So Coronavirus is working its way through the world. And put to one side the human misery the virus is causing, the effect on the world’s economy is terrifying.
Political leadership has not helped. In the United States within days Donald Trump has gone from downplaying the threat and suggesting that everything was fine to banning travel from Europe, at least the non English speaking part. And it seems clear that he at least mispoke, and caused a great deal of consternation by doing so.
The stock markets have responded appropriately. This morning the Dow Jones crashed by 10% in initial trading and in the United Kingdom the FTSE 100 had its worst day since the 1987 stock market crash. It really makes you wonder about Trump’s viability given he has always seen the stock market as an indicator of his performance as President.
Professional sport has been affected. The NBA has suspended its season following positive tests for two players. In Italy Serie A soccer has been suspended for a month. When soccer is suspended in Italy you know things are dire. There is even talk about the Tokyo Olympics being postponed.
And in Thailand hordes of monkeys normally fed by tourists have taken to rioting as the food runs out.
To me recent events highlights two features, the world’s economy is so finely tuned to consumption that when there is a temporary blip to the flow of new Iphones and flat screen TVs or overseas holidays then significant effects to the world’s economy happens.
And pure market economies do not provide the best response. Either in terms of their testing and management of the crisis. Or who they choose to support to make sure that the effects are minimised. China and Hong Kong have managed to slow down the spread of the virus and testing is common. They are also able to maintain rigorous curfews the likes of which may not be possible in Western nations.
Testing is important. In South Korea the testing rate is 6,692 per million people. In the United States the rate is 23. No wonder community spread is so prevalent in the United States. Current reported rates must be only the tip of the iceberg.
Oil prices have crashed. This has placed the shale industry, already a very inefficient way of producing oil well and truly into the red. Trump has responded by promising relief. From the Washington Post:
The White House is strongly considering pushing federal assistance for oil and natural gas producers hit by plummeting oil prices amid the coronavirus outbreak, as industry officials close to the administration clamor for help, according to four people familiar with internal deliberations. President Trump has touted the growth of oil and natural gas production under his administration, celebrating their rise in politically crucial swing states such as Pennsylvania. But many oil and gas firms were hammered Monday by the price war that broke out between Saudi Arabia and Russia, driving oil prices down in their steepest one-day drop in almost 30 years.
For ordinary people the prospects of relief are not so good. From the Hill:
Senate Republicans say they will not be rushed into accepting a House Democratic bill to provide paid sick leave and a variety of other safety-net aid to people affected by the coronavirus.
“I don’t think we ought to be stampeded into doing something that we wouldn’t otherwise think is a good idea. We need to respond in an appropriate way and in a targeted way, not just throw money at the problem,” said Sen. John Cornyn (R-Texas).
Cornyn said the House bill appears to be an effort by Democratic leaders to “score political points” by pressuring GOP lawmakers to accept an array of welfare spending that they know would be tough for conservatives to swallow.
Senate Majority Leader Mitch McConnell (R-Ky.) on Tuesday morning panned the House bill as “an ideological wish list that was not tailored closely to the circumstances.
“Instead of focusing on immediate relief to affected individuals, families and businesses, the House Democrats chose to wander into various areas of policy that are barely related if at all to the issue before us,” McConnell said.
In New Zealand we are fortunate so far. There is no sign of community spread, current numbers of infections are stable, and we have a health system that works well usually. The Government has a series of measures that will be announced next week. It is likely they will include help for certain sectors as well as a stimulus package. Maybe they should think about a Universal Basic Income.
And I cannot believe how poorly the opposition has handled the crisis. Their responses so far appear to be to demand minimum wage increases not be implemented, to play politics with an issue that demands responsible political leadership, and to promise a bonfire of regulations, including presumably those designed to protect health, speaks volumes. This is Trump quality leadership right here in Aotearoa.
But don’t take my word for this. How about this from Matthew Hooton in the Herald:
When a party’s first response to a global pandemic is to demand looser health regulations, we must ask if it is a serious player.
National’s announcement on Monday of a “bonfire of regulations” was inane. Like the party’s overarching “economic plan” released a month ago, this week’s effort was entirely devoid of substantial content, consisting mainly of social-media slogans.
While the party’s finance spokesman Paul Goldsmith continues to make considered contributions, Simon Bridges and his brains trust of Paula Bennett and Todd McClay seem to have decided the election can be won by empty sloganeering and praying the Ardern regime implodes.
More travel restrictions are anticipated to be announced today. The Government’s response to the first appearance of local community spread and to pressures on the economy could be the determining issues of this year’s election campaign. We certainly live in interesting times …