Month: May 2020

Authored by Jörg Guido Hülsmann via The Mises Institute,

After WWI, the distinguished British economist Edwin Cannan was asked, somewhat reproachfully, what he did during the terrible war years. He replied: “I protested.” The present article is a similar protest against the current lockdown policies put into place in most countries of the Western world to confront the current coronavirus pandemic.

Here in France, where I live and work, President Macron announced on Thursday, March 12, that all schools and universities would be shut down on the following Monday. On that Monday, then, he appeared on TV again and announced that the entire population would be confined starting the very next day. The only exceptions would be “necessary” activities, especially medical services, energy production, security, and food production and distribution. This policy response was apparently coordinated with other European governments. Italy, Germany, and Spain have applied essentially the same measures.

I think that these policies are understandable and well intentioned. Like many other commentators, I also think that they are wrongheaded, harmful, and potentially disastrous. An old French proverb says that the way to hell is plastered with good intentions. Unfortunately, it seems as though the present policies are no exception.

My protest concerns the basic ideas that have motivated these policies. They were clearly enunciated by President Macron in his TV address of March 12. Here he made three claims that I found most intriguing.

• The first one was that his government was going to apply drastic measures to “save lives” because the country was “at war” with the COVID-19 virus. He repeatedly used the phrase “we are at war” (nous sommes en guerre) throughout his talk.

• Secondly, he insisted right at the very beginning that it was imperative to heed the advice of “the experts.” Monsieur Macron literally said that we all should have to listen to and follow the advice of the people “who know”—meaning who know the problem and who know how best to deal with it.

• His third major point was that this emergency situation had revealed how important it was to enjoy a state-run system of public healthcare. How lucky are we to have such a system and to be able to rely on it, now, in the heat of the war against the virus! Unsurprisingly, the president insinuated that this system would be reinforced in the future.

Now, these are not the private ideas of Monsieur Macron. They are shared by all major governments in the EU and by many governments in other parts of the world. They are also shared by all major political parties here in France, as well as by President Macron’s predecessors. Therefore, the purpose of the following remarks is not to criticise the president of this beautiful country, or his government, or any person in particular. The purpose is to criticise the ideas on which the current policy is based.

I do not have any epidemiological knowledge or expertise. But I do have some acquaintance with questions of social organisation, and I am also intimately familiar with scientific research and with the organisation of scientific research. My protest does not concern the medical assessment of the COVID-19 virus and its propagation. It concerns the public policies designed to confront this problem.

As far as I can see, these policies are based on one extraordinary claim and two fundamental errors. I will discuss them in turn.

An Extraordinary Claim

The extraordinary claim is that wartime measures such as confinement and shutdowns of commercial activity are justified by the objective of “saving lives” that are at risk because of the burgeoning coronavirus pandemic.

Over here in Europe, we have heard American presidents use such expressions since the 1960s, as in “the war on poverty” or the “war on drugs” or “the war on terrorism” or more recently “the war on climate change.” Odd language of this sort seemed to be one of America’s many eccentricities. It also did not escape our notice that none of these would-be wars have ever been won. Despite the great sums of money that the US government has spent to fight them, despite the new state institutions that were put in place, and despite the great and growing infringements on the economic and civil liberties of ordinary Americans, the problems themselves never went away. Quite the opposite; they were perpetuated and aggravated.

Most of the European governments have now joined ranks with the Americans and consider that they, too, are at war—with a virus. It is therefore appropriate to insist that this is metaphorical language. A war is a military conflict designed to protect the state—and thus of the very institution that is commonly held to guarantee the lives and liberties of the citizens—against malicious attack from an outside power, usually another state. In a war, the very existence of the state is under attack. Clearly, this is not so in the present case.

Moreover, there can be no war with a virus, simply because a virus does not act. At most, therefore, the word “war” can be used here metaphorically. It then serves as a cover and justification of infringements of the very civil and economic liberties that the state is supposed to protect.

Now, in the traditional conception, the state is supposed to protect and promote the common good. Protecting the lives of the citizens might therefore, arguably, justify massive state interventions. But then the very first question should be: How many lives are at stake? Government epidemiologists, in their most dire estimates—whose factual basis is still not solidly established—have considered that about 10 percent of the infected persons might be in need of hospital care and that a large part of those would die. It was also already known by mid-March that this mortal threat in the great majority of cases concerned very old people, the average COVID-19 victim being around eighty years of age.

The claim that wartime measures, which threaten the economic livelihood of the great majority of the population and also the lives of the poorest and most fragile people of the world economy—a point on which I will say more below—are in order to save the lives of a few, most of whom are close to death anyway, is an extraordinary claim, to say the least.

Without going into any detail, let me just highlight that this contention squarely contradicts the abortion policies that Western governments have applied since the 1970s. There, the reasoning was exactly the other way around. The personal liberty and comfort of the women who wished to abort their children was given priority over the right to lives of these yet unborn children. According to World Health Organization (WHO) figures, each and every year, some 40–50 million babies are aborted worldwide. In 2018 alone, more than 224,000 babies have been aborted in France. However serious the current COVID-19 pandemic may yet become, it will remain a small fraction of these casualties. Not only have governments neglected to “save lives” when it comes to abortions. They have in point of fact condoned and funded the killing of human beings on a massive scale.

They still do so now. Here in France, all hospital services have been run down to free up capacity for the treatment of COVID-19 victims—all except one. Abortion services run unabated and have recently been reinforced by the legal obligation for hospital staff to provide abortions (previously it was possible for individual doctors to refuse this out of personal conviction).

The pretention that drastic policies are justified in order to “save lives” also flies into face of past policy in other areas. In the past, too, it would have been possible to “save lives” by allocating a greater chunk of the government’s budget to state-run hospitals, by further reducing speed limits on highways, by increasing foreign aid to countries on the brink of starvation, by outlawing smoking, etc. To be sure, I do not wish to make a case for such policies. My point is that it has never been the sole or highest goal of government policy to “save lives” or to extend them as much as possible. In fact, such a policy would be utterly absurd and impractical, as I will explain further below.

It is difficult to avoid the impression that the “war to save lives” is a farce. The truth seems to be that the COVID-19 crisis has been used to extend the powers of the state. The government obtains the power to control and paralyse all other human concerns in the name of prolonging the lives of a select few. Never has this principle been admitted in a free country. Few tyrannies have managed to extend their power this far.

The current beneficiaries of these new powers are the elder citizens and a few others. But make no mistake. It is likely that their destinies only serve as a pretext to justify the creation of new and unheard-of powers for the state. Once these new powers are firmly established, there is no reason why the elderly should remain especially dear to those in power. It must be feared that the very opposite will be the case.

Now, in order to avoid any misunderstanding, I do not claim that the present French government seeks to grab power over life-and-death decisions, or dictatorial powers to introduce socialism through the backdoor under the cover of COVID-19. In fact, I cannot imagine that Monsieur Macron and his government are driven by sinister motivations. I think they have the best of all intentions. But the point here is precisely that there is a difference between doing good and wishing to do good.

A Grave Error: Rule by Experts

So far, I have commented on a political issue. But there are also matters of fact. And this brings me to the two aforementioned errors.

The first fundamental error is to hold that is that the experts know and all the rest of us should trust them and do as they tell us.

The truth is that even the most brilliant academics and practitioners have in-depth knowledge only in a very narrow field; that they have no particular expertise when it comes to devising new practical solutions; and that their professional biases are likely to induce them into various errors when it comes to solving large-scale social problems such as the current pandemic. This is patent in my own discipline, economics, but not really different in other academic fields. Let me explain this in some more detail.

The kind of knowledge that can be acquired by scientific research is just a preliminary to action. Research gathers facts and yields partial knowledge of causal connections. Economics tells us, for example, that the size of the money stock is positively related to the level of unit prices. But this is not the whole picture. Other causes come into play as well. Real-world decision-making cannot just rely on facts and other bits of partial knowledge. It must weigh the influence of a multitude of circumstances, not all of which are well known, and not all of which are directly related to the problem at stake. It must come to balanced conclusions, sometimes under rapidly changing circumstances.

In this respect, the typical expert is no expert at all. How many laureates of the Nobel Prize in economics have earned any significant money by investing their savings? How many virologists or epidemiologists have established and operated a privately run clinic or laboratory? I would never trust a colleague who had the folly to volunteer to direct a central planning board. I do not trust an epidemiologist who has the temerity to parade as a COVID-19 czar. I do not believe a government that tells me that it somehow knows “the experts” who know best how to protect and run an entire country.

Furthermore, consider that scientific knowledge is, at best, a state of the art. The precious thing about science is not to be seen in the results, which are hardly ever final. What is crucial is the scientific process, which is a competitive process based on disagreements about the validity and relevance of different research hypotheses. This process is especially important when it comes to new problems—such as a new virus which spreads in unheard-of ways and has unheard-of effects. It is precisely in such circumstances, when the stakes are high, that the impartial confrontation and competitive exploration of different points of view is of paramount importance. Research czars and central planners are here of no use at all. They are part of the problem, not part of the solution.

A government which bets the house on one horse and hands the management of a pandemic over to a single person or institution achieves, at best, only one thing: that all citizens receive the same treatment. But it thereby slows down the very process which leads to the discovery of the best treatments, and which makes these treatments rapidly available to the greatest number of patients.

It is also important to keep in mind that academics—and this includes epidemiologists just as much as economists and lawyers—are typically government employees and that this colours their approach to any practical problem. They are likely to think that serious problems, especially large-scale problems touching most or all citizens, should be solved by state intervention. Many of them are in fact incapable of imagining anything else.

This problem is reinforced through a nefarious selection bias. Indeed, those academics who opt for an administrative or political career, and who make it into the higher ranks of the civil service, cannot fail to be convinced that state action is suitable and necessary to solve the most important problems. Otherwise they would hardly have chosen such careers, and it would also be virtually out of the question that for them to end up in leadership positions. A good example among many others is the current WHO director Tedros Adhanom, who I understand is a former member of a communist organisation. The point is not that a WHO director should have no political opinions or that Dr. Adhanom is an evil or incompetent person. The point is that it is unsurprising that men like him occupy leadership positions in state-run organisations, and that the approach he envisions to deal with a pandemic is likely to be coloured by his personal political preconceptions, not only by medical information and good intentions.

Another Momentous Error: Neglect of Economics

Along with such selection bias comes a peculiar ignorance in regard to the functioning of complex social orders. This brings me to the second fundamental error that vitiates the COVID-19 policies. It consists in thinking that civil and economic liberties are some sort of a consumers’ good—maybe even a luxury good—that can only be allowed and enjoyed in good times. When the going gets tough, the government needs to take over and all others should step back—into confinement if necessary.

This error is typical for people who have spent too much time among politicians and in public administrations. The truth is that civil and economic liberty is the most powerful vehicle to confront virtually any problem. (The notable exception is that liberty does not help to consolidate political power.) And the reverse side of the same truth is that governments typically fail whenever they set out to solve social problems, even very ordinary problems. Think of state-run education or housing projects. I will return to this point further below.

Because of the mechanics of the political process, governments are liable to overreact to any problem that is big enough to make it into the news and to become an issue for voters. Governments will then typically zoom in on this one problem. In their perception, it becomes the most important of all problems that humanity has to solve. If such a government has no clue about economics, it is liable to propose one-plan technical solutions that completely neglect the social and political dimension of what it means to solve a problem. In the present case, the “experts” have blithely proposed to shut down the entire economy because this is what “works.”

Now, I do not contest that shutdowns are effective in slowing down the transmission speed of a pandemic. I have no opinion at all on the most suitable way to deal with pandemics or other problems of virology or medicine. But as an economist I know the crucial importance of the fact that there is never ever only one single goal in human life. There is always a great and diverse array of objectives that each of us pursues. The practical problem for each person is to strike the right balance, most notably to act in the right temporal sequence. Translated to the level of the economy as a whole, the problem is to allocate the right amounts of time and material resources to the different objectives.

For most people, protecting their own lives and the lives of their families has a very high importance. But irrespective of how important this objective is, in practice it cannot be perfectly achieved. To protect my life, I need food. Thus, I need to work. Thus, I need to expose myself to all kinds of risks that are associated with leaving the safe space of my house and encountering nature and other humans. In short, human lives cannot be perfectly protected, even by those who are ready to subordinate everything else to doing so. It is a practical impossibility. When it comes to protecting lives, the only question is: how much am I willing to risk my life and the lives of those who depend on me? And it more than often turns out that by risking much one protects best. What holds true for the eternal life of one’s soul also holds true for the mundane material life down here on earth: “For whoever wishes to save his life will lose it, but whoever loses his life for my sake will find it” (Matt 16:25).

Now, most people do not actually cherish the preservation of their lives, or the extension of their life spans, as the single highest goals. Smokers, meat eaters, drinkers prefer a shorter, more joyful life, to a longer life of abstinence. Policemen, soldiers, and many citizens are more than often driven by the love of their country and by a love of justice. They would rather die than live under slavery or tyranny. Priests would risk their lives rather than forsake their commitment. A believer in Christ would rather risk death than apostasy. Sailors risk their own lives to provide for their families. Medical doctors and nurses are willing to risk their lives to help patients with infectious diseases. Rugby players and racecar drivers risk their lives not only for the glory of winning, but also for the excitement and satisfaction that comes with performing well under danger. Many young men and women gladly trade the excitement of dance for the risk of catching COVID-19.

All of these people, in one way or another, make material contributions to the livelihood of all others. Smokers and drinkers ultimately pay for their consumption, not with money (which serves them only as a tool for exchange with others), but with the goods and services that they themselves provide to others. If they could not indulge in their consumption, their motivation to help others would diminish or vanish altogether. If policemen, soldiers, sailors, and nurses did not have a relatively low risk-aversion, their services would be provided only at much higher cost, and possibly not at all.

The preferences and activities of all market participants are interdependent. In the market order, each one helps all others in pursuing their goals, even if these goals may ultimately contradict his own. The meat eater might be a mechanic who repairs the cars of vegetarians, or an accountant who does the bookkeeping for a vegetarian NGO. The soldier also protects pacifists. Among the pacifists may be farmers who grow the food consumed by soldiers, etc.

It is impossible to disentangle all of these connections, and it is not necessary. The point is that in a market economy the factors determining the production of any economic good are not just technical. Through exchange, through the division of labour, all production processes are interrelated. The effectiveness of doctors and nurses and their assistants does not only depend on the people who directly supply them with the materials that they need. Indirectly, it also depends on the activities of all other producers who do not have the slightest thing to do with medical services in hospitals. Even in an emergency situation, it is therefore necessary to respect the needs and priorities of these others. Locking them away, locking them down, far from facilitating the operation of hospitals, will eventually come to haunt the latter as well when supply chains wither and consumer staples start lacking.

Now one might contend that such consequences only obtain in the longer run and that a government confronted with an emergency situation needs to neglect long-run issues and focus on the short-run emergency. This sounds reasonable, which is why governments have appealed to arguments of this sort with great regularity in other areas, most notably to justify expansionary macroeconomic policies, which also trade off the present against the future.

But the reasoning is flawed in the present case. The root of the error is to consider the COVID-19 virus an immediate threat to human lives whereas the lockdown policies are not. But this is not the case. How many people have committed suicide because the lockdown measures have driven them to depression and insanity? How many did not receive life-saving treatments because hospital beds and staff were restricted to COVID-19 victims? How many have become victims at home because of the lockdown-induced aggression of their spouses? How many have lost their jobs, their companies, their wealth, and will be driven to suicide and aggression in the months to come? How many people in the poorest countries of the world economy are now driven to starvation because households and firms in the developed world have cut back demand for their products?

The inevitable conclusion is that, even in the short run, lockdown policies are costing the lives of many people who would not otherwise have died. In the short and in the long run, the current lockdown policy does not serve to “save lives,” but to save the lives of some people at the expense of the lives of others.

Conclusion

The lockdown policies are understandable as a panic reaction of political leaders who want to do the right thing and who have to make decisions with incomplete information. But upon reflection—and certainly in hindsight—they are not good policy. The lockdowns of the past month have not been conducive to the common good. Although they have saved the lives of many people, they have also endangered—and are still endangering—the lives and livelihoods of many others. They have created a new and dangerous political precedent. They have reinforced the political regime uncertainty—to use Robert Higgs’s felicitous phrase—that bears on the choices of individuals, families, communities, and firms in the years to come.

The right thing to do now is to abandon these policies swiftly and entirely. The citizens of free countries are able to protect themselves. They can act individually and collectively. They cannot act well when they are locked down. They will greet any honest and competent advice on what they can and should do, upon which they will proceed responsibly, whether alone or in coordination with others.

The greatest danger right now is in the perpetuation of the ill-conceived lockdowns, most notably under the pretext of “managing the transition” or other spurious justifications. Is it really necessary to walk through the endless list of management failures of government agents? Is it necessary to remind ourselves that people who have no skin in the game are irresponsible in the true sense of the word? These would-be managers should have stayed out of the picture from the very beginning. Instead, so far, they have managed to get everybody else out of the picture. If they are allowed to go on, they might very well turn the present calamity—big as it is—into a true disaster.

The historical precedent that comes to mind is the Great Depression of the 1930s. Then, too, the free world was confronted with a painful recession, when the implosion of the stock market bubble entailed a deflationary meltdown of the financialised economy, along with massive unemployment. This recession, dire as it was, could have remained short, as all the previous recessions in the US and elsewhere had been. Instead it was turned into a multiyear depression, thanks to folly of FDR and his government, who had the pretention of managing the recovery with government spending, nationalisations, and price controls.

It is not too late. It is never too late to recognise an honest error and correct a wrong course of action. Let us hope that President Macron, President Trump, and all other people of goodwill may rapidly come to their senses.

China’s cash-strapped partners in their “Belt and Road” (BRI) global development project have been begging Beijing for debt relief amid the coronavirus pandemic, according to the Financial Times.

And according to Chinese policy advisers, the Xi regime is considering several options – including suspending interest payments on loans from the country’s financial institutions. That said, outright debt forgiveness is unlikely.

According to Washington-based consultancy RWR Advisory, Chinese financial institutions have lent an estimated $461bn for BRI projects since 2013 – making it the largest development initiative in the world.

“We understand a lot of countries are looking to renegotiate loan terms,” said one researcher at China Development Bank, which spearheads hundreds of billions of dollars in BRI projects globally along with the Export-Import Bank of China.

“But it takes time to strike a new deal and we cannot even travel abroad right now. The BRI loans are not foreign aid. We need to at least recoup principal and a moderate interest,” said the researcher on condition of anonymity.

“It is OK for 20 per cent of our portfolio projects to have problems,” they added, “But we can’t tolerate half of them going under. We might consider extending loans and giving interest relief. But in general our loans are issued according to market principles.”

The BRI, which was launched in 2013 as the signature foreign policy initiative of President Xi Jinping, is aimed at building infrastructure and boosting China’s influence around the world. Most of the 138 countries that have officially signed up to the BRI are developing nations, many with the weakest credit ratings in the world. -Financial Times

 
In particular, BRI partners in several African nations – which have received approximately $143bn in BRI loans between 2000 and 2017 – are understood to have applied for debt relief.

A policy adviser to the Chinese government, who declined to be identified, said that Beijing’s preferred option in dealing with national requests for debt relief would be to “suspend interest payments” on loans.

However, some borrowers with “good market order” may be allowed to reschedule their loans. Forgiving debt permanently would be a “last option”, the adviser said. -Financial Times

Earlier this month China agreed to freeze bilateral loan repayments for low-income countries until the end of the year, agreeing to a G20 initiative which covered “all official bilateral creditors,” including lending from Chinese policy banks.

That said, diplomats say that the process of sifting through which loans from various countries would be eligible, while negotiations are being undertaken with China on a bilateral basis. According to the FT, China consequently has a ton of leverage.

According to researcher Mei Guanqun of the Beijing think-tank China Center for International Economic Exchanges, China has yet to solidify plans for dealing with the mounting debt-relief requests.

“But there are a few rules of thumb,” he said. “First, China’s commercial banks like [Bank of China] and [Industrial and Commercial Bank of China] are unlikely to forgive loans because they are under pressure from Beijing to meet financial targets.”

“Second, China Development Bank and China ExIm Bank may provide sovereign loan relief to countries that are friendly with us,” added Mei. “We may cut interest rates by a few percentage points or have it removed. We could also reduce principal payment by a moderate amount. The idea is to keep borrowers from going under, which may undermine our interest.”

According to Andrew Davenport, COO of RWR Advisory, Beijing is concerned that BRI will be interpreted to have resulted in “predatory economic behavior” by which China will be able to claim valuable assets as collateral when countries can’t pay their debts.

“The narrative certainly matters and indeed they seem to worry about it,” said Davenport. “If they can persuade people not to always be looking at what mischief Beijing is up to but rather to see the ‘goodness’ on offer, that’s a winning formula for China.“

Authored by Pepe Escobar via The Asia Times,

Between the unaccountability of elites and total fragmentation of civil society, Covid-19 as a circuit breaker is showing how the king – systemic design – is naked. 

We are being sucked into a danse macabre of multiple complex systems “colliding into one another,” producing all kinds of mostly negative feedback loops.   

What we already know for sure, as Shoshana Zuboff detailed in “The Age of Surveillance Capitalism,” is that “industrial capitalism followed its own logic of shock and awe” to conquer nature. But now surveillance capitalism “has human nature in its sights.” 

In “The Human Planet: How We Created the Anthropocene,” analyzing the explosion in population growth, increasing energy consumption  and a tsunami of information “driven by the positive feedback loops of reinvestment and profit,” Simon Lewis and Mark Maslin of University College, London, suggest that our current mode of living is the “least probable” among several options. “A collapse or a switch to a new mode of living is more likely.” 

With dystopia and mass paranoia seemingly the law of the (bewildered) land, Michel Foucault’s analyses of biopolitics have never been so timely, as states across the world take over biopower – the control of people’s life and bodies. 

David Harvey, once again, shows how prophetic  was Marx, not only in his analyses of industrial capitalism but somehow – in “Grundrisse: Foundations of the Critique of Political Economy” – even forecasting the mechanics of digital capitalism: 

Marx, Harvey writes, “talks about the way that new technologies and knowledge become embedded in the machine: they’re no longer in the laborer’s brain, and the laborer is pushed to one side to become an appendage of the machine, a mere machine-minder. All of the intelligence and all of the knowledge, which used to belong to the laborers, and which conferred upon them a certain monopoly power vis-à-vis capital, disappear.”

Thus, adds Harvey, “the capitalist who once needed the skills of the laborer is now freed from that constraint, and the skill is embodied in the machine. The knowledge produced through science and technology flows into the machine, and the machine becomes ‘the soul’ of capitalist dynamism.” 

Living in ‘Psycho-Deflation’

An immediate – economic – effect of the collision of complex systems is the approaching New Great Depression. Meanwhile, very few are attempting to understand Planet Lockdown in depth – and that goes, most of all, for post-Planet Lockdown. Yet a few concepts already stand out. State of exception. Necropolitics. A new brutalism. And, as we will see, the new viral paradigm.

So, let’s review some the best and the brightest at the forefront of Covid-19 thinking. An excellent road map is provided by “Sopa de Wuhan” (“Wuhan Soup’), an independent collection assembled in Spanish, featuring essays by, among others, Giorgio Agamben, Slavoj Zizek, Judith Butler, David Harvey, South Korean Byung-Chul Han and Spaniard Paul Preciado.

The last two, along with Agamben, were referenced in previous essays in this running series, on the Stoics,  Heraclitus,  Confucius, Buddha and Lao Tzu, and contemporary philosophy examining The City under The Plague. 

Franco Berardi, a 1968 student icon now professor of philosophy in Bologna, offers the concept of “psycho-deflation” to explain our current predicament. We are living a “psychic epidemic … generated by a virus as the Earth has reached a stage of extreme irritation, and society’s collective body suffers for quite a while a state of intolerable stress: the illness manifests itself at this stage, devastating in the social and psychic spheres, as a self-defense reaction of the planetary body.” 

Thus, as Berardi argues, a “semiotic virus in the psycho-sphere blocks the abstract functioning of the economy, subtracting bodies from it.” Only a virus would be able to stop accumulation of capital dead in its tracks: “Capitalism is axiomatic, works on a non-verified premise (the necessity of unlimited growth which makes possible capital accumulation). 

Every logical and economic concatenation is coherent with this axiom, and nothing can be tried outside of this axiom. There is no political way out of axiomatic Capital, there’s no possibility of destroying the system,” because even language is a hostage of this axiom and does not allow the possibility of anything “efficiently extra-systemic.”

So what’s left? “The only way out is death, as we learned from Baudrillard.” The late, great grandmaster of simulacrum was already forecasting a systemic stall back in the post-modernist 1980s.  

Croatian philosopher Srecko Horvat , in contrast, offers a less conceptual and more realist hypothesis about the immediate future: “The fear of a pandemic is more dangerous than the virus itself. The apocalyptic images of the mass media hide a deep nexus between the extreme right and the capitalist economy. Like a virus that needs a living cell to reproduce itself, capitalism will adapt itself to the new 21st century biopolitics.”   

Workers disinfecting street in Tehran during Covid-19 pandemic, March 19, 2020. (Tasnim News Agency, CC BY 4.0, Wikimedia Commons)

For the Catalan chemist and philosopher Santiago Lopez Petit, coronavirus can be seen as a declaration of war: “Neoliberalism unabashedly dresses up as a war state. Capital is scared,” even as “uncertainty and insecurity invalidate the necessity of the same state.” Yet there may be creative possibilities when “obscure and paroxistic life, incalculable in its ambivalence, escapes algorithm.” 

Our Normalized Exception 

Giorgio Agamben caused immense controversy in Italy and across Europe when he published a column in late February on “the invention of an epidemic.” He later had to explain  what he meant. But his main insight remains valid: The state of exception has been completely normalized. 

And it gets worse: “A new despotism, which in terms of pervasive controls and cessation of every political activity, will be worse that the totalitarianisms we have known so far.”  

Agamben redoubles his analyses of science as the religion of our time: “The analogy with religion is taken literally; theologians declared that they could not clearly define what is God, but in his name they dictated rules of conduct to men and did not hesitate to burn heretics. Virologists admit they don’t know exactly what is a virus, but in its name they pretend to decide how human beings shall live.”     

Cameroonian philosopher and historian Achille Mbembe, author of two indispensable books, “Necropolitics” and “Brutalisme,”has identified the paradox of our time: “The abyss between the increasing globalization of problems of human existence and the retreat of states inside their own, old-fashioned borders.”   

Mbembe delves into the end of a certain world, “dominated by giant calculation devices,” a “mobile world in the most polymorphous, viral and near cinematic sense,” referring to the ubiquity of screens (Baudrillard again, already in the 1980s) and the lexicography, “which reveals not only a change of language but the end of the word.” 

Here we have Mbembe dialoguing with Berardi – but Membe takes it much farther: “This end of the word, this definitive triumph of the gesture and artificial organs over the word, the fact that the history of the word ends under our eyes, that for me is the historical development par excellence, the one that Covid-19 unveils.” 

The political consequences are, inevitably, dire: “Part of the power politics of great nations does not lie in the dream of an automated organization of the world thanks to the manufacturing of a New Man that would be the product of physiological assemblage, a synthetic and electronic assemblage, and a biological assemblage? Let’s call it techno-libertarianism.”

This is not exclusive to the West: “China is also on it, vertiginously.” 

This new paradigm of a plethora of automated systems and algorithmic decisions “where history and the word don’t exist anymore is in frontal shock with the reality of bodies in flesh and bones, microbes, bacteria and liquids of all sorts, blood included.”

Rendering of Open Cobalt 3D hyperlinks connecting five virtual spaces. (Julian Lombardi, CC BY-SA 3.0, Wikimedia Commons)

The West, argues Mbembe, chose a long time ago to “imprint a Dionysiac course to its history and take the rest of the world with it, even if it doesn’t understand it. The West does not know anymore the difference between beginning and ending. China is also on it. The world has been plunged into a vast process of dilaceration where no one can predict the consequences.”      

Mbembe is terrified by the proliferation of “live manifestations of the bestial and viral part of humanity,” including racism and tribalism. 

This, he adds, conforms our new viral paradigm. 

His analysis certainly dovetails with Agamben’s: “I have a feeling that brutalism is going to intensify under the techno-libertarianism drive, be it under China or hidden under the accoutrements of liberal democracy. Just like 9/11 opened the way to a generalized state of exception, and its normalization, the fight against Covid-19 will be used as a pretext to move the political even more towards the domain of security.”

“But this time”, Mbembe adds, “it will be a security almost biological, bearing with new forms of segregation between the ‘immunity bodies’ and ‘viral bodies’. Viralism will become the new theatre for fractioning populations, now identified as distinct species.”

It does feel like neo-medievalism, a digital re-enacting of the fabulous “Triumph of Death” fresco in Palermo. 

Poets, Not Politicians 

It’s useful to contrast such doom and gloom with the perspective of a geographer. Christian Grataloup, who excels in geo-history, insists on the common destiny of humanity (here he’s echoing Xi Jinping and the Chinese concept of “community of shared destiny”): “There’s an unprecedented feeling of identity. The world is not simply an economic and demographic spatial system, it becomes a territory. Since the Great Discoveries, what was global was shrinking, solving a lot of contradictions; now we must learn to build it up again, give it more consistence as we run the risk of letting it rot under international tensions.”        

It’s not the Covid-19 crisis that will lead to another world – but society’s reaction to the crisis. There won’t be a magical night – complete with performances by “international community” pop stars – when “victory “will be announced to the former Planet Lockdown. 

What really matters is a long, arduous political combat to take us to the next level. Extreme conservatives and techno-libertarians have already taken the initiative – from refusal of any taxes on the wealthy to support the victims of the New Great Depression to the debt obsession that prevents more, necessary public spending.   

In this framework, I propose to go one step beyond Foucault’s biopolitics. Gilles Deleuze can be the conceptualizer of a new, radical freedom. Here is a delightful British series that can be enjoyed as if it were a serious Monty Python-ish approach to Deleuze. 

Foucault excelled in the description of how meaning and frames of social truth change over time, constituting new realities conditioned by power and knowledge. 

Deleuze, on the other hand, focused on how things change. Movement. Nothing is stable. Nothing is eternal. He conceptualized flux – in a very Heraclitean way. 

New species (even the new, AI-created Ubermensch) evolve in relation with their environment. It’s by using Deleuze that we can investigate how spaces between things create possibilities for The Shock of the New. 

More than ever, we now know how everything is connected (thank you, Spinoza). The (digital) world is so complicated, connected and mysterious that this opens an infinite number of possibilities.

Already in the 1970s, Deleuze was saying the new map – the innate potentially of newness – should be called “the virtual.” The more living matter gets more complex, the more it transforms this virtual into spontaneous action and unforeseen movements. 

Deleuze posed a dilemma that now confronts us all in even starker terms. The choice is between “the poet, who speaks in the name of a creative power, capable of overturning all orders and representations in order to affirm difference in the state of permanent revolution which characterizes eternal return: and that of the politician, who is above all concerned to deny that which ‘differs,’ so as to conserve or prolong an established historical order, or to establish a historical order which already calls forth in the world the forms of its representation.”    

The time calls for acting as poets instead of politicians.

The methodology may be offered by Deleuze and Guattari’s formidable “A Thousand Plateaus” – significantly subtitled “Capitalism and Schizophrenia,” where the drive is non-linear. We’re talking about philosophy, psychology, politics connected by ideas running at different speeds, a dizzying non-stop movement mingling lines of articulation, in different strata, directed into lines of flight, movements of deterritorialization. 

The concept of “lines of flight” is essential for this new virtual landscape, because the virtual is conformed by lines of flight between differences, in a continual process of change and freedom. 

All this frenzy, though, must have roots – as in the roots of a tree (of knowledge). And that brings us to Deleuze’s central metaphor; the rhizome, which is not just a root, but a mass of roots springing up in new directions. 

All this frenzy must have roots. (StockSnap from Pixabay)

Deleuze showed how the rhizome connects assemblies of linguistic codes, power relations, the arts – and, crucially, biology. The hyperlink is a rhizome. It used to represent a symbol of the delightful absence of order in the internet, until it became debased as Google started imposing its algorithms. Links, by definition, always should lead us to unexpected destinations. 

Rhizomes are the antitheses of those Western liberal “democracy” standard traits – the parliament and the senate. By contrast, trails – as in the Ho Chi Minh trail – are rhizomes. There’s no masterplan. Multiple entryways and multiple possibilities. No beginning and no end. As Deleuze described it, “the rhizome operates by variation, expansion, conquest, capture, offshoot.” 

This can work out as the blueprint for a new form of political engagement –as the systemic design collapses. It does embody a methodology, an ideology, an epistemology and it’s also a metaphor. The rhizome is inherently progressive, while traditions are static. As a metaphor, the rhizome can replace our conception of history as linear and singular, offering different histories moving at different speeds. TINA (“There is no alternative”) is dead: there are multiple alternatives. 

And that brings us back to David Harvey inspired by Marx. In order to embark onto a new, emancipatory path, we first have to emancipate ourselves to see that a new imaginary is possible, alongside a new complex systems reality.

So let’s chill – and de-territorialize. If we learn how to do it, the advent of the New Techno Man in voluntary servitude, remote-controlled by an all-powerful, all-seeing security state, won’t be a given.  

Deleuze: a great writer is always like a foreigner in the language through which he expresses himself, even if it’s his native tongue. He does not mix another language with his own language; he carves out a non pre-existent foreign language within his own language. “He makes the language itself scream, stammer, murmur. A thought should shoot off rhizomatically – in many directions. 

I have a cold. The virus is a rhizome. 

Remember when Trump said this was a “foreign virus?”

All viruses are foreign – by definition. 

But Trump, of course, never read “Naked Lunch” by Grandmaster William Burroughs. 

Burroughs: “The word is a virus.”

Now that the first domesticated dog has tested positive for for the novel coronavirus, joining at least one tiger at the Bronx Zoo, it’s probably worth noting that the CDC earlier this month extended America’s social distancing guidelines to include pets.

To be clear: there’s no evidence of pets infecting humans, but that doesn’t mean it can’t happen. So far, tests suggested that the viral strains found in animals weren’t concentrated enough to cause infection in humans, but nobody can say for certain.

We’re still learning about how #COVID19 affects animals, but it appears that people can spread the virus to animals in some situations. Until we know more, limit contact with pets if you are sick or feeling sick. For more info, see: https://t.co/H8NS2GTd4x. pic.twitter.com/uGEbo1su2O

— CDC (@CDCgov) April 23, 2020

Instead of allowing your dog to run around the neighborhood without a leash, sniffing the anus of every fellow canine, the new guidelines advise Americans to “treat pets as you would other human family members.”

“Do not let pets interact with animals or people outside the household,” the CDC said.

Dog owners should avoid taking their fur-babies to dog parks, or any places where they might risk infection.

More importantly, the guidelines recommend that “if a person inside the household becomes sick, isolate that person from everyone else, including pets.”

While the CDC acknowledged that much research still needs to be done, there’s enough evidence now to suggest that pets can be infected by humans.

Outside the US, a handful of other house pets, including both cats and dogs, have been infected in Japan and in China, according to unconfirmed reports.

 

 

Authored by Barry Brownstein via The American Institute for Economic Research,

In his 1841 book Extraordinary Popular Delusions and the Madness of Crowds, Charles MacKay wrote, “During seasons of great pestilence men have often believed the prophecies of crazed fanatics, that the end of the world was coming. Credulity is always greatest in times of calamity.”

During the COVID-19 crisis, there has been no shortage of “crazed fanatics.”

In a recent interview, Bill Gates claimed that “normalcy will only return when we’ve vaccinated the entire global population.” Acknowledging that the “economic hit” will be immense, he proclaimed, “but [we] don’t have a choice.” That is, no choice other than to go down the path Gates prescribes.  

Then, to deflect criticism from his prescribed path, Gates sets up a mystical strawman opponent who wants to “ignore what’s going on here.” 

Dr. Ezekiel Emanuel was an architect of Obamacare. Emanuel too proclaimed, “We will not be able to return to normalcy until we find a vaccine or effective medications.” 

Rhetorically, Emanuel asked, “How are people supposed to find work if this goes on in some form for a year and a half? Is all that economic pain worth trying to stop COVID-19?”

Emmanuel didn’t invite a dialogue on his questions. He answered his questions with the cry of every other fanatic, “The truth is we have no choice.”

Fanatics proclaim their way is the only way forward and want us to believe “we have no choice.” 

Notice, Gates and Emmanuel present a false dilemma, two alternatives: shut down the economy for many months to come or do nothing. You either support the lockdowns, or you’re a threat to public health.

Gates and Emmanuel refuse to acknowledge other possibilities. They fail to see the limitless possibilities that arise from voluntary adjustments by businesses and individuals.

Through this COVID-19 crisis, fanatics have weaponized the false dilemma logical fallacy to obscure “rational, honest debate.” “This insidious tactic has the appearance of forming a logical argument, but under closer scrutiny it becomes evident that there are more possibilities than the either/or choice that is presented.”

You may recognize this tactic in various other forms. You either want educational spending by government to increase, or you’re against education. You either want higher taxes on the “wealthy,” or you want the poor to go without healthcare.

Foxes and Hedgehogs

Those who use the false dilemma tactic and think in black and white terms have the worst records as forecasters. In his book, Enlightenment Now, Steven Pinker reports on the research of University of Pennsylvania professor Philip Tetlock, who interviewed 284 forecasters to understand the makeup of an accurate forecaster from the many more who are “often mistaken but never in doubt.”

Tetlock metaphorically drew on the Greek poet Archilochus who wrote, “The fox knows many things, but the hedgehog knows one big thing.” “The hedgehogs are more the big idea people, more decisive,” Tetlock observes. For forecasters, decisiveness is not a good quality. Don’t rely on the forecasts of hedgehogs.

A physician with the mindset of a hedgehog might remove your tonsils to cure repeated sore throats. Medical hedgehogs wouldn’t be knowledgeable of dietary and lifestyle changes that could support your health. 

Pinker warns, those “with Big Ideas—left-wing or right-wing, optimistic or pessimistic—which they held with an inspiring (but misguided) confidence” were the worst forecasters. Having a narrow focus, hedgehogs can’t see the big picture beyond their specialization. In the words of Nobel laureate Daniel Kahneman, they labor under “an enhanced illusion of their skill.” Their forecasts, Kahneman adds, “produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options.”

The black-or-white thinking of these poor forecasters stems from their desire “to squeeze complex problems into the preferred cause-effect templates.” Ideas and evidence that don’t fit their theories are treated as “irrelevant distractions.”

Fame leads to arrogance. Kahneman writes, “The more famous the forecaster the more flamboyant the forecasts.” Tetlock observes, “Experts in demand were more overconfident than their colleagues who eked out existences far from the limelight.”

Pinker adds that poor forecasters are allergic to the ambiguities of life and “to wishy-washy answers.” Rather than looking for evidence that contradicts their position, they pile “up reasons why they were right and others wrong.” Such experts “were unusually confident and likelier to declare things ‘impossible’ or ‘certain.’ Committed to their conclusions, they were reluctant to change their minds even when their predictions clearly failed. They would tell us, ‘Just wait.’”

We already hear the “just wait” threat from experts who assure us that if we don’t keep following their advice, the second wave of COVID-19 will inevitably be “far more dire” and the “potentially overwhelming outbreak.”  

Foxes are the “superforecasters.” Pinker instructs that they are “not necessarily brilliant,” but “they have personality traits that psychologists call ‘openness to experience’ (intellectual curiosity and a taste for variety), ‘need for cognition’ (pleasure taken in intellectual activity), and ‘integrative complexity’ (appreciating uncertainty and seeing multiple sides).”

Superforecasters are actively looking for their mindset biases. Pinker writes of the best forecasters, “They constantly ask themselves, ‘Are there holes in this reasoning? Should I be looking for something else to fill this in? Would I be convinced by this if I were somebody else?’”

Politicians and central planners listen to fanatical hedgehogs who insist their way is the only way. The hedgehogs may be decisive, but their forecasts are often spectacularly wrong. 

Why Hysteria is Contagious 

Jonathan Sumption, a former UK Supreme Court Justice, recently warned, “When human societies lose their freedom, it’s not usually because tyrants have taken it away. It’s usually because people willingly surrender their freedom in return for protection against some external threat.”

Sumption blames the public for demanding draconian actions. Most “don’t pause to ask whether the action will work. They don’t ask themselves whether the cost will be worth paying.” 

Because of herding behavior, “hysteria is infectious.”

If you were handed two cards with lines on each, one clearly shorter than the other, could you tell the difference? If you think this is a ridiculous question, think again.   

In one of psychology’s most famous experiments, Solomon Asch showed that if you’re in a group and most of the group members claim the shorter line is longer, you might just go along. In his book You Are Not So Smart, David McRaney reports, “In Asch’s experiments, 75 percent of the subjects caved in on at least one question [about the length of the lines]. They looked at the lines, knew the answer everyone else was agreeing to was wrong, and went with it anyway.” 

Perhaps even worse, those who changed their correct answers to conform with others “seemed oblivious to their own conformity. When the experimenter told them they had made an error, they came up with excuses as to why they made mistakes instead of blaming the others.”

If you’re sure you would go against the grain, consider this: “The percentage of people who conformed grew proportionally with the number of people who joined in consensus against them.” 

Imagine you are in a meeting, and a significant decision is to be made. You think your manager’s plan is ditzy. You are ready to speak out when you see everyone else in the meeting is agreeing with your manager. Would you behave like a mouse and go along? If you’ve ever gone along with a poor decision, don’t beat up on yourself; it’s tough to go against the herd.

Perhaps you think Asch’s experiments merely show there is no reason to dispute the crowd when the situation is trivial. Sadly, research shows when something significant is on the line, fewer people will buck the herd. 

In his book The Science of Fear, Dan Gardner reports on experiments by psychologists Robert Baron, Joseph Vandello, and Bethany Brunsman found that conformity goes up “so long as the judgments are difficult or ambiguous, and the influencing agents are united and confident.” 

Gardner wondered, would new evidence “make us doubt our opinions?” The answer, Gardner found, is, “Once we have formed a view, we embrace information that supports that view while ignoring, rejecting, or harshly scrutinizing information that casts doubt on it.” Confirmation bias trips us up from changing our mind.

The latest evidence suggests COVID-19 is not as high a risk as initially thought. If you think such evidence will convince your neighbors or Facebook friends that it’s time to end the lockdowns, you will be endlessly frustrated. Our neighbors care what other people think. If you live in an area where support for the lockdowns is widespread, your neighbor will likely go along. Remember, the more nuanced an issue is, and the more critical the problem, the more the desire to conform goes up. 

We are living through both a pandemic and a contagious madness of global proportions.

Politicians who led us down this destructive lockdown path won’t be changing their view until their “solution” is politically untenable.

In his conclusion to The Road to Serfdom, Hayek warns, “We shall not grow wiser before we learn that much that we have done was very foolish.” To grow wiser, we first need to “free ourselves” from a mindset that obscures our errors. We will continue to make errors as long as we continue to believe “what we have done in the recent past was all either wise or inevitable.” 

We have become a nation of professional victims. We are not victimized by the coronavirus or by politicians and “experts.” We are victims of our choice to conform in support of their policies. Stephen Covey has observed, “It’s easy to take responsibility for the good things in our lives, but the real test comes when things aren’t going well.” 

Today, we can take responsibility for changing our minds. We are each 100% responsible for how we choose to interpret our experience of life. In her timeless book, The Discovery of Freedom Rose Wilder Lane explained why some prefer to turn over responsibility to authority. When something goes wrong, they proclaim I am an innocent victim of forces beyond my control. Pretending we are innocent is a steep price we pay for losing our freedom.

Writes Mackay, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”

When we choose to see beyond the “we have no choice” mindset, limitless solutions will begin to come into view. The future of America depends, not upon bailouts or a fast-tracked vaccine, but upon individuals choosing to recover their senses.   

At a time when President Trump has officially accused the Wuhan Institute Of Virology of being the cause for the worst pandemic in modern history (as we did first all the way back in January), claiming he has seen evidence that the lab is in fact the origin, potentially exposing China to trillions in global damages and reparations, not to mention the ire of millions of people around the globe who have lost family or loved ones to the Wuhan Virus, one would think – if indeed it was as innocent as it claims – that China would do everything in its power to open up the Institute for the entire world to inspect and prove its innocence. In fact, one would even think China would even make Peng Zhou – whom we singled out in January and who is now being investigated by “the Five Eyes‘ for his role in the Wu Flu epidemic – accessible to the world to remove even the smallest trace of doubt his lab had anything to do with the coronavirus release.

One would be wrong.

As Reuters reports, the World Health Organization (WHO) – which as has already been demonstrated has been doing China’s bidding, PR and damage control ever since the pandemic emerged – has been refused an invitation to take part in a Chinese investigation into the origins of COVID-19. Almost as if China has something to hide even from the organization that it so explicitly control each and every day.

Sky News spoke to Dr Gauden Galea, the WHO’s representative in China, on Thursday who reported that China refused requests by WHO officials to participate in an investigation.

“We know that some national investigation is happening but, at this stage, we have not been invited to join,” Dr Galea was quoted as saying.

“WHO is making requests of the health commission and of the authorities… The origins of virus are very important, the animal-human interface is extremely important and needs to be studied.

He is right. And yet, even though the WHO has been exposed as China’s lapdog, China refuses to grant the only international health organization access. For some odd reason the WHO never bothered to ask “why”?

He said it was crucial to know “as much as possible” in order to prevent a “reoccurrence”. When asked by Sky News whether there was a good reason for the WHO to not be included in the investigation, Dr Galea said: “From our point of view, no”.

But from China’s… yes.

Dr Galea told Sky News that while WHO was confident the virus was “naturally occurring” – and once again, the WHO shows that it can’t even approach this most critical of tasks with an open mind and is already prejudicted by the pro-China position even though the US president himself today said he has seen evidence that virus indeed originated in the Wuhan lab – the laboratory’s logs would need to be “part of any full report, any full look at the story of the origins”. So far, WHO has not been able to investigate the logs, he said.

The WHO representative also said China would have to explain why no new cases of COVID-19 were reported in the country for a significant period of time in early January. Not that China would ever answer.

So while the “establishment” of pro-China healthcare workers and faux Facebook “fact checkers” such as the grotesque case of the borderline criminally conflicted Danielle Anderson, among those who have pushed the “conspiracy theory” that China knows more than its letting on about the virus – some three months after this website of course – are US President Donald Trump, French President Emmanuel Macron and German Chancellor Angela Merkel, who said the more transparent China is, the better.

Meanwhile, Trump has withdrawn funding from the WHO over concerns about its transparency and for placing too much trust in China.

As for China, the bigger question is not if Beijing is lying but when, if ever, it is telling the truth: even the pro-establishemnt, anti-Trump Associated Press reported earlier this month that China was aware of the virus’ seriousness and the possibility of human-to-human transmission days before warning citizens. But China maintains it acted swiftly to deal with the virus and has been transparent with both the WHO and other countries.

Australia’s Foreign Minister Marise Payne has been one of the strongest advocates for a global inquiry into the virus, saying mid-April that Australia would “insist” on one. However, as we reported previously, demonstrating that Beijing won’t even accept being questioned let alone probed, China took offense to that, saying Australia was just parroting the views of the United States, while France, Britain and the European Union and threatened an import boycott.

Even tiny New Zealand, whose real estate market is largely at the whim of Chinese oligarchs, has expressed an interest in looking into how the pandemic occurred, but hasn’t specifically singled out reviewing China’s role. New Zealand Prime Minister Jacinda Ardern also signalled an inquiry should happen once the pandemic was over.

“There have been politicians around the world who have said, ‘Look, in the aftermath of this, we do need to look at what happened and whether or not there are areas we could as a global community improve our response’,” she explained last week. “I think that’s common sense. Of course, we want to make sure we learn from what has been a global pandemic that has shaken the globe in a way that none other has for many decades” she said in her most politically correct tone, desperate not to offend China.

Finally, confirming just how political any potential probe would be, a terrified NZ Foreign Minister Winston Peters said on Tuesday that he trusted China wouldn’t punish New Zealand for taking part in an inquiry.

“It is very hard to conceive, no matter what country it is, of there not being a desire from every country around the world – including the country of origin – for an investigation to find out how this happened,” he said, adding laughably “I’m not worried about [potential ramifications] because China has promised me they don’t behave that way.”

The funniest part about the bolded sentence is that he actually wasn’t kidding.

In what could be a precedent-setting move by arguably the world’s most prestigious academic institution, Harvard University announced Monday that the extreme uncertainty surrounding the coronavirus pandemic and accompanying economic shutdowns means the school is mulling the possibility of going to online only classes for the Fall semester.

“We cannot be certain that it will be safe to resume all usual activities” by autumn, university provost Alan Garber wrote in a school-wide memo on Monday, reports the WSJ. “Consequently, we will need to prepare for a scenario in which much or all learning will be conducted remotely.”

And in a statement sure to be met with collective eye-rolling among a student body prepared to drop some $70,000+ only to kick the year off with months or possibly more of sub-par ‘remote learning’ courses, school spokesman Jason Newton added in an email, “The primary message is that the University is moving forward with the fall semester, rather than delaying it.”

We doubt the students and families, many of which are likely going into debt to get that top-rate and in most cases out-of-state education, will see it that way (though in Harvard’s case – an exception to the norm – its massive endowment and extremely selective acceptance rate means at least 70% of students receive typically massive financial aid, tuition breaks and scholarships via the school’s ample means). 

Last week Harvard announced it has cancelled freshman pre-orientation programs set to take place in August, suggesting further that the Fall semester just won’t happen like it normally would in physical classrooms and on campus.

As we detailed earlier, more broadly across the nation college administrations have remained aloof to student demands either for refunds from this year or greatly reduced tuition for online format classes in the future, given it’s just not the same. But these institutions naturally aren’t feeling generous given most are in mere survival mode, making both budget and in some cases staff cuts. 

Schools are already losing tens of millions in campus and summer fees given shutdowns, not to mention sports programs being shuttered, also as the the question of whether in-person instruction will even happen next Fall remains the biggest anxiety-inducing huge unknown, potentially delivering a financial fatal blow to a number of already struggling schools. Endowment values have plunged along with markets to boot. And then there’s a no doubt a greatly diminished incoming freshman class, and with that severely declining numbers of tuition checks coming in.

Last week The Washington Post summarized the crisis quite well: “The coronavirus crisis is forcing a reckoning over the price and value of higher education” — given that at the root of this, WaPo noted, is this: “Schools geared toward full-time students… offer, in normal times, academic programs with a personal touch, including seminars, laboratory classes, office hours and research opportunities with faculty.”

If Harvard eventually announces an online-only Fall semester, it’s most likely many others will follow suit, leaving tuition-paying families to ponder the increasingly attractive possibility of taking a well-timed gap year. As Forbes comments on this trend:

College students, but particularly current high school seniors, are considering taking a gap year while they wait for campus life to resume… This year, students will have to think outside of the box of the traditional gap year occupations. Rather than begin their college career through online classes, students will be dipping their toes into various nontraditional and professional opportunities.

After all, who wants to drop an initial $40K to $60K or more to potentially sit in the family living room for Fall 2020 and take online classes?

Should this ‘domino effect’ happen, the financial blow to many higher-ed institutions (though not Harvard or wealthy Ivy League schools it should be noted) could prove irreversible and even fatal to continuing operations.

Authored by Philip Giraldi via The Strategic Culture Foundation,

When in trouble politically, governments have traditionally conjured up a foreign enemy to explain why things are going wrong.

Whatever one chooses to believe about the coronavirus, the fact is that it has resulted in considerable political backlash against a number of governments whose behavior has been perceived as either too extreme or too dilatory. Donald Trump’s White House has taken shots from both directions and the response to the disease has also been pilloried due to repeated gaffes by the president himself. The latest mis-spoke, now being framed by Trump’s press secretary as sarcasm, involved a presidential suggestion that one might consider injecting or imbibing disinfectant to treat the disease, either of which could easily prove lethal.

So, the administration is desperate to change the narrative and has decided to hit on the old expedient, namely seeking out a foreign enemy to distract from what is going on in the nation’s hospitals. The tale of malevolent foreigners has been picked up by a number of mainstream media outlets and has proven especially titillating because there is not just one bad guy, but instead at least four: China, Russia, North Korea and Iran.

The accepted narrative is that America’s enemies are now taking advantage of a moment of weakness due to the lockdown response to the coronavirus and have stepped up their attacks, both physical and metaphorical, on the Exceptional Nation Under God.

The most recent claim that the United States is being targeted involves an incident in mid-April during which a swarm of Iranian gunboats allegedly harassed a group of American warships conducting a training exercise in the Persian Gulf by crossing the bows and sterns of the U.S. vessels at close range. The maneuvers were described by the Navy as “unsafe and unprofessional” but the tiny speedboats in no way threatened the much larger warships (note the photo in the link which illustrates the disparity in size between the two vessels).

Donald Trump characteristically responded to the incident with a tweet last Wednesday: “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.” Although no context was provided, the president commands the armed forces and the tweet essentially defined the rules of engagement, meaning that it would be up to the ships’ commanders to determine whether or not they are being harassed. If so, the would be able to open fire and destroy the Iranian boats. Of course, there might be a physical problem in “shooting down” a gunboat that is in the water rather than in the air.

In the Mediterranean the threat against the U.S. consisted of two Russian jet fighters flying close to a Navy P8-A submarine surveillance plane. The Russian fighters were scrambled from Hmeymim air base in Syria after the U.S. aircraft approached Syrian airspace and Russian military facilities. One of the fighters, a SU-35 carried out an “unsafe” maneuver when it flew upside down at high-speed 25 feet in front of the Navy plane.

Also in mid-April, North Korea meanwhile fired cruise missiles into the Sea of Japan amidst rumors that its head of state Kim Jong Un might be dead or dying after major surgery. President Trump was unconcerned about the missiles and also commented that he had received a “nice note” from the North Korean leader.

Wars and rumors of wars notwithstanding, China continues to be the principal target for Democrats and Republicans alike on Capitol Hill. GOP congressmen are reportedly urging sanctions against China while there are already a number of coronavirus lawsuits targeting Chinese assets in U.S. courts, at least one of which has a trillion dollar price tag. Theories about the deliberate weaponization of the Wuhan virus abound and they are also mixed in with stories of how Beijing unleashed the weapons and is now engaged in Russia style social media intervention to promote the notion that the United States has proven incapable of handling what has become a major medical emergency. However, those who are pushing the idea that the Chinese communist party has declared war by other means fail to explain why the government in Beijing is so keen on destroying its largest export market. If the U.S. economy goes down a large part of the Chinese economy will go with it, particularly if China’s second largest export market Europe is also suffering.

The craziness of what is going on in the context of the disruption caused by the coronavirus has apparently increased the normal paranoia level at the top levels of the U.S. government. Pentagon plans to fight a war with Russia and China simultaneously, first mooted in 2018, are still a work in progress in spite of the fact that Washington has fewer cards to play currently than it did two years ago. The economy is down and prospects for recovery are speculative at best, but the war machine rolls on. Many Americans tired of the perpetual warfare are hoping that the virus aftermath will include demands for a genuine national health system that will perforce gut the Pentagon budget, leading to an eventual withdrawal from empire.

In spite of the hysteria, it is important to note that no Americans have been killed or injured as a result of recent Iranian, Russian, Chinese and North Korean actions. When you station ships and planes close to or even on the borders of countries that you have labeled as enemies it would be reasonable to expect that there will be pushback. And as for taking advantage of the virus, it is the United States that has suggested that it would do so in the cases of Iran and Venezuela, exerting “maximum pressure” on both countries in their times of troubles to bring about regime change.

If those countries that are accustomed to being regularly targeted by the United States are taking advantage of an opportunity to diminish America’s ability to intervene globally, no one should be surprised, but it is a fantasy to make the hysterical claim that the United States has now become the victim of some kind of vast international conspiracy.

Having tumbled yesterday on the first set of headlines reporting on the Trump administration’s plans to seek ‘COVID reparations’ amid accusations of Chinese ‘meddling’ in the US election (obviously not in favor of Trump), the Chinese yuan legged dramatically lower in this evening’s illiquid session which sees most of Asia closed for May Day, after Bloomberg reports that Trump is exploring blocking a government retirement fund from investing in Chinese equities considered a national security risk.

Trump made his initial threats from the Rose Garden at the White House Monday after he was pressed by a reporter over a German newspaper report suggesting that China should be issued a $160 billion invoice for the impact on Europe’s economy.

The president responded he had a “much easier” idea:

“We have ways of doing things a lot easier than that,” Trump told the coronavirus press briefing. “Germany’s looking at things, and we’re looking at things, and we’re talking about a lot more money than Germany’s talking about.”

“We haven’t determined the final amount yet. It’s very substantial,” Trump added, suggesting it would be significantly more than the $160 billion floated in German media.

Asked whether he was considering the use of tariffs or even a debt write-offs for China (something which Larry Kudlow vehemently rejected earlier on Thursday), Trump would not offer specifics.

“There are many things I can do,” he said. “We’re looking for what happened.”

Since then various plans have been proposed, but Trump escalated the war of words further, during an Oval Office interview with Reuters  published Wednesday night,  saying that he thinks that China is determined to see him lose the November election based on Beijing’s response to the coronavirus, and that he is considering various ways to punish the Chinese government which he he again blamed for allowing the virus to spread across the world.

“China will do anything they can to have me lose this race,” Trump said in the interview and said he was looking at different options in terms of consequences for Beijing over the virus. “I can do a lot,” he said.

Which was quickly followed by denials from Chinese Foreign Ministry spokesman Geng Shuang, saying that China has no interest in interfering in internal U.S. affairs (unless of course that ‘affair’ involves investigating the origin of COVID-19). China hopes some people in U.S. won’t drag country into its internal processes, Geng said.

And tonight, Bloomberg reports that, after months of pressure from concerned lawmakers, according to a person familiar with the internal deliberations, the Trump admin is planning an executive order to block a 2017 decision that The Thrift Savings Plan, the federal government’s retirement savings fund, would transfer a massive $50 billion to an international fund which would mirror the MSCI All-Country World Index.

The issue being China’s addition to the index, and thus the fund being forced to allocate significant capital to the Chinese stock markets, at a time when the gloves between the two nations are clearly off.

Needless to say, the optics of the US halting capital from entering China would be staggering and could result in a reversion of China-bound capital flows across all Western countries until the current war of words between Trump and Xi rages. The only problem is that, as we noted yesterday, this particular war of words could last a long time, since there is no longer any impetus to kiss and make up, and if anything, Trump will only escalate the anti-China sentiment into the election (and after), to keep pounding that the collapse resulting from the coronavirus pandemic is not his fault, but rather’s Beijing, even as China pursues a mirror image approach, blaming the US for launching the pandemic.

The most obvious market reaction for now is in Offshore Yuan which has collapsed in the last two days, extending losses tonight…

Source: Bloomberg

Of course, much of Asia is on May-Day holiday so liquidity is low, but Yuan’s move is significant nevertheless…

Source: Bloomberg

Bloomberg reports that Senator Marco Rubio, a Florida Republican, applauded reports of the move in a statement Thursday.

“It’s outrageous that five unelected bureaucrats appointed by the previous administration have ignored bipartisan calls from Congress to reverse this short-sighted decision, and I applaud President Trump for directing his administration to take swift action preventing this from going forward,” he said.

We would expect China to be furious at this discussion and wonder what they will do to stall this move – one suggestion, given the weakness in US equity futures overnight, is to push volatility back into US markets – to shake the faith in the dramatic market rebound (that The Fed enabled).