Surreal economics, fiscal stimulus, and the financialization of public health: Politics of the covid-19 narrative

Surreal economics

It’s not surprising that the extent of the US’s deficit financing is turning heads. President Biden’s $1.9 trillion deficit stimulus package comes on top of Trump’s stimulus of $2.35 trillion which doesn’t include the Federal Reserve’s estimated $4 trillion. The US Government has devoted over $6 trillion to banishing Covid-19 and economic recovery. These statistics dwarf anything in the past including the Great Depression and US participation in WWII. Calvin Woodward (2021) describes it as ‘surreal economics’ at warp speed. The only saving grace is that borrowing is cheap. Some critics with little understanding of the accumulated debt think that the current stimulus might see the US economy outpace China for the first time in 45 years (Chan, 2021).

Although as Ceyhun Elgin et al. (2020) have demonstrated the US deficit financing and fiscal response to Covid-19 as a percentage of GDP is well below Japan, Luxemburg, Belgium, and Malta (all above 15%) and Austria, Qatar, Slovenia, Singapore and the Netherlands (between 10-15%). US debt held by the public as a share of GDP is about 107%. Andrew Van Damm (2020) suggests: ‘This year, for the first time since World War II, the United States will owe more than its economy can produce in a given year, the nonpartisan committee estimates. That’s expected to rise to 107 percent by 2025 and as high as 120 percent by 2030…’ Elgin et al. (2020) have suggested that public health measures including ‘closures, travel restrictions, and city lockdowns’ have disrupted supply chains and led to lay-offs while monetary policies have increased liquidity to banks and included transfers to households, the unemployed and the public health system. They develop an Economic Stimulus Index (CESI) after a review of economic policies adopted by 166 countries as a response to Covid-19 pandemic showing significant correlations of for example, GDP per capita health expenditures with economic stimulus packages.

The sheer size of the US’s Covid-19 fiscal stimulus response indicates some qualms about the government underwriting of share markets still bubbling as though there is no problem indicating the extent to which these markets seem to have decoupled from the ongoing distress of civil society. Other economies have been concerned with preventing financial system risk while keeping an eye on the debt-to-GDP ratio. China, the only economy which grew in 2020, devoted an equivalent US trillion fighting the effects of the virus and Hong Kong, some $40 billion. Japan provided a trillion dollars in liquidity and four stimulus spending packages of over a couple of US trillion. The EU provided a raft of stimulus packages expanding its PEPP program to a total of $2.24 trillion while also increasing Central Bank liquidity. The world economy shrank by 3.5% and most governments around the world followed similar stimulus response packages with an accent of relief to households and the unemployed (Alpert, 2021). Cassim et al. (2020) of McKinsey & Company reported some $10 trillion rescue in first two months of 2020 alone ‘which is three times more than the response to the 2008–09 financial crisis’.

As well as ‘surreal economics’ the past Covid year has been accompanied by ‘surreal politics’. The paradox of a US authoritarian government under Trump which used the Covid-19 crisis as the perfect excuse to increase central federal control insisted on a ‘hands off’ approach with the intent of racing to open up the economy. The spectre of a right-wing government hogging the headlines but fumbling its response can be compared with strong interventionist approaches by socialist countries of all colours from strong central states like China and Russia to welfare economies like New Zealand’s Labour Government and to a lesser degree Australia’s liberal administration.

The grand political science experiment of Covid-19 certainly strengthened the government-science complex, even though there are clear examples of ‘corruption’ and the suppression of science. Kamran Abbasi (2020) of the BMJ reported examples of science being suppressed in the interests of the public good and also for political and financial gain. Despite assurances science is seldom unambiguous in its results and core assumptions and axioms of epidemiological studies require active interpretation. The relationship between the health crisis and democracy is not straightforward and assumptions about levels of public trust can vary from one lock-down to another with a slow attrition rate for public acceptance and understanding as well as potential for anti-political sentiment and the exploitation of populist conspiracy (Flinders, 2021).

One aspect of the stress on global political systems has been magnified, as the Korean Foundation discussion of ‘the impact of China-US relations on the system of global governance, and the claim that Asians’ ‘authoritarian tendency’ is an asset to tackling the outbreak’ makes clear (IAFOR, 2020). Speakers at this forum claim that

COVID-19 pandemic is now not only a global health crisis but much more. It has unleashed a cultural war in global politics, shaken the foundation of the healthy functioning of the global economy, thrown into sharp relief the fragility of the UN system when the US leadership is absent, and plunged societies all over the world into anxiety about an uncertain future. (IAFOR, 2020)

The cultural war was an ongoing trade and tech war inherited from the period before Covid-19 struck. As to ‘healthy functioning of the global economy’ one might want to take issue with this description, although clearly the disruption of the virus did emphasise ‘fragility of the UN’ institutions but mainly as a result of Trump’s unilateral withdrawal of funds and membership in accord with his ‘America First’ mantra at exactly the time when liberal internationalism required support especially in relation to poor countries. The opportunity for a new internationalism under the Biden regime seems to have been squandered with Anthony Blinkens’ acceptance of Mike Pompeo’s Americanisation of human rights as the spear-head for US foreign policy. There is no respite here, just the same old ideological beat-up.

The financialization of public health

Different countries have always had different approaches to financing healthcare. Some countries, such as the US, have never had universal healthcare. Other countries, including those in Europe, former Eastern bloc, and others, have one or another version of universal healthcare. However, in early 21^st century, the world has experienced a wave of financialization in all areas of human activity. Costas Lapavitsas, Greek academic working atteh University of London and a member of Greek parliament for the left-wing Syriza party in 2015, writes:

Financialization represents a systemic transformation of mature capitalist economies with three interrelated features. First, large corporations rely less on banks and have acquired financial capacities; second, banks have shifted their activities toward mediating in open financial markets and transacting with households; third, households have become increasingly involved in the operations of finance. The sources of capitalist profit have also changed accordingly. (Lapavitsas, 2011, p. 611)

Riding on this general wave of financialization, global approaches to healthcare have slowly reconfigured for decades.

Issues of public health have come to the fore during the pandemic with state sponsored remedial care and national Covid-19 strategies revolving around the production of vaccines by the large biopharmaceutical companies often emphasising the failure of nation-state to counter the pandemic. Matthew Herder (2021) provides an insight into the fudged processes when he provides the backstory of Bamlanivimab, a biologic produced by the Canadian company AbCellera¹. Abstracting from the detail, he writes

This is how ‘financialization’ works in the field of biopharmaceuticals. Traversing the divide between drug discovery and delivery to patients requires significant resources, a great deal of which trace back to the public sector. A variety of actors involved in that research and development process fail to embed commitments to access into the research agreements that structure the knowledge translation process. Transaction after transaction, the public’s investment is papered over while the corporate actors involved maximize revenues for shareholders. Financial goals supplant therapeutic access, if not in principle, then in practice. (Herder, 2021)

Writing about the financialization of global health and its implications well before the pandemic, Felix Stein and Devi Sridhar (2018) suggest that it raises questions concerning governance, indicating that ‘[i]n global health, it means that financial motives, markets, actors and institutions increasingly determine which kinds of healthcare are available to people in need’. They suggest that 1. ‘financial markets present new challenges in terms of transparency and accountability’; 2. ‘financial markets are notorious for boom and bust cycles’; 3. ‘financial instruments are not morally neutral. Instead, they influence which kinds of healthcare we deem possible, permissible or desirable.’ They maintain ‘there is no a priori virtuous relationship between finance and healthcare’ and ‘whether or not the ongoing financialization of global health will indeed improve healthcare for the world’s most vulnerable people will depend on the regulatory structures within which it expands’. In January 2020, these trends and discussions were suddenly disrupted.

Politics of the Covid-19 narrative

The Covid-19 pandemic has turned some aspects of the healthcare narrative upside down in the blink of an eye. Suddenly, doctors and nurses have become heroes (Wagener, 2020); during early lockdowns, in countries such as Spain and Italy, people applauded them every evening from their balconies (Mañero, 2020). Individual responsibility for healthcare, which is the basis of its financialization, has been replaced by human (Sapon-Shevin & SooHoo, 2020) and (to a lesser extent) inter-species (O’Sullivan, 2020) solidarity. This simultaneously took place at an individual level and at the social level (Jandrić, 2020); fiscal stimuli have attempted to reconcile financialization and solidarity. Early into the Covid-19 pandemic, Samuel Bowles and Wendy Carlin asked:

The Covid-19 pandemic is a blow to self-interest as a value orientation and laissez-faire as a policy paradigm, both already reeling amid mounting public concerns about climate change. Will the pandemic change our economic narrative, expressing new everyday understandings of how the economy works and how it should work? (Bowles & Carlin, 2020)

In May 2021, the answer to their question is far from obvious. Financialization has not disappeared, yet its response to the pandemic has resulted in extensive fiscal stimuli bringing about surreal economics and politics.

Covid-19, for better or worse, brings into focus a third pole in the public vs. financialized healthcare debate: call it community or civil society. In the absence of this third pole, the conventional language of economics and public policy misses the contribution of social norms and of institutions that are neither governments nor markets – like families, relationships within firms, and community organisations. The dream of community science and the maker movement, championed by organizations such as the Peer-to-Peer Foundation, is still restricted by legislation: ‘In the early days of the pandemic, makers were able to produce a lot of missing medical equipment such as ventilators, but hospitals were not ready to accept this equipment.’ (Bauwens & Jandrić 2021, p. 588). However a ‘softer’ approach, where communities and individuals may not produce vaccines in their kitchens but can still somehow influence their development, is now under the spotlight (Hillman et al., 2021).

Another opportunity for a long-needed fundamental shift in the economic vernacular is now unfolding. It is now widely recognized that the Covid-19 pandemic cannot be thought of in isolation from wider environmental issues including climate change (Jandrić et al., 2020; Peters et al., 2020c). And this is just a tip of the iceberg of the great convergence between biology, information, and society. In the great convergence,

[n]ew technological ability is leading postdigital science where biology as digital information, and digital information as biology, are dialectically interconnected. This bioinformational convergence simultaneously leads to convergence and divergence of research activities. Convergence: this unified ecosystem allows us to answer questions, resolve problems and build things that isolated disciplinary capabilities cannot. Divergence: this creates new pathways, opportunities, competencies, knowledge, technologies and applications. (Peters et al., 2021, p. 377)

In our current convergence of Covid-19, climate change, and other issues, the post-pandemic period could be the equivalent of the Great Depression and World War II in forcing a sea change in economic thinking and policy.

Only time can show whether this assumption will come into being. At present, however, there is no doubt that the battle for the (post)-Covid-19 narrative is already underway. As early as March 2020, The Economist (2020) sounded the alarm: ‘Big government is needed to fight the pandemic. What matters is how it shrinks back again afterwards. … A pandemic government is not fit for everyday life.’ Government overreach, we hear, led to America being unprepared. ‘Stringent and time-consuming FDA requirements are preventing academic and clinical labs around the country, with capacity and willingness to develop and deploy testing within their communities, from being able to do so.’ (Bowles & Carlin, 2020) This, and many other examples, are just a tip of the iceberg of the sea of change.

Conclusion

The Covid-19 narrative that emerges in the aftermath of the pandemic will have to embrace two truths. First, there is no way that government – however well organised and professional – can address challenges like this pandemic without a civic-minded citizenry that trusts the public health advice of its government and is committed to the rule of law. Second, people facing extraordinary risks and costs have indeed acted with generosity and trust on a massive scale. This brings about a rise in optimism about human nature (Green, 2020), as well as the importance of formal education (Rapanta et al., 2020), public pedagogy (including the fight against fake news) (Rose, 2020), and many other public functions. Healthcare cannot fight the pandemic alone, just as driving schools cannot fight traffic accidents alone – pandemic responses are located at the intersections of many different fields and disciplines. According to Jandrić (2021, p. 262), ‘[w]hile postdigital really useful knowledge cannot be thought of without the pandemic, it reaches beyond the pandemic to the point where the pandemic experience is transformed from an object of research to an intrinsic part of our theories, approaches, research methodologies, and social struggles.’

However, another snapshot is a cause for alarm: attacks on people of Asian descent are mounting around the world, encouraged, some think, by President Trump’s continued reference to the ‘Chinese virus’ (Chang, 2020). Religious nationalism is on the rise (McLaren 2020), together with emerging reconfigurations of bio-neo-colonialism (Czerniewicz et al., 2020; see also Couldry & Mejias, 2019). These developments are inseparable from the concept of viral modernity, which ‘is a concept based upon the nature of viruses, the ancient and critical role they play in evolution and culture, and the basic application to understanding the role of information and forms of bioinformation in the social world’ (Peters et al., 2020a), and from viral nature of post-truth (Peters et al., 2020b). Thusly, the post-Covid-19 narrative will have to embrace a third truth. People may care about others in negative as well as positive ways; struggles over the (post)-Covid-19 narrative could end up in a wide range of possible outcomes. We are now at the brink of a post-Covid-19 era, and the time to direct these struggles towards caring for each other in positive ways is now.

Notes

1 See https://www.abcellera.com/. Accessed 21 April 2021.