Wednesday 12 February 2020 5:00 am

Coronavirus has exposed the flaws of our globalised system

Dr Joe Zammit-Lucia is a co-founder and trustee of Radix, the think tank for the radical centre

We cannot yet be sure how many lives have already been tragically lost to the coronavirus outbreak, nor how many are still to be lost until the epidemic is brought under control — if that proves even possible. 

At the time of writing, the estimated death toll is over 1,000.

What we do know is that the outbreak is wreaking havoc on the Chinese economy, and on international trade, hitting global markets and industries across the world.

Viruses can be considered true globalists. They know no borders. They do not discriminate by age, gender, race, religion, or anything else. It is ironic that such easy globalists have shown up the weaknesses of the human form of globalisation. 

Borders are being shut everywhere, from Australia to the US. Travel has been curtailed across China and beyond. Supply chains are in disarray. While the extended Lunar New Year holiday has ended, factories in China continue to be closed, and those in other countries may be shut as components cannot reach them. 

My son tells me that he no longer wants to buy stuff from Ali Express — previously his favourite source of low-cost consumption of all sorts of tat — because he is scared.

The coronavirus outbreak should therefore make us stop and wonder about the weaknesses of our current model of globalisation. We have created highly complex supply chains that span the globe. We have chosen to demolish our own domestic industries in favour of lower cost production that is overly concentrated in one country — China. 

The idea of maintaining at least some degree of self-sufficiency has been thrown out of the window in pursuit of a system of globalisation that is driven by one particular economic ideology with almost religious fervour, and by the relentless (some would say mindless) pursuit of a penny off. Keynes’ entreaties in the 1930s to “let goods be homespun whenever it is reasonably and conveniently possible” have been utterly ignored.

This warped ideology was on show some months ago when some suggested that, post-Brexit, the UK should simply throw its doors open to zero-tariff food imports from anywhere in the world. It wouldn’t matter if that totally destroyed local production because it would be inconceivable, claimed the authors, that the UK would ever have problems importing enough food. 

But as the coronavirus outbreak is starkly showing, in obsessive pursuit of economic efficiency, we have given up a huge amount of resilience. As a result, the global community has a limited ability to cope with unpredictable events — or even with events that are predictable but infrequent.

Some time ago, I was giving a talk to a number of senior business executives. There was initial bewilderment when I mentioned that there was a trade-off to be had between efficiency and resilience. “What do you mean by that?” “Can you give us some examples?” were some of the questions raised.

That senior executives no longer understand such basic concepts about their own businesses is concerning, as is the naive belief that shiny technology can plug the gap and solve all problems.

The natural world has survived for millions of years, prospered, and evolved into a wonderful diversity for one reason only: because it is highly inefficient — and therefore both very resilient and extremely innovative.

Plants and animals produce a multitude of offspring because it is clear that only a proportion will survive and make it to adulthood. Redundancy is essential. 

Yet, in our own economic systems, we have become so convinced of our own cleverness that we believe everything we do will work, so redundancy simply becomes unnecessary inefficiency. Hence Boeing’s management decides against having back-up sensors on its 737Max aircraft — resulting in crashes that tragically kill nearly 400 people.

Nature’s process of evolution can be considered an exercise in letting millions of small experiments bloom. Most of them don’t work. But some randomly do, allowing new species and new varieties to evolve.

The global business community, on the other hand, has increasingly created top-down “managed” systems. Management — be it in government or in private enterprise — knows exactly what to do and how to direct everyone’s activities. Experimentation out of the managed system is killed because it is seen as wasteful or disruptive to the overall master plan — inefficient, in other words.

We should hope that, if nothing else, the coronavirus epidemic’s devastating impact on the globalised economy forces us to develop some humility. 

It is time that we realised that our top-down, planned, highly efficient systems are neither innovative nor resilient — and that we risk becoming trapped in a mindset that deifies efficiency to an extent that we create a stagnant house of cards ready to be blown over by the slightest breeze.

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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