🌌 Reshaped #9

Coronavirus and political philosophy, the European New Deal, tracking apps, the Airbnb crisis, supply chain capitalism and much more

Apr 11, 2020

Welcome to a new issue of Reshaped, a newsletter for those who do not want to miss a thing about the huge transformations of our time.

In this issue, I analyze the impact of coronavirus on ethics and political philosophy. In the Alternative perspectives section, I mention two valuable contributions to understanding how the European New Deal will work to maintain the status quo. Let me know your opinion on both topics by answering this email.

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News

Business and Finance

📱 Apple and Google will jointly develop a software solution for iOS and Android smartphones that will allow users to know if they were in contact with people infected by COVID-19 (The New York Times). Privacy issues seem to be fully addressed, meaning that the tech giants will collect anonymous data and store them accordingly with privacy-by-design best practices — as illustrated by various researchers in an insightful white paper.

💶 EU finance ministers agreed on a €540 billion plan aimed to support countries during the coronavirus crisis, even if the dispute between Northern and Southern countries on the emission of Eurobonds still holds (The Guardian).

⛽️ OPEC and Russia have agreed to reduce oil production for May and June by 10 million barrels per day (Financial Times), but the world is still waiting for Mexico to sign the deal (CNBC). However, oil prices continued to fall despite the agreement.

📜 Germany is designing a bill to make foreign takeover rules stricter, allowing for public review of any deal that could threaten public security (Bloomberg). Any acquisition of 10% or more in sectors like artificial intelligence, robotics, semiconductors, biotechnology, and quantum technology will be screened — in addition to the already screened energy, water, telecommunications, and defense.

📰 Due to a new regulation by the French Competition Authority, Google will have to pay publishers for the news it shows on Google News and its search engine (NiemanLab).

💰 Airbnb announced a new funding round worth $1 billion (debt and equity) at an interest rate of more than 10% that reflects how coronavirus caused a liquidity emergency for the company, which had planned to go public this year (The Wall Street Journal).

Science and Technology

♻️ A mutant bacterial enzyme capable of recycling plastic bottles in a few hours was discovered by scientists at Carbios, which is now planning to produce the enzyme at scale (The Guardian).

🤖 Starship Technologies has developed a food delivery robot that will soon expand to various US cities, as the coronavirus pandemic generated an increase in demand for contactless delivery services (TechCrunch).

🔥 Coronavirus is having a negative impact on the coal industry, due to reduced energy demand and higher prices that could accelerate the transition to renewables (Scientific American).

🐟 Because of restaurant lockdowns and the impossibility of fleets to leave ports, reduced fishing activities could be beneficial to make fishing grounds recover from years of overfishing (Smithsonian Magazine).

⚖️ Coronavirus and social justice

The many tradeoffs the world is facing due to coronavirus are testing the ethical backbone of our societies. The first tradeoff countries had to deal with concerns lockdown: is it fair to sacrifice economic performance and individual liberty upon the altar of public security? At least two factors make this tradeoff even more difficult. The first is the duration of the lockdown: the longer it is, the greatest the consequences it will generate on the economy and the society. The second is about the very heterogeneous support measures countries are taking to make people and firms survive the emergency, which depends on national capabilities and power dynamics.

Another relevant tradeoff healthcare systems are facing every day is the so-called triage: how do doctors decide who has the priority in the use of scarce assets like ventilators? The dominant thinking consists in providing patients with assistance based on two priority criteria: chances of survival and life expectancy. In some countries, these choices are up to the healthcare staff; other countries, like the US, have appointed triage officers or committees that take full responsibilities of who has access to ventilators.

🧠 Political philosophy approaches

These tradeoffs, as pointed out by Bloomberg reporter John Authers in a recent article, are raising philosophical questions that have been addressed in different ways by political thinkers in the last century. He briefly illustrates how four of the major political philosophy trends stand in front of the big challenges generated by the coronavirus pandemic. My recap — with some additional information — follows.

Rawlsians, namely liberal egalitarians in the footsteps of John Rawls, believe that institutions should be designed around principles of liberty and equality, which in turn determine justice. All people should enjoy the maximum level of fundamental liberty a society can attain. The refusal of the herd immunity approach so that all citizens can be cured despite the economic consequences of lockdown measures is an example of this liberal approach that justifies the welfare state.

Utilitarians believe that justice should be conceived as the total utility of all the people; hence, governments should maximize the outcomes for the majority of the population, even if it means leaving the minority apart. Boris Johnson’s herd immunity approach is an example of a utilitarian response to the pandemic: in order to maximize the benefits for the entire population, the sacrifice of a small percentage of it was considered a fair deal.

Individualistic libertarians like Friedrich von Hayek and Robert Nozick (whose night-watchman state model was mentioned in a previous issue of this newsletter) believe that individuals have an absolute priority on society: individuals are free to pursue their own life and the state should only ensure that the law is respected. With the spread of coronavirus and the implementation of lockdown measures, libertarians can only complain about the illegitimate intrusion of the state in the individual liberty of people to live their lives.

Finally, communitarians like Alasdair MacIntyre and Michael Sandel believe that individuals derive their identity from the community in which they live. Justice has a double subjectivity, but the community is predominant with respect to the individual. The many mutual aid groups that have grown spontaneously during the lockdown periods are an expression of communitarianism, as well as the forced quarantines in China aimed at protecting the community from the risk of contagion.

📚 Strengths and limitations of liberal egalitarianism

This short summary should have highlighted how the coronavirus pandemic has reshaped the world around a moral philosophy based on the protection of the basic rights of the individuals: no one wants to be left over by the healthcare system during a pandemic. This is a decisive victory of Rawls’ egalitarian idea of justice as fairness — with some communitarianism influences — over the individualistic and utilitarian paradigms that have characterized the neoliberal political scenario during the past five decades (see Reshaped #7). The triage tradeoff would not exist if welfare states had adopted adequate measures for improving healthcare capacity, instead of following the neoliberal principles of privatization and non-intervention.

However, starting from the 2008 financial crisis, liberal egalitarianism is under attack from socialist movements. Indeed, a fault in Rawls’ theory of justice lies in the idea of justice as redistribution of liberty and equality, which leaves no space for the individual as an agent of change. In her excellent book In the Shadow of Justice: Postwar Liberalism and the Remaking of Political Philosophy, Katrina Forrester explains that the most recent evolutions of liberal justice theories tend to merge socialist and liberal principles in a sort of social democracy. While socialist principles are good to generate ideas and concepts, left-liberalism principles are excellent tools to produce policies. Social democracy — as embraced by Bernie Sanders and Jeremy Corbyn — could reshape liberal egalitarianism so that justice is not a mere consequence of institutional redistribution, but a participative and evolutionary process.

In his The Idea of Justice, published in 2009, the Indian economist Amartya Sen refines Rawls’ theory of justice with some important contributions. One of the most fundamental is that social justice should not be seen as something that either we have or not but as a process in continuous evolution. This fits with the social democracy definition, especially in the attempt to go beyond the design of the ideal institution to solve pressing human needs. According to Katrina Forrester,

Rawls had equalized primary social goods — “things that every rational man is presumed to want” — rather than utility, welfare, wealth, income, or equality of opportunity. Sen’s task was to replace Rawls’s primary goods with his “capabilities,” understood to encompass considerations of both need and choice. This, Sen argued, was the correct “currency” of egalitarian justice.

The future of the world after the pandemic can be predicted by looking at these recent evolutions of the moral philosophy. It would be naive to think that individualist neoliberalism is over, but the pandemic has shown not only that it is far less efficient than expected, but also that in front of an emergency we are ready to give up some of our individual liberties so that everybody can access those primary social goods Rawls had theorized. But how long will it last? Will the world population agree to long periods of lockdown and reduced liberties? Again, the temporal variable makes the scenario extremely complicated to cope with — and, in the long run, it might prove to be the best ally for neoliberal forces to maintain their power.

Alternative perspectives

🍂 In an article published on The Guardian, economist Daniela Gabor explains why the European New Deal could end up in a huge greenwashing program that only benefits carbon financiers to the detriment of responsible climate investors and society as a whole. This is evident from the name itself: removing the New that characterized Roosevelt’s New Deal, the European Commission admits it will keep on using liberal instruments that mainly consist of relying on private actors to change the economic system.

The macroeconomics of the European Green Deal remains trapped in the black zero logic of austerity. Instead of ambitious green fiscal activism, it mostly reshuffles existing European funds through a logic of seed funding to mobilise private sector money. […] In dismissing green macroeconomics, the European commission puts its hopes on private finance. The logic is that the state won’t have to pay if the private sector will, provided there is nudging from public funds to “derisk” green investments. Here, the commission seems to have powerful allies, such as institutional investors with trillions ready to be greened.

According to the author, carbon financiers will benefit from a favorable green taxonomy — green assets to be subsidized — and a lack of regulation of brown finance. See also the new report by Servaas Storm published by the Institute for New Economic Thinking for a more detailed analysis.

Having lost the battles for tougher regulation and higher taxation and spending, the Commission’s hope is that private finance will do the job of greening the economy. Hence, the idea is to do ‘whatever it takes’ to persuade institutional investors (insurance companies, fixed-income asset managers, mutual funds, etc.) to — voluntarily — redirect the trillions of money they are managing to specific activities that are officially labelled as being ‘green’ or ‘sustainable’ according to an official EU Taxonomy.

🚛 In a new post on Medium, Ingrid Burrington makes the case for reshaping supply chain capitalism to avoid the paradox generated by the coronavirus pandemic: shortages of fundamental healthcare assets produce profits for some players along the supply chain, but fail to efficiently address public needs.

Supply chain capitalism principles—reliance on outsourced labor, an emphasis on just-in-time delivery, faith in data-driven decision-making, pursuit of economies of scale—have played, at times, an under-appreciated role in the emergence of digitally-enabled inequities that COVID-19 will also likely exacerbate. […] To create conditions so that the next time there’s a pandemic (and there will be one) we don’t have massive shortages of medical supplies or workers compromising their health and safety, the whole of supply chain capitalism needs to be broken apart and reconsidered — including the values and beliefs that make so many other systemic inequalities possible before COVID-19.

😇 On Recode, Theodore Schleifer analyzes the tradeoff generated by depending on billionaires’ philanthropy to face the coronavirus emergency. On one hand, their support is needed to overcome current shortages; on the other, it will make them even more powerful after the crisis.

Tech billionaires can be doing good while simultaneously revealing their power and entrenching it for the long haul. As the government struggles and the safety net crumbles, tech billionaires are reaching the apex of their influence — influence that may not recede so easily once we do manage to survive this pandemic. […] There are four interrelated spheres in which tech billionaires have commanded more plutocratic influence during this crisis: their philanthropic power, their corporate power, their political power, and the power of their personal brands.

Reshaped