Trouble always comes in threes
EVERY morning brings news that is almost beyond belief. Much of the world is in lockdown. Borders are closing or have already closed. The world economy is effectively being brought to a stop in a way we have never seen.
People are speaking as though this might be another Great Depression, but it is actually worse. The closest analogy to the shock we are experiencing is the outbreak of World War I in 1914.
We are effectively in the grip of three interconnected crises, none of which is under control. The first is the global public health emergency. Over the past two months, different countries have tried different approaches but it seems we will all end up in the same place: the quarantining of almost the entire population.
The debate at the moment is not about whether or not that can be avoided but how long we must keep those measures in place.
As you would expect, the rich nations have acted much more quickly than the poor — indeed in much of the world the disease is spreading unchecked — meaning that even if we can get it under control, borders will stay closed for who knows how long.
The second crisis is the threat to the real world economy, the scale of which is almost too terrible to contemplate.
But as if that wasn’t bad enough, there’s a crisis unfolding in the world’s financial markets and this time it really is different. The past two great peacetime shocks to the world economy — the Great Depression and the Great Recession of the previous decade — began as financial crises which then spread into the real economy. Obviously this is not the case at the moment. What we are seeing now is the opposite: a sudden shock to the world economy is triggering a financial crisis. The danger is the financial crisis could then feed back into the real economy. To avoid it we are going to see large chunks of the finance world effectively nationalised.
The government will have to take some pretty tough decisions, too, about which bits of the real world economy they are going to protect and which they are going to allow to go to the wall. A crisis like this will speed up economic history. So if high street travel agents remain closed for months, will they ever re-open or will that business move permanently online? The same for department stores.
Whether we like it or not, it will become a matter for governments. In that sense we are back where we were in the depths of the global financial crisis, when governments around the world had to decide which businesses were to be given bailouts.
But these aren’t even the biggest questions politicians are grappling with at the moment. At the same time as they are dealing with real world and financial crises, our leaders are exercising coercive powers that haven’t been used since World War II.
Many of us, I suspect, had assumed those powers were a dead letter. Indeed, even as we looked on as China basically closed itself down, how many of us assumed that while the government could do that, in theory it wouldn’t try because we wouldn’t put up with it.
It turns out, of course, people can put up with a lot of things that seemed impossible two weeks ago. And we haven’t finished yet, I suspect.
If people don’t stop stripping supermarkets, as the Prime Minister implored them to, the government can and will introduce rationing. And even that might not be the biggest decision it makes in the next few weeks. If things really go pear shaped in our hospital system — fingers crossed they don’t — the government will have to decide who gets access to the ICU beds that are going to be the difference between life and death.
Will people be treated on a first come, first-served basis? Will the government take over the ICU beds in private hospitals to make sure they are rationed according to need? In 2020 the ICU bed is what a seat in a lifeboat was on the Titanic: if you are seriously ill with coronavirus you need one to survive and there aren’t enough to go around.
In 1912 no one thought it was wrong that the first-class passengers survived at a very different rate to those travelling in steerage. Whether or not we have changed since then will be down to government.
I don’t know about you but I can’t help thinking that if we’d believed our politicians might one day have to make those sorts of decisions, we’d have taken more care over who we put into parliament.
IF PEOPLE DON’T STOP STRIPPING SUPERMARKETS, AS THE PRIME MINISTER IMPLORED THEM TO, THE GOVERNMENT CAN AND WILL INTRODUCE RATIONING