While the epidemiology of the disease is still unfolding, the ruinous economics of the treatment is already clear. Our politicians will end up condemned no matter what course they takeby Tom Clark / March 27, 2020 / Leave a comment
It is a virus that affects the typical patient for a matter of days, and yet the response we have settled on is going to affect us for decades. After an initially shambling and sluggish reaction in western capitals to the turn-of-the-year news that a novel virus was at large in China—which in the case of President Trump continued well into March (“the virus will not have a chance against us”)—most political leaders abruptly pulled a screeching handbrake turn. With scarce dissent or even discussion about the long-term consequences, they began jostling to avoid being outdone in the resolution stakes. Never has Lenin’s maxim—about decades where nothing happens, and weeks where decades happen—been more apt. In country after country, there was a lurch within days from “advice” about washing hands and avoiding big crowds, through to requests to work from home, then the closure of schools and all other public facilities, and then finally an order to stay at home and bolt the door.
And this is only the most obvious element of the response. Barely noticed, amid the dramatic changes to day-to-day life and the gathering collective fear, has been the fastest and most fundamental recasting of economic policy since… when? The Bolshevik revolution, perhaps. Even wartime restrictions and mobilisations arrived more gradually, and while the global financial crisis of 2008 certainly turned the unthinkable into received wisdom pretty fast, it did not do so without a whole lot of (sometimes time-consuming) argument.
Recall how it took many months for Alistair Darling and Gordon Brown to move from a neurotic New Labour reluctance to nationalise the collapsing Northern Rock in 2007, towards making the bold move towards buying up big stakes in the big banks. This time, by contrast, a Conservative government has almost immediately jettisoned anything it ever believed about free markets and “sound” public finances by locking down swaths of the economy, and then at the same time committing the taxpayer to foot up to 80 per cent of all the wages no longer being earned. The state is taking control with such speed that moves which in other circumstances might make for weeks of controversial headlines, such as the de facto re-nationalisation of the railway system, are hurtling by without registering.
As for the government deficit, after a decade of our economy being run on the basis…