Source ｜ 智 本社 (ID: zhibenshe0 -1)
Author ｜ Qinghe President of Zhibensha
Head image ｜ Xinhua News Agency, March 4, at the Essa International Airport in Buenos Aires, Argentina, some passengers travel with masks
“Under the Plague, Two Worlds” (Quantum School).
Bridge Water Fund founder Ray Dalio warns:
The world today looks like the 1930s. The huge wealth and political divide led to serious conflicts between countries and ideology, debts piled up, central banks were unable to return to the sky, social conflicts were sharp, and world order was facing reshaping.
The financial crisis of 2008 put an end to past imbalances in the international order. Since then, populist movements in Europe and the United States have sprung up, American constitutionalism has lost momentum, and world order has been chaotic:
U.S. sanctions Russia, Sino-US trade war breaks out, Britain finally leaves the European Union, U.S. forces “beheaded” Iranian general, the new crown epidemic spread to the world, OPEC + talks collapse, and financial market turbulence.
In the era of globalization, commodities, capital, talents, information, technology, and viruses are moving rapidly in a “flat world.” The financial crisis broke out in one country and the global economy shook; the epidemic broke out in one country and the world spread rapidly.
Governments that were once monopolised now have to compete with each other on the same plane. For example, the US government has cut taxes, and India, China and other countries have followed up to compete for international capital and talent.
But due to the retrogression of global governance, state and ideological contradictions are directly confronted on the table.
The epidemic is a fair test for governments around the world. Test their national governance capabilities to see who’s more efficient in administration, seeWhose system is more reliable.
People are referees.
But people are prone to “survivor bias.” In order to win the hearts of the people, they accused each other of inadequate governance and ineffective response, and there was a fierce confrontation scene of “two epidemics in one epidemic.”
Fengyue is on the same day, with different hearts. National emotions and ideology are intertwined, leading to a loss of basis for dialogue and discussion. However, economics gives us a rational perspective to explore the logic of state governance under the epidemic and how to coexist with virus risks.
01. What other “invisible” deaths?
In early March, Zhang Wenhong, the leader of the Shanghai Medical Treatment Experts Group, said in an interview: If the work is not resumed as soon as possible, the death toll will be much higher than that of coronavirus.
When everyone was afraid of the death threat of the new crown virus, Zhang Wenhong saw another “death”-the danger of social order disruption.
For example, hospitals are overwhelmed, medical supplies are scarce, other diseases such as cardiovascular disease, heart disease, and malignant tumors are not treated in a timely and continuous manner, and there may be an increase in mortality.
In the most difficult times, most departments of the hospital stopped receiving non-critical patients to reduce infections and save medical resources. However, many diseases are not treated in time, and they can become serious due to infection or deterioration, or the disease suddenly threatens people’s lives.
In Wuhan, an average of more than 10,000 babies are born every month. If medical resources are not enough, the risk of pregnant women and babies will increase.
Of course, some people also said that people living at home during the epidemic would reduce traffic accident deaths and even increase the birth rate of babies.
(Skipable: Two months of staying at home, both husbands and wives are about to have feelings, their feelings are increasing day by day, coupled with the shortage of condoms, the pregnancy rate is rising. However, after the peak of the epidemic, divorce and abortion surgery are in line Long line.)
So, the social order is interrupted and the market is blocked. This “life account” depends on the whole, not just the pneumonia virus.
The economist Liang Jianzhang published an article called “The Segregated Economic Account” in February, which calculated our lives.
Some people say that resumption of work is money and death. In fact, if there is no “money”, it will be terrible.
Prof. Liang Jianzhang pointed out that economistsAccording to data from various countries, the value of life has been calculated in an economic sense: Generally speaking, the value of life in developed countries is between 10 and 60 times the per capita GDP.
According to this calculation, “For every 1% reduction in GDP per capita, life expectancy will decrease by about 10 days” [1] .
What does this mean?
The number of deaths caused by the outbreak has exceeded 3,000 in China. But if resumption of work and economic recovery is difficult, leading to a 1% reduction in GDP, the average life expectancy will also be reduced by about 10 days.
The average life expectancy is reduced by 10 days. This macro data is not easy to touch people’s hearts. After all, it does not fall on individuals.
If it is specific to individuals, there may be sudden brain death due to delayed medical examinations; there may be bankruptcy, unemployment, salary cuts due to the inability of the company to work, and the risk of divorce, illness, and short-term risks. These lost lives and life spans are also real.
Figure: The relationship between prevention and control levels and mortality, source: Zhibensha
When we see “visible deaths”, we also want to see those “invisible deaths.”
So, anti-epidemic is essentially an economic issue .
In the face of this epidemic, we must manage the general ledger of life, but we must also operate the general ledger of the economy.
Of course, there are still people who stand on the moral high ground and say that life is priceless. How can we measure it with economy? How can you give up your life to protect the economy?
Life is priceless, but as long as people live in the real society and economy, life cannot be rid of being priced. Because the market means risk, risk means successCost means investment, but because resources are scarce, investment is always limited.
The question is coming. How much money do we need to control each risk?
For example, investment in traffic safety. In fact, the government can broaden roads, increase traffic police, and improve the design of car manufacturers to reduce traffic accidents.
How much money do governments and car manufacturers need to invest to ensure traffic safety? What is the acceptable accident rate?
This is a question of the marginal rate of return on investment.
Ethiopia’s Boeing 737MAX crashed in March last year, and 157 lives have disappeared. I wrote an article “Three Paradoxes of Aviation Safety | Can Humans Get Rid of the Nightmare of Air crashes?” 》 “Aviation safety is just a consideration for airlines as a cost benefit.”
Between compensation for aviation accidents and the cost of aviation safety and security, the market will guide each airline, aircraft manufacturer, spare parts supplier and insurance company to make accurate calculations to maximize benefits.
As safety margins increase, the probability of accidents decreases. When the marginal cost caused by the accident probability is less than the marginal input, the company will stop increasing safety funds. This kind of accident risk, I call it “less risk”.
Take the Malaysia Airlines MH17 accident as an example. In 2014, the Malaysia Airlines MH17 civil airliner was shot down by a missile on the Ukrainian border. The accident was a failed gamble by Malaysia Airlines. In order to save fuel costs, Malaysia Airlines ignored ICAO’s danger warning and refused to change routes, which eventually led to the disappearance of nearly 300 lives.
People have criticized capitalists for incorporating the lives of others into their cost-benefit calculations (Malaysia does pay the price). But in fact, each of us includes the lives of others, even our own lives, in our own income statement.
Welfare economists are good at calculating the value of life. Chinese economist Huang Youguang did such calculations. [2] :
Flight from Shanghai to Singapore, assuming that only two flights are available at the same time. These two flights are from two different airlines of AB. Their other aspects are consistent, except that Company B has a worse safety record than Company A and the accident mortality rate is one millionth higher.
Usually, people choose Company A.
However, if company B’s flight fare is 10 yuan lower than company A’s. How would you choose?
At this time,Someone would weigh the death rate of one millionth with 10 yuan. As long as you weigh it, whether you choose A or B, it means that you are valuing your life.
If you choose B, your valuation of your entire life is 10 million (10 yuan divided by 1 million). If you choose A, you have spent 10 yuan, reducing the probability of death by one millionth.
Human activity is, after all, an adventure. Life faces the pervasive risks of traffic accidents, viruses, pollution, investment, etc. Many of our choices are to value our lives.
So, human behavior is a risky balancing art. As part of the social risk, how much investment (cost of money, time, etc.) do we have to spend to resolve this risk. At this time, we need to calculate an economic ledger.
Prof. Liang Jianzhang gave us Calculated an economic ledger for influenza [1] :
According to historical data, the influenza infection rate is about 10%, and the patient mortality rate is 0.2%. Well, in the entire population, the death rate from influenza is two ten thousandths.
Assuming that the average life expectancy of a patient is 60 years, and the average life expectancy of a society is 80 years, then each person who died of illness would have shortened the life expectancy by 20 years. Calculated based on the death rate of two ten thousandths, the life expectancy of the entire society has been reduced by about 1.5 days (20 years multiplied by two ten thousandths).
If public policy interventions are implemented for influenza, strong social controls will be adopted, but social controls will reduce GDP by 1%. According to the above, GDP fell by 1%, and life expectancy fell by 10 days.
So, this kind of control is actually not cost-effective.
So, as the 19th-century French economist Frederic Bascia wrote in his dying posthumous “visible and invisible” [3] :
“There is only one difference between a good economist and a bad economist: a bad economist is limited to seeing the visible consequences, while a good economist can consider and see Visible consequences and those that can only be speculated. “
It can be seen that Dr. Zhang Wenhong has the potential of a “good economist.”
Find “invisible” in order to calculate the economic ledger and maximize the value of life.
02. Who controls this economic ledger?
This has become the core division of the epidemic, the so-called Chinese model and the American model have emerged.
The Chinese model is easy to understand:
The government is the controller of the ledger. The country has a game of chess, joint defense and joint control, closed communities, and Chinese homes. Then the government regulates medical supplies. The provinces and the army support Hubei. The virus eventually suffocates and the battle is resolved quickly.
The implementation conditions of the Chinese model are very high: a strong central authority, a Chinese with great discipline and patience. At present, few countries have such conditions.
The obvious effect of this model is that the epidemic situation is quickly controlled, and the number of infections and deaths has not been further expanded, which has greatly reduced the threat of the new crown virus to the lives of people in China.
China treats the epidemic as a full-scale war, so it is called a “campaign”.
However, this is a way to kill an enemy one thousand and damage eight hundred. In order to suffocate the virus, China has paid a lot of money:
First, the medical system has suffered an impact, hospitals across the country are overloaded, medical staff are physically and mentally exhausted, medical resources are scarce, and the risk of death for non-NEV patients is increased.
Second, the market is interrupted, the economy is halted, and the society is under pressure. The industrial chain has been hit unprecedentedly, and the downward pressure on the economy has increased significantly, leading to the closure of some enterprises, unemployment of workers, and rising household income and debt.
Now that the economy is recovering slowly, many of the “invisibles” that have previously appeared are gradually emerging. In order to cope with the economic downturn, the government has introduced a series of measures, including targeted reductions in interest rates, tax cuts, social security exemptions, free highway fees, and 33 trillion yuan in major infrastructure projects.
So, the government calculates the national economic ledger. The government is like a genius economist and finds many “invisible”; it is also like a quantum computer that dispatches various resources and balances various interests.
For example, financial compensation for medical staff in Hubei and Hubei; subsidies for high-speed companies damaged by free passage; relaxation of regulation to stimulate the property market; tax reduction and social security for enterprises.
However, there are still many places, companies andIndividuals cannot be taken care of. For example, the loss of income, the debt burden, the risk of unemployment, the expected frustration caused by the two-month regulation and so on.
Today, China relies on a huge market mechanism to meet the diverse needs of different individuals, families and businesses. Due to the decentralization of information (information decentralization theory), no individual or government can replace it. The government compensated these individuals and enterprises, and certainly others were damaged as a result.
For example, large-scale infrastructure investment stimulates economic growth in the short term, and protects the income of state-owned enterprises and the employment of related workers. However, this will certainly cause some private investment to be squeezed out and other public goods supplies to be squeezed.
So, the Chinese model can be summarized as “prevention of rigorous protection + strong stimulation of large infrastructure”, which is government-led, rigid, and uniform.
However, the European and American models are quite different and not easy to understand.
Italy was the first European country to lose ground. At the beginning, the Italians did football matches, “Orange Wars”, and did not even recommend wearing a mask. After a large-scale infection, the city was closed, suspended, and classes were suspended. Even so, their efforts to close the city are not comparable to Wuhan.
The British Prime Minister announced the failure of the previous defense a few days ago, and then adopted a mild defense strategy. The specific measures are to isolate the people at home and promote frequent washing of hands instead of wearing masks. The government mainly rescues critically ill patients, and also keeps school, sports events Photographed correctly.
Looking at Sweden again, Swedish officials have announced that they will no longer test mild and suspect patients, and will use limited resources for high-risk groups such as medical staff and hospitalized patients. They believe that it is no longer possible to stop the spread of the epidemic in Sweden.
Domestic media have interpreted the “Buddha-based epidemic resistance” in Britain and Sweden as disarming and surrendering, trying to immunize the group to fight the virus. You know, Britain was the first country in the world to establish a public health system.
Looking at the United States again, Trump said on Twitter that 16,000 people in the United States died of the flu, and only a few dozen people had new crown pneumonia, which is okay. However, when the epidemic spread in the United States, the star was recruited and the NBA was suspended. Trump immediately announced that he would cut off tourism with Europe, and the federal finances spent 70 billion on public health to fight the epidemic.
There may be two things that really make Trump nervous: First, it is rumored that the Brazilian president was recruited, and Trump ate with him six days ago; second, that US stocks melted twice a week, and the capital market was extremely panic.
The above performance is enough to show that the “small government” in Europe and America can face the epidemic situation.Things to do are extremely limited.
The Chinese model is the big government to control the economic ledger; Europe and the United States are individuals to control their own economic ledger. The individuals here include individuals, families, businesses, communities, governments, the Federal Reserve, and Congress.
The Chinese model is rigid, centralized, and uniform. The European and American model is flexible, distributed, and diversified. In the European and American model, individuals, families, businesses, communities, and governments will calculate the value of life based on the development of the epidemic, and then take corresponding measures to form a gradient state.
Figure: No difference curve for prevention and control, source: Zhibensha
Individuals choose whether to go out and go to work according to the epidemic situation, whether the company chooses to start construction, whether the NBA chooses to suspend the game, whether the community chooses to close, whether the government chooses to increase the level of prevention and control, and whether the Fed chooses to reduce interest rates.
For example, after the spread of the epidemic and the collapse of oil prices hit the US financial market, the Fed adopted interest rate cuts and “unlimited liquidity support” to rescue the market.
Another example, after the epidemic spread rapidly in the United States, the House of Representatives enacted a bill to deal with the new crown virus, ensuring paid leave, unemployment insurance, and providing free virus testing.
From individuals and businesses to Congress, the Federal Reserve, and the government, everyone’s choices are made separately based on their economic books. Trump cannot order Congress, the Federal Reserve, businesses, and individuals what to do, and it is even difficult to order the state government to do so (federal system).
Look at the US federal government again. The first prevention and control of the federal government is prevention and control of entry. When the prevention and control of entry fails, it enters the second prevention and control, that is, mild prevention and control. The so-called mild prevention and control is similar to the prevention and control of influenza. The government only treats the severely ill patients, that is, “protects the most vulnerable groups”, and mild patients isolate themselves.
If mild prevention and control fails and the nation falls behind, the United States will move to wartime prevention and control.
If Spain has just declared a state of emergency, all Hispanics must stay at home, except for food or medicine, hospitalization, work or other emergencies. However, according to the Spanish Constitution, a national emergency can last up to 15 days, and parliament needs to discuss and decide whether to extend it later.
So, Chinese-style prevention and control is the last defense prevention and control in the United States. They will not start easily unless absolutely necessary.
Why doesn’t it start easily?
From the perspective of the US federal government, Trump also needs to calculate the economic ledger.
As of March 15th, the infection rate of the New Crown epidemic in the United States was 0.0000086 (US influenza infection rate was 0.08), and the case fatality rate was 0.02 (US influenza case fatality rate was 0.005). Then, in the overall population, the mortality rate of Xinguan is extremely low, much lower than that of influenza. The outbreak has almost negligible reductions in overall US life expectancy.
If the federal government implements Chinese-style control, it can be expected that the US financial market will immediately collapse and the economy will suffer a major blow, which will certainly affect the global economy.
If such severe measures lead to a 1% decline in annual GDP in the United States, it means a 10-day decline in life expectancy. Trump will certainly not do this extremely uneconomical “business”.
However, this calculation, like the first part, has a loophole, and that is that the epidemic is dynamic. If the epidemic spreads, the number of infected people, critically ill patients, and death rates will increase, which may also lead to a decline in GDP. It should be known that the current severe illness rate of the new crown epidemic is between 10% -20%, and the case fatality rate can reach 3% -5%.
So, the federal government has to calculate the gains and losses as individuals and businesses, with the changes in the epidemic situation, grasp the size, and choose whether to increase or decrease the level of control.
If wartime prevention and control is adopted now, it will definitely impact the entire medical system and may lead to even worse consequences.
For example, during the 2009 H1N1 influenza pandemic, Mexico took measures to close the city, but eventually failed. The United States finally gave up after trying to force the ineffective control to switch to the seasonal flu management model, that is, mild management. The flu has infected 60 million people in the United States.
However, Trump has criticized the CDC’s response to the H1N1 flu as a “disaster.” He hopes to raise the level of prevention and control, declare a state of emergency, and provide large-scale testing reagents.
A dozen states have declared emergency statusState, in which Hoboken, New Jersey announced that the city will implement a curfew from March 16.
The conditions for the US model are also very strict:
I. Transparent and accessible circulation of information.
The federal government, state governments, Federal Reserve, Congress, communities, businesses, and individuals calculate their economic accounts in accordance with market principles. The premise of this is that epidemic information cannot be concealed, tampered with, and circulated at high speed.
Second, the boundary between civil rights and government responsibility is very clear.
The government only needs to do its own thing, as long as it does its part, and so does the individual. If the U.S. federal government crosses borders, such as the implementation of strong control, it may cause damage to personal rights and must make corresponding compensation.
This is an important reason why the federal government will not easily launch wartime mode.
Third, a sound public health system and medical resources.
The U.S. public health system has withstood the shock of 29 million flu cases and 280,000 critically ill patients. The community GP system in the United States plays an important role in patient detection and prevention. More importantly, the mild control is targeted at severe cases, which has high requirements for critical medical resources and medical technology.
Italy, Singapore, and Japan all adopt the American model, and the situation in Italy is much worse than Singapore and Japan. It is mainly the debt crisis in Italy that has dragged on public health for many years.
Currently, there are over 10,000 cases in Italy, and there are an estimated 2,000 cases of severe illness, but there are insufficient medical resources for severe illness. There are only 5,000 ICU beds in the country. Japan has the second largest number of beds in the world.
03. How can humans “coexist” with the new crown?
Whether the American model is superior to the Chinese model, is it just a matter of conflict between the two models?
Last month, a boss who was engaged in the export of toys complained to me that orders in South Korea were running short and no workers were found in the country. He complained to me a few days ago, he finally found a worker to start production, and a Korean customer asked him to wait.
If it is not for economic globalization, China and the United States will use various methods to eliminate the virus. However, in this age, viruses are circulating around the world as fast as capital.
From the path of virus transmission, the first wave of China, the second wave of Japan, South Korea and Iran, the third wave of European and American countries, and then the fourth wave of domestic return.
In the first two months, European and American countries complained that China had closed its cities, cut off supplies, interrupted the economy, or caused global supply chains to be blocked, dragging down world economic growth and spreading pessimism in financial markets.
Today, the eyes of the storm have shifted to European and American countries, and many Chinese are extremely dissatisfied with the “Buddha” resistance to epidemics in European and American countries.
Europe and the United States are ready for a protracted war against the virus, and they are considering how to coexist with the new crown virus for a long time.
The British government said: “The peak of the epidemic is postponed to summer, and then the epidemic is controlled.” “Our purpose is to try to reduce the peak and expand the peak, rather than suppress it completely.”
The UK Health Minister revealed that the worst case scenario is that 80% of people in the UK will be infected with the new crown virus and more than 500,000 people will die. German Chancellor Angela Merkel predicts that 60% -70% of people in Germany will be infected with the new coronavirus, that is, 50 to 58 million people.
U.S. experts predict that 96 million confirmed cases will eventually occur in the United States, 4.8 million people will need hospitalization, and 480,000 will be killed.
Figure: Trend of epidemic situation under different control modes, source: Internet
How can the new crown epidemic be regarded as flu?
This is actually a choice made by the European and American governments after they have calculated their economic accounts.
Civil rights and government responsibilities in Europe and the United States are very clear. Individuals and governments have their own defenses, and everyone has the right and everyone has the responsibility. Even if Trump fails to prevent and control, the biggest consequencesIt is the failure of the reelection election this year that the US system is not responsible for.
Chinese government pressure will be much greater. We paid a huge price for the complete elimination of the virus and did not intend to fight the virus for a long time.
If the European and American countries do not end the fighting and coexist with the virus, then the imported risks in China cannot be eliminated, and the prevention and control cannot be completely eliminated. In this way, it will certainly affect China’s resumption of work and production, foreign trade exports and economic recovery.
However, this modest prevention and control in Europe and America conflicts with the Chinese model.
Europe and the United States blame China for transmitting the virus to them. China blames the poor control of Europe and the United States for causing the virus to spread and import into China. This accusation will inevitably rise to the government’s national governance and ideology. This led to the conflict of “One epidemic, two worlds” at the beginning of the article.
So, we have to rethink how to get along with the new crown virus for a long time, and how to find a balance between epidemic prevention and control and socioeconomic recovery.
This problem can be understood as how we can coexist with global market risks. In essence, in the era of a globalized market economy, more scientific state governance is being sought.
In the era of globalization, capital, talents, commodities, and viruses circulate at a high speed, and opportunities and risks coexist. We have to learn to coexist with risks for a long time, that is, to coexist with virus risks, financial risks, and transportation risks in globalized markets.
Through the outbreak of the epidemic, we can see the different national governance models of China and the United States:
China likes playing chess: The head of the central government takes full command of the central government. The horse walks on the sun, the elephant walks on the field, the soldiers go forward and retreat, the hierarchy is clear, and the rules are clear; Clearly, the Chinese and New Coronary Pneumonia, there is you without me, there is me without you.
The United States is like playing Go: The battle is unfolding, with multiple heads fighting, distributed siege; Baizi and sunspot mixed, there is you in me, there is me in you.
Obviously, China is good at fighting blitzes and annihilation. The United States is more like fighting continuous battles and attrition wars.
Each has its own advantages. It is very unfavorable for China to continue to consume it abroad. We have to explore the mechanism of coexistence with the new crown virus, which is also the balance we have been struggling with: virus prevention and control and economic recovery.
Even if China wins the annihilation war, there will still be foreign imports; even if the new crown epidemic is finally eliminated, there will still be other diseasesPoison and risk appear.
This is determined by the nature of the market. In the market era, we cannot completely eliminate risk, and eliminating risk will also destroy market and wealth. Therefore, we need to proceed from the nature of the market to improve national governance.
In the era of farming, the national governance model is based on the planned farming economy, which is characterized by centralized control.
In the market era, the national governance model is based on a market economy, which is characterized by the rule of law and distributed.
The market is a spontaneous order (Bascia, Hayek). There is no central agency command. Individuals make decisions based on self-interest maximization. The price mechanism regulates the orderly allocation of various resources.
Neoclassical economists believe that as long as the factors of production circulate freely, the market can naturally promote the maximization of social welfare. Later, economists of the new system pointed out that this idea was unrealistic, and they added a premise to this view, that is, the incentive system.
The neo-institutional economists believe that the fair property rights system is an inspiring system, and it extends the protection of civil rights.
So, the state governance model that matches this spontaneous market order is a distributed model with clear property rights and protection of citizenship.
Civil rights and government responsibilities are clear. Under the system, individual and government decisions are independent and decentralized, and they all act with the maximum of self-interest to promote the maximization of overall social welfare.
How can we ensure that this state governance model can promote the maximization of social welfare?
The short-term efficiency of this model is insufficient. European and American countries have been controlling the outbreak for much longer than China, and the number of infected people will reach a considerable scale.
This model is more contingent. If a state government, company, community, or individual in the United States takes it lightly, it may trigger a cluster infection.
For example, Gobel, an NBA jazz player, was diagnosed and triggered an NBA suspension (a troubled season). At a press conference, Gobel lacked vigilance and deliberately touched the microphone and the desktop. For another example, the federal government may be shut down due to the recruitment of a senior government official.
However, this model spreads risk. Even if the federal government shuts down for a short time, Trump’s re-election failure will not affect the overall national situation.
If you live with the virus for a long time, relying solely on the government and the wartime model, this life ledger and economic ledger must beNot worth the money. We need to inspire individuals, businesses, families, communities, and governments to respond together, take a multi-pronged approach, share risks, and get what they need. This is distributed control.
The most important thing is that this is a long-term incentive mechanism that coexists with viruses and risks.
Protection of individual property rights and citizenship is motivating. Individuals, businesses, communities, governments don’t need to be “good economists,” they don’t need to see “invisible.” Everyone manages their own financial books, and only needs to act to maximize their self-interest.
Many people do n’t understand why Europe and the United States do n’t recommend that everyone wear a mask. In fact, wearing a mask is a personal right. The government has no power to force people who are not sick to wear masks. If the government requires everyone to wear a mask, the government must provide corresponding public supplies such as a mask. At this time, the government needs to become a “good economist” to discover and compensate for the “invisible” harm of individuals.
With the escalation of the epidemic, every decision from the individual to the government is calculating its own financial account, motivating the individual to create the most value, and thus maximizing social welfare. Even if in the end the individual chooses to abandon his job, the company chooses to close the factory, and the government announces wartime mode prevention and control, the same is true.
But the premise is to establish a fair system, otherwise it will fall into a worse “prisoner’s dilemma”.
Now that Japan, South Korea, and Singapore have passed the outbreak period, their national governance model that coexists with the virus is worth studying.
Of course, the real core of this national governance model is technological progress. A system that protects individual property rights can create enough wealth to inspire continued advancement in medical technology (such as Red Seaweed).
A hundred years ago, the Spanish pandemic infected one billion people worldwide (at that time, the world population was 1.7 billion), the death toll was more than 50 million, and the case fatality rate exceeded 5%.
Since then, humans have coexisted with the flu for 100 years, but there is no real cure. However, the mortality rate has fallen to about two ten thousandths. This is due to the improvement of medical technology and human immunity, as well as abundant materials and advanced systems.
So, Anti-epidemic warfare is economic warfare, scientific warfare, and institutional warfare (in terms of institutional economics).
In the era of globalization, coexisting with viruses and coexisting with risks, a state governance model that embraces countless small individuals, large markets, and large societies is a long-term strategy.
This time, the new crown virusA big test of how to act collectively. Under the pandemic, the two worlds made the virus laugh. One day the virus persuaded human beings to “shadow shame even when they say ‘victory'” (cowhide).
[1] Segregated economic account, Liang Jianzhang;
[2] Refute Zhang Wuchang’s claim that welfare economics is all waste, Huang Youguang;
[3] Visible and invisible, Bascia.
Note: Thanks to the economists Professor Huang Youguang and Liang Jianzhang for their support for this article.