2140. COVID-19 and the economy – the issues.

Here is a quick attempt to summarize the arguments. Obviously can use reworking but it is an example of what each of us should try to do: struggle to get our thoughts clarified.

Short form o f the arguments: The complex situation analytically breaks down in to supply side shock, demand side shock both happening, that stimulus leads to inflation, that the hope for recovery in counter to the needs of coping with climate change. AI and big data will be used to manage the recovery and that system will be owned by the big corporations.

Longer form of the arguments: The current virus damaged situation has created both a demand shock and a supply shock. There is no way to simply restart the economy at the end of the crises. A chunk, perhaps a few months worth of production has been lost and is not regained simply by starting the economy. In fact starting the economy takes a ramp-up period, rehiring some workers and hiring some new ones, all needing to be trained and integrated . At the sme time supply chains are slow to be rebuilt. In this context where production is down, workers did not come to work and were not paid, a stimulus would give unemployed workers the cash to buy things that were not made. So stimulus leads to inflation because people have money but since they are not working the products and services were not being produced in the same amount. Workers with more cash in the context of less production means inflation if the workers fry to buy the same things.

Stimulus goes to poor who pay rent , and this cash ends up in stock of the rich, since much of the rent h goes to pay loans of the landlord who borrowed the money to buy the building. Who gets the money paid by the renter to the landward to the bank to its stockholders..?

Some are comparing the situation to a great depression, others to WW2. It took a long time to recover from the depression because the whole society took time to grow the relationships and infrastructure need for production and distribution, both supply side and the demand side were weakened. The comparison with the war fails because during ww2 the US had full employment and – since production was diverted to war – the workers had los of stored up purchasing power and the economy took off rapidly. Europe on the other hand was devastated, had poor starving workers and no production and took a long tome to rebuild.

People are talking about economic recovery, getting back on track, but that means growth and more use of energy which means more fossil fuel use and production of co2 into the atmosphere. The slowdown we are experiencing is what we logically need to cope with global warming toward the fateful 2 degrees. We need to cut co2 production by 90% in ten years and make progress on taking the co2 in the atmosphere out because, even with no new co2 produced, what already is in the atmosphere works its blanket effect.

If we try to create a rich recovery it makes sense that the emerging economy, with new and reconfigured relations between and within corporations, will be modeled and managed by big data and Ai in a new system controlled by large corporations.

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