Niall Ferguson: why we'll never be prepared for disaster

Transcript

Merryn Somerset Webb: Hello and welcome to the MoneyWeek magazine podcast. I am Merryn Somerset Webb, editor in chief of the magazine and with me today, oh boy, have I got yet another treat for you. Following – I can't remember who we'd had last week... Andy Haldane! That was great. And before that, we had Gillian Tett.

Excellent, but things just get better and better. Today we have Professor Niall Ferguson, distinguished academic, distinguished author. 15 books, I think Niall or am I bigging you up too much?

Niall Ferguson: Actually I think it's 16 , Merryn, to be honest.

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Merryn: 16, yikes. OK, sorry. I wasn't bigging you up enough. Now, the one I suspect that MoneyWeek readers will know best is The Ascent of Money: A Financial History of the World. That was out in 2008 and quite recently updated, I think. I bet every MoneyWeek reader has read that. And if they haven't – MoneyWeek readers, go out, buy it, and read it.

And while you're at it, buy the most recent book, which is Doom: The Politics of Catastrophe. And that's the one we're planning to talk about today among, I hope, many other things. Niall, thank you so much for joining us. We hugely appreciate it.

Niall: It's a pleasure, hard act to follow Gillian Tett and Andy Haldane, but I'll do my best.

Merryn: I think you're going to be just fine. I do.

Now, this book is very much about Covid. But it clearly, I think, must have been conceived long before Covid. So it covers everything from pandemics to wars, volcanic eruptions, tsunamis, nuclear accidents, etc. Think of something awful, and it is going to be in there.

I guess the first question here is: why the focus on this? What connects all these things? On the face of it, as I think you said in the book, there is nothing that connects calamities; some are natural, some are manmade, some, we think are natural, but they're actually manmade – famines, as you say, being the obvious here.

So I suppose that the big question for readers is, what's the connection here between, say, a space shuttle disaster and a volcanic eruption?

Niall: Well, there are important connections. And that's why I wrote this book, because it seemed to me that there were certain general features of disasters that were worth thinking about whether or not one’s in a pandemic. I certainly had been thinking about writing this book before Covid came along, and I want to make clear to listeners, the book has only got a few chapters at the end about Covid. Mostly, this is a general history of disaster, which you could enjoy on the beach, whether you're in a disaster or not.

Actually, if I'd wanted to sell lots of books, I should have written Fun: The Politics of Partying, which is probably the book that people feel like reading. But if we're to understand the situation that we're in – and after all, this disaster ain't over –then we need, I think, to look beyond the history of pandemics.

It's easy enough to write articles, or even books, saying plagues all have these common features. Actually, Covid-19 Isn't that like a really bad plague. Think about it. The Black Death killed 30% or 40% of the populations of most European countries; we're currently looking at the death toll of 0.05%. So I'm not sure Covid really has that much in common with the Black Death at all.

But if you take a step back and just think of human history as a catalogue of disasters, then a couple of things immediately hit you. First, as you mentioned Merryn, the distinction between a manmade and a natural disaster is actually a false dichotomy. After all, are we really going to keep calling Covid-19 a natural disaster? Seems less and less clear that it was a natural disaster. Even if it wasn't a lab leak, the Chinese so mishandled the early phase of the outbreak that it became a pandemic. It wasn't just the virus, it was terrible decisions that were made in Wuhan, and Beijing.

The second point, which is important, is that we can't predict these things. I mean, we can say generally: oh, there's going to be a pandemic. Lots of people did that. But nobody could say there's going to be a pandemic in 2020. Because there's just no way of getting the timing right, any more than I can tell you when the next really big earthquake in California will be.

So we have to recognise that disasters lie in the realm of uncertainty; we know that they're a possibility, but we can't really attach probabilities to big ones and get the timing right.

And that means that we can't meticulously plan for the next disaster because we just don't know what the next one will be. And that has important implications which the book offers.

Merryn: OK, I just want to say before we go any further that I wouldn't necessarily recommend reading this on a beach. Because – tsunamis, that kind of thing. If you want to relax on the beach, I'm not entirely convinced this is the book for it, maybe the aeroplane on the way over or the long way to the airport.

Niall: Well, not on an aeroplane because then you'll be worried about the disasters that can happen when you're flying. I'm not sure what the appropriate place is, perhaps under the table in the foetal position by candlelight.

I've never been able to read on beaches. I don't know who the hell reads on beaches. But anyway,

Merryn: I read on beaches! Not important, serious books; crap books. I'm a standard holiday reader.

The other thing that's interesting is that you've just described the history of the world as the history of disaster, whereas at MoneyWeek, we're terribly optimistic about things, we like to see the history of the world as a catalogue of innovation and creativity and progress.

Niall: It's that too, of course, although it must be said that most of the progress of the last 4,000 years of recorded history happened relatively recently. And there wasn't a great deal of really meaningful progress in terms of life expectancy, or income or any of those things until the Industrial Revolution.

So I think if one looks at history as a whole, by which I mean recorded history, there really is a characteristic punctuation provided by disasters. And often it's the disasters that can hold progress back; sometimes they accelerate it.

But it's pretty clear – it certainly hit me as I was writing the book –that it's very problematic for a cyclical theory of history or a straight progressive history to accomodate for disasters, because they really do come so frequently, not predictably. It's a kind of erratic punctuation.

But how could you write the history of the world without wars? Wars do a tremendous amount of disruption at pretty high frequency, more frequently than than pandemics. And then you go on through the list of disasters, the floods, the wildfires, the volcanic eruptions, the earthquakes...

The point I'm really making is that we have, of course, made tremendous progress, especially in the last 200 or so years. But it hasn't done away with the disaster factor, that tendency for sudden, unexpected, disruptive events to occur, that can at least temporarily blow you off course, we saw that very clearly with the world economy, essentially having a seizure in the early part of 2020.

Merryn: OK, so we haven't really been able to prepare for the vast majority of the shocks that have hit us over the years. But here we are in a science based world full of big governments with large tactics and lots and lots of important sounding departments. And we thought we were prepared for a pandemic, particularly the US and the UK. We believed we were prepared. We had things in place, everyone told us we were well prepared. But when it actually came to it, it turns out that we weren't prepared at all. How did that happen?

Niall: This is one of the fascinating things on paper: the US and the UK were number one or number two in the pandemic preparedness hit parade in 2019, when the Economist Intelligence Unit teamed up with Johns Hopkins to review preparedness for public health emergencies. And yet, although they didn't do the worst in the world – you'd have to give that award to a country like, maybe, Peru – they certainly did pretty badly in terms of excess mortality, which seems like the best measure.

I think this is a critical point that Doom explores. We have the illusion of preparedness. The public health bureaucrats said they really took this threat seriously, and they had pandemic preparedness plans; 36 pages long in the case of one in the United States, doubtless there were equally copious preparedness plans in the UK. Why did they work so badly?

Now, the wrong answer to that question, but it's a very widespread answer, is because Donald Trump and Boris Johnson are very incompetent, populist leaders. That is the wrong answer, because it's very clear –and I try and show you this in the later chapters –that it wasn't presidential or prime ministerial decisions that led to the excess mortality.

Sure, those guys made some mistakes and said some dumb stuff, but it wasn't crucial. What really happened was that the public health bureaucracies at the national level, and to some extent, also, bureaucracies at the regional and local level, made terrible blunders.

Example: the Centers for Disease Control completely screwed up testing in the United States – you couldn't find out who had Covid right into March and April of last year, whereas in South Korea and Taiwan they very quickly were able to ramp up testing capacity. Now, that wasn't because Donald Trump told CDC screw this up, they screwed it up all by themselves, with their own bureaucratic sclerotic way of doing things.

Another example: we didn't really try contact tracing in the US at all. In the UK it took until late last year to get everything up and running. That was a huge omission because If you had testing plus contact tracing, you really could do quite a lot to contain the spread in 2020. Why was that? Did Donald Trump prohibit contact tracing apps? No, Google and Apple decided for reasons of their own to punt contact tracing to state governments as if they would be able to do it.

So at each stage, I think you can see that the big mistakes that cost lots of lives weren't really coming from the top. They emanated from either the bureaucracy or, in the case of contact tracing, from the private sector.

Why did so many people die in elderly care homes? A huge proportion of the European and North American victims in the initial phase were elderly people in care homes. The answer is because nobody responsible for those institutions thought to protect them from infection. And again, that can't really be attributed to mistakes at the top.

Now, why am I telling you all this? Because it's often the case in disasters that the point of failure is not at the top. And that's one of the important general truths about disaster that I wanted to bring out in Doom, it's actually, for me, a really important epiphany that we shouldn't always be looking to pin the blame on the president or prime minister, tempting though that is for journalists.

Merryn: We should be putting the blame on middle management, on bureaucracy, on form filling over action. I'll tell you this – I always find it very amusing – my husband once worked for a company that had a form that you could fill in to demand the creation of a new form.

Niall: This is a typical example of the modern pathologies of bureaucracy.

My other example is that in some institutions, the committees outnumber the individuals, because many individuals are on multiple committees. That's a sure sign that your institution is in trouble, by the way.

A great tale that illuminates this problem is the one Richard Feynman told about the Space Shuttle Challenger, one of the episodes in the book that I really enjoyed writing about, mainly because Feynman told such a great story, but there were a few bits that he'd missed.

He was a physicist, he was called in 1986 to be part of the commission of inquiry to figure out why the Space Shuttle had blown up seconds after launch. Now, the story initially in places like the Washington Post was that it must be Reagan's fault; Reagan must have pressed to accelerate the launch in order to mention the launch in a State of the Union address. That was the story that did the rounds. It was absolutely without substance, there had never been any intention to use this in the speech. And it certainly hadn't led to an over hasty launch.

What Feynman discovered was that the NASA engineers had known that there was a 1% chance the thing would blow up. One in a hundred chance, if you're launching as many shuttles as they were launching back in the 80s, means it's going to happen at some point. And yet there was this bureaucratic decision to turn that probability from one in 100 to one in 100,000 when they were reporting to Congress, which was obviously financing the programme. And that's, that's a really good example of the failure at the mid management level.

Who did that, who actually made that change? Well it was someone called Mr Kingsbury that the engineers could never get a meeting with. So somewhere in the NASA office complex Mr. Kingsbury sat, changing one in 100 to one in 100,000 and making the Space Shuttle disaster happen.

I'm fascinated by that enigmatic figure of Mr. Kingsbury. Because I think he's there in many disasters; different versions of him are there, screwing up the bombardment at the Battle of the Somme, so that the offensive is a total and abject failure.

For example, probably sitting there in the Department of Health and Human Services back in 2019, and saying to himself, gee, I know this pandemic preparedness plan won't work. But as long as I don't get blamed, as long as I've covered my ass, it's all good.

Merryn: Do you think that Mr. Kingsbury may have had something to do with Western countries deciding to go into lockdown when it might not necessarily have been the best result in terms of everything getting out of the end?

Niall: Yes. I think that the lockdowns were a last resort after we'd missed the opportunities that were there in January, February and early March to deal with the crisis in a smart way. And I think part of what happened was that the Mr. Kingsburys did what they often do, which is to say we need more data, let's wait for more data.

Typically, bureaucracies like to say they're data dependent. But in a crisis like a pandemic when a novel pathogen is suddenly detected which appears to have lethal potential, it's actually a mistake to wait for data. It's better to take early action.

And as Larry Brilliant, the epidemiologist, said years ago, the key in a pandemic, particularly with a new pathogen is early detection, early action. That's what the South Koreans and the Taiwanese did and other countries that followed their example like New Zealand. We didn't do that. And I think we didn't do that because the public health bureaucracy was inclined to just wait and play for time.

Also, there was an assumption, I think, that it was going to be influenza that would be the next pandemic. And this was a classic case of fighting the last war, because if you've seen an influenza pandemic – we've had a modest one in the US in 2009 – that's kind of what you're ready for. The idea of a new kind of coronavirus that was like SARS, only less deadly but very much more transmissible, they'd thought about that in Taiwan and South Korea, but I don't think we'd really thought about that in any Western country, not deeply enough to have a good plan for it.

So yes, Mr. Kingsbury is a key figure in almost all bureaucracies and he has certain standard motivations. I mentioned one, which is cover your ass; you produce a document that says we have a preparedness plan and then you get the 5:15 home, because you've done the document, but it's not actually stress tested.

You'll remember –and I've no doubt listeners will remember, too – that we we had very elaborate regulations governing banks’ capital adequacy prior to the 2008 financial crisis. In fact, the Basel Accords kept getting more voluminous. They didn't actually work when there was a crisis.

And that I think is typical of the way modern bureaucracy operates that it produces verbiage, page after page of regulation, that disintegrates on contact with the crisis.

Merryn: Yes, well, let's look at the consequences then of this, a year and a half of various levels of lockdown across the world is going to have fairly intense, well for starters, economic consequences. Certainly at MoneyWeek, our big worry is that after all these years of predicting inflation, we're finally going to get it.

Niall: Well, certainly, if this doesn't happen, we'll have to give some very deep thought to the dynamics of inflation.

Larry Summers was the man who said, beginning in 2014, we have a problem with secular stagnation that is going to mean prolonged, depressed, nominal and real interest rates. Inflation is not our worry. And then the same Larry Summers, in February of 2021, says: you guys are throwing so much fiscal kerosene on the barbecue that you're going to blow up inflation.

The fact that Larry Summers made that argument was very significant. If it had been compulsive inflationistas who had made the same kind of argument in 2010, I think everybody could have reasonably ignored them. But for Larry to take such a view, and essentially to set secular stagnation concerns aside, was remarkable.

Now, nobody knows at this point, if the inflation will be transitory, certainly not Jay Powell. Because it is one of those things that lies in the realm of uncertainty. You can attach percentage probabilities, but it's all guesswork. In truth, we don't have a great handle on the way that expectations are formed. At least economists don't, though they talk a lot about it.

Tom Sargent, who did some pioneering work on inflation expectations back in the early 80s, was a colleague of mine – is a colleague at Hoover when he visits – and he and I used to talk about this. Because it was easy to see how you ended an inflation. That was the regime change that Sargent talked about looking at Paul Volcker's role at the Fed in the early 80s. But we used to discuss what the beginning of an inflation was like.

And I think the conclusion we came to, that we never really wrote up, was the inflations begin much more surreptitiously. They don't begin with the dramatic announcement of a regime change. But in fact, they creep up on you. That's what happened in the late 60s.

People forget that the 1970s inflation didn't begin with the oil shock. It had already begun in the late 60s because the Johnson administration had blown money on not only great society, but also Vietnam, and the Fed had taken its eye off the ball. Inflation expectations jumped and they kept on soaring really until Volcker took charge at the Fed.

So I think there is reason to be concerned that the Fed has miscalculated in ways that will be quite hard to walk back. Older people, this is very interesting, are much more worried about inflation than younger people because older people remember the 1970s. That's part of what's fascinating to me as an historian, that our expectations are really based on our own sense of history.

If you were, as I was, a kid in the 70s, you were aware of rising prices. The first thing I ever got published was a letter at the Glasgow Herald complaining about the price of school shoes, because I can see my mother's face every time I needed to get a new pair. The pained look as the sticker shock struck.

I think what's fascinating about the inflation debate, is that in some ways it's a bigger concern for older people than for younger people, because younger people have no recollection of double digit inflation. Who's going to be right? I don't think we know. And we probably won't really know until early next year.

Merryn: It's interesting, though, isn't it, this idea of younger people not remembering? It's not just they don't remember inflation, it's just they don't remember higher interest rates. And that might be where the real shock is.

It's very hard for central bankers at the moment to think about raising interest rates into an environment of an entire generation who believes that it's normal for rates to be well below 1%. And as near to zero as dammit.

If you put rates in the UK up to 1% now, they've gone up tenfold. And that's an extraordinary shock to people who have no memory at all of rates being at 5% level and 12%.

Niall: Merryn, this is a key point, that the Fed says it has the tools to deal with it if inflation does surprise to the upside, but those tools include higher rates, as well as the end of quantitative easing.

I think that the big problem that the Fed will face is that the debt, particularly the federal debt, is now so large, it's at the highest level since World War Two, that even the smallest change to interest rates will have major fiscal implications, such that you may find yourself back in that time in the late 40s and early 50s, when there was fiscal dominance because the war debts were such that the Fed couldn't really just autonomously make monetary policy until the Fed Treasury accord restored its independence.

So I think, everywhere in the world, this problem will manifest itself in a different way. In China, the problem is you have very high private sector leverage rather than public sector leverage. In China, they also have a big inflation worry, maybe even a bigger worry than we have in the West.

I think the inflation worries are pretty minor league in Europe. But the inflation problems are going to be serious in, say, Brazil. And as central banks respond to these challenges, it'll suddenly become apparent that we've run up a tonne of debt in the last decade or so. And that that huge debt burden becomes very problematic, even with modest rate hikes.

Merryn: OK, let's talk briefly about the other changes that we may see, as a result of the pandemic.

You said earlier that natural disasters tend to accelerate existing trends. And one of the ones we've just talked about there is, maybe the change in the monetary policy regime. But then there are other things that we've been talking about such as the digitalisation of the global economy, the reversal of globalisation, etc.

And another thing – and I would love to talk about all these things, but I don't want to keep you forever – the other thing that is interesting is the relationship between China and the US, and how that's perceived by everybody.

There's been a slew of books already coming out about how China managed the pandemic so much better than the West. But when I look at the way the US has handled it, and I suspect you would agree with this, actually, the pandemic has shown the US to still be in a very innovative, creative and powerful economy, regardless of what's happening in China. So, that was a very long and complicated question.

But what other global changes do you see accelerated by the pandemic? There's a simple question, you can now pick out anything you'd like to answer it.

Niall: I'll try to be comprehensive because you asked a great question.

One obvious and important trend has been for cryptocurrency, decentralised finance, to gain greater credibility. Adoption has definitely been accelerated by this crisis. If you had bet on gold over bitcoin at the depths of the crisis in March last year, you'd have been very wrong. So that's important because I think there are major changes in financial technology happening.

This shouldn't be seen in a simplistic way as a kind of invention of new forms of money because I'm not sure that bitcoin or any of the so-called cryptocurrencies really are money, but they're certainly very interesting new kinds of financial assets. And they are part of a revolution in payments, that is transforming the way that we transact.

Merryn: I have to interrupt you right here because I know that every single reader will now be thinking, does Niall hold any bitcoin?

Niall: Yes, I do. I changed my view on bitcoin in 2017-2018. And decided to become constructive, as they say, in the financial world.

In the new edition of the Ascent of Money, which came out in 2018, ten years after the first edition, I made it clear that my view was bullish on the grounds that if every millionaire in the world had 0.25% of his or her wealth in bitcoin, the price would be $15,000. And if it was 1% of their portfolio, the price would be $75,000. And that's kind of the range that we've seen in the pandemic period.

Interestingly, we're bumping around in the mid 30s right now, but it wouldn't surprise me at all if one saw bitcoin rally further. The problem at the moment is just regulatory uncertainty driven mainly by China. But my sense is that bitcoin is not going to zero here. I disagree respectfully with my old friend Nassim Taleb 's new paper.

My sense about bitcoin is, as I wrote in that new edition of The Ascent of Money, is that it's an option on digital gold, and it behaves a bit like an option. And if, in the end, the whole ecosystem of crypto does not become as I think it will become a really large part of the international financial system, then maybe it does end up going to zero. But if you think of it as an option on this experiment succeeding, then there's a lot of upside above $35,000. So that's a really important trend that the pandemic accelerated.

And the other thing which you mentioned, Merryn, which I think is related, is the Chinese-US rivalry, which was already I thought a Cold War on the eve of the pandemic, although I was one of the few people to call it Cold War Two. It feels much more Cold War now, because, contrary to what some people have argued, China did not do well in the pandemic, China caused the pandemic.

China then tried to bend the narrative with crazy wolf-warrior diplomacy and succeeded in losing friends and alienating people, causing a real shift of attitudes towards Beijing around the world. I'm very interested in the way in which this cold war plays out because of course, cold wars can get hot.

Think of the Korean War, which broke out in 1950; very early in Cold War One. Could we end up with a hot war in Cold War Two? Just look at Taiwan, it's an obvious flashpoint.

But there's a connection between the two things I'm talking about because the Chinese decided to accelerate their central bank digital currency programme during the pandemic, in the belief that they could steal a march on the United States by rolling out a central bank digital currency before anybody else.

You can see both in Europe and in the US central bankers feeling, oh, I suppose we ought to do this too. But they don't feel tremendous enthusiasm for the idea. And I think there are good reasons for that lack of enthusiasm.

But this is where the pandemic has produced some really interesting changes in the international financial system. Not only has it grown bitcoin and grown decentralised finance hugely, but it's also created this alternate model, which is the central bank digital currency that the Chinese are pushing.

Merryn: Interesting. And when you say that cold war can turn to hot war, and we've seen lots of little wars and lots of proxy wars. but the idea that there could actually be a real war between China and America, for example, seems almost impossible to most people.

But when you look at that, do you see a physical war? Or do you see a cyber war? Or what is it you're thinking of when you're talking about a cold war turned into a hot war between the superpowers?

Niall: Well, all of the above, because in the event of a US-China war over Taiwan, which would happen because the Chinese launched a surprise invasion, or even just imposed a naval blockade, and the US decided that it couldn't let that stand, that it wouldn't be like Crimea that it actually would respond, then you'd end up with an initial conventional conflict, which would be primarily naval but also, of course, a war in the air because the US would have to degrade China's air power with bombing of mainland airfields and other assets. That would happen very quickly.

But that's not all. Because there would be a cyber warfare problem almost immediately. The Chinese and their Russian friends know that our great vulnerability is that we're open societies we're very heavily reliant on the internet. Most of us don't have great internet security, I think there would be a big cyber component to any such conflict.

And then of course, there's the financial peace, because if you read the recent very good report that Robert Blackwill did with Philip Zelikow for the Council on Foreign Relations, they point out that the US would use financial sanctions against China in the event of such a conflict. And that would cause absolute pandemonium. I'm not even sure the Biden administration would have the nerve to do that, because it would be so globally disruptive, but it would obviously be on the menu of possible actions that the US could take.

If you think I'm making this stuff up, you should read Admiral Jim Stavridis's recent novel in which he imagines what a war would look like, from obviously a vantage point of enormous military and naval experience and expertise.

This is something that most people in the financial world can't imagine. As you just said, we just can't get our heads around it. We can imagine wars like Afghanistan or Iraq, but a superpower conflict on the scale of let's say, the Korean War, even bigger, perhaps even escalating to a nuclear exchange, most of us can't get our heads around that. And that's the nature of disaster.

The central point Doom makes is that we just struggle to imagine the next disaster, because we can't really remember clearly enough what a big war is like, or what a big pandemic is like, and then it happens. And we are kind of stunned. Even though we should have seen it coming, we act surprised. That's the character of disaster that I wanted to try and emphasise in Doom –a big US-China war. That would be a far more immediate and disruptive event than the climate change risk that we spend endless hours discussing at conferences.

Merryn: At the end of the book, you have a little look at what might be the next great disaster. And obviously, a war between China-US would pretty much fulfil that brief. But the other possibility is you look at another pandemic, a new kind of Asian respiratory disease, a crisis of nutrition in Africa and South Asia, which is so interesting in itself that the consequences of our policies for a pandemic that as you say, turns out to be maybe relatively minor in the great sweep of history might actually cause a genuine problem of famine in Africa and South Asia, and then of course, you suggest an alien invasion.

Niall: Well, I mentioned it simply because it's one of those things that has been predicted over and over again and depicted in multiple science fiction settings without happening. The UFO is back in the news as you may possibly be aware. This, of course, sends the conspiracy theorists into ecstasy.

The point I'm making in the book is that an alien invasion is a bit like the asteroid striking the earth: one can't say that it has a 0% probability, but it does seem pretty unlikely. In fact, I think an alien invasion is less likely than the asteroid hitting the earth because the distances involved in intergalactic travel seem prohibitively large. So I'm going to take the other side of that and say, we don't really need to worry about alien invaders.

But we certainly need to worry about more than just global warming, or the next pandemic, which I'm sure people will talk endlessly about in the coming years because disaster can take so many different forms. And that's part of the challenge that we face, that we don't get the disaster that we want or prepare for; we constantly get blindsided because history has other ideas.

The nature of a black swan is of course that you can't predict it. So I'm just not in a position to tell listeners what the next disaster will be. All I can say is that it's more likely in my mind that we get a superpower conflict than that we get an alien invasion. Will that do?

Merryn: That will do, I wasn't really asking you to put a timescale on alien invasion. But thanks for trying.

I want to ask you about, at the very end of the book when you're talking about future shocks, you talk about dystopian worlds and one of the things that may be a future disaster is very slow burn one, is a slow move or maybe even a fast move, to a surveillance state. This was much talked about before Covid. But if we talk about trends that Covid has accelerated, the idea of being relentlessly watched, relentlessly surveyed, tracked and traced, and having to fill in endless forms wherever you go.

There's something in that, we look at the regulations that Covid has produced and I look at them and think are these ever really going to go away? Will flying ever really go back to normal? Will children actually – look at children in UK schools – will they constantly, whole year groups being chucked out because one child has tested positive, even though it's not ill, all these kinds of things. All these regulations, we're going to find that they just leak into our lives, and we end up stuck with them forever?

Niall: Well, maybe not forever, but I can certainly imagine it taking a while to dismantle these elaborate programmes or procedures for catching planes or even going to the office.

Because we know, looking back, that there's a tendency for the bureaucratic state, and indeed, for the bureaucratic corporation, to retain new regulations, even after they've served their purpose – more people are paid to create regulations than are paid to get rid of them. And that's why the Federal Register always grows, regardless of whether you have a Democrat or a Republican in the White House, the bureaucracy just can't help itself.

And I do worry, having just flown from San Francisco to London, that the ways in which these things are done will probably persist well into next year and beyond. For practical reasons, sure, this is going to take a while, vaccinating the world. We're not going to get there until probably 2023. But the key thing that I'm struck by is that even when the risk goes down to a vanishingly low level, as in, say, Northern California, shortly before we left, masks were still being worn even outdoors. And I was still having to fill in a form to get into my office in a largely deserted building.

There is going to be inertia, there always is. I was amazed to find how many presidential decrees of emergency are still in force, including one that was declared by Jimmy Carter in 1979. Things just accumulate, nothing expires, there's never a sunset clause. A lot of the stuff that has been put in place, I think like the TSA security lines at airports, will just persist long after your risk of becoming sick from Covid has gone very close to zero.

And that's a depressing prospect for those of us who kind of assumed that we could live a fairly global life. If your family is separated by thousands of miles as mine is, Covid has been a rude awakening. And I'm afraid it's not just the virus we have to defeat, we also have to defeat the pathologies of the administrative state that just can't help creating new online forms to fill in.

Merryn: Well, it's interesting, isn't it, because it will all be justified under the precautionary principle. We must be careful and put safety above all else. But as your book so cleverly suggests, we will actually be taking precautions for the wrong crisis.

Niall: I think that the phrase "out of an abundance of caution" should be deleted from general usage. And I think we need to start recognising that we can't have a risk free world. And that if you start to regulate or limit access to education, for a very, very low probability of death amongst young people, and a very low probability of death amongst vaccinated old people, you're doing it wrong.

Ultimately, there were big risks in early and indeed in late 2020. With vaccination, the risks are going down rapidly, you can see that in the current jump in case numbers in England, which isn't really being accompanied by a significant commensurate jump in hospitalisations and deaths, touch wood. I suppose that could change after we have this conversation.

But I do think that what has happened – and it's something that goes back 20 years – is that we've developed a psychology in the bureaucracy and perhaps also amongst ourselves that there should somehow be a 0% risk world, that we shouldn't have risk. And that's not possible, actually, there will always be risk.

Covid wasn't the biggest killer last year in the United States. It was heart disease and cancer. Covid came in third, but we ran our lives around the probability of people dying of Covid. And we're now at a point at which it's really not a significant public health risk in any country with large scale vaccination. And yet, we're acting as if it is.

It's very hard to get ordinary human beings, whether they're in government or not, to assess risk rationally, and to think about uncertainties to which you can't attach a probability. And that's why I wrote Doom, to remind people that we can't eliminate disasters, we can't prevent them, we can't predict them, they're going to happen.

You have to make sure that you don't introduce measures designed to pre-empt risk that create a worse problem than the risk itself. If we end up with our own version of totalitarianism, with our own surveillance state, in which our every movements are tracked and Government departments are informed of them, then that's a bad outcome.

Now, we're not there yet. But of course, the Chinese are showing that technology allows the surveillance state to know everything about you pretty much. And we mustn't end up building our own version of that. We're dangerously close to having abolished privacy, thanks to the power of the network platforms and the ubiquity of mobile phones.

Totalitarianism is a dangerous thing. It killed more people than pandemics in the 20th century. And that's the warning that I end the book with: you could end up committing suicide for fear of death.

Merryn: Now, thank you, that's a great place to end. Everyone, it's time to stop worrying about Covid start worrying about the surveillance state.

Something that I had never worried about before, but I'm now really worried about, is gamma ray bursts from supernovas, which is something I simply didn't know was a risk. So you've got me going on that.

Thank you so much for joining us today.

Readers, please go out immediately and buy the book Doom. But remember, do not read it on the beach.

If you'd like to hear more from us, obviously go to our website, moneyweek.com, sign up there for our daily newsletter, Money Morning, written by the brilliant John Stepek. You can follow me on twitter @MerrynSW, you can follow John at @john_stepek, and you will obviously already be following Niall, but if you are not Niall, what's your Twitter handle?

Niall: It's @nfergus.

Merryn: OK. So buy the book, follow Niall, and Niall, thank you so much for joining us. I hope you make it back to California at some point.

Niall: So do I. Thanks very much.