Prepared

God is exposing the churches lack of preparedness for operating through a crisis. The 8-week shutdown for the coronavirus has been a fairly trivial crisis, but the church has become ineffective because its people are so scattered that they can only relate to their neighbours one-on-one.

The lockdown was a time of opportunity when many people were shaken and fearful, and some were feeling the pain of losing their jobs, but most Christians did not know their neighbours well enough to share openly with them. And their neighbours could not see the body of Jesus functioning, because that only happens when the church meets on Sunday.

Our problem in the West is that we have lived through seventy years of relative peace and prosperity. The modern church operating model functions quite well in that situation.

Many church leaders assume that we will soon go back to peace and prosperity, so their way of doing church will continue to be viable. Unfortunately, that might be a false hope.

Over the last fifty years, there has been a massive decline of faith in the western world. Things still seem to be OK on the surface, but as God has been squeezed out, the spiritual powers of evil have been inadvertently allowed in. They are getting greater freedom and ability to work evil in this part of the world, so they are unlikely to stop.

I believe that they were behind the GFC and the coronavirus, and have noticed how effective these were for hurting people and disrupting society. These were not by any means their best efforts, so I expect that if there is a return to “peace and security”, it will not last long, because the spiritual powers of evil will have another crack at destruction and harm. So, assuming that when we are through this crisis, everything will go back to normal is probably a mistake.

Persisting with a church model that is only viable during “peace and plenty” seems to be rather naïve. No serious business would develop a product that can only function under perfect conditions. Rather they develop products that can continue to operate under a variety of adverse conditions.

Christian leaders should be thinking in the same way. Many years ago, when I was the leader of a church, someone asked me what would happen to the church I led if the pastor was arrested and the church doors were locked by the political powers. That did not seem very likely then, but it has happened in many places around the world. That set me thinking. Was I serving the people that I was paid to lead well, if I was not preparing the church to operate effectively through all possible eventualities?

All pastors and church leaders should be asking the following questions:

• Could my church function through a serious epidemic (we have not had one yet)?
• Could my church function through a serious economic depression (we have not had one since the 1930s)?
• Could my church continue to operate effectively through serious state persecution with being arrested and church buildings being locked?
• Could my church function effectively through a period of social and civil breakdown, or a serious collapse of law and order?

If they cannot answer these questions honestly with a “yes,” they should think seriously about what they are doing and if they are preparing their people for the future.

The first disciples who were trained by Jesus were able to operate effectively through periods of persecution and social disruption. Maybe we should look more carefully at the church model that worked so effectively for them (More here Church and Ministry).

The latest crisis has demonstrated that our way of doing church can be disrupted by something as simple as having to stay at home. I presume that a really serious crisis would cause terrible difficulties. I suspect that the future will bring economic, political and social disruption. Therefore, it is more sensible to prepare for the worst, and be pleasantly surprised, than to “hope for the best” and be caught short.

God’s people should prepare for disaster, but be equipped for victory.

Crisis Budget

Modern governments offer a full-service salvation. They have to commit to doing more than previous governments in order to get elected. All political parties have played this game, and it has gained resonance as faith in God has declined. Consequently, governments are now expected to solve every human problem, including supporting businesses when they face a crisis, and providing work of people who have lost their jobs.

The problem is that there are significant limits on what governments can do. They cannot create real jobs. In the 1970s, the NZ government tried to deal with unemployment by making the Post Office and the Railways to take on extra staff, but this resulted in bloated inefficient organisations with more staff than they could use.

Governments have the power to make people do things that they do not want to do, but that is not much help in an economic crisis. They can take money from some people and give it to others, but that is not very helpful either. Governments can set interest rates low, so it is easy for businesses to borrow, but during a crisis, additional debt is not usually the solution. The other thing governments can do is borrow money without limits, and spend it.

Given these limits, I was interested to see how the current NZ government would respond to the coronavirus crisis when it presented its annual budget last week. A budget is a presentation of the government’s plans expressed in financial terms. And there is a huge expectation that the government will deal with every problem that worries people. (I was going to say that the expectation is unfair, but the politicians have encouraged it, so it probably is fair).

The problem is that politicians are ordinary people just like you and I. Some are really clever, while others are plodders who got where they are by being in the right place. They are skilled in managing the political process and communicating it (not an easy task) but they are not skilled in solving economic problems. And they always protect their power, because they know that when it is lost, it is almost impossible to recover it. So they have to pretend that they know what they are doing even if when they don't.

Unfortunately, politicians do not have the wisdom of God. They don’t have the wisdom needed to solve all the economic problems the economy currently faces. I feel sorry for them because they do not have the wisdom and knowledge to do everything they have promised to do, especially during a crisis.

The Minister of Finance is a career politician. Politics is what he has always done, so he is not an expert on economics or crisis solving. He got the role because it is a powerful position and he missed out on the roles that would normally fall to the deputy leader of the winning party, due to coalition compromises.

Government leaders can get economic advice, from the government bureaucracy that has been put in place to support them. Unfortunately, the people who work in these departments are just ordinary people, too. Some are very clever, but many are mediocre. Most want to do what is right, but they also care about promotion and advancing their career.

Commentators who probably know have said that the skill level in the departments that are responsible for the economy has declined in recent years. The is probably true. Once people in the public service used to stay in one area for many years and become experts in their field. That rarely happens these days. People work in an area until they are competent and then rotate to another area of work. They find that this is the best way to get promoted, but it means that there are very few highly skilled experts left in the core government departments.

The reality is that the government and their economic advisors do not know how to resolve the current economic crisis. There is no textbook they can look up, or expert they can call, to find out how to do it. The truth is that no one knows what to do in a crisis like this one, so governments tend to revert to doing what they have always done.

They can look at crises in the past to see what was done then, but they were different, and many of the government plans to resolve them were not that successful. During the Great Depression of the 1930s, some government actions made the situation worse, and it took a war to get things going, so that is not a helpful example. During the Global Financial Crisis, governments around the world spent billions trying to resolve the problem, but the recovery was weak and sluggish and many of the causes are still causing problems. In each case, the politicians claim that the situation would have been worse, if they had not acted, but there is no way of knowing if this is true.

As I expected, the budget turned out to be the best efforts of a government committed to full-service salvation, but without a clear understanding of what to do. They do not know how to resolve the current economic crisis, so they chose to do what governments have always done: borrow billions and spend it on various projects they hope might work. When the money is all gone, I suspect that we will look back and wonder where it all went.

The restoration of the economy will actually come through creative and innovative people identifying new opportunities and creating new businesses to meet the opportunities they perceive. It will be assisted by existing businesses identifying openings or gaps in the market, and expanding to meet needs that people have. How quickly that can do that will depend on how smart and innovative the people of the nation are. Rather than expecting governments to rescue us, the people of the nation should be looking to lead the recovery themselves. Time will tell if we are up to it.

Expecting a godlike government to deliver us from all our troubles is a mistake.

Psalm 91

In this season, Psalm 91 is an incredibly popular passage. It has some amazing promises, but they are often misunderstood.

The Psalm begins with a statement about the people to whom the promise of the Psalm applies.

He who dwells in the shelter of the Most High
Will abide in the shadow of the Almighty (Psalm 91:1).

The Psalm is a promise to people who live in God’s shelter. To be in his shadow we need to be walking in faith in obedience to the leading of his Spirit. The promise is also for those who abide in his shadow. Jesus told us what it means to abide in him.

Abide in Me, and I in you. As the branch cannot bear fruit of itself unless it abides in the vine, so neither can you unless you abide in Me I am the vine, you are the branches; he who abides in Me and I in him, he bears much fruit, for apart from Me you can do nothing (John 15:4-5).

To be safe, we must abide in Jesus. He reminded his followers that his body is like a vine with many branches. To be linked to him, we must be linked to other followers of Jesus, who are linked to him and to others that are following him.

Abiding in Jesus means belonging to a body of people who are following him and who love each other as he loved us, serving each other, and submitting to each other. When we submit to each other in love, we give the members of the body close to us authority to pray into our lives and release the gifts of the Spirits toward us.

God promised made this promise to those who abide in the body of Jesus.

Surely he will save you from the fowler’s snare
and from the deadly pestilence (Psalm 91:3).

This is not a promise for people wandering around doing their own thing in isolation from other believers. It is for people who belong to a body that is living in obedience to Jesus in the power of the Spirit. They will be loving one another and submitted to each other, so they will have authority to stand against evil attacks on behalf of those that are joined to them. This body of believers will be able to receive the gift of healing and the gift of faith to pray in the power of the Spirit for people who are sick. They will stand together to enforce the victory over evil that Jesus achieved by his death and resurrection.

We are living in a time when the church has struggled to deal with sickness. Given what Jesus accomplished on the cross, we should be seeing far more healings of sick people than we are seeing. This means that we are not as well prepared to deal with the coronavirus virus as we could be. If I struggled to defeat the last attack of the common cold that struck me by standing against it in faith and the power of the Spirit, I am probably foolish to assume that I can defeat coronavirus by faith. We need to belong to a body that understands the gift of healing and the victory that Jesus achieved on the cross.

Psalm 91 is not a magic charm. It is a way of life in unity with other followers of Jesus. It is a promise to a body of believers who are serving together in the power of the Holy Spirit. The best protection against any pestilence is to be in a body of believers who are confident in releasing the gifts of the Spirit, especially the gifts of healing and faith.

Media Conferences

All over the world, it has become the custom for government officials and political leaders to hold a media conference on national television, updating the latest information about the spread of the coronavirus, and describing government activities to deal with it.

Having done media training, in which I was taught how to tell the media what I wanted them to hear, rather than what they wanted to know, I am a bit cynical about what is said in news conferences.

At least NZ, social distancing has stopped the cheesy American practice of having half a dozen people crowding the speaker and cluttering the camera shot with agonised looks on their faces.

I know from doing time, that when a bureaucrat says that they are “doing some work on something”, it means that they are embarrassed because they have been caught short on something they are responsible for doing, and they are desperately trying to put the problem right, before anyone notices their failure.

At a news conference two days ago, a senior health official used the expression four times.

When an official speaking to a press conference seems confused and uncertain, I can’t help wondering if they are out of their depth and the department they manage is not functioning well.

When I see an official at a press conference speaking confidently and clearly, and easily diverting tricky questions, I am reminded of Roger Sutton, the CEO of the Electricity lines company during the Christchurch earthquake. He went on television every night following the earthquake and talked about what his company was doing to restore electricity. He spoke with confidence and flair, so people were wowed with his grasp of the issues and challenges. A few years later, after he had been appointed to lead and important earthquake recovery agency, which continued to perform badly under his leadership, news emerged that he been forced to step down from due to sleazy behaviour.

The electricity company continued on fine without him and it became clear the restoration of the electricity system was organized by his boring, but competent, deputy, and some experienced engineers who quickly developed bold and clever plans to install portable generators, substations and to build a new high voltage transmission line into the worst affect areas.

Ability to wow a media conference does not tell us much about the effectiveness of the organisation the speaker is leading. In the current media conferences, some hints of an organisation that has been caught out and is struggling to catch up have sneaked through.

Two Crises for the Price of One

The world is facing two economic crises at the same time.

1. Financial Crisis
The first crisis is a financial one that has been going on for a long time. It probably began with the Tech Wreck back at the beginning of the new century when the Dotcom bubble popped and the Federal Reserve reduced interest rates and poured out credit to pump markets up again.

This easy money eventually created a housing bubble. This collapsed in 2008 when markets woke up and realised that many of the loans made to people to buy houses at inflated prices would never be repaid. Because the finance sector had sliced and diced house mortgages into various mortgage-backed securities and related financial derivatives and sold them on to other players in the finance sector, the entire edifice was in danger of collapsing.

Central banks and governments came to the rescue again by reducing interest rates and spending money hand over fist to rescue most of the big players in the finance sector. A few of the worst failed, like Lehman Brother, but the rest were propped up with easy credit and other government bailouts and never really took the lessons on board. Fortunately, apart from the many households left with mortgages greater than the value of their house, most of the real economy was not too badly affected. But the recovery was slow, and the world economy took many years to get back to where it had been.

Unfortunately, the easy money fed into a new bubble, this time in the share market and related activities. Big business borrowed money to pay for share-buy backs, which pumped up their share price. This left the top executives and shareholders better off, but their companies were vulnerable because they had few financial reserves to cover any downturn in activity.

Share markets reached record prices, but the bubble was popped by the emergence of Covid19. This collapse of value affects the entire financial sector, as when the collateral offered as security for loans declines in value, the borrower must stump up more collateral or pay back some of their loans. Big businesses that rely on short-term loans to fund their business have struggled to roll over their debt as the market for corporate bonds dried up.

Over the last few decades, the finance sector has grown massively, far outpacing the rest of the world economy. Banks and other businesses in the finance sector have worked together to create a huge infrastructure of debt that sits on the top of the real economy. This monster adds very little of real value for ordinary people and businesses, but it has made those who work within in the finance system fantastically rich.

Of course, central banks and governments are using every weapon that they have to fight this financial crisis and keep the unruly monster of the finance system from collapsing. Governments are making grants to businesses. Central banks have reduced interest rates to zero and made credit available to the usual culprits. They are buying up a wide variety of government and business securities in order to prop up the price of collateral.

I presume that these desperate policies will succeed in papering over the cracks in the finance system, but this will not resolve the underlying problems that make the modern financial system unstable in the first place. The worst consequence will be an enormous increase in government and business debt that will be a deadweight on the real economy as it tries to deal with the second economic crisis that we are facing at this time.

2. Covid19 Economy
The second economic crisis that the world has to deal with is the collapse of economic activity as a result of measures put in place to prevent the spread of Covid19. This is both a supply shock and a demand shock.

As a result of the collapse of tourism, travel and the hospitality industries, many people will be out of work. With their incomes dramatically reduced, they will stop spending in the way that they did in the past. People who still have jobs will be unsettled by the situation and cut back their spending as a precaution against uncertainty. All types of businesses will be careful about their spending until the long-term consequences of the shutdowns become clear. People who are heading towards retirement will have seen their superannuation funds shrink, so they will need to save more seriously.

This collapse in demand for goods and services will make it difficult for all businesses to recover. As they attempt to get going again, they might find they cannot return quickly to previous levels of activity and may need to cut back on the numbers of staff that they employ, which makes the situation worse.

Attempts to confine Covid19 are also a supply shock to the real economy. Many non-essential businesses have to shut down their production. That lost production might not be recovered. If the lost is production is an input into the production of another business, that business will be constrained until its suppliers can get going again.

In the modern world, many businesses have developed very long supply chains. The longer the supply chain, the more likely it is that there will be a break in the chain where businesses have stopped production, meaning that the required inputs are not available. I suspect that during the next year, many businesses will find that things they need to operate efficiently are not available due to shutdowns in other businesses and other nations.

The state of the Chinese economy is uncertain. We do not know if it really has defeated the virus, or how quickly production will return to previous levels. Companies that rely on parts and equipment that are supplied from China might find that it will take longer to get their production back to normal levels.

Unfortunately, the supply shock and the demand shock work against each other. Businesses that still have good supplies and can keep production going might find there is no demand for their production. Others that face strong demand might find that they do not have the supplies that they need to increase production to meet demand.

Unmeasurable
Economics is an imprecise discipline. It can describe the links that influence the working of the world economy, but it is hopeless at estimating the size of the effects it identifies. I have seen enough of economists’ forecasts to know that they need to be taken with a grain of salt. Therefore, it is uncertain how serious this crisis will become. The economy might recover quickly, or the collapse of activity might drag on a long time.

One thing is clear; the problem is made worse by the reality that we are facing two crises at the same time. Central banks will prop up the finance sector so it can create another bubble in a few years’ time, but the increased debt will be a drag on the real economy where the people who manage real businesses that produce things that people actually need are struggling to keep them going.

The situation distressing, but we should remember that economic uncertainty is normal for most people in the third world, and has been normal for most people throughout history. Maybe we are just returning to the old normal.

Shutting Down the Economy

The New Zealand government has put the people of the nation under a lock-down. People cannot leave home, except for exercise, going to a pharmacy or supermarket and essential work. All non-essential businesses have been shut down. We are now nearly a week into a four-week shutdown. However, there is no guarantee that the shutdown will end when the four weeks are complete.

Although unavoidable, I suspect that the harm done by the economic shutdown could be more serious than the health crisis brought about by coronavirus.

Many small businesses are already struggling due to the collapse of the markets into which they were selling. Some are only just keeping ahead of their expenses on a week by week base. The worst-hit are tourism and hospitality-related businesses. These businesses are operating in a very competitive sector with very little to come and go on.

While businesses are closed and earning no income, they will still incur costs. They will have to pay the rent on their buildings and the costs of many of the services that they buy regularly, such as electricity, communication and IT services. Hire purchase payments for vehicles will have to be made. Interest on any debt will have to be paid. Some of these expenses might be deferred, but they will have to be paid eventually out of future earnings that could be significantly reduced.

Like governments all around the world, the New Zealand government will try to keep things going with additional support payments and the central bank will make credit available to banks so that they can lend to businesses. Unfortunately, additional credit will not be enough to keep some businesses to keep going. Most will already have significant debt, so providing them with an additional loan is not really a solution. More debt will just add to the burden that will make it difficult for them to get going again. What they need is more paying customers, but that will not happen in the short-term.

The wage subsidies will help some businesses, but others will struggle to make up the difference between the subsidy and the normal wages, if they are unable to operate. Unless the virus is stamped out quickly, the shutdown might have to go on much longer than expected.

The economic decline could drag on for much longer than many people expect. Many businesses that have had to shut down will not be restarted. Some small business owners will not have the emotional energy to take on more financial commitments to get started again in an uncertain economy. They will choose to get out before their situation gets worst.

Many big businesses also have very tight cashflows. Those who do will struggle, because many of their outgoings and expenses will continue, while no money is coming in. Those operating on very tight margins may find it is too hard to keep going, especially if the shutdown goes longer than initially expected. Many will try to shorten their supply chains, but this will make their inputs more expensive, as specialisation declines, which could reduce their profitability.

Ventilators or Warships

Ten years ago, the New Zealand government bought frigates costing about $300 million each to defend the nation from mostly imaginary enemies. They are now spending another $300 millions of dollars upgrading them with the latest technology. Military spending is always popular, because it provides toys for the boys and girls of the navy.

Epidemiologists have been saying for years that another serious pandemic was inevitable. If the government had recognised that that threat as a serious enemy, they would have spent a few million dollars on several thousand ventilators, heart monitors and personal protection equipment and stored them in a large warehouse in preparation for the pandemic.

If the government had made this preparation, the risk of the health system being overwhelmed would have been mitigated, and we would probably not have needed to enforce an extremely disruptive and costly shutdown. It would have been far cheaper than another frigate, and probably not so quickly redundant, but far more effective in keeping people safe.

Not God

The best way to understand God’ character is too look at Jesus. Like father, like son. Jesus is the best revelation of God that there has ever been.

Jesus went about healing the sick. He was moved with compassion when a leper asked him for help. He wept when his friend died. Healing was probably the most dominant part of his ministry. In light of this revelation of his Father, we can be sure that God is not the cause of the coronavirus.

The other important aspect of our reality is that we are engaged in a spiritual battle; and war is rough. Humans gave the spiritual powers of evil authority to be active on the earth. As people turn away from Jesus in many parts of the modern world, God is being squeezed out of the world that he created and gave to his children, so the powers of evil are flexing their muscles.

The spiritual powers of evil love to kill and destroy. The coronavirus could be an accidental occurrence, but given the death and pain that it has produced, it is more likely to be the work of evil spiritual powers. They assisted God with the creation of the world, before the fall, so they understand how DNA functions.

I explained in a previous post that coronavirus is probably a Warning Event, in which the spiritual powers of evil are trying out something that they would like to more of to see how effective it would be. It might not be the worst that they can do.

If the coronavirus is the work of the spiritual powers of evil, and they have been able to release it because humans have given them authority on the earth, God cannot just snap his fingers and remove it. Before that can happen, the authority situation on earth must change.

In this situation, the best thing to do is to pray that the gospel would go out in the power of the Spirit, so that the spiritual powers of evil are squeezed out of the strongholds they have gained. That will take longer than we would prefer, but it might be more effective than asking God for quick solutions.

Doing Church During a Crisis

The shutdown for coronavirus protection has exposed the inadequacy of the modern way of doing church.

Pastors are talking about virtual church, digital worship and online services, as if they were something revolutionary. The reality is that these methods are far from the “body of Jesus” that Paul described.

Just as a body, though one, has many parts, but all its many parts form one body, so it is with Christ. For we were all baptized by one Spirit so as to form one body… Even so the body is not made up of one part but of many. But in fact God has placed the parts in the body, every one of them, just as he wanted them to be. As it is, there are many parts, but one body (1 Cor 12:12-14, 18, 20).

Paul was not describing a virtual church or digital body.

An online service is a good way for a pastor to speak to all his/her people at the same time, but the body of Jesus is more than a weekly sermon. If the people of the church need to hear from their pastor to know what to do in a new situation, something is seriously wrong. If they have been taught how to hear the Holy Spirit speak, he will tell them what to do. And if people start listening to sermons online, they will soon discover there is far better teaching available online that they can get from their pastor.

Online services enable people to listen to the pastor praying and agree with the prayers, but it is far more important that they pray under the leading of the Holy Spirit themselves.

If people like to worship while listening to Christian music, there is plenty available online. They don’t need their church worship team making their selection for them. They would be better following the leading of the Holy Spirit, who knows what will inspire and encourage them.

The internet can be used to communicate words and music, but it does not channel the Holy Spirit. He lives in the hearts of God’s people, and that is where he works.

The stuff that strengthens the body of Jesus cannot be done in an online church service.

• The gifts of the Holy Spirit cannot flow.
• Sharing with people in need cannot take place.
• Discernment of spirits cannot take place
• Healing and deliverance cannot occur.
• The one another stuff is not possible.
• Discipleship cannot be done.

A digital church service is a very sub-optimal way for the body of Christ to function. Virtual church is not real church.

Paul used the technology that was available in his time to communicate with the churches he had established. He made extensive use of letters to connect with his friends and churches, but he understood the limitations of written communication. He wrote that he longed to be with the Romans so that he could impart a spiritual gift to them.

I long to see you so that I may impart to you some spiritual gift to make you strong (Rom 1:11).

Paul understood the limits of written communication. If he had lived in the internet age, Paul would have used it, but he would not have seen it as a substitute for meeting with people. He understood that the Holy Spirit prefers to move in the midst of a few followers of Jesus who love each other and have gathered to serve Jesus.

The church should be glad that it has had a trial run of a crisis. The current lock-down will end after a few months, but I can think of several circumstances that would cripple the church in a similar way.

• A prolonged period of persecution by the state in which church buildings are locked and pastors are arrested.
• A war that prevents people from moving far from their homes.
• An economic crisis that means people cannot afford to drive their cars to church.
• Economic sanctions that limit people’s ability to travel.
• Weekend and evening curfews following a military coup.
• A fuel shortage that limits the use of motor vehicles.
• A serious epidemic that prevents all travel and movement
• Marauding thieving gangs that make all travel far from home dangerous.

The church has experienced these types of events frequently throughout its history, so they are not abnormal.

The coronavirus shutdown has demonstrated that the operating model of the modern church is only viable in good-times. The irony is that most Christians believe that there could be hard times ahead, but they have opted for a good-times church.

I hope that when the current shutdown comes to an end, pastors and church leaders will not just go back to their good-times way of operating. I hope that they will think and pray about discovering a way of being church that would remain viable through both good times and hard times.

One way that God is using the current bad situation for good is giving the church a trial run of hard times (without being life-threatening for most people). I hope that pastors and church leaders will take the opportunity to learn from the experience. If your pastors are not thinking seriously about this issue, then I suggest that you challenge them to do so.

Here is a truth that we cannot afford to ignore. A church that can only meet by people driving to a church building once a week will not be viable in hard times.

I presume that most church leaders are hoping that the crisis will soon be over so that things will go back to normal. If so, they are missing what God is saying to the church in this season. Getting back to normal is not getting back to good times. The bible teaches that tribulation is normal for the church. Jesus said,

In the world you have tribulation (John 16:33).

If Jesus said we will have tribulations, why would be happy with a way of doing church that is only viable in good times?

The current crisis is a fairly-mild, temporary trial, but it is a clear warning that a good-times model of doing church is really rather fragile. We urgently need a way of being church that can cope with good times, hard times and tribulations. We would be foolish to ignore the warning and carry on as normal.

Faith and Risk

Many prophetic voices are declaring that a spirit of fear is spreading around the world faster than the coronavirus. That is probably true, as fear is one of the enemy’s favourite weapons. However, we must not forget that complacency is another of his favourite weapons.

The best antidote to fear is trust in Jesus and walking his Spirit while living in a body of believers who love each other and are committed to supporting each other. Ps 91 is not a magic spell. Nor is it a guarantee to individual believers. It is a promise to a body of believers who love each other and walk in the spirit together, who make God their dwelling place (Ps 91:9).

The second-best antidote to fear is a clear understanding of the risk. Many people who contract the disease will have very mild symptoms. For most people, the risks of being killed by coronavirus are quite small, and most will get better.

The world we live in is full of risks, such as being knocked down by a car, but most of them are insignificantly small, so we can choose to ignore them. Many people, especially those who are young, have happily engaged in adventure tourism events, driven dangerously in motor vehicles, or done things under the influence of alcohol that exposed them to far greater risk than coronavirus does. We should not panic about risks that are relatively small.

However, for elderly people and others with pre-existing respiratory problems, the risks from coronavirus are much higher. We do not help them by trivialising the risks they face. They might need a group of faithful Christians supporting them in prayer, and some will possibly need a gift of healing to get through.

Although they are well trained, and have protective equipment, the nurses who will care for seriously-ill people hour by hour will feel like they are being exposed to greater risk than usual. They will need faithful prayer support and strong spiritual protection while they are caring for people in need.

As I noted in a previous post, the economic risks from coronavirus are probably much greater than the health risks, and they are already being felt. The slowdown of production in China is affecting production in factories all over the world. The controls on international travel introduced at the weekend will have a much greater effect. The tourism industry will be particularly hard hit, but in the inter-connected world that we live in, the pain will ripple thought the entire economy. I explain some of the reasons in Trade and Specialisation.

When life is uncertain, people stop spending, especially on goods and services that are not essential. This downturn will affect industries and businesses far beyond those that are directly affected. The large number of workers on casual contracts or on short-term freelance contracts will exacerbate the situation.

We had breakfast with friends in the restaurant of a tourist hotel on Saturday morning. The restaurant was quite empty, so I asked the waitress serving us about the impact of coronavirus. She said there had been a big decline in guests at the hotel. She said many of the staff had been put on reduced hours. She was worried about one of her colleagues who had just taken out a mortgage to buy a house. No doubt the situation people employed by this business got worse on Sunday when the government announced big restrictions on international travel.

Trivialising the economic risks is not helpful. Many people will face reduced hours, and some will lose their jobs. Most of the employment in the tourism sector are in low-wage jobs, so they will have much to come and go on. Many businesses will struggle, and some will fail. The restrictions on international travel could be in place for some time, which will increase the economic pain for the business and people affected.

Governments will introduce support packages to help the people and businesses affected, but they will not be able to restore everyone who is affected. Many will miss out, because they do not fit the criteria. Even if they do get help, they will not be fully compensated for their losses.
Unfortunately, because governments all over the world have mismanaged their economies in the last couple of decades, the world economy is not as robust as it should be. I describe these risks in Thoughts on the Economy.

People who are struggling economically will need assistance from the body of Christ. They will need people of faith to strengthen them and people of generosity to sustain them during their time of need. I explained how this could be done in Preparing for Economic Crisis. Unfortunately, the church in the western world is not well prepared for dealing with a season like this, as most of its income is committed to salaries and mortgage payments for buildings.

Trade, Specialisation and Coronavirus

The biggest issue in the current economic crisis is globalisation. Internet communication and container shipping have allowed the business world to massively increase specialisation in production.

In a traditional society, people often lived by subsistence. They did not depend on any other people for survival, because they grew or produced everything that they consumed. If they could not grow or make it themselves, they did not have it. Living on subsistence allowed the people to be self-sufficient, but this was quite limiting, because they spent so much of their lives producing food and shelter, they did not have time to develop and make other products that they may want.

The development of trade changes everything, because it allows people to specialise. Each one does what they are most skilled in doing. By focusing on one task, each person could increase their skills and find ways to do a task more efficiently. The person who specialises can produce more than they need to survive. They can trade their surplus production with others to get all the things they want. Trade improves the situation of almost everyone.

The industrial revolution gave the world new technology, but many of its benefits came from specialisation that made the production of goods and services more efficient. Over the last fifty years, a massive increase in specialisation and trade has occurred. This trade and specialisation makes most people better off, it has linked different parts of the world much closer together.

The production of goods has been split up into its different tasks and shifted to countries that can do them most efficiently. Engineering design for a product might be done by a services company in the United States. The marketing might be organised from France. Manufacturing tasks have been shifted to countries in Asia, where labour is much cheaper. This specialisation often produces greater efficiency, which results in cheaper good.

The components that are used in a product will be manufactured by different companies in different countries. By specialising in one type of component and supplying them to numerous producers for various similar products, they can become more efficient in what they do. The companies that assemble products have specialised in developing efficient production lines.

This division of labour enhances life in cities. Without the benefits of specialisation and trade and specialisation, life in a modern city would be impossible, even for those who live simply. No modern city or country has the capital equipment and the range of skills needed to manufacture the full range of products that people need and want. The only way that it can maintain modern lifestyles is to specialise in a limited range of activities, sell the surplus produced, and use the income to pay for the other goods and services that are needed. These will often be imported from other countries, so some of the surplus production will have to be exported to pay for it.

Risk
The risk of specialisation is that it makes people and business dependent on other people and businesses. That is a good thing.

With the highly globalised specialisation of the modern economy, this dependency extends across the world to many other nations. The supply chains of many large producers extend to businesses in countries all over the world. This specialisation has allowed increased efficiency and reduced costs, but the risk of dependency has also been vastly increased.

The risk has been exposed by the emergence of coronavirus in China and Europe and government actions to slow its spread. The quarantining and closure of businesses in China has disrupted the supply chains of businesses all over the world, contributing to the current economic downturn. Quarantines in other countries will exacerbate this situation.

This risk of depending on producers on producers on other sides of the world was always obvious, but it was probably downplayed for the sake of profits.

Many businesses are now saying that they want to pull back from globalisation and rely only on local suppliers. People are saying that they want to be self-sufficient. Reducing the risks of globalisation may be sensible, but we need to be careful how far we take this.

A significant reduction in specialisation and trade will reduce the efficiency of production, which will contribute to a sharp increase in costs and the prices that consumers have to pay. No business or nation has the capacity to produce everything needed to sustain the modern lifestyle. This makes full specialisation impossible. If a phone manufacturer tried to make all the components needed, the cost of production would be much greater. Most businesses would not be capable of efficiently producing all the components need.

Even the United States does not have sufficient capital and skills to produce the full range of goods and services needed to sustain life in an American city. If America attempted to be self-sufficient, living standards would suffer as the benefits of the division of labour and specialisation disappeared.

Moving all production back to the United States is probably not practical. The much smaller market would not support the level of specialisation that has produced the cheap consumer goods that we now take for granted. If businesses had to produce all components of their products internally, they would be much less efficient. Skilled people will have to engage in a broader range of activities, so they will become less efficient at doing some of them.

The other problem is that the skills needed for making some components of consumer goods no longer exist in the United States. Even if people could be trained up to do them, US employees will not do these for the wage rates for which they are done in Asia and Africa.

Global specialisation is beneficial, but it is also risky, because it is vulnerable to epidemic diseases, wars and political interference. However, full self-sufficiency is not practical either, because it would be too costly. We need a balance between the risks and benefits.

In the short term, government efforts to slow the spread of coronavirus will cause a massive contraction of the globalised activities, causing shortages of components needed for production and some consumer goods. Efforts to short circuit specialisation and globalisation will push up the cost of production.

In the longer term, following the coronavirus experience, that balance might shift toward more self-sufficiency, but some degree of specialisation and dependence on global trade will always be unavoidable.

Thoughts about the Economy

Although it has now been declared a pandemic by the WHO, it is hard to know how serious the coronavirus pandemic will become. Whatever the outcome, it is likely that the economic consequences will be more serious than the health effects.

It seems that the best way to prevent the disease from spreading so fast that it overwhelms hospital systems is to quarantine people from infected areas. The speed of the spread can be slowed by creating social distance and reducing human contact by action such as limiting travel and preventing attendance at large sports and entertainment events. Unfortunately, government actions to reduce the spread of the disease have a significant economic cost. Spreading the advance of the disease out over several months means that the changes introduced by the government will have to stay in place for much longer. And the more serious the disease, the longer that it will take for people to revert back to their normal behaviour.

Governments will have to choose between health outcomes and economic outcomes. I presume that will most will put people’s health ahead of the economy.

Even before the coronavirus struck, the world economy seemed to be turning down, although the consequences were not fully clear. Therefore, although the coronavirus was a catalyst for the recession that had already begun, the outcome will be determined by the other factors that were already in play.

• Europe has been struggling for some time. The uncertainty of Brexit makes it hard to know how this will play out.

• The US trade war with China has had an effect on the economic performance of both countries by reducing trade and increasing costs. US agriculture has bee seriously impacted.

• The recovery from the 2008 Global Financial Crisis has been sluggish at. Part of the problem is that the government solutions, which saved badly managed financial institutions from disaster, left a dead-weight hanging over the rest of the economy. Lax monetary policy helped the banks created artificial conditions that enhanced the underlying problems that were never resolved.

• Share markets have fallen sharply all over the world. Concern about the impact of the coronavirus triggered the fall, but most shares were probably already seriously overpriced with price/earnings ratios well above the long-term average. Loose monetary policy had fed the boom by encouraging share buy-back schemes, which make shareholders wealthy, but do nothing for the real economy. Low-interest rates also encouraged excessive margin buying. Given that share markets had got out of touch with the performance of the real economy, a serious correction was well overdue, before the coronavirus arrived. All that was needed was a trigger.

• Declining oil prices have contributed to the decline in share prices. However, the oil market was already suffering from excess production prior to the coronavirus emerging, so a fall in price was inevitable. The virus was just the trigger of the inevitable collapse.

  US shale-oil production had contributed to the excess production of oil. This production was usually funded by low-interest debt, so it was not really sustainable. Once oil prices fell a collapse of the fracking sector was unavoidable.

• Current economic problems are exacerbated by the high levels of debt, due to the low-interest-rate policies of central banks. Household debt has soared again. The greatest risks are student debts and auto loans. Corporate debt has grown rapidly too, and some of this debt is very poor quality. At the same time, government debt has grown all over the world. This high level of debt leaves household and businesses vulnerable to economic troubles.

• The finance sector in most developed countries has grown enormously in recent decades, but adds very little of value to the real economy. The sector claims that it mediates between lenders and borrowers, but in reality, it does very little of that. A vastly shrunk finance sector could carry out the financial intermediation need to support an economy.

  What the sector has really done is to create a vast range of financial products and derivatives and then sold these on to other financial institutions, effectively betting against each other in a “giant financial casino”. They claim that these activities improve the transmission of information and reduce risk, but the experience during the GFC showed that the opposite was the case. The finance sector has become a massive dead-weight that sits on top of the real economy, weighing it down with additional costs, and massively increasing risk when things unravel. The only people that benefit from these activities is the highly paid staff and shareholders of the companies that dominate the sector.

• Monetary policy was over-used in the last financial crisis, so there is limited room for it to be used with the next, as low-interest rates cannot be pushed much lower before they go negative. This gives central banks very little room to move. Other monetary measures such as quantitative easing have not proven effective in dealing with serious economic problems.

• A modern economy has so many inter-dependencies that once it is slowed down, it will take time for it to get back up to speed again. Some businesses will have failed and will not start again. Many employees will have shifted to other work, and will not go back to doing what they were previously. Their skills will not be available for the restart of the economy. When people stop travelling, it might take along time to be confident to travel again. In a less globalised world, some industries might never become competitive again. Businesses that have found new suppliers might never go back to their old one.

• Many large businesses have weak balance sheets. Since the GFC, they have used cheap loans to finance share buybacks. These have pushed up the share prices for the benefit of shareholders, and particularly senior executives who are paid in shares or share options. Unfortunately, this practice leaves the business without financial reserves to tide them through a difficult time. For example, aerospace analyst Dhierin Bechai reports that:
  

  Boeing spent roughly $60B in buybacks ($40.6B) and dividends ($19.4B) in the past years while it generated roughly $55B in cash flows. Boeing returns all of its cash flow from operations to shareholders... Excluding 2019, we found that Boeing returns 92 percent of its operating cash flow and 113 percent of its free cash flow to shareholders.

  Coincidentally, or not, the $60 billion returned to shareholders is the exact amount Boeing requested in federal support for the aerospace industry.

  Jesse Fedler explains that the total net asset value of the McDonalds, Caterpillar, Boeing and 3M has fallen 90% from $70 billion just a few years ago to about $7 billion today. On average, these companies each spent $200 million per year on issuance of options to top management. Those very same managers were the ones who decided it was a good idea to leverage the balance sheet to buy back stock. This was done at the long-term expense of the resilience of their balance sheets.

• The problem with the current economic crisis and mounting job losses is the vast majority of workers are woefully unprepared for any type of disruption to their income going into recession. This will be a problem all over the world.

• The Chinese economy is weaker than it was in 2008/9 when it led the world out of the GFC.

The outcome is uncertain, but so many negatives are at play that the consequences are likely to be worse than governments expect.

Meetings

Church leaders should be thinking about what they will do if their government decides to prohibit meetings of more than 30 people for the next four months as part of their efforts to stop the spread of the coronavirus. What will you do? What will happen to your church if it is unable to meet for a few months?