THE COMING RECESSION/DEPRESSION?

History says scientists will find an answer to coronavirus, as has occurred with a number of similar scares since Aids in the 1980s.  But what if that doesn’t happen, after all there’s no guarantee? The short answer is a serious global recession and let’s face it, a solid recession has a tendency for human reasons to quickly become a depression. Furthermore, this recession will not be solvable as in 2008, through flooding the world with money. Here’s why.

Something’s I’m proud of is the fact that all of the 1984 New Zealand Party key policies, seen as radical at the time, were immediately adopted by the incoming Labour government. But they weren’t just economic, rather in line with the Party’s libertarian views, they included such things as homosexual law reform and lifting the school leaving age (Then a ridiculous 15) and it’s that I shall comment on.

In advocating that leaving age lift, in every speech I asserted we were on the cusp of an age in which offering the world a mere pair of hands would see no takers. As events transpired, for one unanticipatable reason, I was 100% wrong.

That was the dramatic rise in tourism which has created literally hundred of millions of low skill jobs. Hotel staff, bus drivers, air hostesses, travel agents, waiters, chefs, immigration and other airport personel; the list goes on and on. In New Zealand alone, 200,000 people are employed in tourism activities. Now the world has gone into lockdown. International travel is grinding to a halt. Airlines and hotels, both always precarious businesses, will go broke if a quick solution is not found. So too the booming cruise ship industry will abruptly close. Tourism is now a critical industry for numerous nations, including most in western and central Europe. Mass unemployment beckons.

Then add to that foreign education. For yonkers, coal has been Australia’s largest export earner. Last year it was replaced by education fees, mainly from Chinese students. That has stopped abruptly. Another booming global industry which will cease is the Convention racket, this a huge consumer of airlines, hotels and restaurant services. And for that matter so too business travel, so much of which is in my view totally unnecessary and whimsical.

Compounding all of this will be the huge strain on already under pressure globally, hospitals and medical services.

If no solution is found to coronavirus then we’re two months away from a deep world recession and mass unemployment. In New Zealand, Queenstown and Rotorua will take a huge hit.

So it’s over to the scientists although sky-bayers can do their bit and pray to Cecil, or whatever moniker their God goes under, for a cure. On that note we should be mindful of an American pastor’s claim last week that coronavirus is simply Cecil’s (creator of all life including presumably viruses) wrath at homosexuality. That sounds reasonable. Publicly burning homosexuals at the stake may well be our only solution to appease Cecil and let him enable the scientists find a cure.

Whether things come to this will depend on a cure to coronavirus being found, which as I said, history suggests it will be. But if not, there’s nothing hyperbolic in what I’ve written about the consequences.

Silly articles have been written pointing out the huge number of people who die annually from the flu. That’s an idiotic comparison for with coronavirus we’re talking about a plague which could ultimately affect everyone. We already have flu jabs for those who bother avoiding that fate and that’s the point of difference.

 

2 Comments

A poignant take, sharing some similar sentiments to my own.

Boeing’s CEO is apparently unconcerned, which means he either is an idiot, or knows something we don’t. Still it is better to panic early than too late, a la the precautionary principle. The nonlinearity of power law effects now in the extreme with increasing connectivity/globalisation. In the event of a larger outbreak the existing trends of nationalism, anti immigration, remote work, mask wearing, social isolation, and distrust of government etc. will increase drastically.

But beyond the economic and cultural impact it’s not even unreasonable on the extreme end to talk in almost apocalyptic terms – the Black Death as a historical precedent killed just shy of 2/3rds of the European population (imagine). We have the advantage of modern medicine, but as technology progresses this is a potential double edged sword. The problem of synthetic biology is nothing to be scoffed at, though ironically the Wuhan Institute of Virology is only about 15km from where the outbreak started.

I don’t mean to seem pessimistic as that isn’t the answer but this is a serious matter and we can all hope that if cure hasn’t already been found, then one is not far off.

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We may have influenza vaccinations but doctors acknowledge that they are only about 30% effective because of the rapidly changing virus. The WHO estimates that more than 300,000 die globally from influenza each year. The current virus and its ability to mutate should not be underestimated but at the moment you stand a greater chance of contracting and dying from influenza. As for your sweeping generalisation as to what constitutes low skilled labour when was the last time you cooked a meal for dozens of people or driven a bus? No doubt when you travel you expect all these unskilled people to make your life comfortable. Your columns amuse me but there are times when you are insufferably arrogant.

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