COVID-19 DEPRESSION

In the blog post entitled ‘Precedents’, I highlighted the tendency of experts to get things wrong, and for the need for a balanced approach to decision making – not least, that due importance be accorded to common sense and the lessons to be learnt from precedents. I further stressed that a major change of policy often had to be forced upon the government, and cited the exits from both the EU’s Exchange Rate Mechanism (ERM) and the Gold Standard as examples of this.

In addition to the influence of experts, there is the obstinacy of vested interests. This is compounded if the experts are themselves a vested interest.

In a recent edition of Britain’s Channel 4 News, Jon Snow interviewed Ian Goldin, who is a professor of globalization and development at the University of Oxford. Professor Goldin readily accepted that the cause of the current Covid-19 pandemic (aka coronavirus or the Chinese virus) was globalization. For him, in our ‘hyper-connected’ world the viral pandemic circulated just as quickly as the financial crisis did 12 years ago and for the same reasons. For Professor Goldin, this was inevitable as a consequence of globalization and what was now needed was even more globalization!

Professor Goldin explained that there were two options. Firstly, there was the approach adopted after WWI, with the League of Nations, ‘then rising protectionism and nationalism, the collapse into the Great Depression, and the Second World War’. Secondly, there was the alternative option of the outcome of WWII, with a more internationalist approach and ultimately globalization.

Professor Goldin condemned the use of the description the ‘Chinese virus’, and said that isolationism and protectionism would cause an even worse threat going forward. For him, history tells us we have to act cooperatively and we needed a global response. He ventured that had the World Health Organization (WHO) been more effectively ‘empowered’ then it could have prevented the pandemic. He urged our leaders to step up globally.

This interview is one of many examples which demonstrate the obstacles to change that lie ahead, and which need to be overcome if we are to recover from the second major economic catastrophe within 12 years due to globalization.

The WHO has performed well during the pandemic. It has been a source of expertise and information that it has made available to national governments. It has spoken out when faced with an issue to which it lacked faith. What the WHO has not done, nor been able to do, is usurp the powers of the nation states. It, like NATO, has been supportive of national governments, and it is those governments that have had to tackle the crisis. Not even the EU got much of a look in. This fact underlines the critical importance of the sovereignty of nation states.

The reason why the virus has been referred to as the Chinese virus is not only because it is normal to identify a virus from a geographical location (eg the Spanish flu), but also because the Chinese communist dictatorship has been guilty of both denying there was a problem, even when the doctors were highlighting that there was, and trying to cover up the scale of the disaster instead of dealing with it. Only when things got completely out of control, did the Chinese government clamp down and set out to stop the virus spreading – but by then it was too late as it was already circulating in other countries.

It is the determination of globalists to pretend that there is no difference between a communist dictatorship in a Third World country and a Western democracy that was a factor in both the nature of globalization and in the spread of the pandemic. Chinese food practices, such as cooking dogs alive, has been well known for years. The markets for such practices are unhygenic and China should not have been treated as if it is a part of the West. Account should have been taken of this and other Chinese habits and policies.

The idea that China would ever allow the WHO to tell it what to do and to usurp the powers of the communist dictatorship is lunacy.

Professor Goldin did not give a true account of the aftermath of WWI. Despite the power struggle between the Free Traders and the Tariff Reform Campaign at the turn of the century, the inability of British industry and laissez-faire economics to even supply munitions during WWI (at one point, British troops had to be rationed to four rounds each per day due to supply shortages), and the vow that we would never again allow our industries to fall so badly behind that of our competitors, after WWI Britain rapidly settled back to its free trade internationalist instincts. Although there was some continuance of wartime tariffs, around 85% of imports were tariff free. Britain’s competitors maintained tariffs, which meant that ‘free trade’ was free only in one direction.

Moreover, Winston Churchill, as chancellor, put Britain back on the Gold Standard at pre-war parity, thus, at a stroke, rendering Britain’s exports uncompetitively expensive and imports cheaper. The aim of driving down wages to remedy the uncompetitiveness foundered in the miner’s strike and the general strike. Britain’s competitors were not so stupid.

Contrary to the version given by Professor Goldin, the cause of the Great Depression for Britain was laissez-faire economics and free trade. It was the imposition of tariffs (Neville Chamberlain was then chancellor) that got Britain out of the hole it was in, and consequently Britain enjoyed the fastest rate of growth since the industrial revolution. However, the damage done to the economy and its weakness was one of the reasons for Britain’s hesitant response to the threat posed by Hitler. Britain could not afford to fight a war.

The aftermath of WWII was not nirvana. Britain was dependent on US aid and the return to free trade merely witnessed the resumption of decline. For example, Britain’s overall share in world trade in manufactures fell from 18.5% in 1954 to less than 7% in 1980. The share of Britain’s home market taken by imports grew from 5% in 1955 to 26% in 1980. Britain’s position as a superpower ended.

As with the hangover from the disaster of the ERM, Britain is likely to have long-term problems. In the 1990s, many in Britain were burdened with negative equity, for example. The fallout from the banking crash of 2008 witnessed a fall in living standards and the destruction of private pensions. Now, one can only speculate as to the legacy of the Covid-19 Depression. But, given the scale of the shutdown of the economy, the future problems are likely to be formidable. Then there are other problems of globalization, such as immigration and the demographic changes, for example.

The globalists are already manoeuvring to implement an even more virulent version of globalization. They have to be stopped. Britain needs to regain national sovereignty and put an end to the policy of globalization. The globalists are a vested interest that will have to be confronted.