CORONAVIRUS | MICROECONOMICS


The Crisis Hasn’t Started

It’s always been such that one of the wild cards which could shake our complex, fragile, globalised civilisation would be a pandemic disease. Indeed, the threat of a pandemic like the one we’re experiencing now has always been a case of ‘when’ not ‘if’. Here’s Bill Gates making just such a prediction in 2015 (forgive me if you’ve already seen it, but I put up this TED Talk in an earlier post on this subject); others have made the same prediction at different times:

However, like so many life events which we know will happen, but we’re not exactly sure of the timing, when the event does happen, we’re shocked and unprepared. Cue Covid-19.

Whether the various governments of the world have done the right thing or not is largely academic. Whether we agree with it, or not, half the planet’s population – between three and four billion people – is now under lockdown. It’s difficult to identify a time in history when so many countries and human beings have been subjected to such systematic, synchronised and draconian action absent total warfare. Even during recent and more distant wars, economies continued to function to a much greater extent than is the case today. If anyone reading this blog can cite an example or two of previous occasions in history when mankind has, to all intents and purposes, shut shop overnight then please enlighten us.

The consequences of what we’ve done will be transformative. My own view is that as far as Covid-19 is concerned we’re not in the process of heading out of the crisis; we are in fact at the front end of the crisis, heading into it. All we’ve done is attenuate the impact of the arrival of Covid-19 in our lives. I would say we’re in the first 20% of the Covid-19 crisis period, with 80% of the journey to go. Using my black, military humour, I predict that the fun will start as this year draws to a close and we enter 2021.

Part of the problem – in the UK anyway – is that we’ve been unexpectedly compliant with the lockdown rules. I shan’t provide all the details here (I’ve studied them); however, the data shows clearly that we weren’t supposed to have been so good at ‘Staying at Home’ and ‘social distancing’ as we have been. More people than were expected – both at work and at home – did as they were told. The consequence of this is that we’ve not started the process of building herd immunity. In other words, we’re as exposed to Covid-19 today as we were in January. Nothing’s changed. All we’ve done is ‘Stay at Home, Protect the NHS, Save Lives’.

Diligently, we’ve put ourselves into suspended animation. Meantime, the chances of us putting in place comprehensive, reliable, widespread health and technical solutions (testing, tracking, tracing, vaccine etc) to permit our safe exit from suspended animation any time soon are low. Hence the paralysis in government about ending lockdown. The Powers That Be (TPTB) know – possibly full well – that when lockdown is lifted without adequate health and technical solutions to permit us safely to go back to ‘normal’, we’ll be back where we started in January. Rinse and repeat.

Notwithstanding, let’s assume that the government decides to ease lockdown in some way – probably in stages over time – starting in June. Then what happens? Well, then microeconomics kicks in.

Microeconomics

In ‘Economics for Dummies’ (which is, in fact, an erudite and technical account of economics theory), UCL’s Senior Teaching Fellow Peter Antonioni informs us that microeconomics ‘focuses on the behaviour of individual people and individual firms, studying what motivates them and how they act to achieve the constraints they face … indviduals make decisions in an attempt to maximise happiness, and firms make decisions in an attempt to maximise profits’.

Here’s a specific example of microeconomics in action vis-à-vis Covid-19. For some weeks now we’ve been conditioned to be scared fartless about contracting Covid-19. We’ve been told to ‘Stay at Home’, and the government has passed primary legislation to allow police officers to enforce the ‘Stay at Home’ rule. We’ve been told to maintain a distance of at least two metres between each other when we venture out of our homes, akasocial distancing’. At the supermarket, we sanitise our shopping trolley handles, we sanitise our hands before and after the now weird, funereal shopping experience. A debate is raging about the efficacy of face masks for the general public; some people wear them already; some people are thinking of wearing them; some people wear latex gloves. If we don’t do this stuff, we’re all going to die, sort of thing.

In similar vein, during the EU membership debate in the UK we were expected to be so terrified of Leaving the EU, the implication was that you or I would have been insane not to have voted for the UK to Remain in the EU. Consequently, but not exclusively for the ‘Project Fear’ reason, 16 million British people voted for the UK to Remain in the EU. We were told and, indeed, bizarrely we are still being told that it would be a disaster if the UK left the EU (in fact, the UK has left the EU, but that’s by the by). Scaremongering is a legitimate technique for getting human beings to behave how you want them to.

Post-Lockdown Behaviours

Regarding Covid-19, the implication is that it would be insane to venture outdoors and even more stupid to get anywhere near hand-shaking distance of your fellow citizens; therefore, if we’re not to overwhelm the NHS by contracting Covid-19 in great numbers and dropping like flies, then we must ‘Stay at Home, Protect the NHS, Save Lives’.

Now here’s where microeconomics comes in because we’re talking about individual human behaviours. Assume the scenario where we’ve been told by the government that for our segment of the economy or society, lockdown will be lifted at midnight on Friday and we can go back to ‘normal’ over the weekend and back to work on Monday. We’ve been in lockdown for a few weeks, perhaps even a few months. There’s no immunity testing yet, nor is there a vaccine; both these weapons are months away, probably not available until next year or possibly later. Other related health and technical solutions (testing, tracing, tracking etc) are unavailable or flaky at best. Notwithstanding, we must get the economy and society functioning again otherwise we really are in deep trouble.

However, the problem is we’ve had the fear of God put into us.

So, up until midnight on the Friday you’re told you could contract Covid-19 and die (hence all the life-saving carry-on that you’ve been adhering to in the previous weeks/months). Nothing changes over the weekend, but on Monday it’s, ‘right, back to normal/work’. Now what do you do? How do you behave?

Devil-May-Cares and Hystericals

There will be a spectrum of behaviour, of course, but it’s possible to distil post-lockdown behaviour into two personality types at either end of the behavioural spectrum: the ‘Devil-May-Cares’ and the ‘Hystericals’. For the sake of argument, think of the Devil-May-Cares as the Leave voters in the EU Referendum, and the Hystericals as the Remain voters. In the EU Referendum, the number of voters willing to take a punt on suffering the allegedly appalling socio-economic consequences of having the UK Leave the European Union (the Devil-May-Cares) outnumbered the Remain voters (the Hystericals). Leave voters won the day, the UK has now left the EU and life will continue, albeit with a diminishing minority of rear-guard Hystericals fighting a lost cause (Lord Adonis, Alastair Campbell, Professor A C Grayling, Polly Toynbee, Emily Thornberry to name but a few).

The EU Referendum/Brexit episode is a good analogy. The UK was cleaved down the middle with Leavers on one side and Remainers on the other, and never the twain shall meet. For three years after the EU Referendum and before the result was ratified, British politics and, hence, society at large was, by and large, paralysed. Nobody could figure out how to reconcile Leave and Remain. We face the same prospect with the Devil-May-Cares and the Hystericals. The problem is, however, we can’t use a General Election to decide which personality trait should prevail; those behaviours will persist.

Now, I’ve used the two behavioural extremes to make my point. I don’t wish to offend those of you who don’t see yourselves as Devil-May-Cares, but also don’t see yourselves as Hysterical. Some of you will be Cautious or Risk-Averse rather than Hysterical. However, the point is that individuals will undoubtedly behave markedly differently as/when lockdown is lifted, however lockdown is lifted. These broadly two types of behaviour will impact significantly on both economic and social outcomes.

Unlike the EU Referendum which was a milestone event at a single point in time, climbing out of the Covid-19 lockdown will be a process. That process will have to accommodate the co-existence of the Devil-May-Cares and the Hystericals for weeks or months or even longer. The question is ‘What will be the socio-economic impact of potentially diametrically opposed individual human behaviours in what people deem to be a life-threatening situation?’ We’re not talking here about the microeconomics of choosing this smartphone or that one to maximise personal happiness; we’re talking about the microeconomics of weighing up life or death – or so we’ve been led to believe, very effectively, by the government. Too effectively, perhaps.

A Thousand Questions

All sorts of questions arise. I’m at the Devil-May-Care end of the spectrum. As I approach a Hysterical citizen in the street, will I be treated as if I’m the virus incarnate? This happens now to some extent. A lady at the supermarket this week was clearly agitated as I came closer to her in the Sauces & Spices aisle. She started to give me that ‘keep-your-damned-distance’ look as I approached. Socially, how long can we keep this up?

What if you’re operating a pub or a small café or restaurant or any other socially interactive business for that matter: how many Hystericals are there in what was your market Before-Covid-19 (BC)? How much smaller will be your market After-Covid-19 (AC) and, therefore, what does your business plan look like? What if two of your four employees, or whatever, are Hystericals? Will they come back to work? If they do, what Health & Safety measures will they expect you to put in place to prevent them being killed by Covid-19?

I’m a keen Scottish Country Dancer; I’m a trustee of The Royal Scottish Country Dance Society in my local area and dozens of us dance several evenings each week in different villages around the place. We stage dances and rallies which, BC, attracted up to a hundred dancers gathering in close quarters in the Town Hall and other venues. When we get the go-ahead to socialise again, how many of my fellow dancers will be Devil-May-Cares and how many Hystericals? Will the Society be sustainable if a critical mass of people are Hystericals and refuse to come dancing again?

On the street and in the workplace, how will we signal to each other who we are? Should Hystericals all be invited (ordered?) to wear facemasks so that we Devil-May-Cares can keep our distance? Or should we Devil-May-Cares wear a headband with a couple of little horns sticking up at the top announcing our cavalier attitude to Covid-19?

In all seriousness, can we function cohesively as a society against such an extraordinary backdrop? How will it work on public transport or air travel? Even if the government declared that social distancing was no longer required in law, what will be the impact of potentially millions of people refusing to allow their fellow citizens to get within two metres of them? Will the Hystericals ‘Stay at Home’ for ever more? Will the Hystericals get aggressive towards the Devil-May-Cares, or vice versa? Think of the lady in the Sauces & Spices aisle: what will make her change her behaviour? How will business owners organise their workplaces to accommodate the Devil-May-Cares and the Hystericals? The mind boggles in terms of maximising profits.

How will dentists work? What if your dentist is a Hysterical? Will she withdraw from the profession? If not, what will be the arrangements in the dental surgery, and what will be the costs in time and resources?

What happens in your own social circle? You’re thinking of a big fancy supper party to mark the end of the lockdown. Which of your friends are Devil-May-Cares and which are Hystericals? How do you signal to your social circle that you’re one or the other? Where does that leave the relationship? I’m a Devil-May-Care, you’re a dyed-in-the-wool Hysterical: is that the end of our friendship? Certainly, it will be different, won’t it?

On With The Crisis

You get the idea. The epidemiological evidence suggests that as we lift lockdown, the lack of herd immunity and the absence of health and technical solutions mean that as we approach the end of the year, the Covid-19 bow-wave will rise again and the casualty rate could well exceed the 18,000 or so deaths we’re at now.

I made the point earlier that I don’t think we’re heading out of the Covid-19 crisis, I think we’re heading into it on all fronts: health, economic and social. In terms of the theme of this post, microeconomics is on a collision course with macroeconomics, but this doesn’t get much airtime at the moment. I hope to goodness that I’m wrong and that, above all else, TPTB develop and roll out immunity testing and a vaccine pretty damn quickly, along with any other health and technical solutions needed to fight the virus. That way, it won’t matter if you’re a Devil-May-Care or a Hysterical; life will be back to normal again.

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See you down the pub … eventually.

15 comments

  1. Donna · · Reply

    In my local group of friends I am one three Brexiteers who, where Wuhan Flu is concerned, are all definitely in the “Devil May Care” camp. The 4 Remainers are all Hysterics and there is one fence-sitter.
    It’s a very interesting insight that those who were fearful of cutting the ties to the EU are also fearful of a virus which, although unpleasant, appears to only be life-threatening for the elderly and those with underlying health conditions, particularly obesity-related …. which none of them are.
    The Government’s panic-inducing propaganda around Wuhan Flu will prove to be as irresponsible and dangerous as the Cameron/Osborne Project Fear. One was intended to destroy our Sovereignty but failed; the other was intended to slow the spread of the virus but will instead destroy our economy and the life-chances of the younger generation.
    They certainly aren’t going to appreciate the Government’s efforts to defer mortality in a generation of the very elderly ….. at their expense.

    Liked by 1 person

  2. ‘Get Back to Work, Protect the Economy, Save Livelihoods’

    Liked by 1 person

  3. Great stuff as always MM

    Liked by 1 person

  4. xantilor · · Reply

    Very good post. I’ve written a couple of novels which include a flu pandemic, but those fictional pandemics had the potential to kill at least a third of the population. Had I written CV-19 as fiction – disease kills about one in a thousand people it infects, but a massive overreaction by governments disastrously crashes the world’s economy, readers would simply not have believed it.

    Liked by 2 people

  5. Jason · · Reply

    I’ve had my suspicions from the start. I don’t doubt the existence of the virus but the actions taken and the reasons given just do not add up (a £300bn deficit could have funded the NHS three time’s over for instance)

    My view is what we are really facing is the resource crunch. The PTB have tried
    several times under various guises (climate change emergency, 2008 financial crisis) to get the plebs to reign in their lifestyles and nothing had worked. In their last ditch effort along comes an invisible enemy that’s not too dangerous that it would kill millions but enough to scare people into doing things unthinkable even a few months ago.

    I just wonder what will emerge after all this maybe those distopian sci-fi novels were really just prepping our sub conscious for what is to come

    Liked by 1 person

    1. moraymint · · Reply

      If I’m honest, I wake up in the night sometimes with the dystopian scenario spinning in my head. I do think that we’re heading towards a socio-economic real life epic and not heading out of one. The mood music at the moment is that we’re seeing light at the end of the tunnel. I’m seeing the entrance to the tunnel …

      Liked by 1 person

  6. Sorry for the glitch. I was saying the two “types” I use are entrepreneur and bureaucrat, which by definition align nicely with Devil-may-cares & Hystericals, or Leavers & Remainers. Entrepreneurs are risk-takers, Bureaucrats inflexible rule-followers. Simplistic but fun. We need, I think, both types. Anyway, I enjoyed your post.

    Like

  7. I, too, think personality drives behavior. But used the

    Like

  8. I was going to ask if you had read the article in the DT today in second wave…..

    Looks like you did!

    Another take-away I had was that it spikes the repeated mantra that the hoi poloi were/are ignoring the instructions. In fact, per the article, we have been too compliant.

    Which means when we are all required to wear a mask, of carry our papers for random checking by agents of the state, we will, in the main, comply

    Which is a bit depressing really….

    Liked by 2 people

  9. reallyoldbill · · Reply

    I agree again with much of what you write. However, whilst I agree that the social distancing imperative at the moment has fostered suspicion in some people towards the presence of their fellow citizens, like the lady in your herbs and spices aisle, I hold a slightly more optimistic view of how it will play out once the “lockdown” ends. Every previous pandemic in history, even the Black Death which wiped out a third of Europe’s population, eventually came to an end and receded in the collective memory. During its height villages took up arms to deter outsiders from entering, but within just a few years of it passing life resumed its normal rhythm, albeit with a shortage of labour until the population once again started to grow. Indeed for those providing the labour that shortage actually improved their lot as they could and did demand higher wages and better conditions. Every cloud etc. Within just a couple of years of the last large global pandemic, the Spanish ‘Flu of 1918, the world embarked upon the Roaring Twenties and lived life to the full again. At least they did until the Great Depression entered their lives and put a stop to it. Humanity is nothing if not perpetually resilient.

    My greater fear is that this pandemic has allowed political rather than social divisions to become even more entrenched in the UK. I had hoped that now we are actually out of the EU, after all the acrimony of the past 4 years, the bitterness and rancour would gradually be bridged, but along came Covid 19 and unscrupulous people are now weaponising it in the most immoral manner to argue that closer rather than loser ties with the EU, and all its stifling law and regulation, will be even more essential than they did before. Utter nonsense and once again a reversal of the truth; we will need more than ever to be free to act in our national economic interest without being shackled to a slothful, bureaucratic monolith that has proven once again in a crisis to be an obstacle to speedy and effective solutions rather than their driver. The almost universal criticism of this government by the media, and those who still harbour ambitions to rejoin the EU, over its handling and response to this virus, with very little being directed at others who may be even more deserving of it like NHS procurement officers and Trust CEOs, shows just how politicised the subject has now become. They see this particular government and prime minister as a roadblock to their plans and are intent on undermining it at every opportunity. To use a global pandemic as their vehicle to do so is an illustration of just how obsessive and shallow they really are. It is those divisions which I see little hope of healing for a generation. I too hope I am wrong.

    Liked by 2 people

  10. Hi

    I think you are being too pessimistic. The best statistics we have is from the Diamond Princess where in the period before the Covid-19 infection was recognized there were ideal conditions for the virus to infect everyone. Yet the infection rate was about 19% and the death rate at the moment about 0.35% for a population with an average age of 55 compared to a current median age in the UK of 44 and so contained more older persons, as one expects on a cruise ship at this time of year such that the death rate in the UK population where the more vulnerable are not as exposed will be lower, as will the overall infection rate. According to random testing by professor Ionnides at Stanford University California the undetected rates are 50 to 85 times higher than those measured bringing the real death rate down to 0.15% or less, that is close to a bad flu season, and the likely final infection rate closer to 15% and not the 60% required for herd immunity that we see touted by the uninformed sources that advise governments and the basis of zero experimental or statistical evidence. there is also the likelihood that many dying in ICU units are doing so from hospital induced ARDS infections exacerbated by the use of forced respiration and intubation as shown by the fact that many respond to infusions of vitamin C. Add to this the demand or otherwise of cause of death being recorded as from Cov-2 rather than Cov-2 present in someone with a co-morbidity from which they would have died anyway and even the Stanford estimates may be too high, especially as in Sweden 40% of deaths are occurring in old peoples homes. So I would argue that we are suffering a Fauci/Gates/WHO pandemic that much like Climate Change is designed to drive the population to universal vaccination combined with digital tags and a World Government.

    https://articles.mercola.com/sites/articles/archive/2020/04/22/anthony-fauci-niaid.aspx?cid_source=dnl&cid_medium=email&cid_content=art1ReadMore&cid=20200422Z2&et_cid=DM514857&et_rid=855877041

    https://id2020.org/

    https://www.globalresearch.ca/coronavirus-causes-effects-real-danger-agenda-id2020/5706153

    Keep up the good work

    Ironically the only Government that is acting sensibly towards the Cov-2 outbreak is Sweden who set the Climate Change scam running in the first place via Palme, Strong and Bolin!

    Liked by 2 people

  11. I still have the previous 2 to get through…. I am on a course, sou know! 😉🤪

    Jerry

    Sent from my iPad

    >

    Liked by 1 person

    1. moraymint · · Reply

      Come on, keep up at the back … 😆

      Liked by 1 person

  12. deejaym · · Reply

    As always, a thought provoking read, but when I came to this

    “For the sake of argument, think of the Devil-May-Cares as the Leave voters in the EU Referendum, and the Hystericals as the Remain voters”.

    Have to say my day was made. A better turned phrase to describe the bedwetterati remainiacs I’ve not seen. Thank you

    Not sure though, I was ready for the revelation about Scottish Country Dancing…some things are better left unsaid..

    Liked by 1 person

    1. moraymint · · Reply

      😆

      Like

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