Covid-19 and progress in economic theory

There are numerous competing economic theories, all of which lack empirical proof. With the slow evolution of main economic parameters like GDP, unemployment, inflation, etc. it is very hard to find real drivers behind the evolution and most popular theories are based on a stochastic approach - the future is not predictable, which small addition of real economic parameters. Even the largest 2008 economic crisis did not give any clear understanding of the actual economic reasons causing the slump. This is likely due to the dominance of endogenous factors of the economic crises. Despite its cruelty, the COVID-19 pandemic is a great driver of exogenous impact on the global and national economies. The strength of economic problems varies between countries and gives a large number and diversity of structural responses to the COVID-19 external impact - the actual links between various economic parameters have to be revealed. This is an excellent opportunity to test all economic theories, conventional and non-conventional, and the theories matching actual behavior of the economies (winners) have to survive and be praised. 

It is a chance for everybody to prove their models/theories. The failure of economics as a science in 2008 gave birth to a broader discussion on the role of data, theories, and models for a better understanding of the global economy. After a decade of re-thinking, its time to explain (i.e. predict)  the immediate reaction to the sudden and unprecedented fall in employment. 

Our model shows that the drop in the labor force in the USA will be followed by a deflation period. This result does not depend on the trillions of dollars poured into the US economy. The deflation effect lags behind the drop in the labor force by approximately two years. It is worth noting that the previous 4 trillion pushed into the US economy after 2008 did not affect the low inflation rate.  

Rich and poor

The future is hard to see ... But we can say for sure that rich is a relative notation. One cannot be rich when nobody is poor. The society of the full economy automatization can only exist when wast majority gets all they need to survive for free (no job is available). An alternative is the absence of poor people as such. In both cases, wealth loses the main benefit - exploitation - the poor can add nothing at all.   

Поздравляю с Днем космонавтики! Юрий Гагарин - первый космонавт!

Поздравляю всех с Днем космонавтики!

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Again and again : Qu'ils mangent de la brioche !

When life shrinks to 4 walls and one screen many processes hidden in the speed of the global world become clear and painful. We see ourselves from within and suffer real feelings. Most of us have nothing to do at home as if we are not individuals but parts of one mad machine. Naked nerves are so sensitive that we feel the weakest signs of false nuances in news, videos, smells, and sounds of the outer world. And we start to hate some people who say something like Maria Antoinette said 330 years ago about hungry French people demanding bread for their children - Qu'ils mangent de la brioche. (Let them eat cakes.)  Her death (guillotine) on October 16, 1793, was terrible. The whole history of misunderstanding between rich and poor repeats again and again.

European Union is strengthening

There is a broader discussion on the EU future after the pandemic. It is related to the problems with cooperation and trust between European Union countries. The lack of joint efforts and help to most suffering countries is considered as the reason for the EU break back into national states or smaller blocks. However, the logic of union growth suggests that such problems are an incredible driver of the strengthening. Nobody will like to meet the next pandemic or any other global crisis in weak and vulnerable national quarters. The real discussion now is the set of measures needed to prepare for a joint reaction to future challenges. They will come anyway. The EU has a strong push to the next level. Do not miss the opportunity to join these efforts.

Coronavirus: nuclear explosion vs nuclear reactor approach

The epidemic is a chain reaction process. One person (nucleus) produces virus-full-droplets (neutrons), which infects (induce fission process) at least one further person (nucleus) and so on. There are two quite different trajectories in a chain reaction - uncontrolled and controlled. The former one is a nuclear explosion or epidemic with mild (or inappropriate) protection of citizens (e.g., season flu). Some countries have chosen almost uncontrolled chain reaction and the daily number of newly infected/deaths increases exponentially (like 20% per day). The chain reaction will naturally stop when all (related) people/nuclei went through reaction.   The latter case is a nuclear power plant generating a stable amount of energy under the strict control of absorbing rods or the current strict measures of self-isolation and quarantine in some countries.

What is the main difference between these two trajectories? Most important, the controlled chain reaction allows 1) to decrease the number of people/nuclei passing through illness/fission; 2) to lower and smooth the released energy/stress for the medical system is and does not crush surrounding media/social connections..

About self-isolation and quarantine. In order to start explosive chain reaction one needs to dramatically increase the density of fission material (e.g., uranium, plutonium). It highly increases the probability for a spontaneously (i.e. in natural radioactive decay) generated neutron to be absorbed by another nucleus. For this purpose, chemical explosives are used. Another possibility is to create a very large plutonium sphere and it will explode by itself at some point. (Do not store your plutonium in large buckets!) Therefore, in order to avoid nuclear explosion one just needs to keep fission material in non-compressed form. For the epidemic, the fission material density is the same as the physical distance between people. What we observe now, people gathering in  larger groups create conditions for explosion trajectory. Unfortunately, this process is spontaneous and probabilistic. For corona-virus, people are already contagious when they have no visible illness-specific features. Hence, any crowd may play the role of the nuclear explosion igniter. Stay safe!