GSAC Analytics

New, wonderful world

New, wonderful world

I could not resist to give my two cents to the analysis of what is happening with the coronavirus in the world and in Georgia (I ask the impressionable to stop before discussing Georgia).

I will not discuss much the measures taken by the governments of different countries. In general, they are quite justified statistically. In some cases they are excessive, in some they are insufficient, but on the whole I am impressed by the fact that decisions are made on the basis of statistics and the opinion of scientists, and not populism and the opinion of politicians (there are exceptions, which I will describe in detail on the example of Georgia). I believe that focusing on the decisions of educated people is a great habit for society.

And now I will pass to the main idea. To the description of the wonderful world that awaits us at the end of the quarantine. It has been no secret for specialists that the main inhibiting force of progress is the intellectual inertia of mankind. Planes and cars have long been operated by robots significantly safer than humans. Moreover, it is the live driver behind the wheel that creates the main problem for artificial intelligence. The number of deaths on the road can be reduced to zero if it is banal to remove living drivers from the roads. Of course, we would have come to this without the pandemic, but with it we will do it much earlier.

Production will undergo even more serious and rapid changes. Europe has a very powerful trade union institution that promotes laws on the minimum number of living people at work. As a rule, manufacturers leave the simplest processes at the mercy of workers, otherwise it is very difficult to maintain the level of quality and speed of production. I have very serious suspicions that many Europeans will not return to their jobs.

Obviously, during the crisis, companies such as Amazon will receive cosmic profits, which they will invest in further automation of sales and processes. In this sense, the gin is already out of the bottle. The longer humanity is in quarantine, the more automated world it will return.

For many people, this is very bad news. Moreover, the futuristic advice to choose a profession that will not be automated by artificial intelligence sounds less futuristic. On my own behalf, I will say that such professions are extremely few. Unconditional income becomes as relevant as possible, without it we will see rampant crime or the need to increase security spending.

At the same time, I have no doubts that countries that are already thinking about processes from this point of view have great chances to show serious economic growth next year, and at a qualitative level. I will not go into details of why reducing manual labor leads to economic growth and the prosperity of the entire society. This is a long-term empirical question that is very well described in the book Economics in One Lesson by Henry Stuart Hazlitt. The book is old, but blows all economic delusions and phobias to pieces. In the same place, on the fingers, the harm of the introduction of import duties for its own manufacturer is explained.

In general, a wonderful world awaits some of us, which without a pandemic we would see in 15 years. Why only some of us, I will try to explain using the example of Georgia.

When I analyze the behavior of the Georgian government, a good anecdote comes to mind:

– Mom, I am as strong as Dad – I also broke the pitchfork.

– Another moron is growing. Their behavior has both idiotic and cunning political reasons. You can talk about idiocy for a long time, but it’s not interesting. The only thing to remember is that idiocy is very dangerous to underestimate. But their political plans are much more interesting to analyze. After a series of slaps from international partners, they are very impressed by the praise of WHO. This is, of course, a gestalt, which they cover with their obedience to regulations. But WHO’s goals and competencies do not include concern for the country’s economic prosperity. You should listen to their recommendations as to advice based on common sense. Breaking a pitchfork like dad is a sign of a dumbbell. In Georgia, there is a possibility that by the middle of summer we will begin to lose old people from hunger, and not from the coronavirus.

Why doesn’t the authorities care? First, they don’t seem to understand the scale of the damage they do yet. This is evidenced by the absence of an economic topic on the agenda. The budget obviously needs to be radically revised. Collect debts, abolish stupid regulations (preferably permanently), abolish taxes, modernize production, restructure food supplies, personally deal with vulnerable segments of the population …

Second, in fact, they received additional powers from WHO. Moreover, it is repressive. In a situation of very low political legitimacy, they try to return to society the understanding of who is in power. The big money that they have not shown since the second round of the presidential election (remember, then Ivanishvili paid the micro-debts of 500 thousand citizens) also play a big role in their plans. In the cynical language of business, the radical impoverishment of the population will greatly “cut the cost” of purchases.

Tamaz Khunjua, Georgian Strategic Analysis Center GSAC