For those of us in the field of finance, the last several weeks have been interesting – not to say hair-raising – ones with regard to the financial and economic aspects of the coronavirus epidemic and a fortiori with the official, hyper-Lehman response to it.

Alongside these, much greater issues clearly lie. Obviously, one can only discuss the public health and medical elements of this episode from the perspective of an educated layman and so these will not be dealt with here in any detail. However, there are several salient points arising from these which it would be remiss not to remark upon, given that they have much wider implications, far beyond the epidemiological or clinical treatment of the current crisis. [PODCAST VERSION HERE]

SQUABBLING OVER THE TEA-LEAVES

Firstly, let us note the cacophony of conflicting opinions – the squabbling over the reading of the tea-leaves, if you will – rushed into print both with and without the sacred imprimatur of ‘peer review’, and the raft of contradictory ‘scientific’ findings which this awful novelty has thrown up with regard to the origin, pathology, progression, and prevention of, the complications to, and the possible cures for this disease. Of that mythical ‘consensus’ so beloved of the Climate lobby, for example, there has been nary a whisper.

In truth, such disputes and disagreements, even within the cognoscenti’s own field of knowledge are only to be expected, since such assertion and counter-assertion, observation and counter-observation are intrinsic to that great human endeavour, aimed at the dispelling of our ignorance, which we call, ‘science’.

But, for all that, one can only hope that, in a world largely given over to regulatory fiat and extra-parliamentary rule-making, the perils of empowering narrow clusters of experts – Task Force Technocrats, we might say – should now be apparent even to those deafest of deaf ears upon which our consistent criticism of central banks, for example, have long fallen, disregarded.

When politicians – whether from rank moral cowardice or because of a more commendable sense of intellectual modesty – devolve decisions to what some have called an ‘Epistocracy’ of specialists, they place our hard-worn rights to the ‘Pursuit of Life, Liberty, and Happiness’ in the hands of people who rarely raise their heads from their computer models (and much more rarely from any actual laboratory bench) to ponder on the wider ramifications of their often wildly over-confident, pigeon-holed prescriptions.

In the unfathomably complex world in which we live, Bastiat’s famous Window of unforeseen consequences becomes more of an inescapable Hall of Mirrors; one in which it is facile – not to say jejune – to advocate such-and-such a series of draconian measures in order to address only the immediate challenges at hand. To do so – as seems, regrettably, to be the present case – is to risk causing much wider and perhaps more irremediable damage.

PYRRHUS WOULD BE PROUD

Just consider that, in order to combat a disease which may yet end up no more dangerous to the broader public than those to which its members are routinely subjected, we have locked down half the world; lost a quarter or more of our output (and therefore our income); thrown 100s of millions of men and women out of full-time work, and jeopardized the future of untold millions of business, large and small.

Meanwhile, the US Treasury alone has contracted $1 trillion dollars of extra debt in just five short weeks – a feat it took every other Administration since Alexander Hamilton first brought his questionable genius to bear upon the matter 192 years to accomplish. At getting on for $25 million per death by, with, or from the virus in just this one account, might someone not have stopped to wonder whether a better method of alleviation could have been found?

Nor does the butcher’s bill stop at what some commentators see as the crassly economic.

We have also potentially cost lives today through denying medical care to those suffering other, serious ailments, such as heart disease and stroke. We will cost them in the near future because we are not currently diagnosing such emergent afflictions as early-stage cancer. We will cost yet more in years to come because clinical research and drug development have all been suspended where they do not have some involvement in the rush to find a ‘cure’ for the coronavirus itself. All of which neglect is due to a toxic combination of a sensationalist media, partisan political panic, and our own, craven submission to a typically catastrophist outbreak of ‘scientific’ monomania.

To pick up on the last of those factors, we in finance, of all people, should be distrustful of predictions based on ‘modelling’.

As far back as 1998, the melting of the wax which held LTCM’s wings together provided us with one signal example – even if entirely the wrong lessons were drawn from that sorry episode. The hyper-mathematical nonsense of CDO-cubeds and the notorious ‘Gaussian cupola’ offered an even more starkly Biblical warning at the time of Lehman’s fall in 2008 – though, again, the only conclusion arrived at was that we should thereafter allow the very same central bankers who greatly contributed to the debacle to implement supposedly reparatory policies far beyond their remit, with no expiry date, no historical precedent, dubious theoretical justification, and wholly absent any sustained and rigorous public scrutiny

This is not an error we should willingly repeat: an error of which only a Pyrrhus could be proud.

A FEARFUL  – NOT A BRAVE – NEW WORLD

More widely, we should never lose sight of the fact that, for our sins, the gates of Eden have long been firmly shut in our faces. Everything upon this Mortal Coil is therefore necessarily scarce to some degree and hence its use is unavoidably subject to a series of trade-offs whose costs and benefits need to be decided, if not – as would be ideal – on an individual basis, then at least in a much wider, more diverse forum than can be provided by a man fiddling with the unavoidably subjective, inevitably incomplete inputs he makes into a patched-up computer algorithm of his own devising.

Of even greater concern is the ease with which the authorities have either frightened, shamed or enlisted both the benignly emulative and the would-be Stasi majority into compliance with their extraordinary seizure of power is a sobering testimony as to our acute vulnerability to those who rule over us; as well as to the ultimate insecurity of our property rights, and to the highly conditional nature of our right to free movement, free association, and even free speech.

Nor is this just the complaint of the conspiracy theorist or the Michigan militiaman survivalist. Both constitutionalist philosophers and members of the legal profession have been on public record decrying the ease with which supposedly ‘liberal’ Western governments have allowed themselves to be persuaded to pass Notverordnungen which afford their executives sweeping possibilities of interdiction, surveillance, punishment, and arrest – all of them rubber-stamped by servile legislatures and all of them enacted to a resounding silence from the judiciary at large.

This has been a time marked by a concentration, not a separation, of powers: a time of welfare cheques, not checks and balances.

If, as the time-honoured dictum goes, “hard cases make for bad law”, then we should be doubly careful that the exploitation of self-declared ‘emergencies’ do not make for the total suspension of law. As the great James Buchanan compellingly argued, the principle purpose of those constitutions currently being gleefully shredded is precisely to construct a framework in happier, more contemplative times within which the state must seek to contain its actions when the skies eventually do darken and the needs become much more pressing.

In contrast, our leaders have become increasingly carried away with their glorious self-image as swaggering Generalissimos in the so-called ‘War’ on Covid19*. As a result, they have been woefully oblivious to such compelling ethical and practical strictures. Faced with the perceived need for swift action, they have instead given rein to summary judgement.

Unbound by any meaningful doctrine of sound government, they have become arbitrary as any tinpot dictator, anxious to preserve his rule.

We must not let this virus provide an excuse for a further retreat of the Republic of Laws in the face of the Republic of Men, much less allow those laws – understood as formalized reflections of widely-shared societal norms – to be superseded by that most insidious of bed-fellows, bad legislation of the kind endlessly handed down from on high according to the prejudices of the Nomenklatura, the divinations of the Court Astrologers, and in keeping with the venal calculations of contemporary jacks-in-office.

To do so truly would be a global disaster in the making. It would be to build around ourselves the prison bars of a Fearful – not a Brave – New World.

In fine, if there is a ‘curve’ worthy of our efforts to ‘flatten’ it, it is this one – the worrying trajectory towards Panopticon paternalism along which we now find ourselves being rapidly propelled.

 

• Incidentally, this is a funny sort of ‘War’ they are fighting. It is somewhat akin to having the National Defense Strategy consist of ordering the troops to down arms and confine themselves to barracks while the quartermaster issues limitless ration coupons, good for use only in a mess which is locked and bolted.