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L. Neil Smith’s THE LIBERTARIAN ENTERPRISE
Number 1,067, April 19, 2020

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The Coronavirus Panic:
Pure Waste or Midwife of Progress?

by Sean Gabb
sean@seangabb.co.uk

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Special to L. Neil Smith’s The Libertarian Enterprise

I remain sceptical about the dangers of the Coronavirus. Of course, it is an unpleasant illness, and no one should go out of his way to catch it. At the same time, we are into the fifth month of the panic, and the predicted mountain of corpses has still not appeared. Whether in countries that have imposed a lockdown, or those that have not, rates of infection and of death seem to be reaching the peak of their distribution curves. It may be that the final impact on the health of mankind will be no worse, or not much worse, than that of a severe seasonal flu. Even if, minus the lockdown, the potential impact might have been three or four or five times greater, it may still be worth asking if, on any reasonable calculus of cost and benefit, the resulting slump was worth the small saving of lives.

I will not speculate on what has driven so many governments to shut their countries down for at least a month. Doubtless, the truth will finally emerge. But that may be next year, or the year after. For the moment, I will take the lockdown as a given, and ask what further consequences may flow from it. My readers will forgive me if I focus on my own country. It is the country that I know best, and it is my own country. Besides, what I say for England will surely apply in most other places where my readers live.

The British Government announced yesterday a three-week extension to the present lockdown. I cannot believe this will continue into June. There may even be some loosening within the period of extension. However, I also cannot believe that life will go wholly back to what counted as normal until last month. The Virus may return in the winter. There may be local outbreaks. If so, there will be at least a partial return to the lockdown. And many people have been frightened, and they will remain frightened. I can laugh at the people I see in Deal High Street, shrinking from each other, woollen scarves wrapped over their faces as if the Coronavirus were a kind of small wasp. But I can see the fear in their eyes, and that may take a long time to fade. Few people like strangers at the best of times. Now, the definition of who is a stranger will be widened, and strangers will be objects of active suspicion. Voluntary social distancing will be a fact of life both here and in much of the world for the 2020s. This will have many bad effects—though these will, I think, be more often stupid than positively evil. But many effects will be entirely good—or perhaps arguably good.

I focus on the good or the arguably good. In the first instance, there will be an improvement in public hygiene. There will be no more shaking of hands. Though ancient, this is an insanitary custom. Many people do not wash their hands after going to the toilet. Many do nasty things with their hands between washings. Touching other people is an obvious means of contagion. There will be much less of this. Door handles and stair rails and keypads are other means of contagion. We can expect a more Japanese approach to keeping these clean. Public toilets in England are notoriously vile. So are busses and railway carriages. Swimming pools are best avoided. We can expect more cleaning here.

Even so, there will be less travel. The technology to enable working at home has been mature for at least a decade. Yet millions of people continued travelling, until last month, for an hour or two each way, to do in a town centre what they could do just as easily from home. The effects have been a continuing regimentation of working life, overloaded roads and railways, heavy spending on office space, and a determination of house prices not by size or pleasantness, but by proximity to congested town centres. Many nice jobs are awarded on the basis of connections, but many more on the basis of who is able to be there in the morning. Not everyone can work from home. Plumbers, electricians, manufacturing and agricultural workers—these and many others need to be there in person. But, if a third of the population worked from home, there would be a partial levelling of opportunity throughout the country, and less workplace collectivism, and less need for travel. What continued for so long by habit after it ceased to be necessary may now be ended by fears of infection.

The same can be said about travel for shopping. Already, we can and do buy many things on-line. The advantages are too well known for need of listing. But there are many other things that we do not or cannot yet buy on-line. This will change. For example, clothes and shoes still need to be tried to see if they fit. We can now expect to see a rapid improvement of technologies that already exist, so we can supply accurate measurements from home. Long before the Coronavirus panic, the big shops were suffering from on-line competition. This tendency will now accelerate. I doubt if, three years from now, any of the big shopping centres that have opened since the 1980s will survive in their present form. Some will become distribution centres. Others will close and be demolished.

Speaking more generally, there will be a shortening of supply chains. Since about 1990, globalisation has been driven by the search for cheaper and more docile workers. In recent years, better machinery has sent this process into partial reverse. Clothing manufacture, for example, has always been labour intensive. Cloth needs to be woven, then cut out and stitched. When transport and communications were less perfect than they have become, this was work done in Lancashire. It was then farmed out to children in poor countries. Nowadays, cloth can be stretched and stiffened and precisely cut by automated laser as if it were sheets of steel. It can then be stitched by robots. Take out labour costs, and it hardly matters if a factory is in Bradford or in Dacca. Higher rents may be offset by lower transport costs.

Add to this a lowered threshold for economies of scale and a lowered cost of personalised manufacture. I return to the example of buying clothes. At the moment, you go to a big shop and try on jackets. These have been made by the tens or hundreds of thousand at a factory in Asia. They have been made to a set of average sizes. Hardly anyone is completely average. If, like me, your chest measurement is disproportionate to your height, buying clothes is a nuisance. But imagine. You stand naked at home against a measured background. You rotate slowly, moving arms and legs as directed, while your mobile telephone on a tripod takes photographs. These are reduced to a set of precise measurements. You choose from a range of designs on a website, and see how these will look on your body. You make adjustments according to taste of cut and colour. Your completed order is sent to an automated factory. The finished garment is delivered within five days by driverless van. At no point in its making has your clothing been touched by another human being. As said, where the automated factory is located no longer matters.

This being said, factories might as well be close to their markets. For the Coronavirus itself we need to keep an open mind. There is no doubt of the responses to it. In the past few weeks, we have relearned what our ancestors discovered in 1917. An international division of labour makes good sense in a world without sudden shocks. When those shocks come, individual countries may find themselves without the essentials of modern life. From drugs and electronics to clothing and food, our own part of the world has focussed increasingly on development and marketing, leaving actual manufacture to other parts of the world. We now find ourselves in an emergency where supplies are no longer certain. Here again, changes that have long been possible, if inconvenient in terms of new thinking and new investment, may or will be driven by popular fear.

It is the same with food. Though our population may have doubled since 1945, we do seem to be able to produce nearly everything we eat. We can now expect serious encouragement by the British State of home production. When we first decided to leave the European Union, the idea was to replace the Common Agricultural Policy with a framework of subsidies to make the countryside a nice place for the middle classes to have picnics. There will be no more of such talk. A more likely policy now will be a return to the deficiency payments scheme we operated before we sought to enter the European Economic Community. Food entered the British market free of import taxes. Because it was usually cheaper than home produce, farmers who would otherwise have been driven out of business were given a subsidy calculated to let them break even on the assumption of reasonable efficiency. Assumptions of efficiency can now be based on the requirement of automation. This will eliminate the need for cheap foreign workers—who will be suspected bearers of contagion. It will also secure us against the possibility, in the event of a real plague, of labour shortages on the land.

This applies without taking into account the growing possibility of direct manufacturing of food. Meat can already be grown in a laboratory. Because ordinary meat has been so cheap and plentiful, the only effort put into bringing this to market has been with Vegans in mind. Again, this will now change. There will be artificial beef and pork and lamb and chicken, artificial fish and eggs and milk. Everything we now take from other living creatures—and who does not feel some twinge of guilt when sentient beings are knocked on the head to give us dinner?—can and will be synthesised from plants. There may at first be deficiencies of taste and texture. But science and capitalism, close allied, can do wonderful things in little time. The ideal will be a fully-automated supply chain that brings food to the front door whether or not there is anyone able to work on the farms.

Everything I say about manufacturing and agriculture involves automation. All of this is already possible, and much has been achieved in Japan. Little of it has happened here so far. The progress of automation has been slowed by various considerations. There is, as said, the need for new thinking and new investment. Novelty will usually be avoided when the old ways can still turn a profit. There has been the viable alternative of offshoring and the availability of unlimited cheap labour from the European Union. There have been popular fears of job losses. Cheap imported labour is no longer the option that it was. Offshoring is of decreasing benefit. As for unemployment, there are compelling reasons to set aside any fears.

Until last month, it was possible to argue that past improvements in machinery had not led to mass-unemployment, and that the resulting improvements in labour productivity had made everyone richer. These arguments could be countered by historical amnesia and by the observation that modern automation does not so much alter the use of labour as abolish the need for it. I still doubt this. Every increase of supply in one place is necessarily balanced by an increase in demand somewhere else. But this no longer needs to be argued. The justification now of robotic machinery is that it ensures continued supply even if no labour is available. Hardly anyone knows about the Luddite disorders, and how the fears behind them were unfounded. Even fewer have looked at the debate over automation in the 1950s. No one will forget in a hurry how the supermarkets emptied last month, or how many basic medical supplies come from China.

One step to a new economic settlement might be a universal basic income, the deal being that no one objects to radical automation, in exchange for an assured minimum living. The arguments against are that it will be expensive, that it will destroy incentives to work, and that it will make everyone still more dependent on the redistributive arm of the State—this last being a precursor to unlimited state power. On the other hand, there was something like a universal basic income in Athens, and its democracy was probably enhanced by this. A universal automatic payment to everyone would be less intrusive than the existing system of means-testing and meddling officials. The existing welfare system is hardly cheap, and it has done nothing substantial to abolish poverty. So long as it was basic, and so long as it replaced the existing system, the cost need not be crippling: it may not be more than we already pay. So long as it was coupled with the right policies of deregulation and encouragement of enterprise, it might turn out to be a very cheap cost.

I remain convinced beyond reasonable doubt that the various claims of irreversible climate change caused by our industrial activities are falsehoods, where not barefaced lies. Even so, I am sensible of the cleaner air and general quiet of the past month in England. Air and noise pollution are considerable external costs. They also involve large opportunity costs, in terms of resources that are not available for other things. If we can avoid endlessly expanding an already sprawling transport infrastructure, and if we can agree that many workplaces can be merged into the home, and that we can, without any fall of living standards, limit our reliance on uncertain foreign suppliers—I for one will regard the present lockdown as a useful learning experience.

For the avoidance of doubt, I have not given up my belief in the established laws of Economics. The principle of comparative advantage is as close to a geometric truth as anything in the social sciences can be. But I do see that changes in technology shift patterns of advantage over time—sometimes to a more international division of labour, sometimes away from that. I also see that a secure food supply is rather like reasonable national defence, or like an insurance policy for individuals. Even if we choose the more transparent scheme of deficiency payments for agriculture, rather than outright protectionism, there are costs. But it is up to the informed citizens of a democratic nation state to choose whether to accept a known and limited cost to the taxpayers, or to accept a potentially catastrophic risk.

As for the rest, the Coronavirus may or may not in itself be a serious threat. Beyond doubt, the response to date has been vastly expensive and disruptive. It is now for us to decide whether the response has been a dubiously proportionate evil, or a learning experience that will take into a future of enrichment in every sense—a future that has been increasingly possible since the emergence of distributed information technology in the 1970s, but that has so far been arrested by a clinging to ways that last made sense in the great days of the Ford Motor Company.

 

© 2020, Reprinted from Sean Gabb's Website for 15th April 2020.

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