If I had a dollar for every 5 minute expert in the business media calling for a V-shaped recovery, like occurred after the SARS outbreak 17 years ago, I would be rich even before I took it and added to my growing portfolio of shorts…

The reference to my short portfolio is not made flippantly, I assure the reader. I have used shorts – specifically Put Options – previously as a hedging strategy, or insurance policy, and in my opinion this is extremely necessary at the current juncture. I have a fairly dire view of the consequences of this outbreak, and I am somewhat disillusioned by the inability or unwillingness of analysts to articulate this reality to their audiences.

Perhaps they just do not understand – perhaps they do not have the capacity other than to mentally cut and paste what happened on a superficially similar event in the past into their play books. About the best that I have heard is a reference to China being far more important to the Global economy and to the way contemporary businesses function, i.e. the global supply chains, thereby amplifying the risks to the many exposed businesses and to the Global economy.

This is only the tip of the iceberg, unfortunately, to borrow the metaphor du jour in use by the WHO. I can assure the reader that this event is unlike SARS in 2003 because the virus is all the more serious to humanity. Barring a miracle of nature, i.e. a surprising attenuation to lower virulence by the virus, or a highly unlikely rapid cure being developed, this virus will be with us for much longer than SARS was and its direct consequences on people will be far more serious (i.e. will produce greaters numbers of mortalities) which will necessitate prolonged biosecurity measures.

These were the clear conclusions of my very first statements about the outbreak, and the information arising out of Japan, South Korea, the middle-east, and now Italy, is providing insights into that reality which are only just beginning to be widely appreciated, if not necessarily by market participants.

Next I will explain why just considering the secondary effects via the China channel, which are significant and were discussed in the previous post “Politics Vs Society in the Coronavirus Outbreak“, is missing the point.

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So why is COVID-19 so much more serious than SARS – was not the latter more virulent?

Yes, SARS was more virulent than COVID-19 producing a mortality rate of around 10% compared to a preliminary figure of around 2% for COVID-19. Nonetheless, a 2% mortality rate is serious in a population and the most severe acute pandemic in modern history was due to the Spanish Flu at the conclusion of World War I and it had a mortality rate of around 2%.

The issue comes down to transmissibility and the likely spread of the virus. The Spanish Flu was our most serious acute pandemic of the previous century not just because it killed 2% of people who contracted the infection, but because a lot of people became infected. Many believe that it occurring at the completion of WWI was a contributing factor to its severity. The world was less connected then, with rapid international travel not yet possible, but the Great War brought together many peoples from disparate geographies who returned home after the war thereby enabling its widespread dispersal. Moreover, the people carrying the flu were stressed by the conditions under which they had lived for the previous few years and were more susceptible to all sorts of infections. Because of the co-occurence of the flu with WWI it is difficult to pinpoint the exact number of mortalities due to the virus, but credible estimates are as high as 50,000,000 (in a global population that was around one quarter of what it is now).

So clearly a virus producing a mortality rate of 2% can be serious, and the question is whether COVID-19 is more likely to behave like the Spanish Flu or like SARS in 2003, especially in the context of our contemporary knowledge on infectious disease and spread.

Unfortunately, it was clear early on – as I stated in my initial report “Social Cohesion: The Best Vaccine Against Crises” – that the characteristics of how COVID-19 was spreading and ultimately causing fatality in some cases was indicative of a virus that was going to be extremely challenging to contain.

Firstly from earliest reports of the outbreak it was made clear that asymptomatic transmission was highly likely. This was unlike in the SARS epidemic where transmission was far more likely by symptomatic cases, including the so-called “super-spreaders” who infected large numbers of people. The significance of this is that biosecurity measures – either systemic and imposed by authorities, be they national, local or otherwise, or self-imposed quarantine – will be far less effective because it is impossible for even the infected individual to know that they are spreading the virus let alone those made responsible to detect infected individuals. The only way to detect infections thus would be to test each individual, and of course on flights and in many other contexts that is entirely impractical. Moreover, testing would still not be 100% effective due to the certainty that there would be some false negative results.

Secondly, the data suggested that there was a reasonably prolonged incubation period, meaning that the lag between infection and being obviously unwell created an extended period when asymptomatic transmission was occurring.

Finally, the cases that are now being detected in developed countries, which at this stage have the capacity to carry out full traceback and follow up on those who came into contact with infected individuals, already shows that the few number of cases studied have a high involvement of what was considered “super-spreader” events almost exclusively by asymptomatic carriers. One of the first cases in Europe involved a UK citizen who contracted the infection at a conference in Singapore after which he visited a ski resort in France, where he infected individuals from France, Spain and the UK. When he was informed that a colleague at the conference was infected he was tested, and he is now free of infection having never shown any symptoms.

These factors contribute to why SARS only infected around 8,000 people, and even though it killed 10% of those cases, so it produced 800 fatalities, with modern knowledge and skill at infectious disease containment it was brought under control within around 6 months and it never really got a foothold outside of Asia.

At the time of writing confirmed COVID-19 cases had reached 78,811 with cases in 28 countries and causing 2,462 deaths.

Already it is clear that COVID-19 is spreading outside of Asia including the middle-East and in Italy where the number of confirmed cases has tripled in recent days.

At this past weekend (21-22 February) it was clear that US disease specialists are increasingly prepared to state their concerns in the American press, including in the Washing Post, “Coronavirus Edges Closer to Pandemic Status“, containing these statements:

If we went across the whole world and had a magic ball and were able to detect everyone who’s positive, we’d see it in lots of countries… It’s never clear until it’s happening

Michael Mina, an infectious disease specialist at the Harvard T.H. Chan School of Public Health

I think we should assume that this virus is very soon going to be spreading in communities here, if it isn’t already, and despite aggressive actions, we should be putting more efforts to mitigate impacts… That means protecting people who are most likely to develop severe illness and die.

Jennifer Nuzzo, an epidemiologist and senior scholar at the Johns Hopkins Center for Health Security

Note the schools to which these experts are associated – not exactly establishments known for hyperbole!

So let me repeat myself once more – if you hear a fool who tries to downplay this outbreak on the basis that it produces a mortality rate of “only” 2%, or if they try to suggest that it will all be over “within this quarter, or perhaps early in the next – as it was for SARS” then you can safely disregard all that they have said (and make a mental note to never take notice of that analyst again for they either speak before they have sufficient knowledge to do so, or they are biased towards always playing down risks to ensure fund flows are maintained from which they obtain their “rents”).

The consequence to national and global populations of people should be clear to all readers. As the human cost of the pandemic becomes increasingly clear Governments will be forced to attempt to minimise those impacts in ways that I spelt out in my Coronavirus Outbreak update on 11 February, and these are increasingly in use in Japan, South Korea and Italy, which include school closures, discouraging/banning public gatherings, workplace closures, public transport curtailment, and/or further border restrictions. Besides the human costs, the direct impacts on national economies are obvious.

Next I will discuss what are my views on the economic impacts of the COVID-19 outbreak globally and in my home country of Australia.

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If the reader considered me pessimistic above, then I am about to get down right depressing (pun intended).

For the last decade I have marvelled at how we have gotten so desensitised to extraordinary measures that Central Banks have taken to revive economies after the Great Recession or Global Financial Crisis (being an Australian I will use the “GFC” from hereon).

While many suggest that the echoes of the GFC still affect animal spirits amongst the general populations, I would suggest that the echoes of The Great Depression are having a far greater impact on monetary policy decisions. I believe that all central bankers are petrified of what occurred in the mid 1930s when the recovery was choked off sending most economies into the grips of The Great Depression. Consequently, they have over-egged asset markets, sending sharemarkets to record highs built on nothing more than a belief that the central bankers are omnipotent and consequently it is a gamed market where it is impossible to lose.

Well, until now it probably has been as it became clear that the Paul Volcker era essentially marked the high point for central bank independence from political interference, and everyone knows what all politicians prefer from their asset markets. President Trump is far from unique in that regard.

Of course we in Australia have been more concerned about our casino-fied residential property markets, but the Australian stock exchange has done some catching up in recent years.

The point is this – there is not a great deal of legitimate price signalling going on in our markets with prices paid having been separated from fundamentals some time ago.

There has been much talk about central bankers having depleted – I would say wasted – their ammunition which would necessitate even more creative measures in any future economic downturn.

However, I would hope that a reasonable person having read the analysis above on COVID-19 would realise that this is no garden variety economic issue. This is undoubtedly a Black Swan event of nature’s making. This is a very, very big problem in a marketised world where everybody has been prepared to play the game of pretending that the central bankers are Gods while the profits and capital gains flow in.

All of that is going to be reversed, and because the natural event is characterised by exponential spread, this is going to happen a lot quicker than anybody can imagine.

Now I have no doubt that national teams have been active in the market over the last few weeks, whether they be sovereign wealth funds of various descriptions (in Australia ours is the Future Fund), or whether they just be major financial institutions told to carry out their social license to operate by being “constructive” in this time of need.

It is this reality that complicates timing for any shorting activities that an investor might undertake. (For disclosure reasons I will state now that I am short FMG, QAN, CWN, MQG and CBA.)

However, before long that sense of holding up the market will be overtaken by self-interest and a desire to protect wealth and business will win out.

I understand that a financial panic on top of a growing panic about an increasingly obvious pandemic will be devastating.

I know that. And for that reason I do understand why Governments, even though they always prefer to egg on markets, will be right in trying to prevent it from happening. However, that propensity to always seek higher asset prices has led to great vulnerability in Global markets, and I think that the consequences of that are about to be revealed.

Next I will discuss the specific case of my own country, Australia.

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The Imperial College has produced some more nice research which it released 21 February, with case data up to 17 February, comparing the number of cases detected amongst air travellers relative to the monthly volume of passengers received from Wuhan by various countries. It revealed that Singapore, Finland, Nepal, Belgium, Sweden, India, Sri Lanka and Canada had relatively high rates of detected cases amongst those who travelled on flights relative to other countries receiving flights from Wuhan. To save countries which did not fit into this group embarrassment they were not named in their graphics, but it was simple to work out which dots represented Australia. Whilst Australia was not amongst the worst at detecting infections, the study suggests that we have been about as successful as Japan at detecting infections amongst airplane travellers and that if we had detected infections at about the same rate of the more successful countries then we would have detected around 50% more infections. Of course, this is only a relative measure and even those countries detecting cases at the highest rate undoubtedly would have missed some cases.

So just like the American experts are warning that COVID-19 is likely already spreading within the US, so to in Australia as I pointed out in my report of late last week “Politics Vs Society in the Coronavirus Outbreak“.

In my report I discussed how the continual obsession by our politicians and central bankers with maintaining very high house prices, and thus personal debt levels, had left the nation incredibly vulnerable.

Consequently, as the impacts of this pandemic are increasingly felt, first via the indirect “China Channel”, and then directly within our nation, I expect to see unprecedented actions by our central bank. Quantitative easing will be here quicker than anybody ever thought was likely, especially from where we were sitting just a month or two back.

As I said in that 11 February update, Governments likely will seek to stimulate economies with fiscal spending also. However, the problem will be that most of the spending in the playbook will run counter to good policy to restrict the spread and the impact of the pandemic. There is not a lot of point to giving cash handouts to consumers when you do not want them to go out to the shopping centres in large numbers. Constructing an effective fiscal stimulus will prove challenging.

So if this will not be a “V-shaped” recovery, then what is likely?

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To understand the ongoing impacts on people and thus on the economy we need to go back to the virus. Without the rapid emergence of an effective therapeutic treatment for COVID-19, amongst already developed treatments or those in the very late stages of development, the pandemic is likely to progress until either it spreads so widely that the majority of people have become infected or an effective vaccine is developed, produced and delivered en masse. This may take several years, so it is possible – probably even likely – that we will be living with this pandemic for a prolonged period.

If we are really unlucky, as some have suggested, it is even possible that the virus may develop the influenza characteristic of mutating sufficiently within a year so that immunity from prior infection does not make the person refractory or immune to infection when exposed the following year.

All in all, this is a very serious problem and we are in a wait and see pattern. However, it is clear that things are going to get far more serious over the short to medium term before things get better.

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© Copyright Brett Edgerton 2020

Anybody with a rudimentary understanding of infectious disease should have understood by the start of February or earlier that the coronavirus outbreak had not been contained to Wuhan or wider China.

While the Chinese Government has come under fire from some quarters for not acting quickly to report the outbreak and to enact containment measures, on the one hand I understand that the political considerations that they faced are not unique to their autocratic country, and on the other hand I am amazed by the speed and intensity of their actions once the political decision was made to respond.

Having worked for a period in biosecurity policy development in Canberra, I have seen first-hand how the tentacles of politics extend throughout all functioning of Government even those areas that are apparently fire-walled off from interference by the existence of Global agreements (as in the rules governed by the World Trade Organisation with respect to biosecurity of trade) or intra-Government agreement (as in the Reserve Bank of Australia).

I am very prepared to point out the inadequacies of autocratic Government, as is clear on my website, but when it comes to China’s response to the coronavirus outbreak I consider criticisms largely unwarranted and in this essay I will show how they have responded better than many other Governments have and likely will in the near future. 

Before moving on, though, being a humanitarian, I do have to say that I have some concerns about the rights of people infected by a virus. Then again, this is an issue that humanity has struggled with throughout our history and that is a very vexed question to answer when faced with the crisis that China has faced, and that Japanese authorities faced with the Diamond Princess passengers. It will be interesting to see how other countries handle it.

First I will discuss China specifically.

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The details of how this virus jumped species into humans is yet to be determined. I would assume that my friend Dr Shi Zhengli is already working very hard to determine those very specific details.

The point is this. Those likely 100,000+ infected people in Wuhan that have been infected to this point of the outbreak – note that the total number of infected people will be much higher than the official figure because many infected people remained subclinical before losing the infection – spread from a single or very low number of original cases where the virus jumped to humans.

I think you get the picture… the epidemic in China blew up from a single or very low number of events of the virus jumping into humans. That is how epidemics work – the number of cases increases exponentially until the pathogen either attenuates to be less virulent or transmissible, or it runs out of new hosts to infect. Biosecurity aims to work on that latter factor, but it has to be eliminated from those that were infected, and it needs to be prevented from being reintroduced to those that were not infected, for biosecurity containment to work.

China has enacted truly extraordinary measures, and even beyond that the Chinese people began implementing their own measures of reducing social contact early in the outbreak. Clearly the memory of the SARS outbreak in 2003 remained strong in their conscious thoughts. The footage on Bloomberg of their presenter walking alone in Beijing hotels and shopping malls is truly astounding.

It is an enormous feat that virus’ spread has been slowed in China to the degree it has, but any reasonable person must question whether it can be maintained and at what cost. We are, afterall, talking about a population where there is a great deal of inequality and the majority of citizens need regular income for the necessities of life due to low accumulated wealth and weak social safety networks.

China has managed to put a lid on the outbreak but how can it keep this up without crippling its economy? 

Without testing every single person in China, with a test that is 100% accurate (which they never are, either in terms of obtaining samples with the virus and then detecting the virus at low levels or with other complications), to ensure that the virus was eradicated, once these extraordinary measures are eased so that workers can begin to restart the wheels of commerce, then more people are going to become infected and the outbreak will start all over again, but likely all throughout the country. And here is the thing – even if by some miracle it had been eradicated in China, now that it is gaining a foothold in neighbouring countries, no doubt especially in poorly developed countries, but also in highly developed ones like Japan and South Korea, how can China prevent the reintroduction of the virus without effectively closing its borders (especially when it has complained about other sovereignties closing their borders to Chinese people.)

Hopefully the reader is beginning to understand the reality of this situation. 

I have to admit to being flummoxed by the response of markets, the media and by most people that I speak with about this outbreak.  I cannot understand why everybody is so slow to understand the rather obvious realities of the situation and the serious implications. It really does seem to me that the movie “Idiocracy” is not a Sci Fi but a work of non fiction and one would have to have travelled forward 50 years in a time machine to the present day to realise it. Is it that humans, when faced with a scary situation just cannot accept that it is real? Is it that our arrogance has reached such heights that we really believe nothing from nature can genuinely affect us until after the event?

Before I move on I will make a few comments on how I think China will respond going forward. I suspect that the very top of the CCP will have decided that the costs to the economy, because of the consequent risk to the stability of their leadership, will be too great if this very high level of biosecurity measures are maintained. So, even though loosening of measures will undoubtedly result in there being more cases throughout China and deaths, I expect that a plan will be developed to bring back on-line industrial production while at the same time increased propaganda will be used to airbrush over the reality of increased mortalities in their general population, as was done at other times in their history such as the Cultural Revolution. Xi’s recent move to centralise even more power would fit with the game plan.

Next I will discuss the situation in Australia.

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I am of the view that there may be hundreds of people infected by the coronavirus in Australia as of the time of writing, that being 21 February 2020. (Note I always state such opinions beyond the first few paragraphs of my writing because I know the superficial masses will have stopped reading paragraphs earlier.) To make myself accountable, I will say that I will be very surprised – and wrong – if there are no reports of people ill with coronavirus in Australia by 7 March. And I would expect that many who present as unwell with coronavirus throughout March have not been to China.

That is what I meant when I said that by early February it was clear that containment in Wuhan, and broader China, failed.

How can that be the case when we have not seen any cases reported from the general population in Australia to this point?

Well just look at what is happening in more proximal countries with good health care systems like Japan (not including the specific case of the Diamond Princess passengers) and South Korea. Beginning only a few days ago, cases are surging in these countries and the sources of original infections coming from China are now unknown for most. One couple in Japan returned from a holiday in Hawaii! And today The Guardian has a story on possible infections in Papua New Guinea in two villages which are so remote that they can only be accessed via boat. Clearly very specific circumstances were required to spread the virus, if it is confirmed, to such a remote locality, but the odds are very high that very open localities with much movement of international travellers has many infections already, that will be spreading, that will come to light in the near future.

Surely the epidemiologists providing analyses to Government have been saying that for weeks now. It is clearly articulated by the WHO where the plain language for several weeks infers a certain level of inevitability to the pandemic. For instance, at the Munich Security Conference the Director General of the WHO, Dr Tedros, praised China saying:

“We are encouraged that the steps China has taken to contain the outbreak at its source appear to have bought the world time, even though those steps have come at greater cost to China itself. But it’s slowing the spread to the rest of the world.”

He does go on to specify some encouraging developments, but in my very first post on the outbreak “Social Cohesion: The Best Vaccine Against Crises” I stated that the WHO was working on slowing the spread of the pandemic, not containment, and the comment above confirms that view.

So let us next look at a very basic cost benefit analysis for Australia in responding aggressively to this pandemic.

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In my “Coronavirus Outbreak” update on 11 February I said:

Presently every developed country will be asking themselves these questions:

– what is our capacity to test everybody displaying flu-like symptoms and at what point do we start and at what point do we stop (and devote resources elsewhere)

– at what point will we stop large public gatherings (sports events, conferences, concerts)

– at what point will we close schools

– at what point will we stop public transport and encourage employers to ask employees to work from home

– how will we ensure that we can continue vital services such as health, water, electricity

– at what point do we close the borders completely to all non-citizens or residents

I could understand if Australians looked at that list and thought I was “off my rocker”, these measures must have seemed so alien to them. But if careful consideration is given to the situation and what is occurring in other countries nearer to the outbreak it quickly becomes clear that this is just standard response to a severe disease outbreak.

Now over the years that I have been blogging and in my submissions to Government inquiries, and most recently on MacroEdgo.com, I have stated my serious concerns about the structure of the Australian economy, specifically an over reliance on household wealth from high house prices relative to incomes and consequently high household debt (both world records according to some analyses).This has left our economy incredibly vulnerable in its own right, highlighted by the pressure that the recent brief fall in house prices placed on the national economy, but consequently especially susceptible to an external shock.

There is no doubt that that external shock is now here in the form of the coronavirus pandemic. Already the effects on Australia via the China channel is showing and it has only just begun as my analysis above shows. However, the pandemic will begin to have direct impacts on the Australian economy in the near future, regardless of which or whether any of the measures mentioned above are enacted in Australia locally in response to focal outbreaks or nationally.

The sooner these measures are enacted the greater the chance of limiting the human impact on Australians, and, in fact, playing a role in preventing the spread throughout broader human populations. However, the politics of these actions are significant and even the WHO can not avoid them in that they did not recommend the closing of borders with China even though they knew that not doing so would lead to increased dispersion of the virus.

On the other hand, the sooner these measures are enacted the greater the impact on the Australian economy and especially some specific businesses. And economic impacts certainly do have society and human impacts.

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I want to be clear – I am in no way qualified to make these calls on how the cost/benefit of economic impacts to actions can be weighed against human and societal impacts. Then again I do not really believe that anybody is qualified. Sometimes people find themselves in extraordinary situations and they need to make a call not knowing whether it is even likely to be the right one. Sometimes in life decisions just need to be the best that can be made at the time.

Even if we do strip things down to a bare cost/benefit analysis for society – if it were ever possible to totally eliminate politics, both broad systematic politics and interpersonal, social politics (essentially of egos) – how does one weigh up the costs and benefits of a certain level of economic activity versus a certain level of deaths amongst a society. And even then there are cross-contaminating issues, where economists will quickly point out that the stress of economic hardship results in costs to the health of populations and then to deaths.

I just wish that I had witnessed behaviour worthy of faith and trust in the political leadership of this country instead of a continual erosion of it over the last two decades…

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© Copyright Brett Edgerton 2020

In my first comments on the Coronavirus outbreak within my essay “Social Cohesion: The Best Vaccine Against Crises” which I published two weeks ago, on 3 February 2020, I stated my belief that the virus had already escaped the biosecurity net and that a global pandemic was, unfortunately, likely. I stated that the characteristics of the virus – its relatively long incubation period with asymptomatic transmission – made it very challenging to contain, and that the true cost to humanity would be determined by how virulent it proves to be. And finally I suggested that it would first be introduced to neighbouring countries, and that especially in developing countries it would likely spread rapidly due to the socioeconomic realities of their populations.

Then in my first regular update on the coronavirus outbreak on 9 February I mentioned that the situation on the Diamond Princess would bear close watching as we would get an excellent indication of transmissibility and pathogenicity of the virus under what might be considered optimal conditions – for the present – for detecting and treating infections.

In that same report I detailed what I had managed to gather from the ships schedule published online, but I was in the dark on the details of the first known infected passenger on the ship. All I knew was that the passenger disembarked at Hong Kong before the ship sailed onwards making stops before being placed in quarantine at Yokohama. The Wall Street Journal journalists have now followed up and have provided a reasonably detailed history for that passenger which I include below along with a handy map showing the passage of the ship from the moment the first known infected passenger boarded the ship up until it went into quarantine.

But firstly I will give a brief overview of the situation in Japan.

Background: Why is Japan Important to Watch?

Japan is important to study for a few reasons. It is the closest highly developed country to the outbreak, with very significant movement of people between the two countries.

Unsurprisingly that included movement between the city at the centre of the initial outbreak, Wuhan, and broader Japan as can be seen in the figure below taken from an early paper by Salazar et al (2020), epidemiological researchers out of the Harvard TH Chan School of Public Health, which looked at the number of reported cases relative to the volume of air travel between that country and Wuhan. Now the case data, of course, is well out of date, as the epidemic is moving so quickly, but what I really want the reader to note is the X axis which shows the average daily number of passengers travelling from Wuhan to other countries. Note that Thailand receives by far the greatest volume of passengers from Wuhan, but Japan is second.

Secondly, Japan is a highly developed country with a sophisticated health system, and its people enjoy a high standard of living which affords them a high underlying health state. Observing case fatality rates here should provide an indication of what is likely to be the situation in other highly developed nations, perhaps a few weeks in advance of the progression of the outbreak in countries receiving less movement of people from the initial site of the outbreak.

Up-To-Date Information on Cases in Japan

In recent days there have been several reports of seriously ill people infected with the coronavirus that have not travelled to China and have not had any known contact with people who have.

On 15 February The Japan Times detailed three separate cases unrelated to travel to China. One cluster of infections was around a hospital in Wakayama Prefecture where 2 doctors, one of their wives, and two patients were found to be infected. Another cluster occurred in Tokyo where 7 people infected by the virus travelled in the taxi of another infected person. An eighth Tokyo resident, a businessman who travelled on a bullet train while unwell, was also found to be infected. And a husband and wife in Nagoya were found to be infected shortly after returning from a holiday in Hawaii.

Health officials are now concerned about being swamped by people concerned that they are infected by the coronavirus and have released recommendations on when and how to access health services. The fact that seasonal flu and cold viruses will also be circulating complicates matters.

Below I will track the Japanese case data reported in the WHO Situation Reports released daily.

• For 17 February: Confirmed cases 59 (3 new); Total cases with possible or confirmed transmission outside of China 33 (6 new); Total deaths 1 (0 new)
• For 18 February: Confirmed cases 65 (6 new); Total cases with possible or confirmed transmission outside of China 39 (6 new); Total deaths 1 (0 new)
• For 19 February: Confirmed cases 73 (8 new); Total cases with possible or confirmed transmission outside of China 42 (5 new); Total deaths 1 (0 new)

The Diamond Princess Case Study

This history is directly from the article Fear and Boredom Aboard the Quarantined Coronavirus Cruise Ship in the Wall Street Journal published 14 February 2020.

The first known infected passenger, an 80 year old Hong Kong man, boarded on 20 January at Yokohama (there are no details on how he got to be in Yokohama, though the story says that 10 days prior to embarking he travelled to Guangdong). He boarded with 2 daughters and they had a sauna while onboard.

At the first stop in the Kagoshima the man joined a bus tour with 40 other passengers. When the ship docked in Hong Kong, the man left the ship earlier than planned and 5 days later he went to hospital.

After Hong Kong, the ship made stops in Chan May and Ha Long Bay in Vietnam, in Taiwan and in Okinawa (Japan) before going into quarantine in Yokohama on 3 February. The WSJ article details some of the tours that took place while in Vietnam.

Commencing 5 February passengers remaining on board the vessel have been restricted to their cabins in order to restrict the opportunity for transmission between those remaining on board. However, unfortunately one of the shore team that was assisting has also become infected. It is difficult to understand what proportion of the passengers that are now being found to be infected by the virus have contracted the infection after the quarantine period began. Evenso, the possibility of infection must have been significantly reduced by these quarantine procedures, so very many of the infected passengers must have been infected prior to quarantine commencing.

Below is a daily synopsis of events since the Diamond Princess entered quarantine on 5 February with 3,711 passengers.

• 5 Feb – +10 – 10 confirmed cases, 31 tested
• 6 Feb – +10 – 20 confirmed cases, 102 tested
• 7 Feb – +41 – 61 confirmed cases, 273 tested
• 8 Feb – +3 – 64 confirmed cases; 279 tested
• 9 Feb – +6 – 70 confirmed cases; 336 tested
• 10 Feb – +65 – 135 confirmed cases; 439 tested
• 12 Feb – +40 – 174 confirmed cases; 492 tested (4 people in intensive care)
• 13 Feb – +44 – 218 confirmed cases; 713 tested
• 14 Feb – +4 – 222 confirmed cases
• 16 Feb – +67 – 289 confirmed cases
• 17 Feb – +66 – 355 confirmed cases; 1,210 tested
• 18 Feb – +99 – 454 confirmed cases
• 19 Feb – +92 – 542 confirmed cases (2,404 test – 169 infected passengers still on ship)
• 20 Feb – +79 – 621 confirmed cases

A few things are clear from the 2 weeks that the Diamond Princess has been in quarantine. Firstly, it is clear that the virus indeed is highly transmissible. The first known infected individual was onboard for only 5 days, and the vessel continued on for just 8 days more until it entered quarantine. While cruise ships are known to be environments where viruses are quickly spread between passengers, this is clearly a highly transmissible virus.

Secondly, this case is beginning to suggest that the incubation period and time to morbidity and mortality is reasonably prolonged, which I suggested in my initial reports, thus making biosecurity containment challenging.

This case bears very close watching and I will be updating this page daily.

Now that most countries are transporting home those that did not exhibit symptoms and/or tested negative for the virus, it may be challenging to put together exactly what happens with this cohort of people. Nonetheless reporting will likely mention the origin of these cases and I will do my best to put it all together here.

The US took home their citizens first. There was a hickup as only uninfected individuals were to be on the flight, however on transit to the plane it was learned that 14 in the group had tested positive. They were allowed to join the group and sat separately on the plane, which is a common sense approach as it is highly likely that there will be more infections found amongst those who tested negative (and there may be some who were not tested prior to flying in any case who are not yet showing symptoms). The Centre for Disease Control in the US has stated that all people who were passengers on the ship should be tested for the virus.

On 20 February NHK released that 2 Diamond Princess passengers in their 80s had died from the coronavirus infection.

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© Copyright Brett Edgerton 2020

By way of background, Elliott Roosevelt is the son of President Franklin Roosevelt (commonly referred to as FDR) who led the United States of America through its most challenging period of the 20th century from the Great Depression through to World War 2, from 1933 to his passing on 12 April 1945 as the war in Europe was ending and before the first atomic bomb was dropped on Japan.

Elliott Roosevelt explains why he was the only person who could give an accurate depiction of events, negotiations and deals brokered, and his own father’s viewpoints on these. I think most would agree that a loving son would faithfully seek to have his father’s vision for the world remembered accurately when events transpired which made it clear that promises were broken and that vision was not being enacted.

Introduction quoted in full, with my emphasis in bold, from “As He Saw It” by Elliot Roosevelt, 1946, Publishers Duell, Sloan and Pearce, New York, Third Printing, 270 pages, pp xiii – xviii.

Introduction

This will be, only incidentally, a book about the war. It is designed, more importantly, to shed some light on the peace.

The events which I propose to describe in this book, the conversations which I remember, the impressions and the incidents which have formed my present convictions, took place – roughly – from the war’s outbreak until shortly after the meeting of the Big Three at Yalta in the Crimea. At the time they took place, let me assure you, I had no intention of writing a book about them. The decision to write this book was taken more recently and impelled by urgent events. Winston Churchill’s speech at Fulton, Missouri, had a hand in this decision; the meetings of the Security Council at Hunter College in New York City and the ideas expressed at those meetings were influential; the growing stockpile of American atom bombs is a compelling factor; all the signs of growing disunity among the leading nations of the world, all the broken promises, all the renascent power politics of greedy and desperate imperialism were my spurs in this undertaking. (my emphasis)

The tempo of our times is such that our opinions are net keyed to history but to headlines. Whether we trust or distrust Russia is not conditioned by that nation’s mighty contribution to our victory in the war, still the greatest single fact of our lifetime; rather is it molded by the scare-print on the front pages of three or four days’ newspapers – newspapers often irresponsible in the past, and therefore surely doubly to be doubted in the tremulous present. Our ideas about the loan to Britain are formed in the long memory of the buzz-bombs that fell on London, nor even in the critical knowledge of continuing British austerity-meals, but in an atmosphere of uncertainty over Britain’s imperial intentions. The unity that won the ward should be, must be, a fact today, if we are to win the peace. This is simplicity itself: any thinking grade-school student can write a moving and persuasive essay on this theme. But more and more, since V-E Day, and since the atom bomb first fell, this unity has disappeared.

It is because I doubt that we have only drifted (his emphasis) away from this unity, it is because I am convinced that we are being shoved away from it, by men who should know better or – in Walter Lippmann’s phrase – “little boys playing with matches,” that I felt it important for me to write this book.

Well – and why me? What have I got to offer? After any great world upheaval like this last war, there is bound to be a great spate of books. Generals, ministers, war correspondents, all fly to the typewriter or the not-very-sharp pencil. Nevertheless, for my book I can stake out a small but still quite definite space which is wholly individual.

My qualifications begin with the biological fact of my being my father’s son. Like every privilege, this relationship had its drawbacks. I remember his telling me once about these drawbacks – it was in Hyde Park, at a time when he was still Governor of New York, a month or so before his nomination to the Presidency. He was keenly alive to the publicity that attends every action of the children of a man in public life – especially when the man has bitter political enemies. There was to be sure, little he could do or wanted to do to control our actions. He took the position that our lives were our own, to do with what we wished and what we could. I imagine that, like any father, he wanted to believe that we would stay out of jail, grow up to be responsible citizens, and be happy, successful people according to our individual lights. But he was careful to give us plenty of rope.

At any rate, taking the rough with the smooth, all the drawbacks of being a President’s son must be weighted in the balance against my second qualification for writing this book, which is that it was given to me to be present at and a witness of some of the most important meetings of the war, indeed of our lifetime. Father wanted and needed someone whom he knew well and trusted, a member of his family, if possible, to be with him whenever he was overseas for a wartime conference. This is not to suggest that he didn’t know official advisers well, or that he didn’t trust them; but with one of his sons he could wholly relax. He could talk as though he were talking out loud to himself – and he did. Of his sons, I was most often in a position to be drafted as his aide. Thus, when he first me Churchill off Newfoundland, I was attached to a reconnaissance squadron at Gander Lake, Newfoundland,; when he came to Casablanca, my outfit was operating out of Algeria; one of our headquarters bases was still in Tunisia when he came to the Near East for the Cairo and Teheran conferences. Only when he went to Yalta was I unable to be at his side.

And of course, in addition to my hours with him at these meetings, there were times during the ward when I came back stateside, once on sick leave, twice on official business, once on leave. Each time I was able to spend some nights at the White House, which meant hours of conversation with him.

As his aide, then, I sat in on most of his appointments, conversations, and conferences – military, political, diplomatic – performing the combined duties of message-taker, errand-runner and note-compiler. In this semi-official capacity I was able to listen to the give-and-take, both formal and informal, of the representatives of all the warring Allies. Churchill, Stalin, Generalissimo and Madame Chiang Kai-shek, the Combined Chiefs of Staff, the commanding generals and admirals in every theatre and every branch of the services, Smuts, de Gaulle, Giraud, Hopkins, Robert Murphy, Molotov, the kinds of Egypt, Greece, Yugoslavia, and England, emirs and shahs, sultans and princes, premiers, ambassadors, ministers, caliphs, grand viziers – I met them at the door, ushered them in, sat down while they talked with Father – and then listened to his impressions of them, after they had gone.

And when the long conference days were over, and Father had bid his last caller good night, there was hardly an evening that we didn’t spend some hours, just the two of us, before he turned out his light to sleep, talking about what had happened that day, comparing notes, pooling impressions. Occasionally he’d question me about what I’d been doing as a photographic reconnaissance officer; more often I’d question him about anything that was troubling me, all the way from what was doing with the Second Front to what did he think of Madame Chiang. He had sufficient confidence in me to tell me the results of his bargaining with Stalin before he had told even his chiefs of staff or his Secretaries of State. Our relationship was one of great good companionship; he had come to like me, I believe, as a respected friend as well as a son.

My opportunities to witness these conferences, then, were on two levels; one as an official Presidential aide, the other as a most intimate friend to the man who was primarily responsible for the unity of the United Nations. It was on this second level that I shared his most intimate thoughts and listened to his most cherished aspirations for the world of peace to follow our military victory. I knew what conditions he predicated for the structure of world peace; I knew what conversations led to them; I knew of the bargains and promises.

And I have seen the promises violated, the conditions summarily and cynically disregarded, and the structure of the peace disavowed.

That is why I write this book. For my help I have had the official log of the various conversences, which I have supplemented from notes which I took myself, at the time, and from my memory. I have depended more on my notes than on my memory.

I am writing this, then, to you who agree with me that Franklin Roosevelt was the wartime architect of the unity of the United Nations, who agree with me that Franklin Roosevelt’s ideals and statesmanship would have been sufficient to keep that unity a vital entity during the postwar period, and who agree with me that the path he charted has been most grievously – and deliberately – forsaken.

I am writing this in the hope that it will be some service in getting us back on that path. I believe it is possible. I am fearful of the alternative.

Indeed Elliott Roosevelt was right to be fearful of the alternative, and unfortunately his heart-felt pleas were not met with a response. Perhaps there has not been another Statesman of his father’s calibre since his passing.

The implications of this are contained within my recent essay “The Conundrum Humanity Faces: But Nobody Admits“.

To understand Franklin Roosevelt’s ideals they are brilliantly articulated in his Fourth Inauguration Speech which he delivered less than 3 months before his passing.

To learn my views of on the current state of American politics you can view my prior posts on President Trump and my recent post “The Secret Sauce of American Economic Dynamism was Not Personal Greed“.

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© Copyright Brett Edgerton 2020

Without doubt the United States of America is an incredible nation.

Many successful Americans, along with those that “made it good” in America, talk about a “magic sauce” that has created the economic dynamism that drives American business and society. One of the greatest proponents of there being a “secret sauce” is Warren Buffett, widely regarded as the greatest investor of all time, whose confidence in the US economy and society is often relied upon in challenging times such as during the stockmarket turbulence heralding the Global Financial Crisis or The Great Recession.

In this essay I do not dispute the existence of special characteristics that made the US economy the envy of the world which might be defined as a “special sauce”. I question what is the character of that “special sauce”.

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The US became the predominant power at the end of the Second World War when Britain knew it had no chance of winning without the assistance of the US. By the conclusion of WW2 there was no doubt which country was the dominant power in the world, and with the fall of the Berlin Wall it became clear that there had been no real competitor to that hegemonic status. The feats of the American nation need no repeating – they are very well understood throughout the world.

All peoples throughout the world are familiar with US society through various media. It is accurate to say that for many, via this saturated channel (television, movies, music, sports, newspapers, internet, etc), they understand American culture second only to the culture in which they live.

I have never lived in the US, and I have not spent more than a few weeks at a time there. What I have observed during those visits largely confirms the perceptions that I have gathered through the media.

We in anglophone countries tend to take even greater notice of American culture and trends because what takes place in the US affects us. The media saturation means that the cultural influence is enormous especially on our youth; our need to maintain ties for security reasons ensures that we are certain to support the US on major security operations including major conflicts; and our business and political ties are so great that trends emanating from the US are certain to arrive at our shores very quickly indeed. 

Thus what is occurring in the US today is likely to become our reality tomorrow.

The inequality in society that is occurring in the US is quite alarming with rich becoming richer and the middle class being hollowed out as the owners of capital (the already wealthy) have long been taking a greater share of profits than the workers. The rate of income increase from senior executives has also outstripped that of “ordinary” workers by several orders of magnitude. And the response to The Great Recession (GFC) has made the wealthy vastly more wealthy.

The Wikipedia page on Wealth Inequality in the United States provides stark reading.

This trend has made a position in the American middle class very precarious. We frequently hear stories of how the low level of Government-payments, a mix  of minimal health and employment or social support financing, means that all middle class American families are just one serious illness, marriage breakdown and/or recession away from homelessness.

It was unfathomable to me, as an Australian who has enjoyed the benefits of a free quality public health system for my entire life, to comprehend how those on the right of politics were able to mobilise some of the most financially precarious Americans to rally against President Obama’s health care reforms. In other words those that stood to gain the most from the measure became the foot soldiers for having it minimised and then reduced. How on Earth did that come about?

The only conclusion that I can reach is that it is an indictment of the degree of anxiety these people felt because of their financial and societal precariousness. It could only be that they have become so used to having social supports stripped from low and middle-class Americans through their lives that they could not countenance a Government actually seeking to improve support. Sadly, it is the most vulnerable – those anxious skeptics – that are most susceptible to misinformation campaigns. Consequently they lost a rare opportunity to have their social support significantly strengthened.

Citizens of other western countries are often confused by why the US is upheld as the country that an aspiring migrant would want to go in the hope of entering the middle class. Perhaps it is a testament to the brilliant selling job the media, or “the market”, has done on espousing the virtues of the US culture.

Sure, if you want to be super wealthy, then it is the best place to go in the world. European old money is not highly regarded and anybody can make it big in the US. But on a balance of probability and risks – to attain a comfortable level of financial security for your family enduringly – then it is one of the least desirable developed nations to seek to migrate in comparison with other Anglophone or European nations.

Current affair programs showing the emergence of the working poor with tenuous accommodation and people getting paid for their blood (which they do several times a week for their survival) is a stark reminder of a harsh existence for many in the lower classes.

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For a while I thought that this harsh reality, juxtaposed by the ostentatious displays of wealth by the one percenters holding up the promise of what is on offer to those who find their own perfect mix of hard and smart work, might be what was the base recipe for that magic sauce. I suspect that it is the common perception that it is, based on my observation of how anybody who believes in a fairer society in America is immediately attacked for being a “socialist”.

Then I read Rutger Bregman’s book “Utopia for Realists” and I learned that US society was very different 50 years ago – which encompasses at least the 20 years that followed it being recognised as the mightiest nation on Earth, able to swing the outcome of the toughest war of the last 600 years and land humans on the moon.

In the late 60s the US almost implemented a Universal Basic Income (UBI). It is almost surreal to consider that the developed country with the most precarious middle class, with weak national social safety networks, might have introduced what might be considered the ultimate social safety program 50 years ago!

The virtues of a UBI are only just beginning to be discussed again, and unfortunately it is such a great departure from what has occurred over the last 50 years in the US that even many Democrats simply can not fathom how it could work. I heard Larry Summers talk about his view of how Americans need to work for a sense of self worth. Well, as Bregman discusses, just because people do not need to devote as many hours to income-generating activities does not mean that they will be idle at other times!

Bregman details the history of the UBI debate in American politics in the late 60s and highlights that both sides of politics supported its introduction. In fact, it was the Republican President Nixon that first supported its introduction, and the only reason it failed was because the Democrats felt it did not go far enough!

It is amazing to then consider how far American culture and beliefs have drifted since the late 1960s.

Undoubtedly there will be much propaganda thrown at why a UBI “cannot be done”, as there has been for two centuries. Finland’s recent trial will be highlighted, especially the decision to end it because impacts were minimal. Anybody inclined to accept that as proof that it should not be implemented in the US should compare the standard social safety network within Finland and the US. The issue in Finland is that its social safety network is already about the best in the world – in part the reason for why they were so open to testing an actual UBI – so strong, in fact, that the benefits of the UBI were difficult to detect. Still, when it begins to be implemented elsewhere, they will still go ahead and implement, of course.

In the 80s there was the emergence of the Gordon Gekko “Greed is Good” credo. While Oliver Stone put his finger perfectly on the emerging trend, and Michael Douglas and Charlie Sheen brought the characters to life so luminously, it was far from sufficient to bring the trend to screeching halt. In fact, perhaps it was swallowed in some way by the middle class that thought it was worth putting at risk enduring security for the chances of untold riches.

Then again, I don’t know how it happened. I am not here to speculate on that.

But what I am pointing out is that the greed of the 1% and the vulnerability of the 99% was not in any way the magic sauce that made the US the dynamic superpower that was so strong as to become the hegemonic state 80 years ago.

Moreover, the drift in American society over the last 50 years – since the late 60s when there was a political consensus on the benefits of a UBI – has most likely weakened that magic sauce.

As well as the rightful push back on China’s emergence as a global power, while it remains autocratic and suppresses its peoples, the US needs to admit that it has allowed itself to weaken by its own lack of societal progression.

Anybody who truly wants to “Make America Great Again” must pick up the momentum towards the course that was in place until the 70s and begin to work on a truly inclusive and open society.

One person who I would feel confident would agree is Warren Buffett because he has regularly argued over the last decade or more that he and other wealthy people should be paying far higher taxes than they currently do. Perhaps, instead of just using Warren at times of national anxiety, the roof should be repaired in the fashion Warren suggests before it rains.

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© Copyright Brett Edgerton 2020

Read by Peter Harvey after the 2010 Federal Election

On Saturday in the federal election I voted informally along with a lot of other Australians. It was the first time in the 22 years that I have been voting that I did so. And in discussing my decision with others I learned that many were doing the same thing for the same reasons.

There is a palpable feeling amongst the people that politicians are not there to represent us. That no matter who is in power – and that is the operative word – Power – they look after exactly the same people – themselves and their parties, and thus the donors to their political parties.

That they myopically focus solely on winning the next election and they neglect the greater good over the medium to long term.

My decision was a deliberate choice to not be forced to ultimately decide between two major parties, and the individuals that their members have chosen to lead them (not us).

For too long their game plan has not been to prove that they want to lead the country and do right by the people. Instead in their respective shifts to the centre they set out to persuade the public that they are the least bad option.

Australians deserve much better than the least bad option!

I had been thinking of voting informally for a while but, like others I spoke to, was reluctant to “waste” my vote.  But equally I felt passionately it was a waste to vote for a local member for whom I had no greater expectation than to tow the party line and ultimately a party that is more interested in gaining or retaining power than doing what is right for me, my fellow Australians and other members of the human community.

Mark Latham’s comments on 60 Minutes did cement it for me – not because he said to do it – but, because somebody had publically framed the reasons for voting informally, it had as much meaning – actually, more meaning – than simply tossing a coin to decide who was the least bad option.

The election result is a perfect indication of the mood in the public. Each is as bad as the other and with a great many people desperate for avenues to voice their disapproval at what our democracy has become.

This is a historic opportunity for all politicians to listen to the overwhelming mood of the people and instigate the changes that are needed to ensure that that they and our future representatives are incentivised to work for the greater good over the short, medium and longer term.

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© Copyright Brett Edgerton 2020

In this essay I distil down to a common sense level the interplay of Global population growth and climate change to explain the reality of what has been the impact of delaying both our progress towards global equality and innovative responses to climate change.

Just imagine for one moment that at the completion of World War II we truly heeded President Roosevelt’s lessons about the need for a united and compassionate humanity. 

Sure, regulation and architecture to improve the security of financial institutions – which remained robust until the lead up to speculative euphoria which caused the Great Recession (or Global Financial Crisis) – as well as other vital global institutions such as the United Nations, International Monetary Fund and World Bank – were created in the immediate aftermath of WWII.

However, the opportunity to genuinely make the world a fairer place by allowing (and supporting) all countries an opportunity to develop was squandered. 

In “As He Saw It” published in 1946, Elliot Roosevelt (a US military WWII officer who attended many important meetings with his father FDR who died soon after he delivered that 4th Presidential Inaugural speech and before the surrender of the Japanese) expressed his extreme disappointment with what occurred as the war came to an end and in that year immediately after his father’s passing.

In the second paragraph of the introduction to his book “As He Saw It”, after a long list of reasons for why he wrote and published his account of proceedings, Elliot Roosevelt says “all of the signs of growing disunity among the leading nations of the world, all of the broken promises, all the renascent power politics of the greedy and desperate imperialism were my spurs in this undertaking”. 

(His introduction is so powerful – I have posted it here and recommend all readers to at the least read this passage if not track down the whole work.)

Given what has occurred in the world since the 1970s, and especially now the attitude of President Trump, that is an interesting contrast, but that is the subject of a separate post which I have entitled “The Magic Sauce of American Economic Dynamism Was Not Greed“.

We know that when people are presented with opportunity for a better quality of life, unsurprisingly, they take that opportunity. This in itself leads to lower birthrates as people are occupied by career and professional development, as well as enjoying the trappings of having a disposable income. 

Equally important, the security of knowing that babies born into a more developed world have a far, far greater chance of surviving to continue family lines means that biologically people feel less urge to have larger families.

So it is a virtual certainty that if for the last 80 years all efforts were made to make the world a genuinely fair place, so that the degree of opportunity for a standard of life equal to anywhere on Earth was not determined by the geography in which you live, then the global population would be significantly less now than it is.

No doubt many will counter that a higher proportion of the global human population enjoying a higher standard of living would mean that average per person impacts on the environment would be greater such that environmental impacts and degradation might be even greater than where we are at right now. 

Of course that would depend both on what was that average global standard of living and the actual population level, as well as how much of the additional human capital unleashed would have been devoted to innovation to counteract those environmental impacts.

Now I realise that the climate deniers and hard-hearted right wingers will use this space to attack this analysis as unrealistic pipe dreams (as if a better world for all is never achievable). And I readily accept that the issues surrounding geopolitics and developmental sociology are extremely complicated and difficult to solve. 

However, as is clear in my essay “Let’s Wage War on Climate Change“, humanity has devoted significant resources – including human capital and human lives – to man-made crises throughout our shared history. Human ingenuity and toil can achieve amazing results when directed to a common and crucial cause. Nobody would suggest, I believe, that those sacrifices to save the world from oppression and tyranny were in vain.

So let us imagine for a moment what would have happened if humanity had worked together so that we lived in a (near) perfect meritocratic global community. Perhaps the global population, which really took off after WWII, might be half of its current level and be tapering off if not already in gentle decline.

As that figure shows, the reality of our actual population growth is quite different to this theoretical scenario, and several scenarios for future population growth developed by the United Nations are shown.

We still have a very unfair world with gross inequality in the standard of living and opportunity for a “decent life for all” (in Sir David Attenborough’s parlance from a speech he delivered in 2011 which is essentially identical  to this essay he published at around that time).

If everybody were to enjoy an equitable high standard of living now with the population that we have, without an astronomical surge in innovative technologies to reduce our impact, then most would agree that we would all be imperilled due to the extreme impacts on environment and climate change (again that is the thinking contained in Attenborough’s speech).

The truth is that global elites are already building into their thinking that what will be considered a “decent life” for those in Africa, throughout much of Asia, or South America, or on Pacific Islands, will remain to be VERY different to what is considered a “decent life” for those in the already developed countries.

That is the rub, those same elites are surreptitiously attempting to reduce population growth within those poor regions, all the while the biological impulse (from billions of years of evolution) of those very vulnerable people in those regions will increasingly be to boost their birthrates to increase the chances of survival of their family line.

When those poor people in those other regions become more and more aware of how they have been “hung out to dry” as climate change impacts grow more and more stark, and as they start to get more desperate as their growing populations are increasingly squeezed by diminishing resources due to climate change impacts, then the global tensions will grow to such an extent that containment will require heavier and heavier-handed military actions.

Essentially, it really will be a world where those nations powerful enough to guard their borders to preserve their natural endowments and what they have accumulated from the rest of the globe, as well as guard movements of resources between other “islands of prosperity”, will enjoy a “decent life” while those outside will enter some sort of Mad Max ultra-Darwinian state.

If that sounds like a world that you would enjoy living in, then go for it – live it up now and do not give a second thought to what lies ahead.

I cannot. We cannot go back and change what was and was not done 80 years ago.
But be in no doubt that we do have a choice of how we progress from here. 

Instead of continuing on this path we can recognise our folly immediately, admit to it, and move forward collectively. 

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As Attenborough rightly said, climate change cannot be effectively and enduringly addressed while the global population continues to grow. But the only humane way to address this – not by trickery or coercion – is to allow all people the opportunity to have access to the same standard of living so that humans make the natural decision to have fewer children. As not all people that currently exist on the Earth can enjoy the highest standard of living enjoyed by some nations at present, there will need to be a play off between population and standard of living, meaning that those presently enjoying very high standards of living will need to accept that their standard of living will fall.

To facilitate a more inclusive humanity with equal opportunity for an equivalent standard of living will require a great degree of social cohesion which will require genuine political Leadership to harness the political capital that now exists to confront the climate change crisis and which is prepared for mutual sacrifice, and which stands up against xenophobia and it’s foot soldiers, the naïve, uninformed or precarious.

To give all people an equal opportunity to have an equal standard of living will require an enormous rethink of how globalisation has occurred since WWII. It will also need to occur in the context of the now clear understanding of our impacts on the Earth. 

Essentially we need “quality globalisation” rather than the unsustainable, geopolitically-oriented market-based globalisation that has predominated since WWII. Many of the ideas that I discuss at MacroEdgo.com will be important, but the implications will be far, far greater than anyone can currently imagine.

Greater mobility between countries will be important, as will very open trading and commercial links between all countries.

Ironically, while many ethno-nationalist Australians are attempting to subvert the climate change debate to use it as a reason to reduce immigration, one of the most effective contributions to climate change that Australia can make is in continuing its recent high level of immigration or even increasing it.

This is the case for all developed countries that have what we might describe as  “developmental space” – analogous with the economic term du jour “fiscal space” – to grow their population in a well planned and generous manner to move toward equalising the mean standard of living of humanity.

This will, of course, require significant infrastructure and innovation to minimise local and global environmental impacts. However, again, this is supported by the comments of Attenborough in his 2011 speech where he described Australia as being “big and empty”, thus indicating his position that we do indeed have significant “developmental space”.

Australia has a proud history of success at taking in people from all over the world when responding to humanitarian crises. This history has, however, been tarnished in the last 2 decades commencing under the Howard Government’s response to “boat people”, but this does not diminish the immigration successes.

The fruits of our very successful post-WWII migration policy are visible all throughout our society – in our school yards, in our restaurant strips, and all of the places where we come together as a community. The Asia migration period, now with African and South American migrants, too, is every bit as successful from my standpoint, but I realise that there are elements within our community that seek to portray it is as troubling.

No doubt there are challenges, such as infrastructure provision and housing, but these must be the attention of our endeavours for solutions, not the migrants themselves who just want the same things from life that we all do.

It should be obvious to everyone that there is an enormous opportunity here for a climate and environment-sensitive nation building narrative – the type that Politicians of all descriptions are normally so keen to jump on – the only problem being that the divisive xenophobic element must be addressed for once and for all.

This is demonstrated by the 2019 Australian Broadcasting Corporation’s Australia Talks Survey where 54% of Australians considered immigration a “problem” – unless, of course, many thought the problem was that we did not have enough immigration (I think it a fair assumption that that is not what they meant).

To those who reject the notions within this essay I say this. Each and every citizen of a wealthy country needs to stop and think right now. If you choose to remain indifferent to this conundrum, then you are actually choosing a world where you continue to enjoy the proceeds of living on an island of prosperity at the expense of others in poor countries who will increasingly suffer as climate change impacts worsen. And your high standard of living will be increasingly protected at the point of a gun with increasingly aggressive and callous military actions to keep those increasingly desperate people suppressed.

It is time we stopped pussy footing around this reality – as Attenborough said, it is much too late for fastidious niceties.

Let us stop not spelling out the truth as some form of political correctness so that people in wealthy countries can continue on with their commerce-producing mindless consumption in a guilt-free manner.

To achieve this transformation the political class will most likely put the globe and their specific nations on a war footing to deepen the non-partisan buy-in from their citizens and to ward off the populists.

This time, however, it will be a war for all of humanity – a united humanity – instead of against or within humanity.

Let’s wage war on climate change!

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© Copyright Brett Edgerton 2020

As survivors of the Auschwitz concentration camp mark the 75th anniversary of their liberation by appealing for people to remember the perils of indifference, the Wuhan coronavirus is set to test multicultural cohesiveness in a way that has not been tested since World War II.

 The European Day for Remembrance of the Holocaust is 27th of January, the anniversary of the liberation of the concentration camp at Auschwitz. This year the commemoration was especially poignant – not just because it marked the 75th anniversary of the liberation of Auschwitz survivors – but because many of those survivors spoke up about concerns about humanity forgetting the lessons that their hellish experience, at the hands of the Nazis, delivered the world.

During the Holocaust 6 million Jews were slaughtered. At Auschwitz 1.1 million people, mostly Jews, were murdered. 

More than hate, the Holocaust survivors feared indifference because we know that in any large grouping of people the number of people who will be racist to the point of hate will be minor. It is the indifference by others to xenophobia and prejudice which allows the haters to rise up and become powerful.

In my own country of Australia the events of the Holocaust seem a world away, and most contemporary Australians would consider it largely irrelevant to our culture. However, Australians have a long history of indifference to racism. 

The first, and thus longest lasting form, of racism is towards the Indigenous Aboriginal peoples, which started soon after colonisation (better described “invasion”?) even though the leaders of the new colony were surprisingly enlightened and in many ways had a higher regard for the Aboriginals than certainly the convicts that they were charged with keeping incarcerated.

In the early stages of the colonies there grew a virulent racism against Indians and Chinese, which evolved into formal legislation known as the White Australia policy which remained in place until the 1970s (Lockwood, R. “British Imperial Influences in the Foundation of the White Australia Policy.” Labour History, no. 7, 1964, pp. 23–33. JSTOR, www.jstor.org/stable/27507761. accessed 18 October 2019]. As brilliantly articulated by Tim Watts (2019) in “The Golden Country: Australia’s changing identity”, now over 40 years since the formal extinguishing of the White Australia Policy, there remains a great degree of indifference to Asian Australians.

The waves of Asian immigrants over those 40 years, initially mainly from conflicts in Vietnam and Sri Lanka and elsewhere, and more recently from China and India, has coincided with an increase in conspicuous ethno-nationalistic racism.

Moreover, even though surveys consistently show that the great majority of Australians object to racism and consider it an issue of import – highlighting on the one hand that there is a widespread perception that it is prevalent in society, and on the other hand that the great majority are concerned enough about that to consider it a problem – those same surveys suggest that indifference is highly prevalent.

For example, while the 2019 Australia Talks Survey conducted by the Australian Broadcasting Corporation found that 75% of Australians considered racism a problem, 54% considered immigration a problem.

Moreover, Watts (2019) did an excellent job of describing the multitude of ways in which conscious and subconscious biases and prejudices pervade all aspects of Australian society. In workplaces we are only now coming to grips with the impact of the Bamboo ceiling on crushing the aspirations of hard, smart working Asian Australians, and on how that is having a deleterious affect on business innovation and productivity.

It is for this reason that I believe very strongly that quotas are necessary to bring about sustainably diverse workplaces in Australia.

Australian politicians have had an unfortunate habit of playing on this indifference and latent xenophobia to garner political support, and even though the 70s marked the highpoint in bipartisan support against racial discrimination, since the emergence in the 90s of Hansonism and the global success of populist parties overt indifference to xenophobia has been too enticing for those on the right side of politics to ignore. 

In pandering to these xenophobic elements their divisive views have been given legitimacy and social cohesiveness in multicultural Australia has been setback significantly.

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In a “former life” I was a research scientist specialising in disease of aquatic animals. I had a special interest in viruses and carried out some basic virological research on a few novel viruses that I discovered.

So to preface what I am about to say, I would describe myself as knowing much more than the average person about microbiology and virology, but much, much less than a cutting edge contemporary virologist like Shi Zhengli who is based in Wuhan and has been conducting research on these coronaviruses for the past 15 years including leading the research team responding to the current oubreak.

I mention Zhengli because I know her. She did her PhD in the laboratory of the brilliant and legendary invertebrate virologist Jean-Robert (JR) Bonami in Montepellier, France, where I worked for a year, and I visited her in Wuhan many years ago. Zhengli was also kind to list me as a co-author on a paper published soon after I had retired from scientific research. Zhengli is a wonderful person and researcher of the highest quality and when I learned that she was intimately involved with the response to this outbreak I immediately felt better about the situation.

Evenso, I have great concerns for the implications of this outbreak. To be clear, in no way am I suggesting that I am an expert – I am no longer even an expert on crustacean diseases even though a decade and half ago I was one of the global experts. And I have not spoken with Zhengli in many years so I have no special information. These are my own views which are based on common sense as much as anything else.

I recall in the early 90s reading about the Ebola virus. People do not realise it, but for a virus it is massive and it is scary looking! I commented to a friend that it is so large it would probably feel like receiving an injection when it entered cells to replicate.

The thing about Ebola virus is that while it is deadly, it is not highly transmissible. It is spread by exposure to blood or other bodily fluids of a seriously ill person. While in poor countries with limited and basic medical facilities it can spread and cause some deaths it does not present a serious threat to humanity as modern biosecurity protocols can limit its spread.

Ebola gets media attention because of the high mortality rate and because the symptoms are so severe including haemorrhage and ultimately bleeding from orifices.

The really concerning diseases from a whole of humanity standpoint are those that are highly transmissible, have a reasonably long incubation period where the infected person is asymptomatic (so the infection is undetected) but is transmitting the infection to others, and which has a reasonably high mortality rate (ie. a reasonably high proportion of people who contract the infection die).

The information presented by the WHO on incubation period and asymptomatic transmission confirms that Wuhan coronavirus presents those first two characteristics. 

These characteristics combined make a disease difficult to contain and thus eradicate in its early stages, without need of a vaccination program which will take time to develop and administer widely.

At the time of writing the rate of increase in the total number of cases, the proportion of which are serious and very serious, and the number of mortalities, is indicative of a virus that is capable of rapid human to human spread in populations. It will be some time yet before it is fully understood how much of this is due to the ramp up in diagnostic capacity and public health response – i.e. some of this apparent hyperbolic increase in the number of cases may be due to increased diagnosis. If diagnostic capacity reaches a steady state with virus spread, in part due to biosecurity measures taken, then we may see the apparent hyperbolic spread become more linear and then decelerate. However, if the actual spread remains hyperbolic then diagnostic capacity might never catch up. 

The mortality and morbidity (what proportion of people become ill and to what extent) rates will not be completely understood for some time. Underlying health status of populations and other factors will play a part.

If the virus becomes pandemic quickly, then it will be the mortality and morbidity rate that determines the full cost to humanity.

With what is already public knowledge with regards the two week incubation period and asymptomatic transmission, I very much suspect that the WHO and the major countries are working on an assumption that there is a high likelihood that the Wuhan coronavirus will not be contained within China and that it will spread in Asia. Though I, too, am impressed by the response by the Chinese authorities and scientific community, early indications of the characteristics of this virus make it extremely difficult to contain.

I suspect that in the weeks ahead it will soon become clear that the virus has escaped the biosecurity net into wider China and into nearby Asian countries, especially the lesser developed countries which have less capability to respond and contain the virus.

One of the complicating factors is that it is still winter in the Northern hemisphere so it is perfectly normal that cold and flu viruses will be circulating, and so there will be no way that any country – and especially not the developing countries – will have the capability to isolate any and every sick person until they are tested and cleared.

Also significant is that we are talking about many poor people here who are not fortunate to enjoy a standard of living which affords them the best possible underlying health status. Moreover, these people have no social safety network, usually have tenuous employment earning low wages, and have little or no savings to draw on during a health scare. Thus these people will have little choice but to continue working rather than subject themselves to self-imposed isolation. 

At this stage, what I believe that the authorities are really working on is slowing the spread of the virus. Of course officials are not going to admit to this because they do not want to panic populations and create conditions which stretch (already stretched) social cohesion.

For those in the northern hemisphere there is a factor which will be supportive in those efforts. With the outbreak occurring at around the midpoint of winter, within another 10 weeks the most favourable conditions for respiratory viruses to spread will subside which will likely naturally slow the spread of the virus (at least compared to what it would be if conditions remained cooler).

Pharmaceutical companies will have around 6 months to swing into action and develop an effective vaccine, produce it in significant volumes, and administer it broadly in the large population centres in the northern hemisphere. My understanding is that, at this stage, there is no reason to believe that this would be problematic as it was with HIV (because of its unique characteristics).

Writing in Australia, in the southern hemisphere, the outlook is somewhat more frightening if I am correct in my analysis that the virus will not be eradicated this northern hemisphere winter. I would be unsurprised if more draconian measures were introduced in Australia than elsewhere in an attempt to prevent its introduction as we will endure a full cold and flu season without any chance of administering a broad vaccination program.

This will produce a great deal of anxiety amongst Australians.

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Given Australia has a questionable history in terms of racism and xenophobia, and indifference to it, what are the early indications of how Australians are reacting to this global health scare originating from China and likely ultimately broader Asia?

Not surprisingly, the early indications are not good with many reports detailing increased verbal and online attacks on people of (presumed) Asian ethnicity.

Moreover, there have been reports of online petitions with thousands of signatories seeking schools to restrict families that have travelled throughout wider Asia from attending, and the New South Wales Government has requested that students who have visited China remain at home in isolation for two weeks even though the Minister admitted it was not medically necessary and was done to appease public concerns.

As the patriarch of a mixed Asian Australian family, I was at the shops early last Saturday morning with my wife. We went to a quieter, stand-alone supermarket and agreed that there seemed to be more people of Asian ethnicity out early there with us. We bought a little more food than we normally would so that we could reduce the frequency with which we need to shop.

If my worst fears are confirmed over the next few weeks, then I expect that overt and angry xenophobia will be increasingly expressed towards Australians of perceived Asian ethnicity as the Wuhan coronavirus spreads especially throughout Asia, and as people become more fearful as Australia heads towards a long and difficult cold and flu season.

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In my earlier seminal essay “Xenophobia Must Be Challenged For An Effective Response To Climate Change Inclusive of Population Growth“, I explained the clear-cut logic on why it is imperative that leaders provide strong leadership in denouncing racism.

I consider the climate change crisis to be the greatest challenge to humanity, and I can see no sustainable and durable response that does not involve a more cohesive humanity built on equivalent access to the same standard of living irrespective of where on Earth one chooses to live and raise a (typically small) family.

Depending on how the Wuhan coronavirus outbreak progresses in the next few weeks and months, and how successful are the scientific and pharmaceutical communities in expeditiously developing an effective vaccine, this disease may prove to be the most serious immediate challenge to humanity. 

Moreover, if this outbreak is successfully contained and eradicated – primarily on the back of the impressive response by the Chinese authorities – it still gives an indication of the tenuous nature of our existence on this wonderful planet, and just how quickly the reality of our existence can be placed in danger.

Most significantly, it highlights that whether we are talking about acute or long-term crises, the reality of life on this Earth for humanity is that we have no choice but to face these challenges together.

Acting individualistically and with self-interest can not produce the sustainable effective response for which all people wish. 

Clearly there is little chance of humanity coming together and working towards solutions to the greatest challenges if the groundwork to build mutual trust has been neglected. 

Therefore, the best vaccine against crises is social cohesion within societies and across humanity.

Social cohesion within multicultural societies is the best stepping stone towards cohesion across humanity. And to do that we must address all of those biases and prejudices within our societies from the ground up, in our workplaces and in our day to day lives, and we must demand of our elected leadership that they work towards a united humanity, and we must punish (politically) those who seek to divide us.

That, I believe, is a world that the survivors of Auschwitz would want for us all, and as it was articulated so warmly and brilliantly by President Roosevelt shortly before his all too early passing.

Addendum

In times of crisis it is very much human nature to reach out to friends in potential danger and inquire on whether they are doing OK, and to let them know that you are thinking of them and wishing them well. I certainly have received those types of emails myself from friends overseas this past summer as they expressed their concern and sorrow for the bushfires in Australia.

I guess we all hope that that brief moment of personal connection – a few kind and caring words, a smile, a pat on the back – will provide some emotional support to our friends and at the same time nourish our own souls.

That is what I did yesterday. After a long time I reached out to Zhengli to let her know I care and that I am thinking of her and her family. I had an inkling that she might be involved in the research into the outbreak, of course, but I was entirely unaware of her career successes since my early retirement from scientific research. Zhengli responded quickly, which I appreciated given the enormity of the challenge she and her team faces – I like to think a brief heart-warming personal distraction provided some light relief in the midst of the intense environment they are undoubtedly working through.

I am so glad that a person of the quality of Dr Shi Zhengli is heading up the research response to this current outbreak – a better person you could not meet, a loving mother and caring friend, and an exceptional scientist. We should all be grateful to her and her team, and our other Chinese friends responding on the ground, who are making significant personal sacrifices for all of our benefit.

As I have said on numerous occasions in my writing, it is when we face collective crises that we truly know that we are united together as human beings against our greatest challenges. Please let this be a lesson that we can hold onto and move forward together before we damage ourselves and our wonderful planet to a point where all of the progress of the last century is lost.

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© Copyright Brett Edgerton 2020

I have little time for most of the “talking heads” that appear on mainstream television and comment throughout the mainstream media, presenting themselves as all-knowing on economic and investing topics and seeing themselves as fulfilling a vital function in society telling people what they should think.

Often these people have developed a quirky or folksy persona, perhaps having modelled themselves on the ageing Warren Buffet, attempting to lull the audience into a sense of security harking back to a primordial feeling of safety and affection afforded by one’s grandfather. (Seriously, think about it and you will realise that there are quite a few media, investment and business professionals that fit the bill!)

I find it comical to watch or listen to segments where the audience interacts with these sooth-sayers especially after the advice-seeker has been given some food for thought from a dreaded “Doomsday Merchant”. 

Invariably “Poppa” immediately moves to, metaphorically, wrap his reassuring arms around the scared youngun (or not so young) and gently suggest that they just close their eyes and drive away that anxiety by listening only to his soothing and reassuring voice. 

In actual fact this attitude is very widespread in the financial services industry in Australia and these more visible members are just the tip of the iceberg. 

I was especially disappointed with a lecturer when I did a short course of subjects as a potential step towards becoming a financial planner. The lecturer had worked for one of the best known advisories in the country and she spent a great deal of time telling the (mostly young) participants in the class that a major aspect of the role is in calming clients particularly during times of market volatility, and she used specific examples of people who wanted to go to cash during the Global Financial Crisis.

We had a heated debate in class, with her stating a preference for it to occur outside of class so that I did not influence my class mates, while I ensured that it took place in the class as I knew it was important that they hear that there are different points of view to what was being taught. 

I said that an advisor investing so much of their subjective view on the actions of clients would leave themselves at risk of litigation in the case of a prolonged and severe downturn, and I highlighted the cases of the post 1929 US stock markets and the post 1980s Japanese stock markets which experienced very deep and prolonged downturns.

I also pointed out that somebody who goes to cash even after the market has fallen 50% is better off when the market retraces 90%! Just because it has not happened in Anglophone countries for many years does not mean that it will not happen, and as I explained in my assignment (and in my manifesto on this site) the job of the advisor is to fully equip the client with the opportunity to gain the knowledge and skills to make their own decisions, not to force one’s own views onto clients.

In the case study that this lecturer gave, her clients, of which she provided their actual portfolio at the time of the GFC, had been retired for a few years, and thus were at the most critical period for adverse “sequencing risk” involving a fall in the market price of their assets, and were fully invested in shares, and mostly Australia sharemarket funds! At the time that she delivered the lecture, in 2014, indices of the Australian sharemarket were still well short of the 2008 peak and they did not surpass those levels until very recently in late 2019. 

The lecturer said that she held their hand and convinced them not to go to cash, and instead encouraged them to obtain more capital to invest in shares for a bounce back which they did. The actual outcome for those clients will largely depend on how much new capital they used to purchase more share funds, and how early in the correction they invested that new capital, but there is no doubt that these clients were taking on a very, very high level of risk particularly given where in their investment lifecycle they were.

I leave it to the reader to decide whether the clients received good advice but I can assure the reader that it is not the advice that I would have given nor would my advice have suggested in any way that they should be fully exposed to sharemarket movements at their stage of the investment lifecycle.

So why do so many in the Australian financial services industry take it upon themselves to shout down any negative views, and cheerlead the lesser informed investors into continually buying the dip and/or continually providing a flow of funds into markets via dollar cost averaging?

As usual the answer lies in self-interest. All financial services industry members obviously are active in the markets themselves, and thus their aspirations are dependent on them, so they have a powerful incentive to maintain confidence in markets thus protecting asset prices. After all, the price of any asset is a function of the price paid in recent transactions. That is a serious conflict which produces widespread groupthink in an industry where most espouse a doctrine that markets over time will always move up so it is best to continually deploy your capital.

Of course, many in the industry, and especially the elites, profit more from flows in funds rather than the prices of the assets themselves. It’s the same in real estate, shares, bonds, various managed funds, ETFs, etc, etc.

In reality it is only the small fish – the Plebs – that are particularly dependent on the actual price of the assets. The really powerful interests have little concern for what happens with asset prices just as long as fund flows continue on which they can continue to clip the ticket or “tax” the transactions.

That is why I have come to consider the finance industry, including the capital markets, as essentially a massive funnelling or vacuuming apparatus where scraps continually “fall off” flows of cash which are then siphoned upwards and accumulated by the global elites.

So, while some describe the current state of our capitalistic system as being based on trickle-down economics, where scraps fall off the table of the elite down to the everyday person, I see it as quite the opposite.

I believe that it is incumbent on the everyday person to fortify themselves with knowledge and skill so that they can better secure their hard-earned nuggets of wealth lest they be rapidly siphoned up and off them and directed to the elites.

So if the elites do not really need asset prices to increase to maintain their wealth, why are the cheerleaders always putting a positive spin on asset markets, you might ask.

Well, just as Central Bankers have realised, what they are really selling is optimism and confidence which creates “activity”. Sure a correction or a bear market where people re-allocate and/or buy the dip creates capital flows, potentially strong flows. But the worst market is a dead market where nobody talks about asset prices and that will only be created by the depths of despair that are associated with a prolonged bear market which has not been experienced across developed markets in decades.

This would be the worst outcome for the elites and it is something to be prevented at all costs. 

I admit that the process is so systemic and embedded that very many consider these views, such as it is “time in the market not timing the market that is important”, to be truisms or facts. However, as the calls in to the “talking heads” show, many want to be ignorant to risks and they want people to tell them what they want to hear. 

There will never be a shortage of “experts” who will provide them with that illusory security.

Here is the simple truth – if you can not listen to anything and everything said about the markets and not be comfortable in your positioning, then something is wrong. If you are frightened or made to feel anxious by what you hear or read, then you need to question yourself on why that is the case. If on reflection you realise that you are taking on more risk than you are comfortable with, then you need to act. If you realise that you are insufficiently informed to be in your positions, then re-allocate to positions with which you are more comfortable.

We rarely become fearful unless there is an underlying real basis to our fears. If you find yourself fearful, then you need to act rather than go searching for a soothing voice who will help you to apply a set of blinkers and narrow your world! They have their own interests in mind, not yours, even if they have convinced many otherwise, and possibly even themselves.

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© Copyright Brett Edgerton 2019

As a single income family dependent on the income of an Asian-Australian female, and having two sons of obvious Asian-Australian descent, workplace diversity is an issue close to our hearts and it directly affects our security on many levels.

For anybody wishing to authentically open their eyes to the challenges minorities face in their careers and in day to day life in Australia, then I can suggest no better reading than “The Golden Country: Australia’s changing identity” by Tim Watts and it should be your first point of call.

Its importance to our family does not mean, however, that my wife and I agree on how workplace diversity in Australia should be addressed.

My wife is not supportive of quotas; she has concerns for workplace cohesion with the best person for the job not necessarily being selected, and she identifies with the disappointment of being overlooked when management has chosen a lesser suited female and she has assumed, based also on prior placements, that management did so as that female had become “a quota filler” in the organisation. (I have seen some writers elsewhere, such as Medium.com, use the term “tokens” but when applied to the entire female gender I would suggest my term is more appropriate.)

I see it as a rather simple mathematical concept. If throughout career lifetimes groups of people and minorities are prejudiced against which slows their progression, from the commencement of their career or from a certain level, then it is entirely logical that the higher the position level the larger the relative pool of individuals who have not been held back by prejudice from which to choose (see diagram below). 

Figure 1 provides a concept of the level of positions within a profession with the very broad base being the lowest level positions and the peak being the very highest positions that can be attained. Many people hope to progress right from bottom to the peak but as one climbs the fewer the number of more senior positions available relative to their current level. There are, after all, only so many Chief Executive Officer roles!

Figure 1: Positions within a profession.

So in a perfectly functioning meritocracy Figure 1 would relate to all individuals within the profession and how far one progresses upwards would depend on our intelligence, in all of its forms, and our effort. But we know from the data that we are not working within a meritocracy and groups of individuals are being prejudiced against by people within professions and workplaces due to conscious and sub-conscious biases.

Consequently, while the population average conforms to Figure 1, in reality various subgroupings of people are experiencing conditions quite different to the average, with some experiencing conditions more favourable for career progression while others are experiencing conditions less favourable for progression.

Examples of these difference are represented in Figure 2, where 2A represents a group that has experienced conditions more favourable than average for career progression while 2B represents a group that has experienced conditions less favourable for career progression right from the outset of their careers. Notice that for each level above the base level there are fewer people in Figure 2B which further reinforces the trend, i.e. amplifies the biases, such that the higher the level the significantly smaller proportions of individuals in the unfavoured subgrouping.

Figure 2A: Positions held by favoured subgrouping.

Figure 2B: Positions held by unfavoured subgrouping.

For interest I have also included Figure 2C which represents a situation where a subgroup experiences average career progression conditions to a point after which biases begin to affect career progression. This might represent women approaching prime to late child-baring age, or it could represent a group of people (perhaps an ethnicity) biased against where the dominant (favoured) subgroup promotes a view that minority groups, while good at process functions, are not good at higher level tasks and/or creative thinking.

Figure 2C: Positions held by subgrouping receiving average conditions for career progression early but then unfavourable at a point in time.

Of course, many will be subjected to several prejudicial biases.

The simple reality is that because subgroupings of people have been subjected to prejudice through their careers, perhaps from the very outset, then the pool of individuals available to choose from for higher level positions will be significantly smaller than the pool of individuals which have enjoyed favour. That will be true in absolute numbers but will be especially significant when dealing with minorities due to their lower representation in the entire workforce.

Thus there is no way to avoid the reality that if these biases and consequent prejudices are to be eliminated from corporate structures, it is going to be the case that some times an applicant from the unfavoured group with less experience will be given a chance to prove themself in a position above someone from the favoured group with more experience. After all, some of that extra experience was gained at the expense of other individuals who did not really have equal opportunity.

What is important is that when somebody is chosen to correct diversity that that person is authentic and of a high calibre, and is not necessarily somebody who shares more in common with the favoured group rather than the unfavoured group. When this occurs it is the most destructive for workplace cohesion because everybody understands that it is purely done to fill a quote and nobody respects the decision. In fact, it is such a poor decision as to suggest deliberate sabotage of the intention of the whole exercise, and may well be done as a conscious or subconscious attempt to undermine it and thus retard the process and prolong the status quo.

Also critical is that Business leaders show genuine leadership on this issue and guide organisations so that everyone understands the necessity for the imbalance to be rectified. In this respect Alan Joyce, the CEO of Qantas, has been a shining light for one subgrouping of individuals and deserves congratulations.

At their AGM in October 2019 Alan Joyce was asked from the floor why Qantas had not done a better job of promoting diversity. He responded that he felt that they had done very well on diversity having a gay man and 4 women on the board.

For someone who is so passionate about discrimination and prejudice, it is a real shame that he seems not to appreciate or care about other forms of it. 

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© Copyright Brett Edgerton 2019