When we wake up from this long pause, much of what we see will no longer be what we know. Many of us will have lost someone we know; too many people we like. We could never fully calculate whether what we saved, in terms of economies and political structures, was worth the sacrifice. Maybe we shouldn’t give it a try.
At some point, it will be time for us to find our way again. Our sense of priority will have been altered. Information technology, with all its platforms and infrastructures, staging and deployment, development and methodology, will not seem important or to those whom the global pandemic event has affected, even relevant. But, to a degree, it’s the luggage we have to pick up with.
The leaders of the nations of the world have the terrible choice of whether to prioritize the health and security of their peoples in the face of continued growth of their economies. (The integrity of their portfolios of personal actions, in a perfect world, would be a lower priority.) Some made the decision ahead of time and thus saved lives and minimized their recessions. Others differed.
“The siren call has been exhausted and various strategies are being implemented to generate all the things we need to deal with the current process,” said Ross Rubin, ZDNet Contributor, senior analyst at Reticle Research. . “Floating hospitals are sent to cities; automobile factories are converted to produce fans; numerous companies are working on new test methodologies and vaccines.
“At some point, given the steps taken to reduce broadcasting, you will come to balance,” said Rubin, referring to a term also commonplace in economics. “Once you do that, unless you do nothing and the virus population continues to spread exponentially, at some point you will have to see a reduction in new cases.”
Whatever the technological economy is emerging from the recovery, wherever it may be, will be the direct and undeniable result of these choices.
The first, critical link of most technology supply chains in the world, originates somewhere in Asia. Today, more often than not, it is China. When COVID-19 became an epidemic in China, its immediate effect on the economy was a supply shock, an inability to produce demand-based products. Historically, supply shock events have been catalysts for the recession.
China, South Korea and Taiwan could soon come out of this supply clash, ready to once again increase production for a world of eager consumers of mobile devices and digital experiences. But those consumers won’t be there. North America, Europe, much of South America and Australia, are likely to freeze over time, with their economies still in good condition. Asia is in the midst of a demand-shaking event – an economic storm is only pandemic.
Sherman Robinson, non-resident senior member of the Peterson Institute for International Economics
“This coronavirus has now added tremendous strain to this (economic) system,” said Dr. Sherman Robinson, a senior member of the Peterson Institute for International Economics. “It really is a supply shock and it’s big enough to have macro implications. We’re looking at it.”
Certainly no one alive understands the principle of the supply shock more deeply than Dr. Robinson. Since the 1980’s, he and his colleagues have been dominating the use of computational general equilibrium (CGE) – a means of computationally simulating the effects of supply and demand changes on markets and economies, to determine optimal levels needed to sustain health and growth. In a sense, CGE is a predecessor of neural networking, applying and adjusting weights until a mathematical model is sufficiently formed. It is the mathematical basis of machine learning, only without the neurological allegory.
The typical global recession, Robinson explained, begins in the asset markets: stocks, real estate, precious metals, money markets. A major financial event, such as the weakening of sub-prime mortgage loans in 2008, triggers a crisis of confidence in the country’s direction. Immediately, foreign investors withdraw funds from this country ‘s investments. This withdrawal triggers a currency crisis, which will soon lead to national securities investment, forcing the stock market to fall and to consume.
“This time,” said Robinson, “we have an administration that has loved trading wars.”
In 2017, just days after the current administration of the United States took office, it launched a trade war with China, along with trade skirmishes in the EU, United Kingdom, Canada, Japan and South Korea. Mentioning the ability of Asian nations to pay lower paid workers, the United States has pulled out of the trans-Pacific partnership. Later, 5G Wireless became another battleground, with the US taking advantage of the fact that China was reopening the back doors for self-monitoring, on Huawei routers and other network equipment, to define China as a post-Soviet adversary of the free world.
With the US administration delaying in almost every country with which trade agreements are critical for American companies, foreign investment in American growth projects, such as manufacturing factories, facilities production and data centers, it essentially stopped. China, meanwhile, has stepped up regulations on what it calls “value-added telecommunications permits”, which prohibit the licensing of data center projects to any company with a foreign majority owner. As a result, none of the major U.S.-based cloud service providers actually manage their own services for China.
The message the U.S. sent to the rest of the world was that it is no longer a trusted business partner.
“Okay. Could you really have a recession that starts in the commodity markets, through trade wars?” Robinson rhetorically raised the issue of marketing commodities such as farm and fuel products. His macroeconomic friends answered, not really.
The normal global recession cannot be unleashed on a trade war. Trade only accounts for about 15% to 20% of the economies of the countries, and so it does not tend to generate what Robinson calls “global repercussions”. There are two exceptions: when investors are affected by a growing heart of negative expectations and when consumers’ expectations of continued consumption are reduced. These are commodity-oriented events which, when aggregated, result in the asset markets where recessions typically occur.
When both exceptions occur simultaneously, the conditions are matured by a global economic fire.
“And that’s what we’re seeing,” Robinson said.
Kevin Anderson, Senior Analyst, Power Semiconductors, Omdia
“When they make scale,” said Kevin Anderson, a senior semiconductor analyst with Omdia (formerly known as IHS), “manufacturers have very close and close relationships with their suppliers. So if there is a shortage, the teams go in.” in action to try to mitigate the problem. This is often the case. Recruitment teams work with vendor teams to make sure they have enough product, so they can continue to work. ”
This is, of course, the case when manufacturers operate programmatically. When it first appears on hiring teams, the components they need to assemble a product can be in the supply soon enough, they plan a double reservation in advance. As stocks increase, this sends a signal to the rest of the world.
“If suppliers have a problem doing enough for everyone,” Anderson continued, “they want to make sure they understand the real demand, not the demand they see in the order flow, but, ‘Do you need to build tomorrow?'” “What do you need?” to build next week? “‘Next month?’ “We will send you what you need, not what you ask for.”
You could call it a “Bailey Bros. Building & Loan” version of demand mitigation, and Anderson said it’s integrated into the system. Collaboration between component vendors and vendors is already in place. Supply shock events of some limited magnitude, he told us, occur surprisingly often, too often to disturb the business press.
If an epidemic wanted to choose the right time to become a pandemic, from a technology-making perspective, Anderson of Omdia believes, February was a good option. Manufacturers in China would already have gone ahead, as usual, before the Lunar New Year holiday on February 12, when the country is celebrating a week-long holiday. In addition, Asian countries were the first to order their citizens to respond instead. As you might expect, this triggered a shock event of demand, where demand declined to almost zero. But for countries like China and South Korea, which have implemented containment measures before the rest of the world, the waves of demand that follow these shocks can be more easily addressed with stored inventory.
If the spread of the new coronavirus to these Asian countries has been diminished, as well as perhaps Japan and some parts of Southeast Asia, it is conceivable that deaths could be minimized and global disturbances be mitigated. We may have been talking now about the resumption of the balancing of the technological economy, with Dr Robinson being the world identification expert. . . Assuming a story about normal factors leading to normal results would have even been mapped out.
That did not happen. A series of warnings about the clear and possibly strong signals coming from Asia caused the virus to rise into unprotected territories. In just a few days (if we are honest, in a good handful of hours), the U.S. attitude toward the new coronavirus went from framing it as a trade war conspiracy to a poaching siege of a power. not identified
The fact that this change was so sudden – that point “A” on the rationale graph was so far away from point “B”, even though the transition was made with the passage of change – led to a crisis of confidence in world economies. In many places, the results were demand shocks in anticipation of supply shocks that may or may not have actually occurred.
“This is one of the issues related to climate change: we look at more extreme events,” said Dr. Robinson, “and therefore there is a greater danger that the suffocation points will be damaged.”
The asphyxiated, in Dr. Robinson’s lexicon, are the most vulnerable parts of any supply chain. One of the examples he cites is China’s virtual monopoly on mining and refining certain rare earth metals critical to the electronics industry, such as cesium. According to the United States Geological Survey (PDF), China produces no more or less than 95 percent of the world’s cesium supply. “An earthquake and all of a sudden,” he remarked, “close an entire industry.”
Governments around the world have been aware of such bad guys. Private companies, meanwhile, feigned ignorance or were, in fact, ignorant. “They were buying these supplies from everywhere,” Robinson told us, “but they were not aware that all of this was coming out of a place at the end.”
In a normal epidemic, a country’s supply chains are susceptible to unforeseen influences, such as demand shocks caused by panic. The epicenter of these demand strokes may be Dr. Robinson’s choking points – critical products needed for production, which are sourced from one place only.
It’s a perfect setup. A hand grenade or landmine could not have been built more deliberately.
The other climate change
Still, a slight warning would have helped. You have probably heard this complaint in recent days. If anyone had thought they had shown a bright spotlight on what would be required for a national, or perhaps even global, response to a coronavirus outbreak, our health and wellness systems could have reacted earlier.
Except that these notices did not exist. Well, it would still have been nice if those warnings came from experts or experienced people who had already won the public’s trust.
Except they did.
“Of all the above issues, the pandemic and the epidemic are the topic with the highest proportion of global gravity and political attention,” said former United States Treasury Secretary Lawrence H. Summers in a speech to the Rockefeller Foundation in 2016. He spoke slowly and emphatically, as if his words could be carved in stone in real time.
“In relation to their importance to humanity and to humanity, there is no problem that will attract less attention,” the Secretary continued. “To put the comparison directly, I think … if you calculate the expected cost of humankind for the next century from epidemics and pandemics in our current global course, it is within the same broad range – within factor of 2 or 3, as the expected cost of global climate change. ”
Sec. Summers referred to both priority and cost. His comments accompanied the publication by the National Academy of Sciences of the United States of America as a kind of global alert. The report included the neglected dimension of global security – a framework for combating infectious disease cases – the report included a suggestion by two PhD students at Harvard University. a health policy program, which countries were at a collective risk of losing between $ 60 billion and $ 120 billion a year, in the costs needed to combat the growing threats of global pandemics. which is unlikely to eclipse 8 events per century.
The pandemic stimulus relief package just passed by Congress is projected to cost more than $ 2 trillion.
We spend a lot of time discussing what preventive measures might have been. Four years ago, there was an opportunity for not only our governments, but also our private institutions and commercial companies to prioritize the pandemic response to at least the same low-heat burner as global warming. At this point while many of us are taking refuge and many are praying for the health and safety of those we love, the task that remains before us is to determine how to make an economy – any economy – viable and viable in the future. world in which we have all entered.
This will be the topic of part two of this report. Until then, stay strong.
Pictures of the fake ruins of Holliday Park in Indianapolis by Scott Fulton.
The strength of an economy, or any segment of it, is secondary to your health and well-being and the health of others. Information on countries and governments’ response to coronavirus is available from the World Health Organization. Information on personal security measures is also available from the WHO, as well as from the American Red Cross. For more information on the spread of the new coronavirus in the US, check out the Centers for Disease Control. People who believe they may have symptoms of the virus are advised to seek security and isolation, and then contact the emergency services by phone to help where you are.