Monday, May 4, 2020

Prophetic Predictions

It’s springtime for prophets. Yesterday, New York Times columnist Frank Bruni dusted off a prophecy offered up in a twenty-seven-year old book. A prophetess named Laurie Garrett predicted the pandemic years ago. In truth, I raised the possibility of a pandemic one year ago. And I am decidedly not a prophet. Besides, when it comes to prophecy, timeliness is everything.

I will spare you Garrett’s bleak view of the future. But, I will share the prophetic visions of Dan Hannan, former British representative at the European Parliament, leading Brexit crusader. Hannan is normally an impressive analyst of current political affairs, so we grant him more credence than we do to Cassandra Garrett.

Hannan believes that the current pandemic will accelerate certain changes and stop certain others. He might be right. He might be wrong. At least, it’s fun.

He begins by saying that the pandemic has ended all talk about governments restraining their spending. 

A constant lament of this column has been that the Tea Party disappeared when it was most needed. Before the first coronavirus case, the Trump administration was already running a trillion-dollar deficit, as high as anything seen under President Barack Obama, and without the excuse of a financial crisis. Yet the people who had been protesting Obama’s spending suddenly stopped caring. This year, the deficit looks like it will be $3 trillion. If you think that will lead to a sudden demand for fiscal rectitude, you cannot have been watching. Spending takes on a momentum of its own. “If you can find $3 trillion,” people will say, “you can find a few hundred million to help my business recover” (or “increase my benefits” or whatever).

Next, the virus has shown that the current century will be the Asian century:

Asian countries, scarred by the experience of SARS, had their defenses in place. Testing and tracing systems were ready; face masks were widespread. Singapore built a specialist hospital. In consequence, those nations are already firing up their economies, while the West faces months of economic shutdown and years of indebtedness.

And the competition, even conflict between the United States and China seems inevitable. What is not inevitable is whether it will remain on the level of competition or whether it will become a full scale all out Cold War. The one that Niall Ferguson has been calling Cold War II.

Any hope for a rapprochement between the United States and China has gone, and we face the prospect of a trade war between the world’s largest- and second-largest economies. Both parties are weaker than they were three months ago, but the U.S. has taken by far the harder hit.

Hannan also says that the coronavirus has made the world more open to authoritarian leadership. Perhaps he was watching as good American labor unions believed that the pandemic was a good time to try to shut down business:

Epidemics make people more suspicious, more introverted — in a word, more authoritarian. We don’t just put up with massive increases in state power; we actively demand them. It had been fashionable to criticize, say, Hungary’s Viktor Orban for seizing emergency powers, but almost every regime in the world is now doing the same thing, and to general applause.

He believes that the pandemic has killed the oil market-- though this suggests that he does not see people rushing out to drive their cars once we have a vaccine:

The scramble for oil, which dominated the past 80 years, is over. It's about time. Cheaper oil is bad news for some very nasty regimes, including Iran, Saudi Arabia, and Russia.

And the pandemic will put an end to Europe’s borderless world. European nations will be building walls between nations:

The free movement of people is over, even in the European Union, where it had been elevated as a ruling principle. Even if screening measures can be put in place, no government will lightly relinquish control over who can enter its territory after this.

The pandemic has given the lie to European cooperation. And will most likely precipitate the demise of the European Union.

But, when the crisis came, each country hoarded equipment, forcing Italy to turn to China for supplies. The EU may survive this, but only in the sense that the Holy Roman Empire did — as a shell of its former self.

Next, Hannan offers up some trends that he sees dying out. The first is the expectation of rising living standards. We will, he suggests, see more unemployment and more privation. Of course, this assumes that the governments will not succeed in jump starting the economy:

For as long as we can remember, we have expected living standards to rise. Not anymore. We will have to get used to a new world of unemployment and privation.

Among the good things to come from the pandemic: it might just shut up the environmentalists who have, after all, been calling for us to shut down industry, manufacturing and transportation. Because, we are now living in the world that they want us to live in. How's that working out?

As the old saying goes: be careful what you wish for, you might just get it. The saying comes to us from China, as I am sure you know.

For decades, environmental activists have been telling us that we need less growth, less trade, more local production, grounded aircraft, and a massive drop in carbon emissions. Now that we know precisely how those things feel, there will be no rush to experience them again.

And, with any luck, the pandemic will stop the movement toward work at home. And even of telecommuting. It will produce a return to the office:

It used to be fashionable to say that we could do many more things from our sofas. I think I may have been guilty of making the idiotic suggestion that college campuses were unnecessary and that universities should supplement largely online courses with occasional face-to-face tutorials. If you still think along those lines, I can only assume you haven’t had a teenager at home over the past month.

To my mind, these are sensible predictions. We shall see how they work out.


ASM826 said...

I don't know about high school teenagers, but universities are going to be on-line in a way they never have before. It is already possible to get an accredited degree without ever visiting the campus. It's going to become common. I know of a university that gone fully on-line for the spring and summer and is planning to limit class size to 25 in the fall and require larger classes to go strictly on-line. Large lecture classes are going to be things of the past.

Leo G said...

The China Syndrome is over rated IMO. They still have problems with their war machines, abject poverty of over 300 million, the Urghur situation, etc.

China also is playing the long game. I expect to see The Poo and Trump re-establish their Kabuki theater after this main wave passes with the usual in the margin skirmishes.

David Foster said...

"And, with any luck, the pandemic will stop the movement toward work at home. And even of telecommuting. It will produce a return to the office"

I've seen several comments along the lines of "This is really great, why didn't we do this before", especially from some senior people in the finance industry.

Also, someone recently remarked how much easier it is to get in contact with high-level executives now that they're not spending half their life on airplanes.

Teenagers at home is or isn't a big deal depending on the teenager. And, at some point, they will be back in school and/or hanging out with their friends part of the day.

I think the trend toward work-from-home is going to continue...there are indeed downsides in some situations, especially in the early phases of a product or business initiative, when informal contacts between individuals really do often contribute to getting the idea defined in the first place.

Sam L. said...

"Perhaps he was watching as good American labor unions believed that the pandemic was a good time to try to shut down business:" Really? Shutting down business lays of the workers... I don't think they're gonna like that.

David Foster said...

"How many hours of work do you have to put in to buy a cup of coffee or a shirt or a washing machine? Whatever the answer is, it is almost certainly less than it would have been a decade ago. For as long as we can remember, we have expected living standards to rise. Not anymore. We will have to get used to a new world of unemployment and privation."

He doesn't really defend or support this assertion. Living standards are a function of productivity. While evolving technologies in robotics and AI are not likely to lead to a sharp upward break in productivity--I'm not a fan of the 'robots will take all the jobs' theory--there is no reason to thing that these technologies, together with other technology improvements, will not permit productivity to continue growing at something like the historical rate...IF government policy doesn't screw things up.