Understanding Our Pandemic – Economy Predicament

The world’s number one problem today is that the world’s population is too large for its resource base. Some people have called this situation overshoot. The world economy is ripe for a major change, such as the current pandemic, to bring the situation into balance. The change doesn’t necessarily come from the coronavirus itself. Instead, it is likely to come from the whole chain reaction that has been started by the coronavirus and the response of governments around the world to the coronavirus.

Let me explain more about what is happening.

[1] The world economy is reaching Limits to Growth, as described in the book with a similar title.

One way of seeing the predicament we are in is the modeling of resource consumption and population growth described in the 1972 book, The Limits to Growth, by Donella Meadows et al. Its base scenario seems to suggest that the world will reach limits about now. Chart 1 shows the base forecast from that book, together with a line I added giving my impression of where the economy really was in 2019, relative to resource availability.

Figure 1. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil,” with dotted line added corresponding to where the world economy seems to be in 2019.

In 2019, the world economy seemed to be very close to starting a downhill trajectory. Now, it appears to me that we have reached the turning point and are on our way down. The pandemic is the catalyst for this change to a downward trend. It certainly is not the whole cause of the change. If the underlying dynamics had not been in place, the impact of the virus would likely have been much less.

The 1972 model leaves out two important parts of the economy that probably make the downhill trajectory steeper than shown in Figure 1. First, the model leaves out debt and, in fact, the whole financial system. After the 2008 crisis, many people strongly suspected that the financial system would play an important role as we reach the limits of a finite world because debt defaults are likely to disturb the worldwide financial system.

The model also leaves out humans’ continual battle with pathogens. The problem with pathogens becomes greater as world population becomes denser, facilitating transmission. The problem also becomes greater as a larger share of the population becomes more susceptible, either because they are elderly or because they have underlying health conditions that have been hidden by an increasingly complex and expensive medical system.

As a result, we cannot really believe the part of Figure 1 that is after 2020. The future downslopes of population, industrial production per capita, and food per capita all seem likely to be steeper than shown on the chart because both the debt and pathogen problems are likely to increase the speed at which the economy declines.

[2] It is far more than the population that has overshot limits.

The issue isn’t simply that there are too many people relative to resources. The world seems to have

  • Too many shopping malls and stores
  • Too many businesses of all kinds, with many not very profitable for their owners
  • Governments with too extensive programs, which taxpayers cannot really afford
  • Too much debt
  • An unaffordable amount of pension promises
  • Too low interest rates
  • Too many people with low wages or no wages at all
  • Too expensive a healthcare system
  • Too expensive an educational system

The world economy needs to shrink back in many ways at once, simultaneously, to manage within its resource limits. It is not clear how much of an economy (or multiple smaller economies) will be left after this shrinkage occurs.

[3] The economy is in many ways like the human body. In physics terms, both are dissipative structures. They are both self-organizing systems powered by energy (food for humans; a mixture of energy products including oil, coal, natural gas, burned biomass and electricity for the economy).

The human body will try to fix minor problems. For example, if someone’s hand is cut, blood will tend to clot to prevent too much blood loss, and skin will tend to grow to substitute for the missing skin. Similarly, if businesses in an area disappear because of a tornado, the prior owners will either tend to rebuild them or new businesses will tend to come in to replace them, as long as adequate resources are available.

In both systems, there is a point beyond which problems cannot be fixed, however. We know that many people die in car accidents if injuries are too serious, for example. Similarly, the world economy may “collapse” if conditions deviate too far from what is necessary for economic growth to continue. In fact, at this point, the world economy may be so close to the edge with respect to resources, particularly energy resources, that even a minor pandemic could push the world economy into a permanent cycle of contraction.

[4] World governments are in a poor position to fix the current resource and pandemic crisis.

In our networked economy, too low a resource base relative to population manifests itself in a strange way: It appears as an affordability crisis that leads to very low prices for oil. It also appears as terribly low prices for many other commodities, including copper, lithium, coal and even wholesale electricity. These low prices occur because too large a share of the population cannot afford finished goods, such as cars and homes, made with these commodities. Recent shutdowns have suddenly increased the number of people with low income or no income, pushing commodity prices even lower.

If resources were more plentiful and very inexpensive to produce, as they were 50 or 70 years ago, wages of workers could be much higher, relative to the cost of resources. Factory workers would be able to afford to buy vehicles, for example, and thus help keep the demand for automobiles up. If we look more deeply into this, we find that energy resources of many kinds (fossil fuel energy, nuclear energy, burned biomass and other renewable energy) must be extraordinarily cheap and abundant to keep the system growing. Without “surplus energy” from many sources, which grows with population, the whole system tends to collapse.

World governments cannot print resources. What they can print is debt. Debt can be viewed as a promise of future goods and services, whether or not it is reasonable to believe that these future goods and services will actually materialize, given resource constraints.

We are finding that using shutdowns to solve COVID-19 problems causes a huge amount of economic damage. The cost of mitigating this damage seems to be unreasonably high. For example, in the United States, antibody studies suggest that roughly 5% of the population has been infected with COVID-19. The total number of deaths associated with this 5% infection level is perhaps 100,000, assuming that reported deaths to date (about 80,000) need to be increased somewhat, to match the approximately 5% of the population that has, knowingly or unknowingly, already experienced the infection.

If we estimate that the mean number of years of life lost is 13 years per person, then the total years of life lost would be about 1,300,000. If we estimate that the US treasury needed to borrow $3 trillion dollars to mitigate this damage, the cost per year of life lost is $3 trillion divided by 1.3 million, or $2.3 million per year of life lost. This amount is utterly absurd.

This approach is clearly not something the United States can scale up, as the share of the population affected by COVID-19 relentlessly rises from 5% to something like 70% or 80%, in the absence of a vaccine. We have no choice but to use a different approach.

[5] COVID-19 would have the least impact on the world economy if people could pay little attention to the pandemic and just “let it run.” Of course, even without mitigation attempts, COVID-19 might bring the world economy down, given the distressed level of today’s economy and the shutdowns experienced to date.

Shutting down an economy has a huge adverse impact on that economy because quite a few workers who are in good health are no longer able to make goods and services. As a result, they have no wages, so their “demand” goes way down. If the economy was already having an affordability crisis for goods made with commodities, shutting down the economy tends to greatly add to the affordability crisis. Prices of commodities tend to fall even lower than they were before the crisis.

Back in 1957-1958, the Asian pandemic, which also started in China, hit the world. The number of deaths was up in the range of the current pandemic, relative to population. The estimated worldwide death rate was 0.67%.  This is not too dissimilar from a death rate of 0.61% for COVID-19, which can be calculated using my estimate above (100,000 deaths relative to 5% of the US population of 33o million).

Virtually nothing was shut down in the US for the 1957-58 pandemic. When doctors or nurses became sick themselves, wards were simply closed. Would-be patients were told to stay at home and take aspirin, unless a severe case developed. With this approach, the US still faced a short recession, but the economy was soon growing again. Populations seemed to reach herd immunity quite quickly.

If the world could somehow have adopted a similar approach this time, there still would have been some adverse impact on the economy. A small percentage of the population would have died. Some businesses might have needed to be closed for a short time when too many workers were out sick. But the huge burden of job loss by a substantial share of the economy could have been avoided. The economy would have had at least a small chance of rebounding quickly.

[6] The virus that causes COVID-19 looks a great deal like a laboratory cross between SARS and HIV, making the likelihood of a quick vaccine low.

In fact, Professor Luc Montagnier, co-discoverer of the AIDS virus and winner of a Nobel Prize in Medicine, claims that the new coronavirus is the result of an attempt to manufacture a vaccine against the AIDS virus. He believes that the accidental release of this virus is what is causing today’s pandemic.

If COVID-19 were simply another influenza virus, similar to many we have seen, then getting a vaccine that would work passably well would be a relatively easy exercise. At least one of the vaccine trials that have been started could be reasonably expected to work, and a solution would not be far away.

Unfortunately, SARS and HIV are fairly different from influenza viruses. We have never found a vaccine for either one. If a person has had SARS once, and is later exposed to a slightly mutated version of SARS, the symptoms of the second infection seem to be worse than the first. This characteristic interferes with finding a suitable vaccine. We don’t know whether the virus causing COVID-19 will have a similar characteristic.

We know that scientists from a number of countries have been working on so-called “gain of function” experiments with viruses. These very risky experiments are aimed at making viruses either more virulent, or more transmissible, or both. In fact, experiments were going on in Wuhan, in two different laboratories, with viruses that seem to be not too different from the virus causing COVID-19.

We don’t know for certain whether there was an accident that caused the release of one of these gain of function viruses in Wuhan. We do know, however, that China has been doing a lot of cover-up activity to deter others from finding out what actually happened in Wuhan.

We also know that Dr. Fauci, a well-known COVID-19 advisor, had his hand in this Chinese research activity. Fauci’s organization, the National Institute for Allergy and Infectious Diseases, provided partial funding for the gain of function experiments on bat coronaviruses in Wuhan. While the intent of the experiments seems to have been for the good of mankind, it would seem that Dr. Fauci’s judgment erred in the direction of allowing too much risk for the world’s population.

[7] We are probably kidding ourselves about ever being able to contain the virus that causes COVID-19. 

We are gradually learning that the virus causing COVID-19 is easily spread, even by people who do not show any symptoms of the disease. The virus can spread long distances through the air. Tests to see if people are ill tend to produce a lot of false negatives; because of this, it is close to impossible to know whether a particular person has the illness or not.

China is finding that it cannot really contain the virus that causes COVID-19. A recent South China Morning Post article indicates that roughly 14 million people are to be tested in the Wuhan area in the next ten days to try to control a new outbreak of the virus.

It is becoming clear, as well, that even within China, the lockdowns have had a very negative impact on the economy. The Wall Street Journal reports, China Economic Data Indicate V-Shaped Recovery Is Unlikely. Supply chains were broken; wholesale commodity prices (excluding food) have tended to fall. Joblessness is increasingly a problem.

[8] If we look at deaths per million by country, it is difficult to see that lockdowns are very helpful in reducing the spread of disease. Masks seem to be more beneficial.

If we compare death rates for mask-wearing East Asian countries to death rates elsewhere, we see that death rates in mask-wearing East Asian countries are dramatically lower.

Figure 2. Death rates per million population of selected countries with long-term exposure to the virus causing COVID-19, based on Johns Hopkins death data as of May 11, 2020.

Looking at the chart, a person almost wonders whether lockdowns are a response to requests from citizens to “do something” in response to an already evident surge in cases. The countries known for their severe lockdowns are at the top of the chart, not the bottom.

In fact, a preprint academic paper by Thomas Meunier is titled, “Full lockdown policies in Western Europe countries have no evident impacts on the COVID-19 epidemic.” The abstract says, “Comparing the trajectory of the epidemic before and after the lockdown, we find no evidence of any discontinuity in the growth rate, doubling time, or reproduction number trends.  .  . We also show that neighboring countries applying less restrictive social distancing measures (as opposed to police-enforced home containment) experience a very similar time evolution of the epidemic.”

It appears to me that lockdowns have been popular with governments around the world for a whole host of reasons that have little to do with the spread of COVID-19:

  • Lockdowns give an excuse for closing borders to visitors and goods from outside. This was a direction in which many countries were already headed, in an attempt to raise the wages of local workers.
  • Lockdowns can be used to hide the fact that factories need to be closed because of breaks in supply lines elsewhere in the world.
  • Many countries have been faced with governmental protests because of low wages compared to the prices of basic services. Lockdowns tend to keep protesters inside.
  • Lockdowns give the appearance of protecting the elderly. Since there are many elderly voters, politicians need to court these voters.

[9] A person wonders whether Dr. Fauci and members of the World Health Organization are influenced by the wishes of vaccine and big pharmaceutical companies.

The recommendation to try to “flatten the curve” is, in part, an attempt to give vaccine and pharmaceutical makers more time to work on their products. Is this really the best recommendation? Perhaps I am being overly suspicious, but we recently have been dealing with an opioid epidemic which was encouraged by manufacturers of Oxycontin and other opioids. We don’t need another similar experience, this time sponsored by vaccine and other pharmaceutical makers.

The temptation of researchers is to choose solutions that would be best from the point of their own business interests. If a researcher gets much of his funding from vaccine and big pharmaceutical interests, the temptation will be to “push” solutions that are beneficial to these interests. In some cases, researchers are able to patent approaches, even when the research is paid for by governmental grants. In this case they can directly benefit from a new vaccine or drug.

When potential solutions are discussed by Dr. Fauci and the World Health Organization, no one brings up improving people’s immunity so that they can better fight off the novel coronavirus. Few bring up masks. Instead, we keep being warned about “opening up too soon.” In a way, this sounds like, “Please leave us lots of customers who might be willing to pay a high price for our vaccine.”

[10] One way the combination of (a) the activity of the virus and (b) our responses to the virus may play out is as a slow-motion, controlled demolition of the world economy. 

I think of what we are experiencing as being somewhat similar to a toggle bolt going around and around, moving down a screw. As the toggle bolt moves around, I picture it as being similar to the virus and our responses to the viruses hitting different parts of the world economy.

Figure 3. Image of how the author sees COVID-19 as being able to hit the economy multiple times, in multiple ways, as its impact keeps impacting different parts of the world.

If we look back, the virus and reactions to the virus first hit China. China’s recovery is moving slowly, in part because of reduced demand from outside of China now that the virus is hitting other parts of the world. In fact, additional layoffs occurred after Chinese shutdowns ended, because it then became clear that some employers needed to permanently scale back operations to meet the new lower demand for their product.

Commodity prices, including oil prices, are now depressed because of low demand around the world. These low prices can be expected to gradually lead to closures of wells and mines extracting these commodities. Processing centers will also close, making these commodities less available even if demand temporarily rises.

As one country is hit by illnesses and/or shutdowns, we can expect supply lines for manufacturing around the world to be disrupted. This will lead to yet more business closures, some of them permanent. Debt defaults tend to happen as businesses close and layoffs occur.

With all of the layoffs, governments will find that their tax collections are lower. The resulting governmental funding issues can be expected to lead to new rounds of layoffs.

Natural disasters such as hurricanes, tornadoes, floods, earthquakes and forest fires can be expected to continue to happen. Social distancing requirements, inadequate tax revenue and broken supply lines will make mitigation of all of these disasters more difficult. Electrical lines that fall down may stay down permanently; bridges that are damaged may never be repaired.

Initially, rich countries can be expected to try to help as many laid-off workers as possible with loans and temporary stipends. But, after a few months, even with this approach, many individual citizens and businesses will likely not be able to pay their rent. Default rates on home mortgages and auto loans can be expected to rise for a similar reason.

We can expect to see round after round of business failures and layoffs of employees. Financial systems will become more and more stressed. Pensions are likely to default. Death rates will rise, in part from epidemics of various kinds and in part from growing problems with starvation. In fact, in some poor countries, lower-income citizens are already having difficulty being able to afford adequate food. Eventually we can expect collapsing governments (similar to the collapse of the central government of the Soviet Union) and overthrown governments.

Longer-term, after this demolition ends, there may be some surviving pieces of economies. These new economies will be much smaller and less dependent upon each other, however. Currencies are likely to be less interchangeable. The remaining people will need to learn to make do with many fewer goods than are available today. It will be a very different world.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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3,868 Responses to Understanding Our Pandemic – Economy Predicament

  1. Tim Groves says:

    With any media event these days, it doesn’t take long before somebody makes a YouTube video attempting to debunk it. And this one is cutting-edge stuff!

    “Pay attention! They can’t fool everybody and I told you, these stories that fake, they only gonna be conflicted, because that not real, they put it together… Big turnout, of course, because it’s an event, somebody put it on. Just remember, all events were planned; you better remember that. … Nobody gonna face no charges. They just work on your brain, yes, keep you in contact with the fakery and of course, they’re gonna disappoint you at the end of the day…. All of the [?] organized by the government, and I told you, if you have any brain at all you will never participate in this [?] the government put on and show that you’re brainwashed…..”

  2. Covidinamonthorayearoradecade says:


    “… the racial strife of the 1960s, when the fury and despair of inner-city African-Americans over racism and poverty erupted in scores of cities, reaching a climax in 1967 and 1968, two years that saw more than 150 ryots.
    This moment has not produced anything close to the vyolence of that era.”

    quite interesting…

    American cities have much higher populations now, and yet this story claims that this week has not produced anything close to the 1960s…

    I suppose because MLK jr was an internationally important person…

    it’s almost as if these proetests come and go in cycles…

    to be continued…

    • Chrome Mags says:

      They’re saying on the news I was just watching that these riots are the biggest SINCE the riots following the assasination of Martin Luther King. And I think that’s true. The rioters aren’t trying to set a Guiness Book of World records, it’s just a boiling over point in which law enforcement continues to kill black people. I mean someone in handcuffs on the ground with a knee to his neck relentlessly until he’s dead? Why not shoot fish in a barrel? The policy the Minneapolis police dept. has is it’s ok to apply knee pressure to a person’s neck. So this was not just an isolated incident. It apparently is their policy. Imagine being handcuffed with a knee and someone’s weight against your neck. This is unacceptable and it’s reached a boiling point in which the lid has come off.

      People say the violence isn’t necessary, but even with the violence nothing is changing. No one has come out and said the policy of knee to throat has changed. The arrested officer is only facing manslaughter charges, which even for a civilian only carries a max. of 1 year in prison. Being a cop he’ll get probation and nothing more. His life will go on like nothing ever happened.

      But I think something else is going on with the riots. They are in part due to the widening wealth divide and many people are hungry and feeling like they have nothing to lose. Also, once Trump said there should be violence against the looters, it fed into anger at Trump. I think the rioting would have settled down but Trump is fomenting violence by his MAGA followers against the rioters. That spurred more anger.

      If nothing changes and people’s gripes are ignored and policies of violence against black people remain in tact like I’m sure Trump and his MAGA followers would like, then there’s going to be more violence in the streets of America.

      • Kim says:

        “If nothing changes and people’s gripes are ignored and policies of violence against black people remain in tact ”

        80% of crime in the United States is intra-racial, black on black, white on white, etc.

        Of the remaining inter-racial 20% of crime, 90% of it is black on white. Blacks also commit 60% of robberies and in more than 50% of cases the victim is white.

        “In 1992, police reported 23,760 murders and non-negligent homicides. Although they are only 12 percent of the population, blacks committed about 55 percent of the murders. This means that murder rates, by race, were dramatically different. “Whites” (including Hispanics) killed at a rate of 5.1 per 100,000 while the rate for blacks was 43.3 per 100,000. Blacks are therefore 8.5 times more likely to commit murder than whites and, all by themselves, account for the fact that the United States has a higher murder rate than England or Italy.

        Most of the time, blacks killed other blacks, but about 13 percent of their victims were white. Whites also usually killed each other, but six percent of their victims were black. In all, there were 2.7 times as many whites killed by blacks as blacks killed by whites, which means that any given black is 17 times more likely to kill a white than vice versa.”

        Please tell me more about “violence against black people”.

        • Yoshua says:

          When will white people rise?

        • Matthew Krajcik says:

          Police killing a suspect during a legal intervention is not a crime, unless they get convicted. so your statistics may only be looking at criminal killings. That may also not include “stand your ground” killings, etc.

          • Kim says:

            Here is what the always-leftist snopes has to say on the stats:


            Do Police Kill More White People Than Black People?
            More white people are killed in police shootings than black Americans, but overall white people are statistically less likely to be killed by police than black people.
            So the fact is that more whites are shot but proportionally more blacks.


            Let’s look at a set of statistics different from those I posted earlier.


            “In the U.S., African Americans are 2.5 times more likely to be killed by police than white people. For black women, the rate is 1.4 times more likely.

            That’s according to a new study conducted by Frank Edwards, of Rutgers University’s School of Criminal Justice, Hedwig Lee, of Washington University in St. Louis’s Department of Sociology, and Michael Esposito, of the University of Michigan’s Institute for Social Research. The researchers used verified data on police killings from 2013 to 2018 compiled by the website Fatal Encounters, created by Nevada-based journalist D. Brian Burghart. Under their models, they found that roughly 1-in-1,000 black boys and men will be killed by police in their lifetime. For white boys and men, the rate is 39 out of 100,000.

            In fact, people of color in general were found more likely to be killed by police than their white counterparts.”.

            BUT NOTE

            “The study was published on Monday in the Proceedings of the National Academy of Sciences, or PNAS, a journal that recently drew controversy for publishing another study on police killing disparities. That study, led by Michigan State University psychology professor Joseph Cesario, published on July 22, FOUND THAT VIOLENT CRIME RATES AND THE RACIAL DEMOGRAPHICS OF A GIVEN LOCATION ARE BETTER INDICATORS FOR DETERMINING A POLICE KILLING VICTIM’S RACE.

            As Cesario explained in a press release:

            Many people ask whether black or white citizens are more likely to be shot and why. If you live in a county that has a lot of white people committing crimes, white people are more likely to be shot. IfF YOU LIVE IN A COUNTY THAT HAS A LOT OF BLACK PEOPLE COMMITTING CRIMES, BLACK PEOPLE ARE MORE LIKELY TO BE SHOT.”

            Crazy stuff, huh?

            Now can we stop with the special pleading for blacks?

            • Matthew Krajcik says:

              Someone should let them know that COVID is twice as likely to kill a black man as cops are.

            • JMS says:

              The problem is you have no evidence for your conclusion that it is ” because BLACKS ARE MUCH MORE LIKELY TO BE COMMITTING VIOLENT CRIMES!” Do you have any data that indicate that the black community is more prone to violent crime than the white community? If you do not have this data, i think we can easily conclude that a robotcop has less qualms about using excessive violence with a poor black man than with a poor white man. Racism is very real of course, and the american police forces has it share of it, that’s for sure.

    • I agree that today’ riots are not of the scale of the late 1960s.

      I read in today’s Atlanta Journal Constitution that the broken glass and other damage would likely be fixed shortly, because it will likely be covered by insurance policies. It sounded like a curfew was instituted that was expected to stop future demonstrations. Of course, this may just be the spin, for now.

  3. Covidinamonthorayearoradecade says:


    “Protesters marching against the death of George Floyd chanted “Eat the Rich” while moving through Beverly Hills, California.”

    sounds like there is an economic element to these proetests…

  4. Matthew Krajcik says:

    For a brief moment, there was a tweet from Mike Tyson “If white people rioted every time a white person was killed by a black one, we’d never have any peace.” The tweet was almost immediately deleted.

  5. A lot of people are in denial about what is happening.

    On 1803, there was a brief truce between the City of London and Napoleon, and English tourists flocked to Paris. That period would end on 1804 when the crowned heads of Europe began to fight Napoleon because he had killed the Duke of Enghien, a rather unimportant nobleman.

    Ditto to World War 2 when the period of Oct 1939 to May 1940 was called the Sitzkrieg, when not much happened except a bloodless Nazi conquest of Denmark and a smallish operation to Norway.

    • Malcopian says:

      ‘Sitzkrieg- – ‘phoney war’, in the English phrase. The ‘Sitting down’ war in German – cleverly rhyming with ‘Blitzkrieg’.

  6. I wrote this earlier but it was ignored, so I am posting this again and also adding some more words to it.
    May 24, 2020 at 6:02 am

    About Dennis L’s quote on universities, it does not matter whether somebody has a degree from Harvard-Facebook, whatever. Since such degrees will be seen as bogus as all these for-profit vocational institutions.

    Before WW2, few people received post secondary education. Universities were for upper classes, to network, have fun, etc.

    There were land grant institutions run by states to train vocational students for their own use. A lot of state universities began as teacher’s colleges, not considered to be full universities back then. They taught agriculture, technical studies, and military tech. Humanities and medicine were for the upper class.

    After WW2, the GI bill was invented to keep the returning soldiers out of workforce for some time. Because there were not enough universities to house them, all of these institutions were renamed as full universities.

    Berkeley ,also called Cal, is legitimate since it began as a full university right from the start. UCLA began as the southern branch of California Normal School(teacher’s college). The main branch of CNS became the San Jose State University, which is not taken seriously; UCLA is not considered to be a legitimate university because of its origins. (Ditto to the various universities under the University of California system – only Cal is legitimate, the rest stepchildren.)

    That’s just one of the examples.

    No matter how much money the state universities and the second and third tier private universities might get from tech companies, their degrees will be worthless. Those who paid to take such courses will be no different from those who took huge loans to take worthless courses from a for-profit ‘universities’.

    Once again, Universities will be for the upper classes, who will be paying a much higher tuition since the capacity will have to decrease significantly. Companies will set up their own technical institutions, with a preference for the family of existing employees,and smaller companies will just take experienced employees released from the larger ones.

    In addition to the above, college education will probably go away for those who don’t need it, since the cost/benefit analysis does not favor that.

    Only the most misinformed will spend $50,000 or so a year to attend online lectures. One goes to college to get networks and have social life which might build for a lifetime. There is really no point spending all these money to earn an online degree, accredited or not, which is not worth a crap.

    • Today’s costs for education are incredibly high, even at state-operated institutions. The huge amount of debt available to students plus the belief that a degree is the key to a job that pays well has fueled a bubble in graduates of all kinds. I think I remarked earlier that we are now requiring students to pay for higher costs of all kinds: fancier dormitories, fancier cafeterias, fancier labs, faculty with Ph.Ds doing research instead of faculty with masters’ degrees teaching classes, and big football stadiums.

      In a high-tech world, an education is indeed helpful. But the high-tech nature of the world seems to be going away. And technology changes so quickly, that a degree quickly relates of technology that is out of date.

    • Matthew Krajcik says:

      “Before WW2, few people received post secondary education. Universities were for upper classes, to network, have fun, etc.”

      Surely, you are only referring to liberal arts degrees?! It seems for at least a few hundred years universities have been an essential means of educating people for specialized tasks, such as doctors and engineers.

      Elon Musk made a comment about how he doesn’t require people to have degrees. I wonder if that applies to his engineers (who aren’t if they didn’t) and if he plans to send medical staff that “learned on the job” only to Mars? Or does the university degree as optional only apply to programmers and office administrators?

      • Nope.avi says:

        “urely, you are only referring to liberal arts degrees?! It seems for at least a few hundred years universities have been an essential means of educating people for specialized tasks, such as doctors and engineers. ”

        For a few hundred years the majority of doctors and engineers came from the upper class. It was not until very recently did education to become a doctor or engineer become open to the masses. Most people just aren’t smart enough to become doctors or engineers, and even if they were, like in many Asian countries, there are not enough jobs requiring such education that pays well.

        One of the reasons why India’s infrastructure is in shambles is because civil engineering does not pay well in India. Software engineers (programmer) are paid better than civil engineers.

        “Elon Musk made a comment about how he doesn’t require people to have degrees. I wonder if that applies to his engineers (who aren’t if they didn’t) and if he plans to send medical staff that “learned on the job” only to Mars?” You sound like someone who has complete faith in the University system. There is no guarantee that any education will produce a competent employee or an exceptional employee that will give a firm an edge in a competitive marketplace. Selective schools don’t make people qualified, they are just good at selecting who would be most likely to excel at cognitively demanding tasks, such as rocket science, or brain surgery which will never be nothing more but a small portion of the population. I’m sorry, but you’ve been lied to. A society where everyone requires a STEM education will never materialize. We will never go to Mars.

        • Matthew Krajcik says:

          “One of the reasons why India’s infrastructure is in shambles is because civil engineering does not pay well in India. Software engineers (programmer) are paid better than civil engineers.”

          That sounds like the market trying to balance out an oversupply of one skill set, and a shortage of the other. Maybe they also have a lot of nepotism or other issues where people are not rising up out of competence, but other factors.

          “A society where everyone requires a STEM education will never materialize.”

          Would you really have someone who never went to medical school preform brain surgery on you? Would you trust a bridge or skyscraper designed by someone who learned only on the job?
          I didn’t say everyone, I am only saying that some small set of specialists should have formal education and some form of testing to ensure a minimal level of competence.

      • Robert Firth says:

        I remember talking to a very senior manager of an IT company (yes, in Silicon Valley). We were griping about how bad most IT was, and, perhaps incautiously, I blamed the university degree courses. His reply: “I never hire computing science graduates.” “Why not”, I asked. “Because it is cheaper to train than to retrain.” Very, very true, as I found out for myself working for a startup heavy with CS PhDs, who knew how to design nothing, because all they knew was how to use tools written by fellow academics.

  7. Harry McGibbs says:

    Unrest in Italian cities:

    “Assemblies of hundreds of people , many of them without a mask and without safety distances, as reported by AdnKronos , this morning in Piazza Duomo in Milan or, simultaneously with other squares in Italy, for the manifestation of the so-called “orange vests”, addressed by General Antonio Pappalardo .

    “The protest was among other things against the government and for the return to the lira, under the banner of slogans such as ” They want to sell us to China “. Tension also in the center of Rome for some events organized by different groups linked to the far right

    “What is the movement of orange vests?It is a composite and heterogeneous protest movement whose watchwords are the return to the “Italian lira ” and a government voted by the people. To guide them, among others, is General Antonio Pappalardo, a former Italian carabiniere . Brigadier general of the Carabinieri on leave since 2006.”


      • There need to be underlying problems for protests to spread this far.

        • Matthew Krajcik says:

          Does there, though? After months of lock downs, people are just looking for an excuse to riot, I think. Even then, it looks like maybe a few hundred in each major city, and thousands of protesters. A couple hundred people can do a lot of damage if there is a lack of political will to stop them.

          • Nope.avi says:

            Why would they being looking for an excuse to riot, though? These are the same people who thought the lockdowns were justified and accepted them. I don’t remember black people or progressives being profiled as being skeptical of the lockdowns at all. As long as they were getting an unemployment check, they were cool with it.

            • It's all so tiresome... says:

              Just type “black mob violence” into YouTube.
              One reason is they think it’s fun. “Kids just being kids..”

              In the US, public state-fair events have been abandoned because of black “wilding”. It’s just a thing they do.

              This is Minneapolis well before covid/floyd:

              Analogous behavior in Australia:

            • Bobby says:

              No, during lockdown there was fear of virus, this kept everyone compliant, which was and still is legitimate. Now we have economic impacts and complicit behaviour. Aka job loss, insecurity and riots. Study retrovirus that’s what sars cov2 is. Maintain your distances, stock up, reduce viral load for you and loved ones. There is no black and white in this pandemic, just slow social economic destruction as Gail highlighted at the end of the post above. Small amounts of Cinnamon , vitamin D and fennel tea are a good place to start taking care of business for minorities of one two or three, family. Wish you all well

            • I am not sure that they are getting an unemployment check. Or, if they are, that they can count on the check for all that long.

              This is a link to a Vox article. It claims that depression symptoms are highest for young people.

              Depression symptoms are also higher for Latinos and blacks:

              The more education a person has, the less distress a person tends to have:

              These are the people whose life is being taken away from them. Those of us who are older and well educated are less threatened by what is happening.

            • Matthew Krajcik says:

              “Those of us who are older and well educated are less threatened by what is happening.”

              That is interesting; does it mean that worrying is incorrect, or that the college grads have a (perhaps unfounded) confidence that everything will be fine?

          • Adam says:

            Are you in denial Matthew?

            I’ve lurked here for years, underlying problems are everywhere. There were trends along these lines prior to Covid-19.

        • Nope.avi says:

          One of the underlying problems seems to be a lack of will for local authorities to stop them.

          • Adam says:

            Or Ability?

            • Matthew Krajcik says:

              There is no lack of ability. They could shoot all looters and arsonists if they wanted. They have the ability to roll out thousands of national guard in armed vehicles if they want to.

        • Robert Firth says:

          One of the “underlying problems” is a certain Hungarian billionaire ex Nazi who will fund anything that aims to destroy Western civilisation.

  8. Harry McGibbs says:

    “For decades, China has been powering global manufacturing through its integrated supply chains on the back of large amounts of debt. Troubles are mounting for China since its years of profligacy on borrowed money has now resulted in its debt pile becoming extremely large at a time when its economy is contracting…

    “One round of bailout by the central government took place in 2019 as smaller Chinese banks were witnessing tremendous uncertainty. There are now expectations that many more Chinese financial institutions will need bailouts by the central government.”


    • Harry McGibbs says:

      “Hammered by the health crisis, China’s economy shrank 6.8% in the first quarter from a year earlier, the first contraction since quarterly records began. Analysts believe it will be months before broader activity returns to pre-crisis levels, even if a fresh wave of infections can be avoided.

      “While most businesses have reopened, many manufacturers are struggling with reduced or cancelled overseas orders as lockdowns push the global economy into recession. Domestic demand also remains depressed amid increased job losses and worries about a second wave of infections.”


      • Harry McGibbs says:

        “Banks in Hong Kong have been warned they face a tangle of red tape as the territory prepares to lose its special trade relations with the United States as Beijing tightens its grip.”


        • Harry McGibbs says:

          “…the leadership in China historically takes a slow approach in dealing with foreign policy with the United States.

          “The uncertainty of the next leader coming into a highly contentious election in a divided nation facing the Coronavirus’s challenge means that China will wait until after November to decide how to proceed when it comes to a trade deal and relations with the US.”


      • The big problem in China seems to be lack of demand:

        Export orders logged the fifth consecutive month of contraction, with a sub-index standing at 35.3 in May, well below the 50-point mark, as the coronavirus pandemic continued to take a toll on global demand.

        “Judging by the PMI sub-indices, the absolute levels of demand-related indices are way below the production-related ones, indicating a pronounced constraining impact from demand on production,” said Zhang Liqun, an analyst with the China Federation of Logistics and Purchasing (CFLP), adding that more than 50% of companies have reported a lack of demand.

    • Failing Chinese banks are indeed a concern.

  9. Harry McGibbs says:

    “Global demand for personal luxury goods has been steadily increasing for decades, resulting in an industry worth US$308 billion in 2019.

    “However, the insatiable desire for consumers to own nice things was suddenly interrupted by the coming of the COVID-19 pandemic, and experts are predicting a brutal contraction of up to one-third of the current luxury goods market size this year.”


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