The UK chose to respond to a global pandemic by reducing the amount of money given in foreign aid. Yet COVID-19 is attacking every country in the world. So is climate change. And there will be other viruses to come. For example, Ebola is reported to be out of control in West Africa right now. It is not as infectious as COVID-19, but its fatality rate is way higher (maybe as much as 50 percent). So, how does the west protect the developing world, and itself, through mass vaccinations. Can it fund the vaccines with money it creates. Could we adopt an approach where the pound, the dollar and the Euro fund local production facilities in developing nations, just as the Chinese Yuan is funding belt and road initiatives in many countries. Never before has there been a need for such global cooperation, but how do we fund it?
Steve Keen is a Distinguished Research Fellow, Institute for Strategy, Resilience & Security, UCL
Phil: So where are we right now with vaccines? Well, Italy doesn’t want Australia to get the vaccines it needs. Europe (for a while) didn’t want the UK to get some of the vaccines it was making as well. France didn’t want its old people to get a British vaccine (perhaps because they were worried they’d suddenly acquire a taste for Yorkshire pudding), and in the United States, President Biden has now said there’s going to be enough vaccines for everyone in the country by the end of May. He didn’t actually say that they would be distributed and jabbed in the arms by then, they’ll just have enough vaccines ready to go, which is great. But what about the poor countries? Don’t we realise [that] until it’s wiped out (or at least substantially reduced everywhere) it’s going to stick around forever?
Today: ‘Vaccination is a Global Game’, on the Debunking Economics podcast with Professor Steve Keen. I’m Phil Dobbie, welcome along!
So [there’s been] a rapid roll out of the vaccine in the UK, the largest vaccine programme in history for the UK. Two million or so people every week (over twenty-one million people so far) have had the jab with the [aim] that all adults will have been given it by the end of July. Israel [is] well ahead in terms of jabs per head (or jabs per arm, it should really be), but [has] a much smaller population of course. And Europe [is] falling behind, mainly because they delayed negotiations because they were trying to get a better price. They’re paying half the price Israel paid for the Pfizer BioNTech vaccine, but is this the time to be quibbling over dollars and cents?
But Steve, there is little point in the West vaccinating itself if we leave ourselves open to reinfections, or the virus evolving in places where people haven’t been vaccinated in other countries, because as the World Health Organisation puts it, nobody wins the race until everyone wins the race.
Steve: No, not by a long shot. A lot of ideology, and a lot of colonial politics lies behind the way we treat the third world, and the virus couldn’t give a rat’s arse about our political and colonial systems. It just wants to breed somewhere and evolve. We talk about the virus as if it’s a living entity. In fact, it’s an “undead” – it has to be inside a human body (or a body) to reproduce. But of course, because it can reproduce inside a human body, and it reproduces inside any being with a cell structure, then the pressure we put it under by our own attempts to suppress it can lead to it evolving in directions that we’re not ready for.
People often think in terms of Ebola: “… Ebola didn’t get [out of?] Africa so why should we worry about Covid? If Covid infects Africa, that’s Africa’s problem.” But the thing is, if this stuff can continue being transmitted, and changing while it’s so transmissible in another region, then it can come back in a different and more dangerous form.
Phil: Well if it comes back and it’s as dangerous as Ebola is, with the infection rate it’s got, then we are all done for aren’t we, basically. The cockroaches will rule the Earth.
Steve: That’s Hell.
Phil: Absolutely. Let’s hope we don’t get to that! The problem (I guess) in the Third World, in the developing nations, is that whereas we in the West [have] all got these bullshit jobs that allow us to work from home, and look at our computer screens, and talk to each other about moving money around and all that sort of stuff, there, in developing nations, they don’t do that. They’re actually at work in the factory or in the fields or in the streets, and they are in contact with each other, and they don’t often have the option to sit at home and self-isolate because they need money to survive.
Steve: Mind you, let’s not forget at the moment [that] the Third World’s doing a damn sight better than the First in terms of managing [thus] far. I’m just looking at the Indian data right now, and India’s trajectory from April to August was looking absolutely appalling. Going right back to … the end of March [it was running at] 146 cases. That was substantially less than the UK and Netherlands at the time, with far smaller populations. It was heading towards 100K and I was thinking it’s going to be up to a million at some point. It peaked in September at about 96,000 cases. India has now driven its cases per day down to about 10,000 to 15,000.
Phil: Are they testing as many though?
Steve: Yeah. Because this is such a virulent virus, if you’re not testing as many and it’s still spreading, it will ultimately overwhelm your numbers anyway. In terms of the number of deaths, for example, like in terms of India’s deaths per day, they peaked at 1300 people in September, and they’re now down to 100 a day. Let’s compare it to the UK right now. The UK is running at 800 a day.1
Phil: And that’s good. We’re celebrating that.
Steve: So the Third World’s doing far better.
Phil: So why is that then? Because [in] the scenario I was describing [you’d imagine it would be] very difficult for the for the Third World to put in place the sorts of measures that we’ve seen in countries like the UK, which [seems to have] been in lockdown almost every week for the last year (apart from [the] brief summer last year). So how can they be doing it so much better? What’s different?
Steve: I hate to put a juvenile characterization on it, but it’s basically [the difference between] a disciplined young child versus a bunch of spoiled brats. The way that the West is behaving: “You can’t take my liberty way!” You don’t have fantasies about liberty in India to the same degree. If your police direction comes out, you follow the police direction, [and it’s] not particularly good for your health to refuse it. There’s [also] more experience in handling [things like massive] Cholera outbreaks. When that happens, you’re told to boil the water, don’t do this, don’t do that, etcetera, etcetera. And there is a realisation that you have to follow those rules, otherwise you’ll be overwhelmed by it. Because you’re closer to the ground when these things happen than people living in cities like London and New York are, then there’s more obedience, more following [of] the public health directives.
I must admit, I’m surprised. I would not have predicted this. It’s remarkable to see that India has been far more successful at turning this around than any of the developed nations, and India only ranks number two to the USA because it’s got four times [the] United States population. If you look at the ranking right now (I look at this and I find a lot of people mustn’t be looking at it for the sort of nonsense-comments I’m getting from people in America and the UK right now about Covid policy) the USA is currently up to roughly 28 million cases, India has 11 [million], Brazil has 10 [million], and the UK has 4 [million]. Now the UK is one sixth the size of Brazil, one twentieth the size of India, one sixth the size of USA. Even Brazil (on a per capita basis) is doing better than the UK, even with a right-wing jerk as its political leader.
Phil: That’s great news …
Steve: But they can’t succeed on the vaccine – this is the point you’re making.
Phil: Yeah, that does take money. So the World Health Organisation has set up a programme, the COVAX programme, which supposedly ensures vaccines reach countries irrespective of their income (they say). They’ve got 200 countries that have signed up to it, which is more than 90% of the world’s population. Sounds good so far doesn’t it? And they say they’re going to invest and pool their resources to buy up the vaccine, so they’ll be available to everyone no matter where they live. So rich countries can pay as a self-insurance policy to ensure that they get the vaccines they need (although most have done a fairly good job of doing that without the World Health Organisation), so they can be “self-financing” (the term they use in this programme). The rest are funded by contributions from public and private donors. So where do you see a problem with that?
Steve: How much money is there?
Phil: He says [LAUGHING], “The part where the rest of it is funded by contributions from public and private donors.” They have a budget this year of $6.8 billion to buy up the vaccines they need. They’ve secured 1.1 billion doses (which is obviously nowhere near enough). [A] $6.8 billion budget: they’ve only got a shortfall of $6.4 billion. I don’t know how they fix that problem.
Steve: Here we come back to the sins of the father being visited upon the sons. One of the ideas of Bretton Woods (in Keynes’s version) [was that] by having a non-national currency as the currency of international trade (the bancor), and by having rules to constrain the degree to which surpluses could be run up by countries running surpluses (taxes on them, in effect to help development), there would have been an enormous fund of bancor available to pay for what the International Monetary Fund was supposed to be – [an] international clearing house. Those funds would have been available to pay for a vaccine if we’d got ourselves into this situation in that alternate universe. But because we haven’t, this is one case where you simply have to borrow money, or are given [the] money to buy it, because you can’t pay for these vaccines with your domestic currency if you’re not running a trade surplus in the first place. It’s a reason to have international aid, and to have largesse, and it’s not going to happen. There’s going to be that huge shortfall so the vaccinations won’t get as widespread as they should be in Africa and in India and Latin America and the poor parts of Asia (Thailand will do a very good job). So we’re going to have these breeding grounds for Covid 19 to give us Covid 22 and Covid 25 and so on.
Phil: For which our existing vaccines will be useless.
Steve: Yeah, potentially. You want to get a vaccine which attacks parts of the virus that have to stay the way they are for the virus to exist. [Vaccines] that target the spike protein aren’t necessarily going to be successful because we’re seeing the British version and the South African version change the spike and make it more effective. At least one of the vaccines has been bypassed by that particular piece of evolution. But yeah, this has to be treated as a global problem, and we’re not set up as a global community.
Phil: It might not be best in terms of the local economies, but if you look at the way the Chinese have rolled out the Belt and Road Initiative, where they basically invest money into infrastructure in overseas countries, and then they employ Chinese workers paid in Chinese yuan to work in those factories so that … money can be generated in their own local currency (even though it’s applied overseas) – could we do the same sort of thing? Could we say, “Well, okay, let’s build production facilities around the world, and the US will fund some of it, and the UK will fund some of it, and it’ll be with money that we’ve created in [our] own economies”, rather than having to pay money into these … Then it becomes part of our own circulating currency, doesn’t it.
Steve: Yeah. What you want to have is [the] building up [of] facilities [capable of producing] vaccines on the scale necessary (domestically) in each of those countries or regions. You wouldn’t want to have every country in Africa [producing vaccines], but you would want to have at least one facility in India to produce its own vaccines. You don’t want that to mean that the Indians have got to go cap in hand to the World Bank for a trade deficit. It is one of those things where you want to (in a sense) costlessly give them the technology. I’ve got a few friends who work in vaccines (I want to talk about that at some point in the next few podcasts), but I have no idea what’s involved in a vaccine factory (that’s the same degree that I have an idea of what’s involved in a semiconductor factory), but something that lets them build those [at] scale, [at] volume – that’s necessary. Distribution – most of these countries can cope with it because they have already got their networks for distribution. It comes down to the temperature issue (do you have to freeze the stuff and so on), and that makes it much more complicated.
Phil: Yes, well it’s only really one – the Pfizer BioNTech vaccine – that needs to be stored at minus 70 degrees. If you look at the Astra Zenica one and most of the others, they’re cheaper and they can be stored between 2 and 8 degrees, so distribution’s obviously a lot easier for that. [It’s] a little less efficient; it’s that whole [question] of efficacy. So the BioNTech [has] 95% efficacy whereas the others are less, but it costs $14.00 per dose. If you look at the Astra Zenica, it’s $5 and it can be stored in much [warmer?] temperatures, so easier to distribute. But … it would be a lot, even at $5. You’ve got to have two shots, so that’s $10 [multiplied by] 7 billion people around the world – it’s a lot of money still …
Say the UK says, “Well, we’re going to pay a chunk of that, we’re going to contribute $10 billion, for example, out of our own currency”, and that money goes overseas into these foreign plants. What happens? What impact does that have materially on the UK economy? Explain it to a country that’s just cut foreign aid in half because it doesn’t want to see money going out of the country.
Steve: That’s definitely handing over some of its own productive capacity to do that. If you give somebody UK pounds, effectively you’re saying, “Here’s a certificate you can use to get stuff from the UK.” Normally you do that in exchange for buying Indian textiles in return for your UK pounds, but here you’re saying, “Here are the pounds: we don’t want any textiles back.” So you’re handing over buying capacity against UK production capability on the global market. That money can end up being transferred into other currencies on foreign exchanges. I’ve no illusions about the money being directly used back in the UK again, but you are handing over part of your productive capacity. What you’re saying is, “We are sharing our capability to produce these with you using a financial means.”
Phil: But we’ve been in an era where we’ve been creating money like it’s going out of fashion anyway, so even if we are handing it over, we’ll still be handing over money [saying], “We want to buy stuff from you, so can we do that too?” I guess it’s very different to using it to create money to support people in the UK because you hope those people are going to spend that money in the UK. That’s your point isn’t …?
Steve: Yes, it’s not going to be spent domestically, it’s going to be spent internationally.
Phil: But we should do this, shouldn’t we? There’s no alternative other than the fact that we all have to take some sort of economic hit. In countries that have control over [their] own currencies, it’s not a big issue is it? It’s not a big issue as most people would see that it’s money spent that we have to pay back.
Steve: Yeah. It’s an economic hit if you don’t take it and [pick up a] much bigger one later. So it would have been feasible, for example, [for] Texans to have insulation – well insulated houses. But it was cheaper to keep them cool by not insulating them, and then bang! You get hit by global warming and freeze to death.
Phil: Unless you travel to Mexico; unless you go on holiday to Mexico, [where] you’re fine.
Steve: Cancun’s a nice part of the world this time of year I hear! Again, the UK has economised by running down the NHS [which is why?] you ran out of personal protective equipment during a pandemic. This is part of building resilience not efficiency, and I think that we are now seeing a huge mistake in believing that efficiency is a form of resilience – no, it’s not! It’s a form of being tailored to the current situation, and if you get a drastic change in that situation then you are toast by being too efficient. You needto have excess capacity everywhere to cope with the unexpected.
Phil: If you’ve got an outflow of money though, so if Britain pays a whole chunk of money, even if it’s money, that it has created to start funding operations in India and other parts of the world, that’s a big outflow of money for the pound. Does that change our exchange rates? How does it influence the money markets?
Steve: This is where I disagree with MMT on this whole way they analyse money. You’re going to be increasing a trade deficit which (to me) is a negative for the sustainability of the economy, but it’s a necessary negative in this situation, because the negatives of not doing it could be far worse if the result of not vaccinating Africa, or the poor parts of Asia, was a return of a much more virulent virus in two or three-years’ time.
Phil: So we need agreement then, because you’re saying it’s going to be detrimental to whichever country does this, so it’s got to be shared, hasn’t it?
Steve: Effectively, yeah.
Phil:So the West has got [to work] together. But is it harder for the EU to do it, given that they are a mix of different countries? I mean, well, it’s not harder is it, except for the fact that they’ve got to agree amongst themselves that they’re going to [UNCLEAR] …
Steve: And they’ve also got their 60% limit on government debt which stops them doing this.
Phil: Yeah, but that seems to have been ignored for the moment, doesn’t it?
Steve: Oh, it’s total nonsense. I think Greece is now running 160% of government debt – even Germany’s rising. So we have the Maastricht Treaty and the Treaty of Lisbon looking like the total jokes they always were (at the moment) in the face of two major crises in one decade: the global financial crisis, and now Covid. But yeah, they’re going to be slow getting off the mark and doing it, definitely.
Phil: Yeah, but we’ve got to be quick, and that’s the problem, isn’t it? So the World Health Organisation is saying, “Well okay, we can secure all these doses and we can do more, but the big problem is funding. We’ve got this big gap”, and that’s because they’re looking for donations. What the World Health Organisation should be doing is coordinating contributions as a proportion of GDP (or some other measures) from the wealthiest nations …
Steve: And that’s what bancor was set up to do; the original bancor proposal would have enabled that straight away.
Phil: We’re not going to do that this year though, are we? So the only way is for them to actually get a bit more determination and try and drive influence through all of these countries to say, “Yes, you need to support it, otherwise we’re stuck with this thing for a generation or more.”
Steve: And now, of course, because that’s not going to happen – if it doesn’t happen – then it means we’re going to get too low a level of vaccination in Africa and Asia, and then the question is what’s going to happen with this virus over time? This is one reason that Yaneer Bar-Yam made such a strong call (for those who don’t know his name, he’s one of the people who led the campaign [for] the eradication of Ebola in 2014, or the containment of Ebola). He said, “You’ve got to go for eradication, it’s got to be a global thing”. So this whole idea of saving the economy by going light on this virus is just giving it time to come back and hit us at a later stage, and we may see another wave of this particular virus, with evolutionary overloads, in the next two or three years. I’m certainly hoping we won’t …
Phil: Yeah. Are we going to go down the road (in that case) of maybe saying (we’re not going to do [it] now) but are we going to go down the road of vaccine passports? Are we going to say, “Well okay, you can’t come into this country unless you’ve shown us (demonstrated to us) that you have actually been vaccinated, and maybe not just for Covid, over time for other diseases as well.” [Is] each individual nation going to start cocooning themselves, and maybe having travel corridors between places (the developed nations) that are well vaccinated, but we’re just going to cut ourselves off and rest the world?
Steve: Yeah. And the only country that’s going to come out of that in any successful way is going to China, because they’ve done a successful eradication, and they’ve got their own virus-vaccine manufacturing capability, and they’ll do very nicely. Russia as well, actually, by the looks of what they’re doing with their vaccine, and also their success (relative success) compared with the UK in restraining the virus now.
Phil: But that is not good for the global economy if we start stopping travel.
Steve: I think this is the end of globalisation, okay? This is the end of it, I think – the beginning of the end of globalisation.
Phil: You do sound like a strict headmaster sometimes, you know?
Steve: [LAUGHTER] Oh, not at all, my personality’s completely …
Phil: “This is the end of globalisation, now stop it!” … But do you think it’s because of our own selfishness that we actually can’t see that eradication is the answer, and we actually do need to take some sort of economic hit in the short term to go for this global eradication? Or do we believe that global eradication is too big a call, it’s just too impossible to achieve?
Steve: Well that’s the usual cost-benefit analysis that economists fall for. The whole idea of cost-benefit analysis implies you can actually measure them accurately in the first place (which is always dubious) and there’s no evolutionary process going on. I’m sorry, this is a virus – it evolves. So doing anything which does ‘minimisation’ not ‘eradication’ is just giving it an opportunity – indeed, a pressure – to evolve [UNCLEAR] problem again in the future. Imagine what would have been done in the Second World War if that were the case? ‘How much do we need to fight the Germans to stop them actually affecting us all that badly?’ versus ‘How much do we need to defeat the Germans?’ In this situation, chuck cost-benefit analysis in the garbage bin and eliminate the damn thing.
Phil: Yeah, well they won, but not by much. So we’ll only speak German part of the time.
Steve: 33% of the time: one third German
Phil: I’m never going to finish a plate of sauerkraut, either. Just forget that idea!
So you say a cost-benefit analysis is never going to work for this, but maybe it would. If you’re sensible with the cost-benefit analysis, you look at the various scenarios and you take a worst-case and a best-case scenario … I guess your point is that we then choose one in the middle, whereas in fact what we should be doing is looking at the worst-case scenario. But that would be fairly easy to do a cost-benefit analysis for, wouldn’t It?
Steve: It’s more scenario analysis you need to do. Cost-benefit literally thinks you can convert everything into dollars, and if it comes out plus one you do it, if it comes out minus one, you don’t. An are you putting a manager?
Phil: But you could do that because in this scenario, the worst case scenario would be a severe downturn in the global economy because there wouldn’t be globalisation. We would have less trade globally as a result, and that is going to go on for generation after generation, versus short term impact in investment in vaccines. I mean, it would be a fairly clear case to make wouldn’t it?
Steve: Not the way economists do cost-benefit analysis.
Phil: Let’s do it then!
Steve:That’s a great idea.
Phil: I am just finding it incredulous that we find ourselves in this situation where the World Health Organisation is there trying to procure the vaccine with no way of paying for it.
Steve: It’s actually going begging on street corners (affectively) to get the money needed. When the whole idea of a World Health Organisation was to improve the health of the world, and to coordinate global responses to global challenges, here it is in a situation where it has got to go with a begging bowl to get pretty much 90% of the money it needs to do its job.
Phil: Yeah. The United States wasn’t even a signatory to this until Biden came into power, actually. In fact, Donald Trump specifically said that they shouldn’t be part of this coordinated effort, because the attitude of the world has become all to do with your own sovereignty. That’s the problem isn’t it; this has come at precisely the wrong time. Just as the world was becoming much more insular, this has come to say, “Hey, this is what sovereignty can do for you.”
Steve: Yeah. The only sovereignty that works here is total isolation, and countries that have done that successfully (Australia being one of them, New Zealand, Taiwan, Thailand) – they can be relaxed about this. But where it’s too big a country to be able to manage that (India is a classic; even though they’ve been successful, they’ll never be able to eradicate [it] I think), all the ones that have bungled it completely, they’re the ones who are paying.
Phil: Yeah, but you know what? There will be a lot of people who are saying, “Well look, so long as we’re vaccinated that’s fine”, because as you said yourself, places like India seem to have been containing it fairly well, so containment might be all we need. But it doesn’t stop it does it?
Steve: No. Whenever I read people doing this cost-benefit stuff on ‘living with the virus’, blah-blah-blah, they’re leaving out how fastit grows, how contagious it is (it can double every two or three days), and what that means is, if that happens at any point in time, then within two or three weeks your health system is overwhelmed. And your health workers then die (Not the [same] proportion would die if we were talking about Ebola levels of morbidity here, but you still lose a large part of the infrastructure you need, and your damaged for the future). And that’s the thing we haven’t got ourselves around. Governments of the world should have no question but to give the World Health Organisation all the money it’s asking for to enable the whole planet to get vaccinated.
Phil: Which probably is not going to happen. So the only hope we’ve got is that this thing mutates itself to such an extent that it actually becomes less infectious and less harmful. Or it could become just as infectious, but less harmful, and we live with it in that way. But that’s a big risk isn’t it.
Steve: [Maybe we should talk?] to the people in our Patreon Circle who are working in biomedical research, and they can talk about what the odds are of that over time.
Phil: Yeah. What, talk to experts? Jesus!
Steve: Yeah. What a radical thought!
Phil: I know! There’s a whole new direction for this podcast (apart from your good self of course, Steve). Alright, well we’ll leave it there for now, because we are getting into an area that we know nothing about. But yes, another podcast finishing with a rather grim outlook, unfortunately. We’ve got to turn it around some time. When are the happy times going to return, Steve?
Steve: We’ll have to sing Always Look on the Bright Side of Life at the end of one of the podcasts.
Phil: Yes, as we nail you to a crucifix, perhaps …
Steve:[SINGING] “Always look on the bright side of life!” da-dum, da-dum …
Phil: Definitely nailing you to a crucifix now!
Steve: [LAUGHS] Bye-bye.
Phil: Bye-bye. Well look, just after we finished recording that he said this:
Steve: My voice is improving, I think, as I get older by the way, weirdly enough.
Phil: [LAUGHS] What do you reckon? Anyway that’s it for today. Back with another one next week. I’m Phil Dobbie. Thanks for listening!
Steve:[SINGING (In a loop)] “Always look on the bright side of life! … Always look on the bright side of life!”
Phil: Yeah, that’ll do – get off!
1. 236 daily deaths were recorded in the UK on 5th March 2021 (Source: GOV.UK Coronavirus Dashboard)