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#COVID-19 pandemic as a force to disrupt institutional trust : EU Reporter China

#COVID-19 pandemic as a force to disrupt institutional trust

| May 12, 2020 | 0 Comments

By Guest contributor

On 8 April 2020, after 76 days of lockdown and confinement in Wuhan, China reopened Wuhan City and started resuming production. The temporary victory took place after unprecedented damage suffered in this city and an all-out medical effort to save infected people. China sacrificed Wuhan City and Hubei Province to gain time to battle COVID-19 in the rest of the country and the rest of the world, write Dr.Ying Zhang and Dr. Urs Lustenberger.Â

The latter, however, does not seem to appreciate this. All the data and the lessons learned, and the sacrifice of tens of thousands of people were hardly registered by the so-called experts tasked with many countries’ pandemic preparation. Ignorance, bickering and arrogance have become the key words defining how many nations started to deal with this pandemic. Best practices and lessons learned such as using AI to closely trace infections, population-wide testing, and various methods of treatment are still hardly acknowledged and do not take place in many countries. The crucial time window to win this pandemic in the early stage has been wasted, due to a hesitation between lockdown (to protect its people from virus infection) and risking people to be exposed to acquire herd immunity so that the economy could possibly be saved. A few interesting themes made the headlines for politicians and the media:

(1) This is nothing but a flu? Therefore we shouldn’t worry about it. After all it is only a problem of mainland China.

(2) We have enough resources and the world’s best medical infrastructure to deal with this pandemic!? Even after COVID-19 started spreading outside of China, the western world still considered COVID-19 as an Asian matter, similar to 2003’s SARS. With that, large scale discrimination started to occur in many countries in Europe and North America.

(3) When Europe and the USA became the center of the pandemic as a consequence of their ill-preparation and their late and lackluster response, the geo-political consensus developed as “this pandemic started from China, so this virus is produced by China?!�, or “China is supposed to have more death from this pandemic, if using the Western measures to control this pandemic, so all the infection rate and death toll declared by China must be wrong?! Therefore, China should compensate others for their loss endured by this pandemic?!� etc. All these hilarious political arguments have been eagerly lapped up by the leaders of many countries. It proved easier to blame China as the culprit than to admit their own failures and mistakes. By now, Covid 19 has indiscriminately and quickly wreaked havoc in both rich and poor countries. The cost of life that was endured from the failure to take note of the lessons learned in Asia has by far outweighed the risk of a downturn of the economy. Such was proved by countries like South Korea, Singapore and Taiwan that showed how a quick and decisive reaction could have limited both the cost to the society as well as the cost to the economy.

Similar to the last pandemic, known as the Spanish Flu, also known as H1N1, in 1918, this current pandemic is indiscriminate of race, age, status, gender educational level etc. and as such has a tendency to provoke mankind’s reaction to be opportunistic and distrusting . In 1918 during WWI, when the Spanish Flu killed millions of soldiers and civilians in Europe, the media was not allowed to report about the pandemic as the leaders were more afraid of losing WWI than the battle against the pandemic. The public health emergency was not a priority and human life counted little. This opportunistic mentality caused a death toll of hundreds of millions and exceeded the atrocities of the war by far.

Interestingly, the lessons from the 1918’s pandemic have not been learned by humans. As history replays with a quite similar story line in which the majority of developed countries chose to protect their economies rather than the lives of its citizens. In doing so they missed what could be called the golden window for the application of the golden rules of when and how to deal with the pandemic decisively. Instead, it became common place to argue that one did not have sufficient information from earlier infected countries. It became a consensual geo-political argument to accuse those who held a different ideological system but responded well to the pandemic; and to dodge citizens’ critiques on the deadly consequence of ill-preparation. The excuse for keeping the economy running as the one priority instead of a quick adaption of the golden rules on fighting the pandemic have ironically become the main reason for the decisive destruction of the economy.

Many commented the choice between hunger (economy) and illness (pandemic) is a dilemma. I argue, however, that only for those who are not prepared this choice poses a dilemma. Once a system is civilized, sustainable, and collaborative, the damage and the loss from any crisis is predictable and reducible. Even though a crisis is hard to predict and control, a sustainable system is able to prepare reserves for all to go through it. But what do we have now?

The current pandemic has broken the global value chain, caused millions of citizens to go unemployed, caused millions of firms to terminate their business or go bankrupt altogether; and more seriously, it exposed millions of people to a precarious situation without access to unemployment rescue funds and no access to medical care, even though our morality would tell us that all lives should be saved. Therefore, predictably, even though people could die from either/both hunger or/and illness, no matter if they are from wealthy countries like the USA and West Europe, or poor countries like India or Bangladesh, most of the institutions of all these countries still blindly struggle with the dilemma between upkeeping their respective economy or battling the pandemic. As such, all these systems show that they are neither sustainable, civilized, nor collaborative. They rather prove themselves to be unequal, unsustainable and contradictive.

In the face of the current pandemic, a series of urgent questions, need to be addressed.

(1) What components are essential in our economic equation? How long should performance of an economy continue to be determined by a GDP-based index? Shouldn’t we take this pandemic as an opportunity to revolutionize the system of our economy? Is the current system agile enough to find solutions to these questions or will it be disrupted by novel ideas and concepts? What is the cost of human lives of a passive approach to deal with these issues?

(2) Should our current concept of the economy and its underpinning theories be revised because of the predictable economic recession caused by this pandemic? Will it be sufficient to have international free trade relationships based on the law of comparative advantage only? Can this law, together with a series of economic derivatives such as futures contracts, really bring all the market participants a shared prosperity without economic bubbles? Will this law-triggered globalization bring equally beneficial use to each country? The answer is a resounding no1.

It is evident that this law of comparative advantage, even when considering combining it with the law of absolute advantage, will not be enough to deal with the on-going transformation. The essential point is, as long as the equally full collaboration across nations and across classes is not applied, wealth distribution and resource allocation will always remain biased and discriminative among the various levels and clusters. With such a logic, the rich will become richer, the poor will become poorer; cross level trade will never truly favor both sides equally. Even though leapfrog catching up is possible for some latecomer countries, the middle-income trap will paradoxically always remain an absolute for most.

During this COVID-19 pandemic, most people are off from major offline consumption, entire industries slowed down and as a consequence, supply was reduced. People’s life style changed dramatically because of the confinement and severe limitations of social activity. In the prevailing conditions of the economy, financial reserves are not able to be allocated equally to all citizens for any longer than three months, no matter if a nation is a poor or a wealthy one. This stems largely from the fact that the economic system was designed to consume the resource of the future rather than being sustainable at present. Applying this logic and considering the expected maximum economic volume on the earth as an alternative presence of the energy, the total economic volume of this isolated system on our planet should be constant according to the Law of Conservation of Energy. Therefore, the role of the Law of Absolute or Comparative Advantage in economics and international trade is not only to increase the economic volume of the system to its maximum at a certain speed, but also to distribute such increase to various networks either equally or unequally. Following the universal Law of the Constant Energy, the total volume of the maximum economy should be a constant and calculated on the basis of the total economic volume of all species.

Therefore, the rule of unequal distribution of resources must cause unequal economic consequences. And the unequal resource distribution comes from the problematic system that was designed for such. If the formula of resource distribution on our isolated planet is based on plundering the resources of any other nation, species, or the next few generations, the law of Conservation of Energy will predict an eventual disruption of human’s society. A force beyond human’s technology and understanding will then intervene to reset a new equation of conservation of energy. Such a force could be a war between tribes, nations, species, and even amongst planets. The reason is simple, unequal energy distribution breeds unequal consequence, one of which is the hatred that brings humans into a war.

Taking the 2008 financial crisis as an example, the American government invested $700 billion to rescue the financial-sector and bail out its banks; the UK government invested a $850bn rescue package; the Chinese government invested a $575bn stimulus package (13% of 2008 China’s GDP) to stimulate the economy, etc. What is done this time to offset the adverse effects of the pandemic? In addition to the late response and a naïve interpretation of the pandemic and its impact, the exact rescue plan for each country was completely incomparable. The EU’s whole support fund for the 27 EU countries in this pandemic is just €500 billion by early April. Precariously, when joint collaboration is needed to battle the virus, acrimonious bickering, hatred and nationalistic carelessness have quickly spread.

The media, similar to 1918 when dealing with the Spanish Flu, could not fulfill its duty. Disinformation, capture by politicians and a strong bias to give in to mere propaganda made the mainstream media appear to be without any use to the general public at all. The pandemic was long underestimated, and mainstream media turned more or less into a forceful propaganda tool of the respective national leadership and its bias vis-Ã -vis its pressure groups. It is clear that disinformation comes from both the manipulation of the source of information and misleading function of the information intermediaries. Therefore, for average citizens, with diversified sources of information and less experience and knowledge about the pandemic, it is almost impossible to make a right judgement, and to prepare and protect themselves at a micro level.

Over time the disinformation proved to be wrong allowing the emergence of the real facts. People started to realize COVID-19 is not e.g. an ordinary flu as what was widely claimed; they realized that it was not true that leaders and their systems were well prepared as they had kept claiming; they realized that wearing masks is equally important as having social distance. Within a short period, changes of expert’s and leader’s opinions and shocks about the real state of affairs came not only with the emergence of the factual truth but also from new political accusations. Country A can accuse country B of its disinformation in the pandemic, or country A can openly seize country X’s strategic medical supply imported from country B. Various scenarios manifest unusual levels of distrust between nations. When countries and governors are busy accusing each other to excuse their mistakes and shortfalls, medical workers, care givers, and scientists across the world are relying on collaboration to fight against the pandemic.

Due to general state of disinformation, distrust and even hatred within the same territory are ripe. Citizens start distrusting their public institutions, private sectors and firms start to be concerned if their government would rescue them from a foreseeable bankruptcy; public institutions question the judgement of other public institutions; provincial governments distrust their central/federal government… and so on and so forth. How much will it take for the tax payer to realize that the state is neither willing nor able to protect him/her. Will he let himself be fooled one more time by a careless tweet from its leadership or will he wake up. On closer look, this trust crisis actually stems from the missing trustworthiness of the entire system and its main protagonists as they were in the first place before the pandemic. Governments have long ago ceased to be reliable, responsible, and dependable for its citizenship at large.

The foundation of trustworthiness is the embracement of the great love with a much broader meaning than the ordinary romantic love. To explain this great love, I dwell on the following three streams of Eastern philosophy :

(1) the benevolent love (�爱ren) in the book of the Confucianism with the distinguished levels loyalties, actions, duties, and attitudes towards different groups of the relationships;

(2) the universal love (兼爱jian ai) in the book of Mohism, calling for people to care about all others equally; and

(3) the path of enlightening in the book of Buddhism.

To build trust on the basis of this great love, trustworthiness as a bridge in between, should be equipped by a parental love system. Such a system encompasses a mother side of parental love which requires its citizens to be caring, brave, calm, organized, co-operative, and with long-term view similar to the mothers’ love to their children. This part of the system needs leaders to embrace universal love to be responsible for its citizens and to be capable to enlighten and lead others (rather than command them) as in benevolent love. To its balance, a father side of the parental love system should be equipped by a strict reward-and-punishment mechanism, so that any wrong behaviors against the rules (set by the long-term goal from the mother side of the system) can be punished while any good behavior can be rewarded. This sphere of the system requires the leaders to have a superior level of morality coupled with strong execution power to convince citizens to willingly obey rules and regulations.

Both spheres of this system are equally important, but to reach a sustainable society imbued with trust, the mother-side of the love system is the foundation, and the father side of the system is the execution machine, otherwise any system with only the father side will easily lose its moral base and slide into what I call the dark side, whereas a system with only the mother side will lose the powerful execution tools to achieve the common goals. The way the current pandemic is handled by most leaders in the world has shown clearly that our system has crucial failings as it lacks institutional trust and the mother sphere of the basic trust system.

So, what will be the consequences once we have dealt with the immediate effects of this pandemic? Mostly probably, there could be another wave of global hatred caused by the increased loss of our humanity, and still a time where the naive prioritization of economic growth over the survival of humanity. In the end, the realization of the fact that the current leaders have sacrificed an enormous number of unnecessary lives could trigger long needed changes from within the system to rebuild trust and rebase the role of the economy within society. If such changes from the inside were not forthcoming, it will become increasingly likely, that disruptive elements from the inside will force an untrustworthy system to change to a more sustainable one which is able to obey the law of conservation of energy and the balanced parental love system.

1 More argument please refers to Zhang, Y. (2020) Covid-19, Globalization, and Humanity. Harvard Business Review (China). April 6, 2020.

Dr. Ying Zhang is a professor of entrepreneurship and innovation and an Associate Dean from Erasmus University Rotterdam. Dr. Urs Lustenberger is the president of the Swiss Asian Chamber of Commerce.

Source:: EU Reporter Feed



Category: Energy, Uncategorized

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