After the epidemic part 1

UK Finance Minister abandons Thatcher’s heritage.

The response by Rishi Sunak, the UK’s Finance Minister, to the CV19 pandemic is a breath-taking example of state intervention in the economy, the final boot into the gut of Thatcherite “market will rule” doctrine and a total victory for Keynesian economic theory. It is the funeral rites of the Austrian school of “market forces” exponents.  Of course, practically speaking it is the only response possible to the crisis situation. Leaving it to the market to resolve would probably precipitate an economic crash on a scale not seen since the 1930’s but this time, at least in the USA with a heavily armed and belligerent population to contend with. Clearly then, the anticipated effects of the pandemic are akin to a war situation: there will be a recession, all countries, including those in the European Union, will have an almost overwhelming debt burden and there will be substantial levels of unemployment. This situation will be further exacerbated by further extensions of internet working. We might even finally see the end of the farce of the European Parliament physically moving each month for four days to Strasbourg, but don’t hold your breath on that, France will never agree, for France, national pride trumps all and there are a lot of hotels and restaurants depending on the money the temporary move bring, to say nothing of the income of the logistics companies moving the entire parliament and offices back and forward. Intervention in the economy, similar to the 1946 Marshall plan, is clearly called for.

The Trump alternative, ignore the virus and keep working to save the economy might have some attraction to the very rich, living is splendid isolation in Saint Tropez or the Hamptons but, if the death rate soars, which it very well could, who can say whether the unprotected workers risking their lives to keep the economy running, will view this with equanimity? “The rich man in his castle, the poor man at his gate” might well have seemed reasonable in 1848 when the lines were penned but it is by no means certain that the poor will be quite so accepting in 2020.