After the fall

After the fall

If shrunk to a comparable size, the earth would be smoother than a ping pong ball.  The earth’s atmosphere is thinner than the skin on a ping pong ball. Most of the time we forget how much our whole life is lived in a tiny margin and how dependent we are on its seeming stability.

Life does not feel stable now.  Whole countries are being quarantined, the banalities of international travel are shuddering to a halt.  In War Of The Worlds, the Martians’ invasion was stopped by a virus.  A virus is similarly putting the modern world on pause.  This being a betting site, I might claim that the chances of this were a million to one.  It wouldn’t be true though. Sooner or later, a new mutation of a virus was always going to rip through our highly interconnected world.  Sooner or later, it will happen again.

So far, the disruption is mainly economic and cultural.  Covid-19 has so far for most people been an inconvenience, for some an illness that requires treatment in hospital and only for an unlucky few has it resulted in death.  It is a disease that preys particularly on the elderly, a kiss goodnight at the end of a long life. The median age of the dead in Italy is 80.

I do not diminish the pain and heartache that every death from Covid-19 has caused.  Elderly relatives are just as much loved as younger ones and their untimely death is just as much mourned. I also recognise that the number of deaths will increase and increase dramatically, given how it spreads exponentially if unchecked.  

These deaths, however, do not explain the huge crashes on the stock markets.  The sell-off is not happening because people are dying or going to die from Covid-19.  The sell-off is happening because no one is going to be flying much for the near future, no one is going to be going on holiday much in the near future, no one is going to be going out shopping much except for essentials in the near future.  And so on. Most of all, the sell-off is happening because those who hold the levers of power around the world seem either clueless or in disarray as to how to combat it.

For now, the focus must be on enduring. The government has a strategy of building up sufficient herd immunity to prevent a fresh peak in infections the moment that restrictions are lifted.  It is easy to see what a delicate balancing act it has to strike. We must all hope that it works. The sombre truth, as Boris Johnson fairly recognised, is that many of us will lose loved ones.  Some of us will die from Covid-19.

Meanwhile, we are watching wealth destruction on a mind-boggling scale.  Some of this is temporary and some of this is not. Large fortunes on the stock markets are becoming smaller fortunes.  Seemingly rock solid sources of income may well look considerably more shaky by the end of all this.

Unless further action is taken, some companies are going to go to the wall.  Some of these will be household names. Governments need to work closely with institutional creditors and early to ensure continued lines of credit for companies particularly exposed to this one-off shock.  If they do not, jobs may needlessly be lost.

The ones who will suffer the most, however, are likely to be those who are self-employed, on zero hours contracts or casual workers.  Many of them are already suffering. They may not have much debt but they cannot live on air. How is the government proposing to help these people?  So far it has not offered much more than sympathy.

As Charlie Chaplin said, nothing is permanent in this wicked world – not even our troubles.  Sooner or later, Covid-19 will subside, sinking back into the pack of troublesome but manageable viruses that we all have to contend with.  If the government’s approach works well enough, then well before that point many of the looming restrictions will have been lifted as the decision is taken that the benefits of controlling the spread of the virus have by that point been outweighed by the benefits of allowing people to live their normal lives.  The world will lift up the shutters one country at a time.

What will the world look like then?  Poorer. Perhaps it will be a little more equal as a result, though it would be a levelling-down rather than a levelling-up.  If the elderly are disproportionately affected by Covid-19, we can expect to see some of the country’s remaining wealth move through the generations.  However, money goes to money, so this particular wealth transfer is unlikely to do much to increase equality.

Countries themselves will be broke.  Britain’s public finances were in a shaky state even before Covid-19 hit and they’re probably going to be a train wreck at the end of all this.  This problem is not unique to Britain and there may even be international pressure for either an explicit collective default (“public debt forgiveness”, I expect it would be called) or an implicit collective default (printing money).

What of society?  There will have been too much disruption, too much extended quiet panic for people to shrug it all off and go back to normal.  After a year or two, there will perhaps be a reaction. Not immediately, I suspect.

Like Frodo, we wish none of this had happened. Gandalf’s response to Frodo, however, is the one that should guide us: ‘”So do all who live to see such times, but that is not for them to decide. All we have to decide is what to do with the time that is given to us.”  So let us decide what to do with the time that is given to us.

Alastair Meeks

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