Global supply chain woes stemming from the Covid-19 pandemic are highlighting the fragility of globalisation, according to Steve Keen.
Keen, an honorary professor of economics at UCL (University College London), describes himself as a critic of mainstream economics.
In a Zoom interview with interest.co.nz from Thailand, Keen said countries opening up with 70% vaccination rates, which the Government of his native Australia has touted, will result in continuous Covid-19 outbreaks.
"This [Covid-19] is so contagious that 70% is not enough. I've seen estimates from a virologist that you need 90% of the population, that includes children, 90% vaccinated to stop the transmission link," Keen said.
"Opening up at 70% we're going to continue getting outbreaks, and then when the outbreaks happen you have to isolate because with the Delta variant if one person gets it then all their close contacts will get it. So this is going to mean continuous interruptions to the economy."
"So I see this as a series of booms and slumps in the economic data, but overall the trend is probably flatlining to falling because what this is doing is disrupting the global supply chain," said Keen.
The pandemic, he adds, is showing up the fragility of globalisation. With many big, especially US corporates, having shifted manufacturing to China, just in time warehousing and components of things like Apple's iPhone being made in dozens of different locations, "one outbreak anywhere is going to break that whole chain."
"Then with just in time you don't have much in the way of inventory in case there's a disruption. So it means production is incredibly fragile...We should have an anti-fragile system, not one that is easily broken down. To be robust you have to have buffers. It means you have to have short supply chains, and have to have stocks on hand. So if there are disruptions to the supply chain you can continue producing while you work out how to get around the disruption," said Keen.
"So I think what Covid is going to do is force production back onshore. And that's going to be extremely difficult because they've outsourced that production because they've lost the skill set. America is the classic example of that, but Australia, New Zealand, the UK...The Anglo-Saxon countries which fell for this neoclassical [economic] garbage more than the rest of the world did, are going to find it very, very hard to reestablish industries they've outsourced."
However, reestablishing industries in countries that have outsourced them would not be easy or quick to accomplish.
"It would take of the order of a decade. For a start you haven't got the engineers you need, so you've got to train them. And you probably haven't even got the staff to train them," said Keen.
"It will take you a decade to build back the manufacturing capability you've lost over the last four decades."
He acknowledges, however, that there isn't necessarily the political or public will to actually do this, saying mainstream economists will continue advising against it citing comparative advantage, which Keen describes as "the greatest load of codswallop in economic history." He says the public has lost that experience of working in factories, doing design.
'When it comes to some products you simply can't imagine doing the design yourself...Then we'd need to get to the stage where people are willing to sell designs rather than sell products. And that is a world we've never lived in, and it won't be easy to make that transition. But I think it will be necessary," said Keen.
Meanwhile, he doesn't expect to see sustained inflation, rather a collapse in demand.
"What I expect is a collapse in demand meaning many things we've taken for granted as a mass consumer item will cease being a mass consumer item. And that won't go down very well because people have got used to a comfortable lifestyle, an international holiday every year, a new car every five years etc, etc."
*Keen last spoke to interest.co.nz in April 2020 when he said a debt jubilee, universal basic income and the reversal of globalisation were three things he wanted to see in response to the Covid-19 pandemic. And you can see more from Keen here.
*This article was first published in our email for paying subscribers early on Tuesday morning. See here for more details and how to subscribe.
25 Comments
BAU is really hard to change especially when a doctrine has been accepted for decades to change direction will require political as well as business to coordinate to achieve this . I believe the Anglo sphere is aware of the need to do as suggested but whether the will to make the change is there is another thing
In his own convoluted manner President Trump was concerned to relocate manufacturing for US consumption back in the USA. For instance motor vehicles ex Mexico. Japan too has taken significant steps to begin restoring their own domestic production. Trouble is it all requires furniture, fitting and plant and most importantly skills and all of that in a viable economic package . NZ has definitely lost a lot of that light industrial ability since importing made up modules became dominant. Actually lack of those sort of skills is showing up all over the place. Anybody been able to get into a panel beater without a six week wait?
What you do there is put the cost of those emissions on to the end user, just because the means of production has been outsourced shouldn't let you out of your responsibility from buying it.
Would make some of us think twice about what you buy, even though that is totally counter to consumer world we have (de)evolved into
Agreed. That is the design of the NZ ETS, which locates the point of obligation for emissions offsets at the fuel import or extraction level of the supply chain, allowing the suppliers to pass the cost of compliance down the chain. Electricity and gas are good examples of this.
"This [Covid-19] is so contagious that 70% is not enough. I've seen estimates from a virologist that you need 90% of the population, that includes children, 90% vaccinated to stop the transmission link"
In the UK has between 90 and 95% of the adult population have antibodies [Link] and they still have daily cases [Link]. Elimination is not a viable strategy unless we ran perpetual MIQ and locked down a few times a year to prevent outbreaks. I just don't want people walking around next year saying "Scientists lied to us about the vaccine stopping the virus..." when in fact it was politicians who lied to them about the effectiveness of the vaccine in preventing transmission. The word we should be using is "reduce" not "prevent", scientists have been most clear on this point for most of this year. The vaccine substantially reduces the effects of Covid-19 and reduces the rates of transmission. We will still have to live with Covid-19.
This infantilisation of the population may be politically expedient but it is threatening to undermine our trust in actual scientists. That is an unacceptable outcome from all the very good work done over the last 18 months by the scientific community.
that's where we need the science to catch up with fast and cheap testing so businesses could check their workforce at the beginning of each shift, i already get temp checked walking into my office and we are split into pods so if someone catches covid that pod gets stood down but the other pods can carry on and only vaccinated people are allowed onsite, much much different from the company i worked for five years ago where we all sat shoulder to shoulder under aircon and all got sick in winter from the flu ( from parents bringing in from their kids) the company would not even bother funding or arranging the flu shot, they just paid out the sick leave instead
You are too general in your consensus of the scientific community because as we see, there is almost as much divergence in what the scientists are telling us as what the politicians say.
And good science is like that, as new evidence comes to light, then things change, yet the opinion given by many is absolute.
And in doing so many scientists have broken the social contract they made by stating things as hard evidence which they should never have done and have now proven wrong.
For example, almost all the theory and historical evidence pointed to Covid being mainly spread as an aerosol, yet this was denied by the Govt. (in taking the advice of their scientific advisors), and any dissenting scientific voice was ignored, or worse labelled in the anti-vax. camp.
Many scientists need to get back to correct scientific methodology and remember words matter and stay away from the propaganda of political persuasion, and leave it to the politicians to be held accountable for the 'end justifies the means.'
Otherwise, they will be treated, and rightly so, like the politicians, in 'How do you tell if a politician is lying?
And curled up in that is the compulsive need for politicians to cherry pick information as it best suits their agenda, image and polling. this can go much further too and unhealthily so. for instance the relationship between this government’s hierarchy and the Director General of Health, who holds a role that should be non political for very good reasons, has evolved into a united self protective ring of wagons where each side cues the other with patsy questions, calculated answers and advice that has been predetermined. This is not right. The Director General’s role is there foremost to protect the health system and thus the people, not the government.
If you're talking about an anti-fragile system then wouldn't you want a high proportion of the population to have superior natural immunity.? That means not vaccinating healthy under 20's, or maybe under 30s who's risk from covid is more or less the same as the seasonal flu.
After both a prior COVID-19 infection and two doses of Pfizer or Moderna's vaccine, some people's immune systems develop an incredible ability to respond to the virus.
Researchers call this 'superhuman immunity' or 'hybrid immunity' - these patients' immune systems can produce a lot of antibodies able to respond to different variants, as documented in multiple studies in recent months.
In one study, patients with this 'hybrid immunity' demonstrated the ability to respond to current variants of concern, non-human coronaviruses, and potentially even new variants that don't yet exist
After both a prior COVID-19 infection and two doses of Pfizer or Moderna's vaccine, some people's immune systems develop an incredible ability to respond to the virus.
Researchers call this 'superhuman immunity' or 'hybrid immunity' - these patients' immune systems can produce a lot of antibodies able to respond to different variants, as documented in multiple studies in recent months.
In one study, patients with this 'hybrid immunity' demonstrated the ability to respond to current variants of concern, non-human coronaviruses, and potentially even new variants that don't yet exist
What's happening there is that the immunogloublin levels are decaying with time, and re-exposing people to spike protein either through vaccination or virus will boost the immunogloublin levels back up above the sterilising threshold (ST), whatever that is measured in ng/mL of immunoglobulin in the blood. The key thing is the ST of naturally acquired antibodies is much lower thant the ST of vaccine acquired antibodies. That's what this paper is talking about.
https://www.science.org/lookup/doi/10.1126/science.abh1766
Also what type of spike protein were you exposed to the frist time is really important because that's what your immune system remembers and gets programmed with. This is ignoring T-cell immunity of course which is hugely important.
From my point of view - Steve Keen has very much described what has happened with our manufacturing base and skill-set over the last number of decades - one of the arguments put to us back then, was that we were trading our manufacturing jobs for high paid, high skilled jobs of the future. Was hoping that he would have also touched on the training that used to be done by the like of the Ministry of Works, Railways , NZED, our Defence forces, the Post Office and so on. Along with the asset sales went the organizations that also trained a significant portion of our people. Maybe next time he will discuss this aspect.
Aye, you are right. It would be more useful to start with the slightly less useless. It’s just that I visualised the re-training commencing with endless time trials over the 440yds hurdles. Vindictive streak undeniably but there is no reason as to why retribution shouldn’t be fun.
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