WHEN PUBLIC AUTHORITIES all over the world make it impossible for a critical mass of the population to participate in society or the economy, there are going to be consequences, many of them unintended. One obvious consequence is an acute labor shortfall. When that happens in economies already struggling with labor shortages, the effects are magnified (a situation we’ll return to momentarily).
In the case of the COVID-19 pandemic, labor shortages also exacerbated a global supply-chain crisis that has made it difficult for businesses to procure the basic components they need to manufacture products that consumers and businesses are increasingly desperate to buy. In the UK, for example, small businesses are even struggling to get hold of items as basic and essential as cardboard.1
Of course, there are many reasons for this once-in-a-generation supply-chain crisis; the pandemic response is only the most obvious and impactful. When the virus was declared a pandemic in February 2020, countries responded by closing their borders and implementing lockdowns. Factories, construction sites, restaurants, and shops were forced to shut their doors. Governments temporarily closed or significantly reduced capacity at ports around the world. Demand for consumer goods—and all the raw materials and labor that go into them—fell off a cliff.
Against this backdrop, container carriers had no means of gauging future demand and did the only rational thing: They slashed capacity. The immediate consequence was widespread vessel cancellations. Within a matter of weeks, global supply chains had snapped.
As we have since learned, it is a lot easier to press the pause button on the global economy than it is to release it. Formerly shuttered factories took time to get moving once again. Raw materials were in short supply. As a result, when economies began reopening in the second half of 2020, there was a massive shortfall of the basic components global consumer goods manufacturers needed to assemble their products. For example, a dearth of silicon chips (processors and other semiconductor components) prevented automakers from finishing many of their models and the supply of new vehicles to the market plunged.
The problem was not just one of supply but also distribution. The reopening of economies led to a massive surge in pent-up demand for raw materials, components, and finished consumer products, but there weren’t enough trucks, freight trains, planes, or ships in the world to transport all the timber, semiconductors, car parts, bikes, trainers, petrol, whisky, and other things businesses and consumers were clamoring for.
There are deeper-rooted reasons for the supply-chain crisis, including the trend among multinational corporations to offshore and outsource their production processes to countries with lower costs of labor, such as China, Vietnam, and Mexico. This allowed them to book huge profits, but it also made them more vulnerable to a supply-chain shock. Many of these same companies also bet big on just-in-time (JIT) manufacturing by holding low inventories and having necessary component parts delivered right as they’re needed for a particular step in assembly. This meant that when the shock came, they did not have spare capacity to ride it out.
The ongoing trade war between the world’s two superpowers, the United States and China, has also made matters a lot worse, as Business Insider reports.
In September 2020, the Trump White House imposed export restrictions on SMIC, China’s biggest chipmaker, forcing it to source parts elsewhere and reconfiguring supply chains in the process. Meanwhile, companies buying their chips from SMIC had to go elsewhere, only to find that alternative chipmakers were already at full capacity.
America struggled to rely on its own production, as lead US semiconductor giant Intel struggled with its own production problems. And some firms have been hoarding chips, claims TSMC’s CEO Mark Lui, making the chip crunch even worse.
The Biden administration has been enlisting its allies to freeze China out from the technological equipment it needs, making sourcing even harder for the country.
This all happened after the pandemic shut down semiconductor manufacturing operations for months in 2020, leading to spikes in the prices of new and used cars and shortages of all kinds of electronics.2
And of course, there is another huge factor exacerbating the supply-chain crisis, as I mentioned above: an acute—and in many places worsening—labor shortage. Vaccine mandates and passports are making those shortages far more severe.
For example, the ports of Los Angeles and Long Beach, which handle around 40 percent of all US container imports, are suffering from both a shortage of truck drivers and terminal mechanics. As a result, there aren’t enough trucks to remove containers from the rail yards. This has created an unprecedented backlog of empty containers that, in turn, prevent cranes from removing containers from the waiting ships. That backlog is unlikely to ease until the summer of 2022, said Gene Seroka, executive director of the Port of Los Angeles, in mid-December. At that time the port was still short of around 4,000 truckers, which was continuing to exacerbate the port’s surfeit of empty containers.3
“From Los Angeles to Felixstowe, England; to Dubai, United Arab Emirates; to Shenzhen, China, the world is witnessing delays and shortages of everything from toys to turkeys,” Guy Platten, the secretary general of the International Chamber of Shipping, pointed out in a November 2021 New York Times op-ed. “At the root of this crisis is a transport sector that is buckling under the strain of COVID-era conditions. Workers who drive the trucks, fly the planes, and crew the ships responsible for moving all these goods—around $19 trillion of world trade annually—have been stretched to the breaking point. Governments have been too slow to act.”4
A month earlier, a Twitter post by Ryan Petersen, the founder and CEO of the logistics firm Flexport, perfectly illustrated this point. On October 21, Petersen rented a boat and took the leader of one of Flexport’s biggest partners on a 3-hour tour of Los Angeles’ Long Beach port, ground zero of the United States’ months-long supply-chain crisis. What Peterson learned was that on that day alone “there were 76 ships waiting at the Port, with 430,000 container cargoes worth $26 billion,” yet only seven out of hundreds of the port’s cranes were actually operating and fewer than a dozen containers were unloaded.5
By late November, Bloomberg was reporting that the huge backlogs at US ports had begun to clear, but that wasn’t strictly true. The waiting container ships were still out there—but many of them were out of sight, and also seemingly out of mind. As the trade publication Hellenic Shipping News reported, many of the ships were over the horizon, where they couldn’t be seen (and as such weren’t counted), thanks to the successful implementation of a new queuing system:
If you include all of the container ships physically at anchor on Tuesday off LA/LB, plus the ships in holding patterns within 40 miles of the ports, which were counted in the previous queuing system, plus all the ships waiting further afield that are now technically in the queue under the new system, then 93 container vessels were waiting for berths at Los Angeles/Long Beach on Tuesday, a new all-time high.6
It’s a perfect example of how government, with a little help from media, has tried to conceal the stark reality of the crisis. As Hellenic Shipping News suggested, “perhaps politicians were more interested in erasing a politically nettlesome photo op—attention-grabbing imagery of idle container ships stretching off into the distance”—than actually tackling its hugely complex underlying causes. Unfortunately, when governments do act, they often make the crisis worse rather than better.
Even before the Biden government unveiled its vaccine mandate in September 2021, a record number of Americans were quitting their jobs. The Job Openings and Labor Turnover Survey found that 2.9 percent of Americans quit their jobs in August, the highest figure since the survey began in 2000. This trend was dubbed the Great Resignation, or the Big Quit, and is happening for many reasons, including shoddy work conditions, intensifying workplace surveillance, and Victorian-era differentials between the salaries and bonuses rewarded at the top and the peanuts handed out at the bottom. Due to the high demand for workers across the economy, some low-paid workers are looking for better paid jobs in other sectors. Others are opting to retire early.
And then, of course, there are the vaccine mandates. As they have come into effect, the Big Quit has got even bigger. In September, the number of people quitting grew even more, reaching a new record high of 4.4 million—equivalent to 3 percent of all Americans. The hardest hit sectors were leisure and hospitality, trade, transportation and utilities, and professional services and retail. The fact that many workers in the trade, transportation, and utilities sector are leaving their posts should be a major cause for concern, given the ongoing supply chain and energy crises.
Many Western economies are also suffering from a dearth of truck drivers. France is short of around 40–50,000, Germany 80,000, and Spain 15,000.7 The UK urgently needs 100,000 more truckers if it is to meet demand, according to the trade group Road Haulage Association (RHA).8 If it doesn’t, the country risks suffering even more severe energy and food shortages. However, the UK’s truck driver shortage is a result of a number of factors including, of course, Brexit, which led many foreign truck drivers to head back home; the huge backlog in truck driver tests due to the pandemic, meaning tens of thousands of potential new drivers have been unable to join the industry; and the fact that even before the pandemic more people were leaving the industry than coming into it. Many young people simply don’t want to work in such a hard, lonely, and often poorly paid job.
In the United States, truckers can earn even less than the statutory minimum ($2.13) earned by waiters with no hope of tips making up the difference, explains Ryan Johnson, a 20-year truck driver, in his article “How Truckers Are Paid”:
Truck drivers, farm workers, and restaurant staff are exempt from the Fair Labor Standards Act (FLSA). While many states have corrected some of the worst abuses against farm workers and restaurant staff (and many have not), the one profession that is still untouched by any reform is trucking, largely because of federal interstate commerce exemptions. Trucking companies will use every loophole they can to not pay their workers, and the laws are so loose that employers can literally make up the rules as they go …
Truck drivers can legally be paid in multiple ways. This is true for all levels of trucking, either direct employee, “independent contractor” owner ops leased to a company, or owner operators under their own authority. They can be paid hourly, a percentage of the load, by the mile, flat rate, or a combination of all of these. But in all of these cases, the wage laws that apply to 99% of the public who are paid hourly do not apply to trucker pay.9
Mandating vaccines for the millions of truck drivers across the United States will make matters a lot worse. The country is already short of around 80,000 truckers compared to before the pandemic. But that number could explode if the federal government pushes through its vaccine mandate without exempting the haulage industry. If Biden’s January 4 vaccine deadline is enforced, the industry will lose 37 percent of its truckers, or 2.5 million people, according to a survey by the American Trucking Association (ATA), the country’s largest trucking trade group.
“We’ve tried to be very clear to the administration—I understand the logic behind it—but if you do this, these are the consequences,” said ATA President Chris Spear in testimony to the US Congress. “So, if you’re trying to solve the supply chain problem, you’re actually compounding it and actually hurting the very problem you’re trying to fix … 37 percent of the drivers not only said ‘no,’ but ‘hell no.’
A worsening supply-chain crisis not only means that products will take longer to reach businesses and end-consumers but also that when they do, they will be more expensive. This will heap even further pressure on the tight margins of many of the world’s already struggling, heavily indebted small and medium-sized businesses.
The trucking industry reflects a broader trend in the United States, which is that blue-collar, customer-facing industries are seeing the biggest exoduses. By November 2021 manufacturing quit rates were up 78 percent compared to February 2020, according to Nick Bunker, economic research director for North America at the Indeed Hiring Lab. By contrast, the number of people quitting in a traditionally white-collar, office-based industry, such as the financial activities sector, was up only 5 percent. In other words, many of the low-paid essential workers who were lionized for keeping the economy alive last year are leaving their jobs in droves while well-paid white-collar workers are largely staying put.10
While many of those who left their jobs in the summer did so over reasons of pay, benefits, and working conditions, by the autumn the main motivation had shifted to the vaccine mandates, according to Ronald J. Pugliese Jr., a union, labor, and employment lawyer:
The government mandates on health care workers, educational employees, and federal government employees have not persuaded people to take the vaccine as expected. In fact, it looks like more people are choosing to leave their jobs or ask for accommodations rather than submit to forced vaccination …
Now we are stuck with a divided society, a labor crisis, a supply chain crisis, soaring inflation, low worker morale, a low vaccination rate, a pandemic that will not quit, and millions of Americans out of work. Oh, and to top it off, up to a third of Chicago police officers could be placed on unpaid leave over the city’s vaccine mandate. This is happening in a city where crime is out of control. Do the residents of Chicago, and other major cities, really want their police forces cut in half over their vaccination status? I know I don’t.11
This is one of the most important side effects of the vaccine mandates and passports: At a time when the economy needs more qualified workers than ever, millions are being threatened with the sack for refusing to take a vaccine that offers little hope of controlling, let alone vanquishing, the virus. This is going to make life even harder for the legions of struggling small and medium-size businesses. To make matters even worse, as economic conditions decline, many of the public workers we depend on to keep society functioning—police officers, soldiers, refuse collectors, firefighters, teachers, coastguard officers, customs officials—are also being sidelined.
Vaccine passports and mandates not only risk exacerbating the global supply-chain crisis, in the process pushing inflation even higher, they also threaten to break many countries’ national health care systems. Many of these systems were already struggling prior to the pandemic, were brought to the brink during the course of the pandemic, and could well reach the breaking point, as a consequence of mandates and passports. Once again, one of the biggest issues is acute staff shortages. Millions of frontline health care workers around the world, including doctors and nurses, midwives, radiographers and ambulance drivers, have been forced to choose between taking the vaccine and losing their job. Many have chosen the latter.
A significant number of those health care workers already have some degree of immunity as a result of previous COVID-19 infection. Numerous studies suggest natural infection provides broader, longer-lasting immunity than vaccines.12 But in many jurisdictions, including the United States and the United Kingdom, naturally acquired immunity doesn’t count. You are either vaccinated or you are not; there is no other way. The EU, to its credit, still recognizes natural immunity, but it only buys you six months of eligibility for the Green Pass. After that you need the vaccine. And by the beginning of 2022, some EU Member States, such as France and Belgium, were thinking of abandoning all recognition of naturally acquired immunity as well as negative PCR test results. Health care workers were already leaving their jobs in droves before the vaccine mandates, for a host of reasons, including the glaring (and growing) disparity between executive pay and the salaries of frontline workers. In the United States, hospital execs have received record pay and bonuses during the pandemic while the nurses who have been holding the fort, at risk to their own health, got virtually nothing. It’s a similar story in England and Wales, where nurses were offered a paltry pay rise of just 3 percent; that’s less than the rate of consumer price inflation, meaning they will actually be getting a pay cut in real terms. The Royal College of Nursing, the country’s largest nurses’ trade union, called the pay deal a “bitter blow.”
“Hospitals and other parts of the NHS are struggling to recruit nurses and health care support workers,” said Royal College of Nursing (RCN) General Secretary and Chief Executive Pat Cullen. “The government has been warned that many more are on the verge of leaving. With today’s decision, ministers have made it even harder to provide safe care to patients.”13
Staff shortages in the NHS were already acute before COVID-19, after many nurses and doctors from mainland Europe packed their bags and headed back to their countries following Brexit. Many of the remaining nurses and doctors are facing burnout.
It’s a vicious cycle that is crippling health care systems around the world, from the UK to the United States, to France and Australia. The worse the staff shortages get, the more nurses and doctors end up succumbing to mental and physical exhaustion, further exacerbating the shortages.
The vaccine mandates appear to be the final straw. A sudden wave of dismissals and resignations of unvaccinated staff is making it even harder for overstretched hospitals to treat patients of COVID-19 and other serious conditions, especially as winter brings higher caseloads. Waiting lists for non-COVID-19 interventions are growing at an alarming rate at the same time that caseloads for COVID-19 as well as other acute illnesses are surging.
In the UK, almost six million people were waiting for hospital treatment at the end of September 2021, the highest number since the National Health System (NHS) began collecting these records in August 2007.14 Over three hundred thousand patients were having to wait more than a year for hospital treatment, more than double the number a year earlier. The number of people waiting more than 12 hours in the emergency room surged by 40 percent between September and October 2021 alone. Twenty times more people were waiting over six weeks for vital scans that can diagnose heart disease compared to the number prior to the pandemic, according to the British Heart Foundation in November 2021.15
These system failings are already costing lives. Research by the Financial Times (FT) found that 2,047 more people died in the second week of November 2021 than during the same period between 2015 and 2019. Just over half of these people (1,197) had COVID-19 on their death certificates. This “raises the possibility that since the summer more people have been losing their lives as a result of the strains on the NHS or lack of early diagnosis of serious illness.” The most frequent causes of extra deaths were cardiovascular disease and strokes, raising the stark possibility that vaccine injuries may have played a part (though this connection was avoided in the FT article).16
Of course, the UK’s health care system has been in crisis for years, after decades of mismanagement, underfunding, and stealth privatization. Unfortunately, just about everything the UK government is doing right now is further deepening the crisis, which in turn is creating yet more opportunities to further privatize the system.
On November 11, the Department of Health and Social Care pushed through a vaccine mandate for care workers in England, propelling as many as 70,000 workers out of the sector, according to Nadra Ahmed, the executive chair of the National Care Association (NCA).17 Care leaders begged the health secretary, Sajid Javid, a former investment banker, for an 11th hour reprieve, but to no avail.
Care homes were already facing their most acute staffing shortage on record prior to the mandate, with some 170,000 vacancies.18 The vaccine mandate has further exacerbated those shortages, forcing many care homes to cut back on their services. Methodist Homes (MHA), the UK’s largest charity care provider with 90 care homes and 6,000 employees, announced in November that it was closing around 7.5 percent of its care homes to new admissions. The care provider estimates that around 750 care homes may have already stopped taking new admissions due to the staffing shortages.19
“This means fewer older people are able to get the care they need to live the good life they deserve, and more older people find themselves unable to leave hospital after a spell as an inpatient,” said Sam Monaghan, chief executive of MHA. The vaccine mandate has also heaped further pressure on the overstretched NHS, as more and more care homes refuse to take patients from hospitals.20
NHS staff in England will face their own “no jab, no job” mandate in early 2022, which could lead to the additional loss of up to 80,000 workers, including many doctors, nurses, and other frontline staff. Naturally, if that were to come to pass, it would be even harder for the NHS to deliver the basic health services English patients need.
The British government doesn’t seem overly concerned about that prospect, presumably because the worse the system performs, the more opportunities will open up for private health companies, many of them US-based, to fill the gaps. And many of those health companies have close ties to the governing Conservative Party. In a survey by the online news platform Open Democracy, 40 percent of the patients who responded said they “were told that the NHS simply can’t offer them the treatment they need. Half of these patients—20 percent of all patients—said an NHS worker then told them they would instead have to pay privately for the treatment they needed.”21
In the Canadian province of British Colombia, the government’s vaccine mandate for health care workers, implemented in November 2021, put so much pressure on hospital staffing that by late December the same government announced it was considering “allowing” some infected doctors and nurses to return to work. Authorities in the province of Quebec had already taken this step while the province of Alberta had allowed unvaccinated workers back on the job, as long as they agreed to undergo regular testing.22
It’s a similar story in the United States where many hospitals, be they privately funded or publicly subsidized through the Medicare or Medicaid systems, have been stretched to the breaking point, particularly in the rural heartlands. In October 2021, the Biden administration imposed vaccine mandates for workers in most health care institutions that receive Medicare or Medicaid reimbursement, including hospitals, ambulatory surgical settings, dialysis facilities, and home health agencies. By the middle of the month, around 41 percent of all hospitals in the country had imposed a vaccine mandate on their staff.
Some executives at rural hospitals worry the vaccine mandate will exacerbate a labor shortage that could be described as severe, even prior to the pandemic. “Some hospitals have already cut back, delayed, or eliminated services, such as elective surgeries, labor, and delivery, and other inpatient care,” according to the independent nonprofit Pew Charitable Trusts. There are fears that some hospitals will even have to close their doors.
“I’ve talked with administrators of hospitals that have estimated anywhere from 3 percent to as much as 20 percent of their workforce may have to quit their jobs if they’re required to have the vaccine as a condition of their employment,” said Brock Slabach, chief operations officer for the National Rural Health Association, a nonprofit representing rural hospitals and clinics as well as doctors, nurses, and administrators. “In a rural hospital, that could be two, maybe three nurses, which could cripple their ability to meet the demands of patient care.”23
These problems are not unique to rural America. In late November 2021, Mount Sinai South Nassau in New York announced the temporary closure of the freestanding Long Beach Emergency Department due to nursing staff shortages caused by the state COVID-19 vaccination mandate.24 Staff shortages also led to temporary hospital closures in the upstate New York cities of Syracuse and Buffalo.25
Health care systems on mainland Europe are also buckling. In France, where more than 3,000 unvaccinated health care workers were suspended in September 2021, one in five beds was out of action at the end of October due to acute staff shortages. As a fresh wave of COVID-19 infections gathered steam, France 24 reported that many nurses and nursing assistants no longer had the strength to continue. Resignations and absenteeism were threatening to derail a hospital system that was already stretched to breaking point. Thierry Amouroux, a spokesperson for the National Union of Nursing Professionals (SNPI), said he had never seen anything like it in his 40-year career.
We have always closed beds from July to allow staff to go on leave. But this is the first time that we have not been able to reopen the beds at the start of the school year.26
It is testament to the folly and hubris of our leadership class that many of the heroic doctors, nurses, care-assistants, and other frontline health care staff who were lionized during the early waves of the COVID-19 pandemic are now being forced out of work for refusing to take vaccines that provide little in the way of protection from infection or transmission.
Another important source of systemic fragility is IT. Large swathes of the globe have undergone 10 or 15 years’ worth of digital transformation in the space of just two. This has brought some key benefits, such as greater speed and convenience of digital transactions. Virtual communication platforms such as Zoom have made it possible for millions of office workers to work from home during the pandemic. But it has also made the IT systems and networks we depend upon for almost everything more fragile and vulnerable to crime.
As almost everything was pushed online, including work, communication, payment methods, government processes, and, even to a certain extent, health care, many criminals did the only logical thing: They migrated online, too. Ransomware—malicious software that threatens to publish private data or renders it inaccessible unless a bounty is paid—has become increasingly popular among criminals since the pandemic began. Targets can range from small businesses and nonprofit organizations to utility providers, food suppliers, government agencies, and global banks.
In March 2021, Spain’s employment service (SEPE) was hit by a ransomware attack that paralyzed all of its online processes, resulting in the suspension of virtually all activities at the organization’s 700 offices. The attack disrupted the payments of unemployment benefits to some of the 2.73 million people who depended on SEPE. After roughly a week, the system was restored after the government paid the hackers an unspecified amount of money to end the siege.27
Two months later, Colonial Pipeline, the United States’ largest petroleum pipeline, fell prey to a ransomware attack that brought down the computerized equipment managing the pipeline. The attack disrupted a major supply of fuel to the East Coast for roughly a week before the $4.4 million ransom was paid (much of which was later recovered) and the system restored. According to inside sources, the system was breached by a single leaked password.28
This is one of the main reasons for the rising fragility of the IT systems on which we are increasingly reliant: The easiest way to pull off a hack is to have a mole on the inside. And that is nigh-on impossible to prevent, given how many disgruntled employees many large companies have on their payroll, or formerly on their payroll. The rising threat is also being driven by the increasing technological sophistication and capability of hackers. The work-from-home revolution has also increased vulnerabilities. Often neither the companies nor their employees consider the security implications of working from home until it’s too late.
Banks are an increasingly popular target, particularly in emerging economies where financial institutions have fewer funds to dedicate to IT security. At the end of October 2021, Pakistan’s third largest lender, the National Bank of Pakistan (NBP), suffered a huge cyberattack that put its online banking system out of action for more than 48 hours. NBP is one of three banks in Pakistan deemed to be systemically important at a domestic level. As a column in the Express Tribune, Pakistan’s only internationally affiliated newspaper, noted, this means it is officially “too big to fail. The entire national economy could collapse if something goes wrong at NBP.”29
Even short-lived bank outages can cause serious problems for consumers and business customers, including lack of access to one’s own money and financial services. They are happening more and more frequently in countries across the globe, whether due to internal IT issues, external outages, or cybercrime.
For example, the online banking system of Mexico’s largest lender, BBVA, went down three times in 2021. On each occasion the bank’s 24 million customers were unable to use the bank’s ATMs, its mobile app, or in-store payments. Two of the outages took place on a Sunday, meaning customers could not even avail themselves of the lender’s in-branch cash services. The bank blamed the first Sunday outage on an internal system update failure and was at pains to assure customers that their financial data was not compromised. A month later, the system went down again.
Other banks that have suffered serious outages include Ecuador’s largest lender, Banco Pichincha, whose IT system was brought down by a ransomware attack for several days in October. Venezuela’s largest lender, Banco de Venezuela, was also taken out by a cyberattack in September, which the Venezuelan government blamed on the United States government. The bank’s 16 million customers had no access to any digital banking services for five days.
It is not just banks in emerging markets that are suffering cyberattacks; so, too, are many big banks in advanced economies. One of New Zealand’s largest lenders, Kiwibank, and ANZ Bank, Australia’s third largest lender, both suffered distributed denial-of-service (DDoS) attacks in 2021, leading to a spate of IT system outages.
During the same year, Mizuho Bank, one of Japan’s three mega banks, experienced so many IT system failures—the equivalent of almost one every month—that it ended up costing the jobs of Mizuho Financial Group CEO Tatsufumi Sakai and Mizuho Bank President Koji Fujiwara.30 Another giant Asian lender, Singapore-based DBS Bank, suffered its worst outage in 10 years at the end of November. This is a bank that prides itself on its technological prowess, having picked up the Euromoney’s hotly contested “World’s Best Digital Bank” accolade on more than one occasion. The bank’s ambition is to become “digital to the core.” Yet for over 48 hours many of its customers were unable to access online banking services.31
In the UK, nary a week goes by without the mobile app and/or online platform of at least one high street bank going down. On just one day in November, three large banks—Lloyds, Halifax, and Bank of Scotland, all belonging to the Lloyds Banking Group—encountered problems with their mobile apps and internet banking services, leaving many customers unable to access their online accounts.32 Two weeks earlier, another big bank, Barclays, suffered a nationwide outage that left thousands of customers fuming.33 A week earlier, it was the turn of HSBC and NatWest.
On the other side of the Atlantic, Bank of America suffered a major outage in October 2021 that left thousands of its customers locked out of their online accounts for hours on end. Like most banks, the company says it has seen a huge increase in digital banking, with 85 percent of customers using digital channels for deposits.
These bank outages may have happened for a whole gamut of reasons, from internal glitches to sophisticated hacks, to server outages, but one thing they all highlight is the inherent fragility of banks’ IT systems, at a time when cash is being hurriedly replaced by digital banking services (see chapter 6).
It is not just banks that are falling prey to cyberattacks. So, too, are many major government agencies, insurance firms, credit reporting companies, cryptocurrency exchanges, central banks, and even the most sophisticated tech companies on the planet, such as Microsoft, Google, and Facebook. And if they can’t protect their own systems from attack, who can?
The vulnerability of key IT systems and networks has not escaped the attention of the World Economic Forum, which is spearheading the accelerated shift toward a digital economy. In July 2020, the organization held a cyberattack simulation titled Cyber Polygon 2020, whose central theme, ominously, was “Digital Pandemic.” During the event 120 of the largest Russian and international organizations from 29 countries joined the technical training to respond to a simulated attack, aimed at hacking company data and undermining its reputation. The participants included many of the world’s biggest banks. One of the keynote speakers was former UK Prime Minister Tony Blair, who told the event’s participants that Digital Identity would form an inevitable part of the digital ecosystem being constructed around us, and so governments should work with technology companies to regulate their use.
For the 2021 edition of the event, an estimated 5 million people from 57 nations tuned into the live stream, which featured, as the website states, “global leaders and experts, including Mikhail Mishustin, Prime Minister of the Russian Federation, and Klaus Schwab, Founder and Executive Chairman, World Economic Forum as well as top officials from INTERPOL, ICANN, Visa, IBM, Sberbank, MTS and other organizations.” Also participating were “state and law enforcement agencies, financial, educational and health care institutions, organizations from the IT, telecom, energy, metal, chemical, aerospace engineering and other industries.”
The participants were split into two teams: The Red Team simulated a supply-chain cyberattack while the Blue Team had to contain it as best it could. On the event’s website is a stark warning that in light of the digitalization trends largely spurred by the COVID-19 crisis, “a single vulnerable link is enough to bring down the entire system, just like the domino effect.”34 A promotional video for the event posted on the World Economic Forum’s (WEF) official YouTube channel warned that “a cyberattack with COVID-19-like characteristics would spread faster and further than any biological virus. Its reproductive rate would be around 10 times greater than what we’ve experienced with the coronavirus.”35
The question some people are asking is whether Cyber Polygon 2021 will prove to be as prophetic as Event 201, the coronavirus pandemic simulation exercise the World Economic Forum organized in partnership with the Johns Hopkins Center for Health Security and the Bill and Melinda Gates Foundation just months before the outbreak of COVID-19.36
Interestingly, just as Cyber Polygon 2021 was about to start, a real cyberattack occurred. The Russian-based cybercriminal organization REvil launched a massive ransomware attack that encrypted 60 managed service providers by exploiting a zero-day vulnerability in the Kaseya VSA remote management platform. In what technology news website Bleeping Computer described as the “largest ransomware attack ever conducted,” REvil was able to infect the computer systems of more than 1,500 global organizations.37
It doesn’t take a cyberattack for a vital IT system to go down and cause chaos. Natural disasters or internal glitches can do just as much damage. In June 2018, a hardware failure in Visa’s card payment network in Western Europe left many consumers in the region unable to pay for purchases for hours on end. When a category-five hurricane ripped through Puerto Rico in 2017, the island’s electronic payments system went down for weeks, essentially turning the island into a cash-only economy. If you didn’t have cash, you couldn’t buy anything.38
There are more recent examples. On November 11, travelers at British airports were forced to wait hours at border control due to a national outage of the facilities’ self-service e-gates. It was the third reported failure in three months. Using biometric identifiers, the e-passport gates can process as many as five passengers every 45 seconds, providing a fast and effective way to clear the border. When they fail, the work falls to staff on passport control desks. But the UK border force, like so many organizations these days, was suffering from an acute staff shortage.39
The unintended consequences of our pandemic response, including the vaccine mandates and vaccine passports, are making the delivery of basic goods and essential services more and more difficult, while many of the IT systems we depend upon are becoming more and more fragile. But it is not just the unintended consequences of vaccine mandates and passports we should worry about; it is also the intended consequences. They include an accelerating shift toward authoritarianism around the world.
“The world is becoming more authoritarian as nondemocratic regimes become even more brazen in their repression and many democratic governments suffer from backsliding by adopting their tactics of restricting free speech and weakening the rule of law, exacerbated by what threatens to become a ‘new normal’ of COVID-19 restrictions,” warned the International Institute for Democracy and Electoral Assistance, a Sweden-based global nonprofit. The number of countries that are becoming “more authoritarian” by the group’s calculus is three times the number of countries that are moving toward democracy. The year 2021 was the fifth consecutive year in which the trend has moved in that direction, the longest uninterrupted stretch of proauthoritarian developments since the IIDEA started tracking these metrics in 1975.40
If vaccine passports and digital IDs get a foothold, they threaten to significantly intensify this trend by ushering in an all-pervasive, tech-enabled, heavily centralized system of totalitarian social control and surveillance that threatens to obliterate what remains of our constitutional rights. Do you think I’m exaggerating? Read on.