Episode 64 – Supply Chains and Pandemics with Steve Keen

Macro N Cheese – Episode 64 
Supply Chains and Pandemics with Steve Keen 
April 20, 2020 

 

Steve Keen [intro/music] (01:34): 

You simply have to get a universal basic income to everybody for the meantime to enable them to be able to remain alive while capitalism goes on life support and that’s what we have to do and to get any ideology whatsoever is simply survival now. We have to pull our heads in, we have to regard ourselves as the custodians of life on the planet and not the exploiters of life on the planet, which is what we have been. And if you exploit life too much, guess what? We die. 

Geoff Ginter [intro/music] (01:34): 

Now let’s see if we can avoid the apocalypse all together. Here’s another episode of Macro N Cheese with your host, Steve Grumbine. 

Steve Grumbine (01:35): 

All right. This is Steve with Macro N Cheese, folks. I wish I could come to you during better times, but I got a great guest for you today to talk to you about the real world that we’re living in. This is a piggyback off of a interview I did a few months back. The great Steve Keen, Professor Steve. Professor Keen is a distinguished research fellow at UCL, the author of “Debunking Economics: Can we Avoid Another Financial Crisis?”  

And one of the few economists to anticipate the global financial crisis of 2008, for which he received the Revere Award from the Real World Economics Review. His main research interests are, developing the complex systems approach to macroeconomics and the economics of climate change.  

He has over 80 refereed publications on financial instability, money creation, logical and mathematical flaws and conventional and Marxian economic theory, the role of energy and production and many other topics. He is ranked in the Richtopia list of world’s 100 most influential economists. He designed the open source system dynamics program, Minsky, which is the first program to allow monetary economic models to be designed visually.  

He has previously been professor of economics at Kingston University in London, and the University of Western Sydney, Australia He is active on Twitter @profsteveKeen, and is crowd funding his non-mainstream research into economics via Patreon. See him on this page www.patreon.com/profsteveKeen. And with that introduction, let me bring on my guest. Welcome, sir. 

Keen (03:17): 

Good to be here, Steve. There’s actually one little footnote to that. My Patreon page, people often think the posts there are behind a paywall, 99% of them are not. The only things which are pay walled are my podcast I do with Phil Dobie, and even some of those put out free. So don’t be put off by seeing Patreon before any of my posts, and just click on the link and go and read. You don’t have to contribute to my financing. 

Grumbine (03:39): 

Okay, well, I appreciate that clarification, but regardless, this is really important stuff. And what I want to really bring out here is that in our last interview, you painted a very bleak picture. As soon as we got off the phone, I was immediately on the phone with a bunch of friends saying, my god, I’m literally having terrors right now, as I think about this, way before the COVID-19 pandemic hit, actually not way before, but before it enough, that there was no linkage, and you spoke of having to ration, and you spoke of a required centralized authority, kind of taking over like a military campaign to maintain civilization during the climate crisis.  

And with all this going on, you know, you had mentioned at least three or four times throughout there, that as climate change hits, it’s going to be bringing about new, new old bacteria, new, old viruses, new, old contagions into the atmosphere that we long since forgotten about, and that it was only going to be the beginning. Well, here we are… 

Keen (04:49): 

Yeah 

Grumbine (04:49): 

…in a pandemic. And my goodness, what a wake up call for how unprepared the world is. And especially the United States. What’s going on here, man? 

Keen (05:02): 

Well, I’m actually writing a long post for my Patreon page right now about it, because we have followed the advice of neoclassical economists for the last 40 or 50 years. You can really date the dominance of this mob back to 1973, during the stagflation period, when Milton Friedman managed to knock out the remnants of anything resembling a Keynesian approach to what government policy should be.  

And we went from the whole idea about the government, running a deficit, maintaining public infrastructure, etc. etc., to where it’s all about reducing the government to as minimal an intervention as possible, letting the market rip. And this is completely ignored. The importance of realizing that the economy exists inside the ecology.  

Without the ecology, there is not only no economy, there’s no humans either. And this has been completely ignored by mainstream economics, and the date of 1973, isn’t a bad one to use because that was the one year after the publication of “The Limits to Growth”, which neoclassical economists in particular, William Nordhause, disparaged without understanding the logic behind it and put us on a “let it rip”, there’s no constraints for the expansion of the human economy and let’s deregulate, Let’s globalize, let’s move production offshore to low wage countries, etc., etc., and now we’re being kicked in the balls rather than slapped in the face by the coronavirus. And I think it’s only the beginning of this entire process. 

Grumbine (06:26): 

You mentioned the idea, let’s just take this snake down. We started off, obviously as a guy who supports modern monetary theory, most of our discussion points have been surrounded by the concept of imports are a real value and exports are a real cost. And under a normal blue sky world, one could make the case that that is right. You’re trading pieces of paper for real goods and real services.  

But here we are in the middle of a pandemic and our supply chain is completely broken, and we have no means of getting enough food, enough water, enough medicine, enough gurneys, enough ventilators, enough of all these different things to the right places. What does that say about our readiness on one hand? And the other thing is tying production and economics together in terms of the relationship between local economies and this concept of globalism. 

Keen (07:35): 

Yeah. I’m a complete supporter of the logical argument and MMT in terms of how money is created, and their need for the government to create money for the private sector to spend, because if the government tries to run a surplus, that actually takes money out of the private sector and pushes it into negative equity. That part of MMT is completely logical, completely intelligent. I’ve always supported it. 

I have always been horrified by the argument that exports were a cost, and imports are a benefit. I’ve regarded that as one of Warren Mosler’s little ideas, which was not sound for a whole lot of reasons. And I won’t go into all of them here, but you know that I had a debate with Warren some time ago, and I was simply flummoxed by that being regarded as part of MMT. And that is, whole lot of problems with it. 

Keen (08:17): 

What we’re seeing now of course, is that works fine, when the economy is in a good state. Yes, you can send pieces of paper overseas and get ventilators back. When a crises like this hits, you want to produce the ventilators as fast as you damn well can, but oh dear, you haven’t got the production facilities anymore. You don’t have the manufacturers anymore. You don’t know how to make them anymore.  

They’re coming from overseas, and guess what? China’s not going to send it to you who wants it for its own people. You can keep your pieces of paper. That was a totally foolish idea, but it’s especially foolish in the circumstances we’re in right now. So I’d be very much appreciative of people who support MMT, knocking that one out of the ballpark and saying, what we need is to have local production. We have to regionalize production rather than globalize it.  

We need to have the production capability, and the know-how, locally, for virtually everything, but certainly the vital, and in the health crisis, like we’re facing right now, vital products like ventilators and even vital products, like for example, paper masks. And to give you an idea of what it’s like to live in a country, which actually makes those things, I posted a photograph on Twitter earlier today of all the people lining up outside the local makro shop, which is the bulk foods outlet in the same street that I live in now, in Thailand, in a little town called Trang, lining up to get four masks per person, per day for the princely sum of 50 cents. So total of about 10 cents each.  

And that includes, by the way, a 2 cent profit for the manufacturer, though that’s a government ordained price. That Thailand has the capacity to produce this stuff, and we know already very, very rapidly that America doesn’t. And to cover the fact that America can’t do it, being told the lie that they’re not really necessary.  

We know from medical research that they stopped the virus in two ways. First of all, the virus itself is about 500 nanometers across, apparently, where the n-95 masks that you’re talking about here, block particles above 2.5 nanometers across, uh, they get around your face because it’s only a surgical mask, but you dramatically reduce the number of virus particles you absorb.  

And anybody with the disease, who’s wearing a mask transmits, a damn sight less as well. Now this is a classic instance of where offshoring production regarding exports are a cost, and imports are a benefit. meant you lost the manufacturing capability and you’ve got to gear up after the crisis begins, which does not work. 

Grumbine (10:37): 

It’s scary because I understand the logic and, 

Keen (10:40): 

it‘s bad logic as well, Steve. Pardon me. I’m going to roll over you here, but pardon me. It is bad logic. 

Grumbine (10:45): 

I understand where your perspective is. I guess, where I’m taking this is, is that I understand the logic in terms of, it allows you to focus on things that have been let go. In other words, in the United States, because it’s been such a race to the bottom, we have allowed everything to deteriorate.  

We’ve allowed our entire infrastructure to crumble. I mean, our bridges, I worked in industry that allowed me to see the bridge structural analysis here in the state of Pennsylvania, even. And in a prior life, it was scary. Many of these bridges are C and D rated and require significant upgrade. We have pipes that are still made of wood… 

Keen (11:26): 

oh my god 

Grumbine (11:26): 

…pipes made of wood, and pipes made of clay. And you know, really incredibly dilapidated. So I guess the point I’m making here is, is that, there is a case to be made for where you place your focus. And I think a lot of folks talk about this, but they don’t always tie it together as a core component. And that is that daily upkeep and maintenance of everything we do has to be baked into our models.  

It always has to be baked into our models. It’s not the one time purchase if you will, that is the cost. It’s the entire life cycle. That’s why there’s a depreciation added to these things and so forth. I don’t understand, I guess, why we cannot balance this, why there’s not a balance, if you will, in terms of understanding the need for focusing on your core competencies, so to speak, a basic business principle, and importing those things that are not your core competency and accepting that role of benefit and liability so forth. But in this case, we have let everything go… 

Keen (12:34): 

Yep 

Grumbine (12:34): 

…our manufacturing base is nonexistent. 

Keen (12:38): 

Not quite, I mean, let’s not get too carried away. I mean, you‘ve got things like Elon Musk, SpaceX, and Tesla and so on. So you certainly have the capability to innovate. You certainly have a substantial range of productive facilities that exist on the rest of the planet, but a large part of the fundamental basic stuff, particularly low profit, low wage based things, like for example, making masks, and established products like ventilators, you’ve outsourced them all to China, which is great because China’s got the capacity to produce as many as it damn well needs. 

 And if it doesn’t have enough to export, then damn, it doesn’t export them. And you can ship all the pieces of paper you like to China, you won’t get ventilators back. 

Grumbine (13:13): 

Right. 

Keen (13:13): 

So it’s a very shortsighted part of MMT. And I would be delighted if people had the guts to say to Warren, sorry, Warren, that’s a bad idea. Yes, it’s true. Government’s spend to tax, not government’s tax to spend. That’s correct. Exports are a cost, imports benefit. It’s nonsense, throw it out of the lexicon. 

Grumbine (13:29): 

Okay. Yeah. I think one of these days, maybe we can set up a debate again, because I think that now that technology allows us a little bit better, medium than we had previously. We can maybe have a good core debate, because I think this is such an important thing, especially in light of this pandemic. I think it has exposed the United States supply chain in the worst possible way. 

Keen (13:54): 

Yep 

Grumbine (13:54): 

And I think people are literally going to die. I think. 

Keen (13:58): 

Well, you’ve already had died massively. 

Grumbine (14:01): 

Exactly 

Keen (14:01): 

I mean, I walk around, one of the reasons I’m in Thailand now, is that I was looking very carefully at the data of the number of cases around the globe. And if you remember very early on when this pandemic began, Thailand was number two to China. It is now in about number 32. I had four choices of where I could stay and live through this pandemic.  

The UK, because I’m a resident, Amsterdam because my girlfriend is based there, she’s a resident, but not a national, Australia because I’m a citizen, and Thailand because my girlfriend is a citizen of Thailand. And I looked at the numbers and thought, there’s only one place I want to be and that’s Thailand, reason being that the Thais, first of all, have the productive capability to produce things like masks and ventilators.  

Secondly, the climate is in their favor because we know again from decent academic research, the virus is less viable outside the body at temperatures above 25 degrees Celsius. And the average maximum here is 36 degrees in the town that I’m in, but 36 degrees Celsius by the way, not Fahrenheit for our American friends. And that temperature, in the open it degrades much more rapidly.  

So you’re less likely to pick it up in the first instance, that’s also in Thailand’s favor, but they had experience with the SARS virus, and so the idea of wearing masks in public is not at all a social stigma. In fact, walking into a shop without a mask, not only the social stigma, they won’t let you inside the shops anymore, without a mask on.  

So it made it a very safe place to be, and they had the productive capability. And this is a little thing I found out. I wanted to send some of these masks to my mother who’s 94 in Australia. And they were blocked at the post office, because they will not let you export, even post them out to other people. So they are keeping all this stuff for themselves, which is extremely sensible. 

Grumbine (15:45): 

Wow, no kidding? Absolutely. So let me talk about the United States right now. Clearly New York City is the epicenter of the virus. There’s been people talking about going in for appendectomies and being surrounded by COVID patients and dead bodies lining the walls… 

Keen (16:05): 

Oh my god 

Grumbine (16:05): 

Horrible, horrible scenarios. And I guess the question here is, you know, people are not prepared. We don’t have healthcare in the United States. We really don’t. 

Keen (16:16): 

No you don’t. You have health profit, not healthcare. 

Grumbine (16:19): 

Exactly. And we’ve got Joe Biden running for president in this country and he’s already said, unequivocally, he will absolutely veto Medicare for all. 

Keen (16:32): 

Oh my god 

Grumbine (16:32): 

And he has said unequivocally that he is against single payer healthcare. And yet Democrats have come out and thrown their full weight, the establishment that is, thrown their full weight behind this man. And here we are in a pandemic and we’re in the middle of a presidential primary that should be vetting ideas, explaining what‘s going on.  

We got a real life pandemic to show point blank, which policies would solve it better, and literally there’s no debates. You’ve got Joe, who is clearly in cognitive decline, out there stumbling and bumbling around. He, hasn’t got a single idea, and here we are, watching people die by the thousands, and they’re predicting a quarter million people dying. And I think that might be conservative. 

Keen (17:20): 

It probably is conservative, particularly because the payment system, all the things you have to pay money for are going to prevent people going on and getting themselves checked in the first place. This has to be free. In fact, you should be paying people to come along and get tested. You should be paying people to stay at home.  

We need exactly what modern monetary theory argues for, and I know Stephanie Kelton and Scott Fullwiler and all my other friends in the MMT community on the monetary side, have been arguing exactly this, quite rightly, not just a case of putting people who are suffering from this into induced comas, the economy is in an induced coma.  

And in that situation, the government is the only system which can provide the money to enable people to maintain their financial commitments, and also without food actually being militarily distributed, which I think is probably coming, well, actually have to discuss yes, the post office is the way to do it with the postal workers in hazmat suits.  

Before that actually happens, to be able to pay for basic necessities like food. And in the case of being faced with continuous confinement, basic necessities like internet access and YouTube and Net Cast and all that sort of jazz as well, so they don’t go mad while they’re confined. But we have to think about this as a biological process.  

Forget get about capitalism, forget about communism, forget about even fascism, just think about us as one biological species, facing a parasite. The way the parasite works is by having us come into contact with each other, and therefore, the only way to fight the parasite is to avoid having contact with each other, outside our immediate family circles. And to do that, we have to be able to get food, and we have to be able to minimize the level of social contact. 

That’s what’s necessary. And therefore you do what’s necessary to do that. And our system because of the monetary nature of our way of receiving goods from each other, the government has to be creating the money, for the length of time necessary, to restrain the growth of the virus and turn it into a negative, rather than a positive, exponential process 

Grumbine (19:08): 

Capitalists that are knee deep in this political system here, the neo-liberals, are absolutely hell bent on finding a way to turn this into Corona capitalism, and they’re trying to find ways to turn this into a profit. I jokingly looked back at the video of Hillary Clinton talking about Iraq now being a good business opportunity, I think they are mentioning… 

Keen (19:29): 

What? 

Grumbine (19:29): 

… about seeing this. One of these days, I’ll show you the video she’s preaching, “Well, I think that Iraq is now a pretty good business opportunity, investment opportunity here.” I mean, this is the kind of perversion that has wreaked havoc over the centrist Wall Street Dems. And they’re basically hijacking the entire progressive movement ,with this absolutely ill-fated market-based approach. 

 I mean, Elizabeth Warren came out during the primaries and said, you know, “I’m a capitalist to my bones and I love markets.” This is what we’re facing, Steve. This is exactly what we’re facing. And we have to be practical. Of course, we must be practical. We have to consider all these practical things (sarcasm).  

Well, as we’re going through this process, you go through Walmart, god forbid, and the entire toilet paper section is completely empty. Yes, there’s hoarders. Yes, there’s idiots out there, but the reality is, is that our supply chain is indeed broken. And we talked offline before we started this call, that I wanted to talk a little bit about the concept of hyperinflation, and the idea of production meeting demand.  

And we’re in a situation right now, where our productive capacity has been put into a Corona induced coma, so to speak, we don’t have the production going on right now to meet the needs of the people stuck in homes. What exactly is it, that creates this concept of debt collectors still calling people in the middle of this, and the idea of student debt still mounting while we’re in this? What the hell?? 

Keen (21:06): 

Yep 

Grumbine (21:06): 

Talk to me, I guess, about the supply chain in the middle of a pandemic, and the concept of private debt and these collectors. It’s just ridiculous. 

Keen (21:15): 

It’s ridiculous all around. I mean, I’m actually writing a long post on my Patreon blog, which of course, will be free access, about the coronavirus and supply chains. I thought I’d check and see how many countries are involved in producing the iPhone, and from a CNN survey some time ago, apparently there were 43 countries involved in producing the iPhone.  

Well, if even one of them gets an outbreak of Coronavirus that shuts down a factory, you can’t produce iPhones, and you’ve got to change what your supply chain is. And we’ve done this over the entire globe.  

This was promoted by neoclassical economists in the first instance, of course. And I was actually in China in November of 81, taking a group of Australian journalists for a conference with Chinese journalists. The first they had ever had with those of any other nation. And we actually went to the Shenzhen Free Trade Zone, which was the very first trade zone in China.  

It opened up sometime in 82. And as it happens, the concrete for that free trade zone was being laid by an Australian company called CSI. We had a lovely Australian barbecue with the husband and wife team who were mainly involved in the construction at the time. And, we then got taken to the management section of that free trade zone, and had probably the most intelligent conversation that we had in China, at the time, apart from that, with the journalist themselves initially.  

And it was explained to us, the free trade zone was exploiting the provision in the American trade legislation, which enabled goods to be shipped to a third world country, reworked and re-exported, without having to pay tariffs on the re-export. And the Chinese were going to encourage American corporations to relocate production, from America to China to take advantage of that loophole, and of course, to go from paying the American workers in terms of today’s wage, to say the equivalent of $15 an hour, down to $15 a month, fundamentally, for the Chinese workers in 1981- 82.  

And the condition the Chinese imposed was, that any manufacturer that took advantage of that, had to have a Chinese partner, and with zero capital, within five years, the Chinese partner had to own half the business. Now you just imagine, in what situations there’s an American capitalist handover half the ownership of a company, it’s got to be where they can screw the workers so much, regardless of the nationality of the workers, that they come out ahead anyway.  

And that’s the scale of the gap between American wages and Chinese wages, that American corporations gleefully exploited, and the Chinese gleefully used the gleeful behavior of American corporations, to build the manufacturing powerhouse, that China now is. And of course the neo-classical economists cheered that on because as far as they were concerned that was comparative advantage. 

 Look where we are now, 43 countries involved in producing an iPhone, and 20 of them will not be exporting to America anymore, until such time as the virus is under control. So for one and a half years, you can’t produce iPhones, not that, that matters right now, but you can’t produce ventilators either. And that does matter. 

Grumbine (25:08): 

So with the situation in the United States, because we seem to export neoiberalism more than any other attribute, if you will, what do you think is the way out for the US? Clearly, even now you listen to the television shows that are on, god forbid, I don’t do it, but I read up on it and they’re out there hyping more capitalism. Let me backtrack a little bit. Pavlina Tcherneva, who is one of my favorite people in the world… 

Keen (25:40): 

Ditto 

Grumbine (25:40): 

…has been actively pumping the idea of nationalizing payroll, to keep things normal, to keep things afloat, to keep things going. And I looked into it and I had been saying this not nearly as eloquently or with the supporting materials, it was definitely done as an activist more than anything, but her concept of nationalizing payroll, and obviously the federal job guarantee that we talk about in the United States, redefining work, providing a countervailing pressure against capital, to allow people to work in their local communities, and to get away from “the man”, so to speak.  

We need an ability to be able to maintain, not necessarily our way of life, I don’t like that concept, we need a way of maintaining life in general. And to me, this seems like, between the federal job guarantee, pumping a major amount of stimulus to keep folks going, putting a break on mortgage collections, eradicate the student debt etc., but in particular, the concept of nationalizing payroll. What do you think about that idea? 

Keen (26:49): 

Yeah. You simply have to get a universal, basic income to everybody, for the mean time, to enable them to be able to remain alive while capitalism goes on life support. That’s fundamentally all it is. And that’s what we have to do, and forget any ideology whatsoever. It’s simply survival now. And there’s no way that a market system can survive this crisis.  

Because if we require payments to be made by everybody, when in two weeks, 9 million people have joined the unemployment queue, and therefore don’t have healthcare anymore in America, your insane idea that you have to have a job to get healthcare. And don’t have any income coming in and therefore have to live off their cash reserves, when most Americans, again, don’t have enough to pay one month worth of bills.  

Then suddenly the entire financial system comes collapsing down around you as well. But people might be able to pay for one month. I was just speaking to a friend, Aaron Bosner, who is putting out a podcast as well, in a couple of days’ time, about what should people prioritize in their own spending. And of course, some people, like you’re saying, people have debt collectors ring you up saying you’ve got to pay your student loan. You’ve got to pay your mortgage. You’ve got to pay your credit card. You’ve got to pay car debt.  

They’re saying stuff em, Don’t pay them. Go on a rent strike. Go on a mortgage strike. Don’t pay any debts whatsoever. Because if you do pay your debts in a month’s time, you won‘t have any money to pay the next one. In only one month’s time, you’re going to be unable to pay it anyway. So don’t pay it now, buy food. Buy food, if you can find masks, buy masks, that sort of thing. That’s what you have to do, prioritize staying alive. 

Keen (28:18): 

And capitalism cannot survive this lock down, that we need to prevent the virus growing further. That’s a real dilemma. Nor can capitalism enable, people, can’t pay for the vaccines, they can’t pay for the development, the state can. So we have to simply have, forget about ideology and say, how do we provide the revenue that enables the system to continue functioning?  

And that comes down to a universal basic income, at the level that’s necessary for the average person to pay the average mortgage. People who are richer than that, of course, they’ve got cash reserves, they can buy everything they need, in the meantime.  

We have to keep the monetary system going. We have to stop the financial system collapsing. So we need what I’m calling as, again, I wrote a recent post on my blog, again, about free access, calling for a modern jubilee. And we need something like that for the duration, that’s necessary to survive this virus. 

Grumbine (29:07): 

It’s interesting because we have a dichotomy here. We’ve got the concept of requiring people to basically be paid to stay home, to not get into society, to get out of society for now, to do this social distancing. So this concept of cash assistance, direct cash payments to get us through this phase here. The flip side to that is that we also have to have the production available to be able to meet the needs and demands of those people, which is they’re working against each other there. 

Keen (29:41): 

Yah 

Grumbine (29:41): 

And this is again why I don’t use the term universal basic income in this case, because UBI means something very different under normal blue sky world. During this pandemic, it means something entirely different. We’re talking about being able to sustain life. And we’re talking about being able to meet needs.  

I have a thing to float by, and you talked about it a second ago with the debt jubilee, in my opinion, and it’s just an opinion, right? The idea of putting a halt to payments, in general, putting a halt, to mortgage payments, getting rid of student debt. There’s no reason for it, getting rid of these things in general, to me is a more meaningful way of doing it, and then the cash assistance, not even assistance, the direct cash subsidies/payments to people to provide for food and stuff like that, has to be met with an ability to produce that food.  

Because if we’re all social distancing that also includes factories and farms and other things. So there has to be some understanding of, cash only is good if you have an economy that can absorb that cash, if you’re not actually producing the goods and services, this is the real story of what happened in Zimbabwe, where you had the productive capacity of the farm lands diminished so severely, it didn’t matter how much “cash” people had. There was no way to provide the food that was demanded. To me, this is a real, “what do you do here?” I want to make sure I understand this. 

Keen (31:20): 

Well. We know that if we isolate people for a two week period, and if we test people, and they’re now tested at rapid enough that you can find in a matter of, apparently now minutes, with some of the tests, who has the virus and who doesn’t. What you need to do, think about this in a military campaign way, forget about your “isms”, this is a military campaign.  

We need to stop the virus spreading at its exponential rates. That’s the real danger. The exponential nature of the crisis means that it will overwhelm our health systems, and overwhelm our productive systems as well. Apparently roughly 20% of people who get it going to need hospitalization. We can’t hospitalize 20% of the population, but with the rate of growth of the virus being exponential, without social distancing, doubling every five or six days, it doesn’t take very long before you get to the stage that enough of the population is in critical illness, that your health system is overwhelmed. 

So, you need to, first of all, test and identify essential workers, who don’t have the virus, and then quarantine them at the production facilities. Now the production facilities fundamentally include farms, uh, factories, that process those products from those farms and turn it into consumable food, transport workers that get that food to people, uh, set that up in the first instance and keep them completely quarantined from the others who may be infected.  

Then you have locked down for the rest of the population and something of the order of, a four to eight week lockdown, or six to eight week lockdown would be sufficient to identify which family groups have the virus and which don’t. The ones that don’t can then be released from confinement. The ones that do remain confined, you treat the ones that have the serious illness, and you isolate the virus, and try to stamp it out.  

It’s not as deadly as a Ebola. The main danger is, it’s so transmissible and its rate of growth is so fast. Its reproduction level is so high, that we have to isolate it for those reasons. If we do that, we can knock it off in the matter of something like about three months. This could be behind us in three to six months, but if we don’t do it that way, then it’s going to go on for six months to 18 months, until such time as we develop a vaccine.  

And in that process, so much of our social system can be broken down. So much of our production system will fail. That is feasible. So the basic measures, we identify what are essential services and fundamentally those are food, power and distribution of food. Then we isolate everybody. We test those who are essential workers. 

We isolate them from the rest. They don’t get the virus. We then isolate all houses, all family groups, until such stage, for about four week period. Since we can’t manage to test to everybody at once. Given again, the lack of the facilities to test, we use isolation as a testing mechanism, about four weeks to six weeks is enough to be able to be 99.9% sure who has it and who doesn’t. And then we can address the rate of growth of the virus and stop it in its tracks. But if we don’t, the alternative is 18 months of this. 

Grumbine (34:17): 

So it looks like, by taking swift, direct action, in terms of quarantines and isolation, in terms of the social distancing, etc. In some parts of the world, I could see this happening very easily, but in the rugged individualism of the United States, … 

Keen (34:35): 

yah 

Grumbine (34:35): 

…I cannot imagine, I mean, look how slow Trump was to react to this. Look how slow and how pathetic the response was. I’m happy to see the country has basically been shut down, in a sense, the bad part clearly is that we haven’t taken care of the supply chain yet. Just stopping production, just stopping people from going into work, etc. ,is one thing. Do you see any indication that the United States gets this? 

Keen (35:03): 

No, not yet. I mean, again, not just the individualism, but the religious side of the states as well, this bizarre, evangelical belief that you can pray and get rid of a virus. Good luck with that. Particularly if you do it collectively as I saw some evangelical arguing for recently. I noticed that the tweet of god said, that’s a great idea.  

I encourage all evangelicals to attend. American ideology is its worst enemy. And that’s, what’s now happening. The virus has no ideology, it simply has an environment it needs to reproduce in, that environment happens to be us. And everything we do, which is collective in terms of getting together, rather than collective in terms of behaving in a coherent fashion, is going to bring us unstuck.  

And for that reason, if you look at the list of countries, John Hopkins database is a very nice one to check this out with, China is now number five in the countries who have serious infections, and is dropping down the list, as the United States, Spain, Italy, and Germany are ahead of it. And it won’t be long before France and the UK, overtake, probably Iran as well.  

It’s the Asian countries that have a confusion, you know, “obey the state, while still having some independence” mentality that is surviving this better than America, however, with its rugged individualism. That was designed as William Nordhaus said for what he might call the prairie economy, or the cowboy economy, when there were wide open spaces to go and move into, and were a tiny imposition on a vast continent.  

Those days are over. It’s now almost called the spaceship earth, where we are in a self-contained environment where everything we do remains in the environment and the feedbacks of that, are overwhelming us. And it’s time to abandon the American ideology, which is fundamentally a neo-classical-religious ideology. It’s what’s going to destroy America rather than make it, in these circumstances. 

Grumbine (36:54): 

I listened to that. And I’m once again, terrified because I don’t think America gets this. I think people are desperate to get back to normal, whatever that means. And one of the things that struck me, in what you said, and I want to make sure we don’t go past this. The idea of quarantining people in production areas, and making sure that we get these people to produce, I see no evidence the United States is going to do that. 

Keen (37:27): 

No, nor do I. 

Grumbine (37:27): 

We give them, I don’t know if you saw how pathetic it was, $1,200. And they eliminated people who had arrears in child support, just to show you how brain dead they are. People with arrears in child support. I mean, it’s just like the welfare queen. Most dads don’t want to screw their children over. Most dads want to be there for their kids, but they’ve been destroyed by neo-liberalism. They’re just another victim of this horrible machine. 

Keen (37:53): 

Ya 

Grumbine (37:53): 

And they were eliminated from, not only being able to get student loans, god forbid, maybe that’s a blessing, but they were also eliminated from receiving the stimulus check. 

Keen (38:05): 

Bloody hell 

Grumbine (38:05): 

And so, there you go, people that were already hurting. Okay? So maybe they get to get their digs in for a few bad men. They get to say, yeah, we didn’t let them get over. But the reality is that this is a macro issue. It’s far greater than getting a little zinger in for a deadbeat somewhere. And it was only $1,200, Steve. 

Keen (38:26): 

It’s crazy. Ya, I’d be giving the money to Rupert Murdoch. Okay? This is done at a universal level, screw how bad somebody has been, everybody gets the same amount of money, and it’s enough to pay the average mortgage or the average rent, plus have food for the average size family. That’s what should be going out, no conditions, no question whatsoever, everybody gets it. That’s the way you approach this thing. Not with any attempt to apply moralism from the left, or the right. 

Grumbine (38:51): 

I couldn’t agree more. It’s just a real scary thing though, that it’s like piecemeal. Everything is piecemeal. Like it’s based on the feels, not based on what would work, not based on what is the right answer, but based on how does this process through my religious lens? How does this process through my ideological lens? How does this process through my 401k plan?  

How does wall street react to this? There was a post the other day that just blew me away on Twitter. Peter Daou said, “interesting, millions of people are laid off and on Wall Street the stocks go up, that tells you everything you need to know.” And, amazingly that is enough for some people to say, “oh, we’re going to be alright.” And this is so prevalent in the United States, it’s terrifying. 

Keen (39:41): 

It is terrifying. 

Grumbine (39:41): 

What do we have to do? This is another one of those moments, where it’s like, okay, there’s the answer just on the other side of this bulletproof glass, you can see it, you’re within six inches of it, but you can’t do a damn thing about it. How do we get there? I mean, is this a case of the United States will eventually do the right thing because there’s no choice? 

Keen (39:59): 

Fundamentally. I think that’s going to be it, yeah. We need to look at the number of cases, you are now, as of today, there’s just over one million cases. Finally, it’s going to crack a hundred million. It’s going to crack a billion cases. We’re only at the very beginning of this whole process.  

The odds are it’s going to be, before we get a vaccine developed, and I mean, a mass vaccine, there are possibilities for earlier supplies of vaccines, that the mass tested vaccine is going to take about 12 to 18 months, given the dangers of those bulk produced, cheap vaccines.  

But we have a quarter of a million Americans already, that have got that disease. Now, by the time it gets to, let’s say 10 million, 20 million Americans, then I think you might start waking up. And at that stage, the military side of your country will take over. 

Grumbine (40:45): 

Hmm. You said that you did a bunch of research going into this, and chose Thailand. 

Keen (40:51): 

Yep. 

Grumbine (40:51): 

You gave some reasons for why you chose Thailand. What are some of the countries around the world that did this right? Or did this better. And what did they do that was so much better, than what I’m seeing here in my own backyard? 

Keen (41:04): 

It’s almost exclusively Asian countries, and that includes China. It’s a willingness to have a lock down, and the willingness to obey a central authority that says you have to be isolated, you have to maintain social distance. And the willingness to cancel major events. It took the Japanese a while to cancel the 2020 games I might add, but it was fundamentally those countries.  

South Korea is one example though, it’s got a large number of cases nonetheless. If you look at the list of countries that have got more than 10,000 cases, China has got 80,000. That was the epicenter. But the next Asian country that has that many cases is Korea. And it’s the very last of those with more than 10,000 cases, it’s 15th in the listing of countries, but that’s the first Asian country, other than China itself.  

Then you’ve got to go way, way down before you find the next Asian country which is Malaysia. And that to some extent, has got a British over hanging with it. Then the Philippines, then Japan. Now Japan of course is populated, well over a hundred million people, it’s got 2000 recorded cases.  

So, it’s the Southeast Asian countries that have done this best, and Thailand, because these countries experienced SARS, to some degree, they’ve got a previous experience, if not with a pandemic, but of an epidemic. So, they’re the ones that have done it best. And if you look down the list, it’s also partly based on temperature.  

It helps to be in a country where the daily temperature hits over a hundred degrees Fahrenheit, which is the case for where I am in Thailand. So yeah, Southeast Asian nations that have some sort of sense of accepting a central authority, largely because they’re the very last ones out of a feudal system. T 

he Asian systems rule, what Marx called irrigation socialists, I believe ,or something of that nature, and to have centralized irrigation, to distribute monsoon or rains, you need to have a central authority building the irrigation system. And that’s why culturally there’s a tendency to accept a state being able to impose parameters on how individuals behave. And that’s much more the Southeast Asian in general, East Asian mentality than it is, certainly the American, the European or the English. 

Grumbine (43:12): 

With federalism in the United States, the states and the state’s rights and so forth, we’re realizing for example, Medicaid being state paid, can’t handle the influx. We’re realizing that the States themselves are largely powerless to manage the kind of activity that needs to take place. And going back to the civil war, we’ve got this state’s rights, this 10th amendment mindset that prevents us from rallying under a central authority, and they can’t shake it. 

I mean, we were beaten with McCarthyism for so long, that the ability for them to think of anything that has anything to do with a central authority, has got to be the Soviet Union, thinking in that way of the cold war. And it is so prevalent, even now. And they red baited Sanders so much, every time he tried to make a universal program, universal childcare, a right to shelter, a right to medical care. Immediately, it was so ingrained in these individuals’ minds.  

And I hate to say this, but it’s demographically skewed so heavily, to the boomer community and above, who largely just remembers the duck and roll, duck and cover mindset. They’re still steeped in that red scare and cannot fathom a society that cares for each other. They’re still steeped in Vietnam. All these things are still so prevalent in our society. 

Keen (44:52): 

By the way, just on that note, Vietnam has 1000th as many cases as America, 237 cases versus 250,000 cases. And I’ve seen arguments, Vietnam has an extremely good public health system. So, we lost the last war against the Vietnamese, and you’re losing the war against them with the virus as well. Congratulations. 

Grumbine (45:12): 

So terrible, yet funny all in the same breath. Cuba is out there in the middle of exporting doctors to help out. We are retrenching so badly. Our tail ends are puckered. We are literally getting our ass handed to us. We are unfortunately, number one in all the wrong things. 

Keen (45:34): 

Cuba’s has got 233 cases. Again, one thousandth as many as America. 

Grumbine (45:39): 

It’s just a damn… My wife sits there and talks about this to me. And she’s not initiated, she’s not involved in the things we’re talking about. She just pays attention to the regular news. And all she can say is “what idiots we are that we didn’t shut down the country.”  

Why were we such idiots? Why did we wait so long? What is it about us thinking that we can just be world travelers and going off to spring break and doing this and doing that? And I told her, I said, it’s an ideological thing, it’s Ayn Rand coming back from the dead … 

Keen (46:11): 

and taking you with her. 

Grumbine (46:12): 

Exactly. So you talked about in our previous one with the environment, you talked about how it would require military intervention. The one thing that we have seen is a slowdown in carbon emissions as a result of this virus. So waters are clearing up. Amazing, the poison of humanity, our production, has ceased to pollute the world for a moment.  

For a moment we’ve taken a break, we’ve given the earth a chance to clean its lungs a little bit, but I want to talk about the future of pandemics and the future of the climate. Let’s say we get through this, our minds are so distracted with this virus that we forget, we have climate change to contend with still too. And I guess, tying these all together to finish off this show, what do you think the future looks like from this day forward? 

Keen (47:10): 

Extremely bleak, as I said in the last show, we have pushed the biosphere so far, that it’s now in breakdown mode and the coronavirus happens to be the first instance of this biting us. But at, by far, far, far from being the last. And in this sense, I want to bring back the limits to growth study, which was disparaged by William Nordhaus without him understanding it’s logic.  

That looked at the world as a set of interlocking feedback systems, including pollution, including food per capita, including resources, including population, and saying that if we push it too far, these feedbacks will start to causing a breakdown to the production system that we rely upon. And health was actually part of their issue as well, an increase in the death rate, and that is what we’re seeing in a comparatively trivial level, out of the coronavirus.  

But to give you an idea of just how much it would push the planet beyond the stage where the biosphere can support our needs, there’s a study recently done on the amount of the biomass distribution on earth, looking at how many gigatons of carbon are represented by different organisms.  

Now, this is a paper I’m going to be mentioning in my forthcoming blog post, but it calculated that the total mass of life on the planet is about 380 gigatons from memory. All of that 0.0007 gigatons are wild mammals, all the ones that we look at at zoos and admire. Humans had almost 10 times the mass of wild animals, and our livestock is almost 20 times the mass that we are.  

That’s the amount of pressure we’re putting on the environment, but we are therefore, the most likely hosts for pathogens to develop. And we are exploiting the biosphere well beyond its capacity to support the extent to which we’re exploiting it.  

So it’s going to fight back, and that’s effectively what‘s happening right now. We have to pull our heads in. We have to regard ourselves as the custodians of life on the planet, not the exploiters of life on the planet, which is what we have been. And if we exploit life too much, guess what? We die. 

Grumbine (49:17): 

And with that, my friend, I’m going to thank you because this is hopefully a body of knowledge that we’re putting forward, that folks, if they listen, pay attention, they can start to understand the gravity of the situation we’re in, and start paying attention to maybe different things, things that matter.  

And I think you’ve made a compelling case, for not only what we need to do today, but why we’re where we are and what the future will hold if we don’t take direct and immediate action. So with that, I want to thank you, Steve, for joining me today. This was great. I really appreciate your friendship, and knowledge that you bring, and I hope you’ll come back again soon. 

Keen (49:58): 

Absolutely, Steve. Good luck. 

Grumbine (50:01): 

Thank you so much. Folks, this is Steve Grumbine and Steve Keen, Macro N Cheese, please join us on our next episode, every Saturday 8:00 AM. Talk to you later. Bye, bye. 

End Credits (50:16): 

Macro N Cheese is produced by Andy Kennedy. Descriptive writing by Virginia Cotts and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressive Patreon account. If you would like to donate to Macro N Cheese, please visit https://www.patreon.com/realprogressives