com/refuse-to-work-coronavirus-unemployment/
Even office workers are concerned:
https://fortune.com/2020/05/26/going-back-to-work-employee-health-reopen-economy-coronavirus/
But are polls and “actual local sentiment” the appropriate parameters to use for making policy decisions, or should we try to quantify actual health risk and use that instead? Most people’s ability to evaluate risk is quite poor, and they routinely overestimate the risks of highly visible or publicized dangers while underestimating risks elsewhere. [In my lightly affected area, an office worker is more likely to be killed in an automobile accident on the way to work than by a COVID-19 infection acquired there.]
And at some point, we need to let the ~40 million people who lost jobs get back to work. When will that be? Should we wait until COVID-19 is completely stamped out and nobody is scared of it anymore? [That could be years from now, especially if vaccine development efforts go poorly.] If not that, then what metric should be used to determine when re-openings can occur?
Again, with all due respect, you don’t get it. Not working is due to the disease. Blaming it on the lockdown is a misattribution, as Sweden shows. They had no lockdown and now have the worst per capita death rate in the world despite being low density. And not only have they taken as bad a GDP hit as their neighbors, it may wind up being even worse because their neighbors are loosening up border and travel restrictions with other countries but are considering keeping them in place v. Sweden.
Do you think airline passenger volumes, or any tourist related business like hotels, or the conference industry, or theater, or music performances, are going to come back to anything like the old normal? The notion that we can “get back to work” in tons of sectors is spurious.
And you have no idea what the actual situation is in your area given the dearth of testing. Plus the risk of coronavirus is not just death. At least as many people as those who die wind up with debilitating conditions. 1/3 of the survivors of hospitalization suffer permanent kidney damage. Permanent lung and heart damage are also common. And plenty of people who are not hospitalized report that the illness is so severe that it impairs their functioning, in a surprising number of cases for over a month. I’m gobsmacked as to how cavalier you are about this illness after so much has been written about it.
You can look at the example of the rest of the world. Thailand, where Bangkok is the most visited city in the world, 30 million people, tons of Chinese tourists, has crushed infections. Poor Vietnam has hardly any. You can go down the list. We needed more time in lockdown to get the disease levels down so that people would feel safe to go out again, that any rise in infections would come from such a low level that it could be reasonably well contained. But we had very inconsistent responses and terrible leadership, not just Trump (who was the worst sinner) but the Dems and media. How many officials do you see wearing masks on TV? That sort of leadership by example counts a ton.
Look at how high level execs and Silicon Valley companies, which have luxury in how they operate, are responding. They are planning to keep as many people as possible at home. They are making plans to make these changes permanent. Yet you ignore the message of their behavior.
With all due respect, you didn’t answer my question. What metric should be used to determine when re-openings can occur? If now is too early, then when?
And you misread me. I’m not cavalier about COVID-19. I’m well aware of how severe it is. But I’m also alarmed by the job losses. We’ve literally thrown 20% of the workforce out of work. Now I agree that some of those jobs were doomed anyway (like in the travel and tourism industries), but I personally know nearly a dozen people who were ordered out of work who could have kept working safely by wearing masks, cleaning shared contact surfaces, and taking a few other precautions.
And your previous comments about Hong Kong are interesting. Authorities there imposed restrictions that suppressed the virus even with their high population density, but they did it without the tremendous job losses. I’m having a hard time finding firm statistics, but it appears that fewer than 5% of HK workers lost their jobs. What did they do differently so that people could keep working?
And regarding officials not wearing masks on TV? I totally agree with you. We desperately need to be wearing more masks in the US. I’d just like to see more people be able to do so from work. Especially for those who can’t work from their computers at home.
You are misattributing causes. The cause of job losses is not the lockdowns. It’s the level of infection leading people to curtail their activities. Sweden proves that. No lockdown, GDP hit similar to that of its neighbors, on a path to be worse.
I flew in March for medical reasons. Domestic flights are not locked down. But go look at the collapse in travel. The airports I went though were ghost towns. Even with tons of flights cancelled, the ones I was on were at 20% of capacity. Hotel was virtually empty too. OpenTable predicts 25% of the restaurants will fail. My friends in finance think that % is low. That’s not due to lockdowns. That’s due to fear of getting sick.
Some parts of the US never were serious enough about lockdowns to begin with. Some counties in Alabama had none save the state-ordered closure of public schools. Even in Birmingham, which was better about restrictions that the rest of the state, a world-recognized epidemiologist said we’d let up the lockdowns two weeks too early.
Jerri-Lynn has written a series of posts on Hong Kong. I suggest you read them. The key bit was quarantining and contact tracing. Americans are doing almost no quarantining even when warranted (as staying in your room, having family members or delivery service leave food outside the door) and our contact tracing is a joke. There’s no point unless contact tracing is accompanied by testing everyone who is possibly infected and we aren’t doing that.
Paging Slavoj Zizek. The ideological coup de grace administered here where the talking heads managed to blame the quarantine for the virus’ damage has been the greatest slight of hand trick in quite some time.
Thank you for continuing to hammer home this point, Yves. I feel like I’m having this conversation with almost everyone I know.
Look, you need to realize that there has been no destruction of productive real capital whatsoever. Everything is still standing as it was three months ago. Factories, schools, homes, everything. The crops are (knock on wood) not failing yet either, except for that locust infestation in Eastern Africa and the Middle East that is going on right now.
There is absolutely no rational reason why we should not be able to “pause” non-essential activities for however long is necessary to get rid of the virus, then go back to normal life.
Not just that, but not doing so ensures there will be no return to normal, because until an effective vaccine that can be produced and distributed in billions of doses becomes available, there will be no return to “normal”, whether shelter-in-place orders are in effect or not.
From which it directly follows that the real problem right now is that we have a totally dysfunctional socioeconomic system that is not fit to serve the needs of society and has to go.
Yet who is your anger directed towards?
Looks like it is not the people who designed this system to serve own interest and who are now clearly planning on sacrificing many millions of lives over the coming 2-3 years in order to not have to change it. And on doing so while tricking much of the rest of the population that this is being done for the common good…
Me and most of my people are planning to stay locked down and let the yahoos get out and test that herd immunity thing first. (No surprise that we are mostly able to work from home.)
I’d be totally cool with it if it were 100% optional. Let the people have the freedom to infect themselves if they want! But it’s not optional if you have to risk exposure to feed your family.
Our big concern had been one relative who works as a prison guard at Rikers. Luckily, she broke her foot and has been on leave.
Still, my 19-year-old is dying (!!) to go back to college in Santa Cruz in the fall. I’m worried about that second wave.
Here in Suffolk county Long Island (where those protesters were yelling at the TV newsguy the other day), traffic has been ticking upward since last week.
Looks to be a meaty preso. I will dig into it later.
Unfortunately the freedom to “infect themselves” also increases the likelihood that they will extend the time and extent of the pandemic.
In Orange County, CA where the beaches are crowded with lots of congregating younger people, the number of infections is 3X’s higher in the 18-24 Y.O. cohort than in the over 60 cohort. Not until more younger folks get hospitalized (and monetarily burdened) will the concern for spreading the virus improve. Or when they take the virus home and their parents/grandparents succumb.
Follow the money. Who benefits if parents and grandparents die from Covid 19. No downside to partying.
Ferguson points out that he’s heard (and he has impeccable contacts at that level) that some central bankers and other government officials discussed how Covid-19 could helpfully reduce pension obligations. So some parties are explicit about wanting to shorten the lifespans of their citizens.
I like seeing the words “resources” and “management” together.
Which reminds me — has there ever been a starker illustration of the fundamental insanity of our system than the COVID disruption?
So for a brief moment of two to three months we are forced to not waste our limited nonrenewable resources on pointless activities with no long-term benefit to humanity such as jetting around the globe for business meetings whose main goal is figuring out how to destroy everything even faster and on vacations to exotic destinations. And what is the reaction? Everything is falling apart…
One would think that not having to waste our precious geological inheritance that will not be regenerated for another 100-200 million years would be a reason to celebrate. But no, instead the system is crashing and everyone is up in arms about why we are not burning our proverbial furniture as fast as we can…
+1. And only a small percentage of air travel is for business. The vast majority is considered “leisure travel. “
An organized and thorough response from our federal government was necessary for the country to see itself as one. The effort was negligent, disorganized and reflected the management of a real estate swindler. Deficit spending, on behalf of the forty percent of the country with little or no savings, should have been the priority and would be the priority of a right thinking administration. About four one thousandths of the country has become infected. What happens when an event occurs that affects eight one thousandths of our citizens?
An organized and thorough response from our federal government was necessary for the country to see itself as one. The effort was negligent, disorganized and reflected the management…
A+1–in that first statement– for seeing where step one was so misplaced—imo also
Kudlow talking about a “back to work bonus”. How about a hotline into the TBTF tip sheet boiler room to front-run then dump the next miracle vaccine Scam-Co fraud to be touted on CNBC the next day? SEC will look the other way on their p-rn monitors, as usual.
I’m one of the yahoos out every day, which includes a 90 minute hilly trail run through the woods at a few public “undisclosed locations”. Hint: the governor of this state is in no condition to chase me even if I was carrying a 200 pound backpack. Admittedly I’m pretty good in the 60+ year old age group.
Up here in southwestern New York state, the insanely popular ice cream stand, famous in our small village as being the local gathering place from Memorial Day weekend though Labor Day, frequented by ice cream lovers wearing red MAGA caps ….. remains closed. You can get your ice cream cone fix at the tiny general store around the corner, but my local information source reports that the ice cream scoopers are unmasked and ungloved, so older people are staying away. We are currently sticking with the half gallon in the freezer and scooping our own.
You should see what happened to an ice cream store on Cape Cod when they opened for Mother’s Day:
The workers were harrased for following the rules
Because they stuck to ordering over the phone only, and taking the orders out to the customers, they lost their composure. I can’t and won’t understand this outlook that a business has to cater to me, right now, or I will harass you.
Spare the Austerity, Spoil the Austere
(or its advocates anyway, these people who take their ‘locker room talk from the top remind me if all you had to drink every day was Chateau Neuf wine, you’d be too drunk and tight to pick your own grapes)
Though I read here in the comments that an oven is quite rare for U. S kitchens, so buy her one for next Mom’s day instead of getting hot under the collar at a Parlor maid haha
Regarding the vaccine: IMO, the big shortcut will be 3rd phase of clinical assays which would need at least 60.000 subjects and a long lasting survey on efficacy. IMO we might run, almost directly, for massive vaccinations without knowing the real efficacy and with more or less good indications on safety. There are, here and there, subtle indications this could be the way to accelerate this. Big pharma won’t probably be big players in this game as they will guard their backs against any potential problem.
Anectotally, in Madrid, with a neolib regional government, all communications, applications, forms… have been diverted to private autentication firms through a fee ignoring the already existing official and free autentication methods. And it is not that easy to notice this is the only way to do it. If someone is doing, for instance an application for the recognition of dependent relatives, which requires certain amount of documentation, a new bussines is contracting an agent that will do the bureocracy for you, and of course, eat on the corresponding economic support for the dependent or those caring them. This is their way to try to reduce the effectiveness of such programs: interposing middlemen here and there.
And yeah, counting, 27.500 deaths so far when excess mortality has been about 43.000. Neoliberals don’t give a …. on nursing homes even when they are running the businesses. In the late years private equity has been investing heavily on nursing homes cos a growing industry ya know? Let’s not start with their business model because it is nauseating.
Chinese vaccine trials, with so supposedly low disease incidence, wil have to move their phase III to, let’s say, Africa unless they do these at home with many millions individuals in each trial. For instance the whole Hubei province should be a trial.
Things will take a turn for the better only after finance, big corporations and big business admit to their hysteria. They are in pretend mode now. Save face; get some bailout money. Trust us, we can bring the world out of this catastrophe. Because? We are The Free Market, the profit takers; what else is there? If it weren’t all so tragic it would be fun watching them crash and burn. In the end they’ll probably be as nasty and vindictive about their own self-imposed destruction as Dick Fuld was. Not with a bang; not with a whimper – just with a lot of recrimination and hatred. What else is new?
Tom Ferguson made some great points on the social forces, such as how there is no OSHA, no whistleblower process, and no investment by government to help redesign production methods. We were already living in a new gilded age and now it’s most likely to get worse. It will happen over 1-7 years, but the social forces look mostly negative.
I frequently think that the push to “open up” now is really a push to prevent people from thinking about transformational politics and systems. Get ’em back on the hampster wheel before they start thinking of something better.
“Get ’em back on the hampster wheel before they start thinking of something better.”
Perfectly, powerfully put.
Yes. And why is limited testing not a purposeful way to avoid responsibility for a better documented catastrophe? Ya wanna look like Belgium? If you don’t gather the data, they can’t hurt you, says the machine. It’s all swept up as fog of war. A well-established practice, which I seldom see considered by analysts.
Seems too true. We don’t need or want knowledge for governing now. Maintaining the shibboleths that tell the Teams apart is enough.
Agree! perfectly, powerfully put. I added this phrase to my compendium of phrases of rare clarity and expressiveness.
The Pandemic’s explosion in Europe and North America isn’t a coincidence. It is directly correlated with the secondary status of government and supremacy of the plutocratic FIRE sector. Big government has been bad since Bill Clinton, but Donald Trump decimated corporate regulations and significantly cut their taxes.
There was bipartisan support for 4 trillion dollars for Wall Street but at the same time the fight against the novel coronavirus was dumped on the 50 states. Totally ignoring that a working government that tests, traces and isolates the ill is the only sure way control the novel coronavirus. Corporations can’t.
What is not mentioned by corporate media or democrats is that the USA has just made a stupid mistake worse than the invasion of Iraq or the Vietnam War. This happened due to the reigning “get rich” ideology whose sole goal is making a higher quarterly profits that increase managerial bonuses.
Coronavirus is related to the common cold. It appears to have characteristics like HIV that inactivates the immune system. All decisions in the West are based on promoting pharmaceutical profits from a magical vaccine or treatment. The USA is not funding a federal public health system to combat the pandemic. The Elite have pretty much guaranteed that the Wuhan coronavirus will become endemic in North America just like HIV is in Africa. Up to a million could die.
Due to the incompetent response to the pandemic, the Western Empire has fallen. Virus free Asia has risen. The USA is now a pariah nation that must be quarantined for the foreseeable future.