Español

Thinking 2020

Written by Pablo González and Pedro Nonay trying to understand Covid 19’s consequences.

Entry 5 – covid 19

April 18, 2020

I continue with the “story” of previous entries. This time I will not make the previous comments on opinions received, but will comment directly in the text I write below.

So far I have been arguing (in summary) that:

• We are facing a really new “problem”, accelerated by Covid 19.
• There is a root cause of it all (the Internet).
• This root cause was already generating system instabilities.
• “Stopping cycling” has had very large costs (economic and social).
• There are signs of geopolitical proxy warfare, and
• The concept of money is “in the eye of the hurricane”.

We continue:

Inertia (stopping a train without brakes is very difficult).

In physics, the concept of inertia is something basic. Since Isaac Newton it has been clear that all motion remains the same if no force is applied to change it.

In sociology something similar happens. Changing the way things are understood, and the way the masses act, requires a very great force.

The example of the train is descriptive: if a train runs out of brakes at 100 km/h, stopping it is not easy at all, and requires a lot of time and a lot of free track. Much more if it is running downhill. And, if you don’t have that time, or that free distance, any attempt to stop it can lead to derailment.

At the present time we are stopping the train of economic activity without time and without a free track. The risk of derailment is immense. If we derail, in addition to breaking the train, there will be many deaths. And then we will have to build a new train.

In our present case, the important inertia is that of mass sociology. What they are prepared to understand and accept. 

Can we re-educate the masses for the new situation in a very short time? I think that is not easy. Mao Tse Tung already tried it in his cultural revolution, and although he succeeded, the cost was very great. And, now, the world does not have the capacity of imposition that Mao’s dictatorship had.

Although it is true that, as I have tried to explain in previous entries, we are in one of the rare moments in history when a major change is going to happen, it is also true that no one is prepared for it. 

In this situation, as Newton said, every action has its reaction. The change may be very necessary, but the existing structures will react (defending themselves, ignoring it, …). It doesn’t matter if that defense is numantine, the fact is that the structures will change, but the defense will delay the change. I say numantine on purpose, because Numantia defended itself strongly against Rome, made them spend a lot of time and resources, and, in the end, … disappeared.

It is also useful to use the example of Newton and physics to see how inertia responds:

• If we throw a ball against a wall solid enough so that the ball does not break it, what will happen is that the ball will bounce off the wall (we will have drastically changed its inertia and trajectory). That is, the force of the wall will have been enough to change the fate of the ball.

• If the wall is not solid and the ball breaks it, what will happen is that the ball will continue forward, but with less speed (it will have spent force to break the wall), and with another direction (the circumstances will have changed its angle of advance).

What I mean by inertia is that the world is not prepared for the coming change. Therefore, although it would be desirable to adapt quickly to the new situation, that is not going to happen. Mass psychology does not allow it. Some will defend themselves, others will not believe it and, in short, they will put up a wall. As the force of change (of the ball) is very great, the wall will break, but late, consuming many resources on the way.

There is going to be a transition period in which the old rules will still work (very rusty) before total surrender to the changes. How long will that transition last? That’s the big question, and the answer is that it depends on so many factors, it’s impossible to calculate (at least for me).

The navel.

Related to the previous point of inertia, it is a fact that each of us has our own way of seeing the part of the world we live in. 

Our life experience has led us to establish rules of action, in which we believe, and a way of analyzing situations, which is based on past learning.

We all act by looking at our “navel”. We think that, if those rules we learned in the past for our daily activity gave us results, we have to apply the same rules. Almost nobody realizes that those rules were valid for that situation, but not for this one.

We think we know our business, and we refuse to accept that our old knowledge is no longer worth anything. We also refuse to learn new knowledge.

I don’t want to talk longer about this, because it is very unpleasant to accept. Better that we each think about it on our own.

Deglobalization?

Because of the things I have said before, such as global threats (viruses and climate, for example), and global tools (Internet), it would be logical that the changes should be oriented towards greater globalization, in order to find efficiency in the response.

But, because of other things I’ve also said (inertia and navel), the answer is that it’s going to be no. 

It seems that an idea of “de-globalization” is being implanted, under the discourse that it was a mistake, and that it is the cause of our ills. Populist politicians are transmitting the idea that “China is guilty” (copying our Serrano Suñer regarding Russia). The solution they provide is that we have to stop trading with them. In other words, they are proposing a step backwards in globalization. 

For the same reasons, they propose to return to produce almost everything in our country (masks, for example), based on the fact that we cannot cede strategic production plots. In other words, they believe that autarky will work (and it did not work even for Franco, who was not bad at mass control and future management).

But, as I said, the masses have “bought” that idea. So I think we are heading for de-globalization. But it will only be partial and temporary.

The bias is because the big things will continue to be global (the balance of power, money, whatever it is, the climate, viruses, …). But the day-to-day life of the masses will not be (there will be less international tourism, less language learning, and more support for “regional holidays”). Thus, the masses will feel more in line with their inertia.

And, that de-globalization will be temporary, I say that because the final result of civilization needs a global government, but it may be early for that from the point of view of inertia. Before we get there, we need a socio-economic convergence of the different parts of the world to happen, and that is something that is going to happen (after the internet), but it needs a lot of time.

So we have to prepare for that partial de-globalization. And we don’t have to do it for the final globalization, because that will happen after our lives are over.

And, I expressly mention that this idea is not the one I had in mind when I started writing my notes. But conversations with one of my reader friends (whose judgment I trust more than a lot), have led me to understand that the inertia of society does not allow any other way.

Inflation vs. deflation:

As I have said in previous notes, the printing of currency at will must generate inflation, or even hyperinflation.

But it is also clear that this is the end result. And that it takes time.

As long as we have the economy at a standstill, or at very low activity at the beginning of the exit from “confinement”, it is a reality that the famous “velocity of money” is a joke. So, as long as this situation lasts, even if we use the money printing machine a lot, inflation will not appear. 

Of course, as soon as everything starts moving at fast speeds, hyperinflation is almost inevitable.

Therefore, my conclusion is that we should not worry about the dollar or the euro sinking for a few months, but we should worry about it afterwards.

Revolution vs. evolution.

When social changes are very important, revolutions are possible. But it is true that, for that, it is necessary that the masses are very conscious, and very encouraged (French or Russian revolution, for example).

We are facing a change of this magnitude. But I do not see the social conscience to get into such adventures. I am referring to the revolution with war, a lot of risk, and many deaths, not to the salon revolution of the type: “I would like it to happen…, but I am not going to risk it”.

For this reason, revolutionary episodes may not yet occur (perhaps they will in the future). This is basically the same reason why neither the final globalization nor hyperinflation will arrive yet: it is still early, and society is not ready.

What there will be is a lot of change implemented through evolution. If the change is sufficiently rapid and adequate, revolution may even be avoided. If not, we will simply delay it.

I also say that this opinion is based on comments of the same friend of the previous point. Hopefully he is right (he has convinced me), because everything is more bearable under evolution than under revolution.

It will continue, …