How Might Milton Friedman Respond To The COVID-19 Pandemic? (Part 3)

Continued from Part 2

Perhaps it is a consequence of our social structures and how ideas spread, but my observation from my half century on Earth is that societal ideas and values, and thus policies and political trends, seem to act like a pendulum with the bottom of the swing the point at which there is most momentum to continue to move in that direction away from what in reality is the equilibrium (stable\sustainable) state until all of that (kinetic) energy is transferred and builds up inexorably into potential energy to swing back in the opposite direction with ultimately equal force.

Because I have an overall optimism in humanity I do believe that in the third dimension – imagine turning your view of the swinging pendulum 90 degrees – you will observe more easily that the pivot point is on a gradually rising trajectory, but experiencing the amplitudes of the swinging pendulum is why it can really feel like sometimes we are going backwards.

The secret for humanity is really to learn how to dampen those oscillations so that our progress can be more smooth and feel less disengaging for large swathes of society when the pendulum is at its least favourable so that positioning is not extreme.

This pretty much spells out the situation for contemporary extreme capitalism and the political ideology based on its value of greed and never-ending aspiration for materialism.

Here I should note that I do not consider aspiration in itself a negative as I am certain that those who wish to apportion me or paint me as belonging to an anti-capitalist tribe have assumed. It all depends on what the aspiration is towards. I think it is fair to say that each and every parent aspires to keep their family safe and to work towards maximising their moments of happiness in an uncertain world. But I think it is a reasonable argument to make that never-ending aspiration for more material wealth, power and influence is instead a toxic form of aspiration, and I would argue that it is encouraged within this contemporary extreme capitalism.

That we have reached this moment in time, and no doubt a major factor has been the pandemic providing a rare moment in time when many people will reflect on their existence as it has been in recent years and how they would like it to be in the future, is understood intuitively by very many. Some of us have intuitively understood that this moment would come at some point.

Trickle down economics never was a sustainable model on which to run society and the potential energy created within society to swing back in the other direction now has a certain degree of inevitability to it (writing by others indicates that they feel similarly, for example Ray Dalio, the head of the largest contemporary hedge fund, who perhaps I should have included on my earlier list of elites whom I respect.)

But it does make you wonder just what Dr. Friedman would have recommended for societal leaders to do in the face of this pandemic. To answer that one needs to decide to which Dr. Friedman we are referring – the contemporary perception of what he stood for, the man who wrote his doctrine as the pendulum reached its most extreme position disfavourable to his own views, or the man who was assisting President Reagan and PM Thatcher to reform their economies. 

I am prepared to accept that the 90 year old man that stood in front of President George W Bush to be conferred a Hero of Freedom, and so warmly embraced by the elites that had already benefitted so greatly from this movement towards extreme capitalism, might work at explaining and justifying the situation as his ego and conscience might dictate. However, I cannot help but believe that the 58 year old man that stood from his desk, after hand-writing the final draft of his doctrine, would feel disappointed and perhaps saddened that his writing and thoughts were co-opted in a fashion to arrive at such an extreme form of capitalism that has made only a very few so very wealthy and has failed so very many Americans, and many others around the world, as so devastatingly exposed in the COVID-19 pandemic.

As I pause to reflect on this piece I concede that some might suggest that I have not met my brief as indicated in the title, that I have not provided a plan for responding to COVID-19 which Dr. Friedman might have recommended. To my knowledge he had no special understanding of virology or any field of medicine, so any answer must centre predominantly on what is the state of the system into which the pandemic was seeded.

Just as in the old Irish joke, Dr. Friedman might have said “If I was going to formulate a response to this pandemic I would not be starting from here”.

As Dr. Friedman was venerated as a Hero of Freedom Present George W Bush said:

He has used a brilliant mind to advance a moral vision: the vision of a society where men and women are free, free to choose, but where government is not as free to override their decisions. That vision has changed America and it is changing the world. All of us owe a tremendous debt to this man’s towering intellect and his devotion to liberty.

But the economic system that his writing and early advice is credited with creating a moral vision of society for has led to a middle class on a knife edge, just one act of misfortune away from homelessness and destitution, and a chronic underclass of working poor with inferior outcomes across the range of critical social services and especially for health.

That is only freedom to the elite and to people blinded by unquestioned devotion to an ideology.

Any objective observer surely would ask whether this is a better form of “freedom” than in any contemporary autocracy which has lifted living standards for broad society by adopting some open market reforms.

It might be easily said that the problems in America’s response to COVID-19 is due primarily to one man, President Donald Trump. While I am in no doubt that history will show that President Trump failed Americans miserably in the COVID-19 pandemic, it would be a mischaracterisation if he and his administration attracted all of the blame.

Undoubtedly the power was in President Trump’s hands to respond more aggressively to the threat as explained to him and his administration by February, and he clearly chose not to do all in his power to protect human life. However, Donald Trump is most definitely a product of the system, both in the way he has lived his life and how that was widely perceived from his regular appearances on television and wider media, and in the messages that he expressed to the electorate which led to him winning the 2016 election. And even moreso for the messages that he gives the powerful business elites in the bubble in which he and many of them have occupied for all or large portions of their lives.

The evidence has long been in that the system has failed the health of Americans. Even if in February 2020 a decision was made to do everything possible to protect human life, the chronic failings of the system was going to be challenged in ways that would show greater similarity with developing countries than other developed countries. The disparity of living conditions between the haves and have-nots, especially along racial lines, have been shown up globally in the COVID-19 pandemic in the tragedy of infection and mortality rates and nowhere is that more true than in America.

That President Trump so callously disregards the realities of the failings of the American health system, especially on demographic and racial lines, emphasises that, while the blame for America’s poor performance in protecting the public during the COVID-19 pandemic is not entirely his, the necessary reforms cannot begin while he remains President.

As I draw to a conclusion, I already recognise what many – if my writing were taken seriously enough – would proffer in counter-argument. “In earlier writing he said Trump was standing firm against businesses profiting from China’s emergence, now Trump is too close to business elites!” – well, yes, but to suggest that Trump has not lived a life in a bubble of elitism is patently absurd. He is obsessed by wealth – measuring his Presidential success by the level of asset prices, chiefly the stockmarket – and he is most comfortable surrounded by other wealthy businessmen (intentionally gender-specific) as long as one condition is met, that they do not disagree in the slightest with him or suggest in any way that they are more anything (successful, intelligent, …) than he.

Perhaps more than ever before we citizens of Western countries – and possibly elsewhere – have developed a habit of believing what we want of what has been said or written by others. President Trump’s success has largely been built on asserting to his base that he knows perfectly what are others’ motives and intentions, and this has further stripped nuance from public discourse resulting in greater intolerance, misunderstanding and outright misinformation. Such behaviour detracts from public debate as the value of expressed opinion is diminished because there is a loss of faith that others will take the time to consider those views faithfully prior to responding.

Thus debating views in open fora on the internet can seem fruitless, especially when opponents are shielded by a fog of anonymity and might well be a paid troll (who has little conviction for what they are argue other than to earn an income) or even an artificial intelligence “bot”.

The one issue I do want to address, though, is the re-emergence of what Dr. Friedman referred to as “social responsibility” in the business sector, including through activist, impact and\or ESG (Environment, Social and Governance) investing themes, as well as what I mentioned briefly above, corporate leaders responding to critical social issues of the time.

These activities would certainly fit that description and thus be the prime target of Dr. Friedman’s main objections stated within his doctrine.

Again, the contemporary reality has moved on from the time in which Dr. Friedman wrote his doctrine. A leadership void has opened in the developed world. This void was growing before President Trump adopted an “America first” foreign policy. It is a result of the dearth of genuine political leadership over recent decades throughout much of the Western world.

In my own country of Australia discontent with poor political leadership has been growing through this millennium, and to me this issue reached a real low point earlier this year when Australia’s Ambassador to the United States, and former Australian Treasurer, Joe Hockey, appeared on 7.30 on the ABC:

LEIGH SALES:  Do you think that ministerial standards are at the same height that they were 20 years ago?

JOE HOCKEY:  I mean, it’s all changed, Leigh. Social media has changed everything. Social media has made the voice of the critic much, much louder than the voice of the advocate.

And the second thing that’s changed is disruption.

Everyone keeps calling for government to initiate reform, but really, what’s happening is the private sector is initiating reform, on a scale that we’ve never seen before.

LEIGH SALES:  Is there something fundamentally wrong with that though, if Government is not leading?

JOE HOCKEY:  No. Because it empowers individuals and we all believe that individuals should be their best.

When I heard Mr. Hockey’s intellectually feeble utterings I was immediately transported, to the words of a brilliant actor bringing to life a period that lingers long in humanity’s collective imaginations:

Gracchus: I think he [Commodus] knows what Rome is. Rome is the mob. Conjure magic for them and they’ll be distracted. Take away their freedom and still they’ll roar. The beating heart of Rome is not the marble of the Senate, it’s the sand of the Colosseum. He’ll bring them death…and they will love him for it.

From the motion picture “Gladiator” directed by Ridley Scott, a Dreamworks production.

I see social media platforms as modern day arenas; Facebook the Colosseum.

(I leave it to the reader to imagine who might be Commodus.)

The truth is that individuals can not fill that void and that is creating widespread insecurity and thus anxiety (no matter how much I and others, like Brene Brown, might attempt to inspire and\or cajole all to have the courage to lead). That is why behaviour on social media often resembles that of a mob.

In Steve Biddulph’s seminal book “Raising Boys” (Finch Publishing, Sydney, 2003) he describes how young males require structure.

Boys act tough to cover up their fear. If someone is clearly the boss, they relax. But the boss must not be erratic or punitive. If the person in charge is a bully, the boys’ stress levels rise, and it’s back to the law of the jungle. If the teacher, scoutmaster or parent is kind and fair (as well as being strict) then boys will drop their ‘macho’ act and get on with learning.

Biddulph further explains that without that structure males become insecure and fearful, and relationships within groups become turbulent as they attempt to establish hierarchies.

I find a lot of similarity between these descriptions and broader society where politicians have withdrawn from their leadership roles and thus from providing their vision on where our societies are heading.

Right now society in much of the developed world is behaving like the fearful teenage boys that Biddulph describes. The lack of direction provided by mainstream, conventional politicians has led to at first a flirtation with, and then an acceptance of, populist leaders because their willingness to express strong ideas made the anxious mob feel more secure. Many within the mob have become aggressively supportive because they do not want to go back to feeling insecure and directionless, and so are prepared to accept their leaders’ short-comings unless and until the consequences are very personal.

As I mentioned earlier, there are a few female politicians who have stepped into that leadership void. But they remain the exception.

Into that leadership void business leaders have also stepped forward. Whereas 1970 Dr. Friedman painted a picture of business leaders feeling that they were pressured by Government bureaucracy, or agents of socialism, to act with social responsibility, it seems clear this time around that businesspeople recognised the vacuum from the political withdrawal and stepped forward in part out of necessity. In many nations, including my own, that is especially the case with diversity and inclusion, and environmental policy.

On diversity and inclusion, there has been a growing awareness that more than just a social issue, diverse and inclusive cultures are more productive and innovative. Consequently, filling the void left by politicians in relation to diversity and inclusion within society, and even at times countering their divisive impulses, comes with significant benefits to business which will positively impact their financial performance.

It is important to note that businesspeople now acting on climate change is not antithetical to Dr. Friedman’s views as some will no doubt suggest.

Critically, this issue has not “blown up” overnight or even recently. Global warming from greenhouse gases had been identified and was being taught when I studied for my undergraduate science degree in the late 80’s. Businesspeople have observed the ebbing of global political leadership, even in areas of critical concern for humanity, and have become concerned by the impacts of that on business functioning and certainty.

More to the point, however, businesspeople are recognising that the collective view of the human beings that decided to specialise as scientific researchers is that our climate is changing due to humanity’s actions and that the consequences to us humans and our planet are severe and will be devastating if corrective actions are not progressed urgently.

It is this faith in human specialisation, a key underpinning of capitalism, that provides the majority of businesspeople with the surety that they need to act definitively on climate change. It would be better if politicians would leave behind their partisan political self interest, often due to lobbying from disaffected industry sectors, so that a truly global response could be formulated to guide businesses. Absent this, businesspeople now realise that taking measures alone or with the support of localised groupings which may assist in the battle against climate change is far preferable to continuing business as usual which they know will contribute to more climate change.

This is the political and social environment into which the COVID-19 pandemic was seeded.

Martin Wolf, a highly regarded Financial Times journalist, recently suggested that the critical distinction between populist leaders in their varying responses to COVID-19, thus the impacts on their people, is whether the leaders are more interested in the theatre of leading rather than actually governing. Perhaps whether they seek to be a modern-day Commodus. Mr. Wolf is clear that even theatrical populists definitely do want to effect change on their societies.

I would suggest a more relevant factor, however, is how closely these leaders are linked with the business elite. In the extreme capitalism in Western societies that linkage has become very close, but it does exist elsewhere. On the other hand, in a few other countries, especially autocracies such as in China and Vietnam, the link is not as strong and this separation has allowed their governments to act assertively to stamp out clusters.

The Chinese Communist Party, for example, clearly decided early that their political fate would be decided by how well they protected their people and as such have proven themselves to be the gold standard in stamping out a serious outbreak and at working at preventing the seeding of new clusters.

Just one example of their relentless efforts to identify and manage risks is remaining open-minded on the potential for re-introduction with processed meat, a risk that I have discussed on these pages since end of April with an open letter to Prime Minister Morrison and a detailed post, but which has been ignored throughout much of the world including in my own country. In recent weeks Chinese scientists have published data linking two clusters in China to frozen food imports.

It is noteworthy that the International Monetary Fund forecasts that it is only China amongst the major global economies that will make a genuine V-shaped economic recovery on the back of their ability to get the pandemic under control to the point that in a country with over a billion people they have had few clusters of community transmission in recent months. What is more, the only thing that appears likely to dampen that recovery at this stage appears to be the economic impacts from the uncontrolled pandemic in the majority of the rest of the globe and especially in important consumer markets in America and Europe.

Together with a growing appreciation of the severe pitfalls to many in society from the current extreme capitalism in the Western world, the better performance of countries prepared to protect human life above protestations from business elites has coalesced to suggest that the economic paradigm that Dr. Friedman and others heralded and initiated has been taken to an unsustainable extreme.

As with any change of paradigm, what occurs from here will be determined as much by the incumbents as the proponents for change. History suggests that incumbents do not willingly relinquish any of their favoured position, and given the current state of society in extremis (especially in America, patent to the most objective of observers), the pain that humanity is collectively suffering in the COVID-19 pandemic, and the pressure of a re-emergent geopolitical superpower, this transition to a new paradigm is shaping to be more disruptive than most in recent human history.

We should all hope that from the midst of the Western world comes a cohort of brilliant leaders, with intellectual rigor and iron fisted determination to sustain the effort to continue to carry humanity forward with the least possible disruption. Presently it is the European female leaders who are leading the way, though as great as they are, they cannot do it alone.

If assistance comes in the form of a re-awakened, progressive America, such that it retained the mantle of global leadership, then there would be nobody happier than I. What I have observed over recent decades, however, prevents me from being sanguine for America. I hope that that recency bias proves to be my error in the same way it was Dr. Friedman’s.

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© Copyright Brett Edgerton 2020

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