6 post-Corona Institutional questions

The mass hysteria of the corona crisis is raging, with the resulting self-isolation of whole economies and populations. The loss seems greater with every new forecast on the economic collapse than I initially thought, and the benefit of imprisoning and terrorizing the population smaller than I initially thought, leading courageous little Sweden to forego these options. High-level media and calm commentators are waking up to the longer-term implications, though the population is still too overcome by fear.

I want to share 6 areas where we should think of international institutional reform to prevent another hysteria like the one we are going through now. I don’t want to presume any answers but simply want to hear your thoughts and suggestions, so am merely laying out the challenges.

They are: i) How to diminish the normality of apocalyptic thinking, ii) How to read China better, iii) How to prevent international contagion of panic through social and regular media better, iv) How to reduce the fragility of international supply chains, v) How to foster better cooperation between countries in the EU, and vi) How to regain our lost freedom and reason.

Over the fold I explain them in more detail.


  1. The cult of the apocalypse. This crisis laid bare that large parts of the population and the scientific community, not just epidemiologists, have really bought into some notion of extreme emergencies for which a totalitarian response is needed. Via petitions and the media have these people loudly called for draconian measures, based on little evidence that this would work or no evidence that it would do more good than bad. The world has up till now shrugged its shoulders over the various doom scenarios dreamed up by scientists, including “extinction due to climate change”, “killer asteroids”, “nuclear devastation”, “run-away robots”, and a whole host of other scenarios you might recognise from disaster movies. This time the population went along with one such story, leading to devastating losses as the ‘cure’ turned out to be far more deadly and destructive than ‘the problem’. How do we reduce the prevalence and growth of these doomsday cults?
  2. Understanding China. The Chinese government showed the world the example of how to be totalitarian about a disease, and their example proved infectious. Understanding in the West as to why the Chinese did this was extremely limited, but we looked up to them anyway and several governments simply followed their example. We need to learn how China truly operates and stop imagining they are like us. The Chinese have a long history of disastrous totalitarian projects, like the Great Leap Forward or the Cultural Revolution, and we should learn why they do this, in order to avoid following their example, not copy them.
  3. Contagion of panics via social media and the regular media. This was first and foremost the biggest mass hysteria event in history, fed by a connected media. Even in India, which is far too warm for this virus to do much damage and where there are hence almost no recorded cases, the population has become scared enough to loudly call for draconian measures, leading to the madness of locking down hundreds of millions of extremely poor people who have no savings and no income to buy food. We need to think hard about how to make contagion of these panics harder and slower, not just for pandemics but also the many other global fears (financial, military, ethnic, religious). This will require thinking about the architecture of media, the internet, mobile telephony, etc. It is not easy to see what can be done.
  4. The fragility of international supply chains. The huge recessions of 1929 in the West, and 1990 in Eastern Europe taught us that broken supply chains are very hard to rebuild in a hurry. Companies and industries make very particular investments that form a link, and if some of the pieces in the chain break, the whole chain cannot function, disbands, and very quickly loses the knowledge to re-form as parts go their separate ways[1]. We should think of what we could do to make the supply chains less fragile to disruption: how do we build more slack into the system?
  5. International cooperation. As Harari pointed out in the Financial Times, international cooperation has broken down during this crisis. Even in the EU, countries went their own way, not caring about the disruption to partners of their own actions. This is also what happened in 1929 and in Eastern Europe in 1990, to the loss of all. We have learned again that only nation states remain cohesive and take collective decisions. What to do about it?
  6. How to regain respect for freedom, privacy, own reason, the fallability of expert advice, etc.? This hysteria has cost the West, which is the audience we on this blog overwhelmingly belong to, much of the best we had to offer the world. For the sake of fear have we loudly demanded totalitarianism, invasive top-down monitoring, top-down rules on who is important and who should do what, and adopted the fantasies of experts who had no more idea about the balance of the effects of what they proposed than anyone else. How to regain and more stringently hold on to our ideals and our reason?

I have preliminary suggestions on these but want to hear your thoughts. Also importantly, what other international institutional challenges do you see needing to be addressed once this hysteria passes and the West wakes up to the loss it has inflicted on itself?

[1Because this stuff is too hard to put in an easy macro-model (though you can do it in micro models, see here), mainstream economics hasnt managed to incorporate these lessons into its canon and has thus once again missed the importance of this when the crisis hit.]

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20 Responses to 6 post-Corona Institutional questions

  1. Kien Choong says:

    Someone said “we should not let a crisis go to waste”, and you are right to urge that we review global institutions in light of the Covid-19 crisis. I certainly support your call for more global cooperation.

    There is nothing inherently evil about a natural disaster like Covid-19; rather the “mischief” lies in how we deal with it. Whether we strengthen the ethics of “caring and sharing” by looking after one another and (at least) taking account the effect of our actions on others, vs closing borders, restricting export of medical supply, or worse, stoking xenophobia for political gain.

    One thing that has been overlooked (I think) is the Australian government’s initial policy of requiring international students from China to spend a 14 day quarantine in a 3rd country (like Thailand) before being allowed to return to Australia to resume their studies. No one has reflected on whether this created risks for Thailand and other countries. It seems to me that given the value that international students bring to Australia, it ought to have been Australia’s responsibility to ensure that the students returning to Australia are quarantined and given appropriate medical care. After all, these international students do pay for health insurance.

    On China’s response, I agree we ought not simply copy whatever the Chinese do. However, if Western countries have been slow to take precautions, and then over-react when they realise their initial error, they ought to take responsibility for their own choices vs blaming China. It also seems arrogant to think there is nothing the West can learn from China. Rather, be curious about how China deals with Covid-19 (as you say), but in the end, make up our own minds on what is best.

    We need more public discussion and good reasoning. All countries need to be involved in this global discussion about global institutions.

    • paul frijters says:

      yes, we can learn a lot from China. But to avoid making their mistakes we need to recognise the motives for its actions, which requires a far deeper understanding than we now have in our policy circles.
      The blame game between countries is not really my interest. Politicians will go there, but its ultimately futile.
      You make an interesting about Thailand, which underscores this international cooperation aspect. However, I am thinking in totally different directions to you. I don’t expect any kumbaya cooperation to emerge based on love and understanding. Well-understand self-interest on the other hand…

      And yes, this discussion cannot be had behind closed doors now that the “experts” have gotten us into this mess.

      • Kien says:

        If we define our own interests narrowly, then we are less likely to cooperate with each other. So we ought to reflect on our interests, goals and values; there is nothing rational about holding narrow interests, goals and values.

        That said, I acknowledge that it takes cognitive effort to reflect on our interests, goals and values.

  2. desipis says:

    On point 4 I disagree. We’ve seen huge and rapid disruption of supply chains over the last decade. The internet and the rise of high tech warehousing and distribution have made supply chains incredibly agile. Establishing new supply chains no longer requires the travel and inspections and handshakes; it can now all happen at the click of a button. I don’t think the experiences from 1929 or even from 1990 reflect in any way the realities of today’s economy.

    • paul frijters says:

      you disagree with only 1 out of 6? I am making progress :-)

      I dont completely have my fingers on the pulse of the economic reactions to this crisis, basically because the health issues have been so much more uniform and easier to track (you cant miss them in the news!). But I do know these cupply chains are a prime policy concern and for instance have lead to the non-closure of most borders for trucks and the operation of most ports to go on relatively unhindered. The whole business of guaranteeing jobs is to prevent bundles in the supply chains from dissolving.

      However, this “30 day free experiment with communism” cant last. Its too costly and governments have to make a huge control apparatus that is easy to game. The span of control of our government is just not that big, though it is very hard to know how bad the economic disruption turns out to be. That’s why i am relying on the market signals as to what the investors think: valuing tough-to-call events is what they are good at.

      There are plenty of examples of disrupted supply chains causing huge problems though. The German automotive industry is basically at a standstill because the parts havent been produced and shipped for months.

      • desipis says:

        I think #1 to #3 have merit generally, however I don’t think they are the underlying cause of governments’ reactions to the pandemic.

        I started to take steps to proactively social-distance and increase hygiene, not when I saw scary social media posts, not when the government started making declaration, but when I started to follow the data and read the science. The reaction to current pandemic is driven by the models and data and not by a “cult of apocalypse” or a “panic contagion”.

        With #5 I’m not sure what better even looks like, let alone how to achieve it. If you were Grand Emperor of Earth for the last month or so, what would you have directed your constituent nations to do?

        With #6 I think that was mostly lost almost two decades ago when everyone jumped on the war-on-terror express.

        • paul frijters says:

          “[I took steps not due to the scare] but when I started to follow the data and read the science. The reaction to current pandemic is driven by the models and data and not by a “cult of apocalypse” or a “panic contagion”.”

          Really? You were just moved by rational well considered consideration you would give any risk? So did you take the same interest in traffic deaths, the risks of a cold, the danger of swallowing washing up tablets, etc.? I am going to bet not.

          What makes it hysteria is not the methods used to scare people but the very volume of attention on one risk over others and the general preparedness to exaggerate the particular risk and not even look at the costs of the intended actions.

          But you are not alone. The UK scientists are also trying to save face now that they have decided the were spectacularly wrong last week. You will have to forgive me for taking no notice of such obvious self-justification moves. Better to admit you have been had and learn from that than cover up one mistake with another.

          Yeah, on 5 its tough and on 6 I agree with your point that this is a longer-term move.

          • desipis says:

            I think there’s plenty of attention on the costs. Everyone is well aware of the large numbers of people suddenly unemployed and businesses that are going to fail. They just have a strong preference for not letting people die.

            “The UK scientists are also trying to save face now that they have decided the were spectacularly wrong last week”

            Can you link to what you are referring to here? I’ve seen quite a few comments along these lines but haven’t been able to determine exactly what they are referring to.

  3. Paul
    Public Health in the west has for many years now been much more focused on, non communicable diseases than on communicable diseases.
    Public health has focused on creating panic re ‘there is no safe level of alcohol ‘ or sugar or red meat so on , and in particular on publishing papers that for example ( seriously ) claim that doing something today causes heart attacks, ten years ago .

    Addressing the corruption cronyism ( 100s of millions directed to pet obsessions et), rent and utterly inane low iq crap that too much of the western worlds public health has been reduced to, needs to also addressed.

  4. Nicholas Gruen says:

    I think there are some very substantial and good challenges in your questions and their elaboration Paul, but the premise – that we’ve hugely overreacted to the crisis doesn’t strike me as all that secure.

    If we can stop and start it seems like a good thing to do. If we can’t, well we’ll muddle through, but it’s not a particularly surprising or terrible thing to see people ‘panicking’ when they see what they saw in Northern Italy. We didn’t evolve to respond to such developments with a calm, cost-benefit framework. And while on these matters (i.e. of public policy) I’m a utilitarian – it’s hard to see anything else that makes sense – I also have quite a lot of respect for the public’s instinct for duty-based responses – which tell them to protect their old folk and not have them being waterboarded to death lying in trolleys waiting to get onto a ventilator.

    As for the totalitarian nature of it, I oppose a lot of the choices we have made in the last couple of decades throwing away liberties. So it’s a serious matter. However in this crisis, the government dusted off various emergency powers, which it should have (though one might want to see lots more automatic safeguards as to how they are used), and they’ve been well suited to their purposes – at least given their deplorable lack of preparation.

    Anyway, since you asked for suggestions as to institutional development – no doubt there are many, but I can throw in what I’ve just suggested – much stronger safeguards for the use of emergency powers – they should be subject to strong review and appeal. (Problem with that is that the lawyers move in, crank the handle and voila $15,000 per day QC jobs.)

  5. Nicholas Gruen says:

    A corrective from one of my favourite econobloggers

    • paul frijters says:

      I dont like that piece. It has no real arguments and is all about the defaults, ie what they view as safe. I do not view economic collapse as the safe thing to do, neither from a health or long-term perspective. That is the logic of the sacrifice. A balance of probabilities and magnitude perspective is always needed when it comes to this level of problem.

      I do see your previous point though, which is that to panic is so natural in such circumstances and it is so hard to think of a system in which we could ignore the panic. Yet that is the challenge.

      And of course people will fight the premise that fear has gotten the better of them. The vast majority has been made complicit and so will want to see their sacrifice be worthwhile, the fear to be justified. It is a terrible thing to have to admit how complicit one is in some grand tragedy. That is partially why we now once again celebrate war during Anzac parades rather than remember the stupidity and futility of the first world war, which is what we did for a while just after it.

  6. Chris Borthwick says:

    On the ‘hysteria’ front, here’s a piece with a very few figures on the hidden death count – that is, a rise in deaths year-over-year of people who don’t have a covid diagnosis – suggesting (and I quite appreciate that we need a lot more data, and should be demanding it) that for every registered CV death there are two unattributed but actually cv-related deaths (which might do something to explain why there’s so much scepticism about Chinese death counts; those funeral homes were cremating undiagnosed deaths).

    • paul frijters says:

      yes, I dont trust the Chinese data either and also suspect the death count there must be far higher, as must the number of new cases there. This not only distorts the picture of how deadly it is, but also what policies work better. The Chinese have a long history of data falsification for political purposes though. They hid millions of deaths during the Great Leap Forward to avoid embarrassment to the leaders. That’s how it works there.

      Still, we now know enough in the West to know the virus will lead to relatively small numbers of additional deaths. My original assessment that this thing will have a total death rate of 0.2% if everyone got exposed now seems too pessimistic. We are not going to get anywhere near that. Yet the damage done by our reactions are just as a big as imagined 2 weeks ago, probably larger, so now the rough number is that for every whole life saved we are killing close to a thousand.

      However, the new twists of the hysteria become dull to look at after a while. It’s a bit like watching the Titanic hit the ice berg in extreme slow-motion. Even though its a tragedy and you feel for those who will die due to the stupidity of the captain and the all round hubris, after a while you want the boat to get on with it.

  7. Chris Borthwick says:

    Well, that is specifically what the article I posted doesn’t say; rather the opposite. I agree that it’s just a cloud no bigger than a man’s hand at the moment, but what it’s suggesting is that during the pandemic the all-causes death rate balloons with only about a third of that rise being tied to cov19 – that is, if the cov deathrate is, as you suggest, 0.2%, then the cov-adjacent and to all intents and purposes cov-caused deathrate is 0.6%. Which makes the exact figure very sensitive indeed.

    • paul frijters says:

      it really is nowhere near 0.2%. Initially, the modellers here in the UK got it right as to how to view this thing, then it seems the hysteria got the better of them and they predicted 500,000 deaths in the UK (which is almost 1% of the population). Now the Imperial College modellers are down to less than 3,000 deaths truly attributable to Corona, or 0.005% of the population. Even if you tripple that number, you are still nowhere near 0.2%
      Even in Italy, we are looking at a final death count of about 20 to 30 thousand, and only a fraction of that is believed to die mainly because of Corona, and even those only had a few more years to live at best so they are only fractions of whole lives. Even 30 thousand is only 0,05% of the population.

      So this is all is very similar in death toll and victims as the 2017-2018 flu season. The main difference seems to be that the deaths are very nasty and very upsetting for the medical staff, with flooded IC rooms. That’s probably a large factor in the panic: not the actual death counts but the manner of dying. The bewilderment at that is infectious. Very understandable, but still no excuse to essentially kill far more others by our panic, causing a huge multiple of loss and grief elsewhere.

  8. Chris Borthwick says:

    Sorry, cov-adjacent 0.4%, summing to a total of 0.6%.

  9. As of the 31st of March the running total of deaths from all causes in the UK is a tad below the long term average. In Australia the rate of new COVID-19 cases has eased from 26% on the 22nd of March down to 5.7% as of this morning 3rd of April.
    Curious bit of international data.
    cases Total tests %per 100k. % positive
    Australia 5133 268,554 1,055 1.91
    Austria 10,192 55,863 633 18.24 ( whats going on there?)
    UK 29,474 152,979 225 19.27

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