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Just a fairy tale to deceive ourselves

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Age is the most important factor in the current pandemic.  Put simply, once you pass 50, each additional year adds to the risk of your developing and succumbing to Covid-19.  But age may play a less obvious role in determining your relative risk – one that speaks volumes about the economic direction of travel taken by different states half a century ago.

Clearly, comparing different countries’ responses to the pandemic is problematic because there are multiple variables in play.  Iceland and New Zealand, for example, are often cited as exemplars for dealing with the virus.  But both are island nations with small populations which have found it far easier to isolate themselves.  Interconnected European countries like Germany and Italy, in contrast, have large populations and face far more difficulties isolating themselves.

Governing regimes also play a part.  Authoritarian governments such as that in China, have far less scruples about enforcing the harshest of restrictions to prevent the spread of the virus.  Those that lean more libertarian, such as republican states in the USA, have difficulty enforcing even minor inconveniences such as wearing masks indoors in public places.  The UK has flip-flopped between the two poles; public health officials and the opposition Labour Party favouring prolonged authoritarian restrictions and lockdowns, while the governing Conservatives have instinctively leant towards keeping government out of the way, only to be overwhelmed by the test data.

The UK government’s reluctant interventionism has created the worst of all worlds.  Not only was the economic downturn which began before Christmas 2019, made far worse by the lockdown in March, but the lockdown was itself late and poorly implemented.  For example, people were still flying into the UK from infected regions of the world in the week leading up to the lockdown.  Meanwhile special “Nightingale hospitals” were built even though a decade of spending cuts meant that there were not enough frontline healthcare workers to operate them.  In effect, other patient groups, many of them with more life-threatening conditions than Covid – such as people with cancer and heart disease – were sacrificed so that doctors and nurses could be redeployed.  Then there was the absence of protective equipment – again the product of decades of spending cuts – which brought about the untimely deaths of many of those medical staff who had been redeployed.  And, of course, the – potentially criminal – decision to decant Covid-infected patients into unprotected care homes brought about the early demise of thousands of older and disabled people.  The list of cock-ups grew so long that the conspiracy theorists began to sound reasonable while the supporters of the government seemed deranged.

Things didn’t get any better as the outline of a hastily concocted Plan-B began to emerge as the end of the national lockdown loomed.  The economic damage inflicted upon the economy was massive.  In the second quarter of 2020, UK GDP slumped more than 20 percent – by far the biggest decline in modern history.  But even this does not tell the whole story.  Behind the scenes, the UK government had borrowed £174.5bn to fund various bailouts, small business grants, loan guarantees and wage support schemes.  In addition, the Bank of England spirited £300bn into existence to monetise – i.e. buy back – government debt.  One way or another, this currency is going to have to be paid back – either by government via taxes and spending cuts or by inflating it away – and by the end of May, establishment figures were already jostling to make sure someone else picked up the tab.

The plan which emerged was reasonable in theory.  The only way in which the economy could safely be reopened would be to test, track, trace and isolate everyone who had come into contact with the virus.  This, after all, was what successful Asian states like South Korea, Singapore, Taiwan and Japan had done.   Here though, is where choices made half a century ago rendered Britain’s attempts a failure before they had even begun.

In the aftermath of the inflationary crises of the 1970s and the depression of the early 1980s, governments across the developed states began to become exercised about the aging population.  In the UK, the post-war baby boomers were in mid-career at that stage.  But Generation-X which was coming up behind them was much smaller in number.  Worse still, Gen-X had left school into the depression of the early 1980s; leaving them with far less income and wealth across their working lives than the boomers.  The fear was that in the first decades of the twenty-first century, as the boomers retired their generous pensions would have to be funded by a younger generation that would enjoy far less generous pensions and benefits.

It is likely that the Thatcher government had intended to follow a path similar to the one followed in emerging Asian economies like Japan and South Korea; bringing in a technological revolution to restore the economy to a balanced growth whose impact would be enjoyed across the UK.  It wasn’t to be.  The deregulations and public spending cuts she introduced resulted in a race to a low-paid and relatively low-skilled economy.  North Sea oil and gas exacerbated the problem, driving the pound far higher than it should have been; Britain’s exporters couldn’t compete, while investors simply moved their money offshore.   Only in the City of London and a handful of relatively small (in employment terms) hi-tech sectors did prosperity increase.  Against this, whole swathes of the economy in the Celtic nations and the Midlands and North of England (again with isolated pockets of prosperity around the top-tier universities) went into a permanent decline.

This had two important consequences.  First, and most importantly, in the last half century, the UK has not faced a labour shortage.  Indeed, more often than not, the biggest employment issue facing governments of all shades has been how to create employment or at least, fiddle the figures to hide unemployment, for a mass of unskilled and poorly educated workers.  One response has been to massively increase the number of university places.  Unfortunately, this did not result in many more graduate-level jobs; we merely ended up with an army of over-qualified people crowding out the unskilled and semi-skilled employment sectors.  In addition, where key high-skilled shortages arose – notably in public services like healthcare – employers found it easier to recruit migrant workers (often to the detriment of the countries where they trained) than to invest in the education and training of the indigenous workforce.

Second, and more important, low-paid, low-skilled economies cannot simultaneously be hi-tech economies.  This is particularly true where economies also lack the collective spending power to repay the cost of the investment.  Only where labour is in short supply, and consequently wages are much higher, is there an incentive to invest in automation.  This, of course, is precisely the direction which the aforementioned Asian economies followed.  Japan has the oldest population on the planet.  It also has the highest level of technological expertise.  Singapore, Taiwan and South Korea are near the top on both measures too.  And what they also have in common is that for cultural, political and geographical reasons, they have very low levels of inward migration.  According to the Migration Policy Institute, Japan has fewer than 1 in 1,000 migrants; its population comprising:

“Japanese 98.1%, Chinese 0.5%, Korean 0.4%, other 1% (includes Filipino, Vietnamese, and Brazilian)”

Taiwan has 0.8 migrants per 1,000 population, while South Korea has 2.3 migrants per 1,000; although:

“Faced with labor shortages in key sectors of the economy, South Korea has moved carefully in recent decades toward accepting greater numbers of workers—albeit in temporary fashion.”

In effect, they had to make do with the workforce they had; something that makes automation far more attractive.  So that labour market choices made half a century ago mean that today, states like Japan, South Korea, Taiwan and Singapore really are far more hi-tech economies. 

The UK in contrast is more of a Potemkin economy in which widespread decline is masked by a hi-tech veneer in London and around the archipelago of top-tier universities.  This – at least in part – is why the Asian states have emerged as pandemic successes, where the UK’s efforts began to unravel from the start.  The UK simply lacks the skilled workforce, technological infrastructure and specialist facilities to operate a functioning test, track, trace and isolate response to the virus.

In the absence of these prerequisites, government did what neoliberal governments always do when they are out of their depth; they handed billions of pounds to their friends in the corporate welfare sector to take responsibility for the inevitable fiasco on behalf of the state.  We didn’t have to wait long before Serco managed to waste £12bn on an excel spreadsheet that didn’t work.  Concerns go much wider, however.  Many of the people employed as contact tracers – whose job is to break the news to people that they may be infected – turn out to be the usual low-paid and low-skilled workers that the private sector always turn to when they want to keep wages low and profits high.

Conditions within the testing facilities are also concerning, since poor quality control undermines the accuracy of the tests; producing far more false positives and false negatives.  For example, a BBC investigation spoke to:

“A scientist who processed coronavirus swab samples at one of the UK’s largest labs [and] has alleged working practices were ‘chaotic and dangerous’.  He highlighted overcrowded biosecure workspaces, poor safety protocols and a lack of suitable PPE…

“The joint investigation by the BBC and the Independent has learnt that an experienced virologist who worked at the lab said he was ‘traumatised’ and ‘freaked out’ by seeing inexperienced colleagues unaware of the hazards they were dealing with.”

A paper by the British Medical Association points to the longer term issues that made failure inevitable:

“The Westminster government’s dependence on private firms during the pandemic follows a decade of health system reorganisation and marketisation combined with severe funding cuts to public services and local authorities in England. These factors have consequently weakened and fragmented NHS services and local councils’ public health departments and undermined the country’s ability to respond to COVID-19. An NHS which was properly resourced and not weakened by outsourcing and privatisation would have been in a much stronger position to respond to the pandemic. The fact that the NHS did not have the capacity to deal with a pandemic was identified during a simulation exercise carried out in 2016. Exercise Cygnus uncovered crucial gaps in the UK’s ability to plan and prepare for a pandemic at both the local and national level. The recommendations from the report appear to have been largely overlooked by the government which meant that the UK started out at a significant disadvantage, with inadequate resources and resilience mechanisms. Cost-cutting exercises as a result of austerity policies, and pre-existing levels of outsourcing are likely to have exacerbated this lack of preparedness.”

Both the quantity and quality of testing facilities was far below what was required to reopen the economy in the summer.  Worse still, the tracking app that was supposed to be installed on people’s smartphones failed to deliver.  In matters of software, the UK government finds itself in hoc to the US tech giants in the same way as it has become increasingly reliant upon Asian suppliers for essential hardware. As Matt Burgess at Wired reported at the time:

“There has never been any evidence that contact tracing apps – of any sort – are hugely effective. ‘There is currently insufficient evidence to support the use of digital contact tracing as an effective technology to support the pandemic response,’ a rapid evidence review by the Ada Lovelace Institute in April concluded.

“However, not using APIs created by Apple and Google always carried significant risk. The system created by the big tech firms lets Bluetooth run seamlessly in the background. Countries like England that chose to forge their own path had to work around restrictions in Android and iOS, something that NHSX has belatedly realised is simply not possible.”

On the other side of this equation, the same low-paid employment which has helped to undermine the privatised test, track, trace and isolate system, is also the main reason why people refuse to isolate when ordered to.  The drop in income, even for someone on the minimum wage, is simply too great.  Moreover, employers at the bottom end of the economy tend to be the least sympathetic; so that isolation may also result in job loss.

Ultimately, Britain’s failure to cope with the pandemic is largely due to our inability to acknowledge our limitations.  For decades we have indulged the myth that we are a hi-tech, world-leading economy.  So long as the oil and gas kept flowing and the City of London continued to launder money, we could hide behind the façade of relatively small (in number of employees) success stories like Airbus and Rolls-Royce.  But the reality for millions of workers – particularly in the years since the 2008 crash – has involved de-automation and a reversion to low-paid, low-skilled manual and routine clerical work.

Progress for most of us, it seems, is just a fairy tale we deploy to avoid scaring ourselves with the enormity of our predicament.  If we can’t respond appropriately to a relatively benign coronavirus, what on Earth makes anyone think we are going to avoid the economic collapse that comes next?

As you made it to the end…

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