A sunny weekend in the UK is a rather sobering reminder of what we are all missing and would rather be doing as the pandemic rages around the world. Several things are becoming apparent. One is that we do not know when it will end, or the number of lives that will be lost in the interim. There is no cure, and there is no vaccine – yet. But there will be one, probably in months rather than years. Thankfully the virus does not, according to the experts, appear to be as complex as some other pathogens so a vaccine should be forthcoming soon. However, a period of testing will be required before it is judged safe for widespread use. That process may take a year or so. At that point, one hopes that plans for dealing with its aftermath will be put into operation.
Missed warnings
At the moment though, history suggests that a) pandemics come in waves and b) this virus – even when a vaccine is found – will become part of a growing list of diseases that afflict the human population each year. In short, we cannot now prevent it from killing people in future, even if a vaccine is found.
Of course, we should have seen this one coming as there have been several near misses over the last 30 years, SARS, MERS, Swine flu, Ebola, Zika, etc. The question of why we did not act on the increasing frequency of these various respiratory and other lethal pathogens over the last 30 years or so is certainly worth asking of governments.
World Health Organisation (WHO) experts have been warning of just such a pandemic for many years, not especially surprising, given the above list. Admittedly, some early warning was put in place, and Centres for Disease Control (CDCs) were set up in some countries after these outbreaks.
But these have been starved of funds and increasingly undermined by some countries over the last decade. They were ignored in a long period up to this outbreak when experts were rubbished, and global organisations were seen as fair political targets.
Ironically, the American embedded in the Chinese CDC had been called home in September 2019 as her job was defunded – just before the first deaths from an unknown respiratory illness started to occur in Wuhan, China, last December.
What next?
Efforts to tackle the virus include people staying at home and only leaving for ‘essentials’ – a lockdown. So that action has hit the global economy hard, with about 40% of consumer spending turned off. Therefore, world economic growth, according to the International Monetary Fund (IMF), will record an outright fall in output this year, something not seen since the Second World War.
In the UK, economic growth could drop 1-2% in Q1 and then by 10% or so in Q2, an annualised fall of over 30%. A similar pattern is expected in the US and likely other market economies. Unemployment rates will likely double or treble, albeit this is expected to be temporary. Activity should improve a little in Q3 and by more in Q4 2020 if the measures put in place to stabilise the rate of infections work so that deaths fall to negligible levels.
False comparisons
But let’s clear up some false comparisons. This is a deliberate shutting down of the world economy to reduce human contact to fight a virus that thrives on our social interactions. Without a vaccine or effective treatment, we have little choice. It was not an economic event created by a housing bubble or banking crisis or an economic boom that ended in a bust, but a medical crisis. Hence, comparisons with previous economic downturns are misleading, as they were caused by inappropriate economic policies.
A second false comparison is between saving the economy and saving lives. The implication is that if we ignored the loss of life, the economy would be okay. It is abundantly clear that it would not be. Not only can we not accept loss of life on this scale on moral grounds as ‘part of going about our daily lives’ (at least not at this stage of human development), but a loss of demand from loss of life and a hit to supply from loss of workers would happen. No one would know if they, or their loved ones, would live or die from the virus. Increased uncertainty by households and business would therefore hit spending and investment hard as people pull back, unsure about the future. In short, a catastrophic fall in economic activity would occur anyway and be accompanied by a substantial loss of life – a worse outcome.
Things will never be the same again
This crisis has laid bare a number of fault lines in the world, and the UK is no different. Some of the actions taken by governments have shown what it can do to tackle issues if it puts its mind to it. So why not help tackle the fault lines?
It is clearer now who the ‘essential workers’ are, and they are not the highest paid in society or the most valued. The nurses, care workers, cleaners, bus and train drivers, utility workers, those in food stores working at high risk to keep people healthy and fed, the city clean, transport working and the utilities running. What about homes for them? What about higher levels of pay etc.? Does this crisis not show that they should be more highly valued members of society? These are just some of the questions that will be swirling around in the aftermath.
Here’s why
We are in a crisis, and if we all expected to make sacrifices, then we all deserve to be equally valued and taken care of afterwards. After the Second World War and all its sacrifices, the welfare state was created, with the NHS at the heart of it.
Internationally, the United Nations was formed. Shortly after, a range of other global institutions from the embryonic EU, to the General Agreement on Trade and Tariffs (GATT) and, at Bretton Woods, a new international financial architecture was forged.
If no collective action is taken after this crisis, this will be a big mistake. COVID-19 has shown up the fault lines in the UK and global economy. It is abundantly clear that the economy was not working for many. Moreover, the financial crisis of 2008/9 saw a rescue of parts of society and left resentment in other areas that then had to shoulder their share of dealing with the costs of the aftermath. Moreover, the inequality between those with access to capital – who benefited from that rescue –and those with access to income – who did not – has festered since then. This time, with inequalities once again laid bare in this crisis, policy inaction would be a mistake.
Will the leaders of today attempt to create a better future world as they did after the end of the Second World War in 1945? If not, we may face a period of turbulence like that between the 1920s and the 1940s or a pause in global trade as blame is apportioned to foreigners. After the Spanish flu ravaged the world in 1918 following the end of the First World War, mistaken economic policies created an economic depression that was only ended by the outbreak of World War II.
So, the challenge of today for global leaders is putting together a coherent framework suitable to deal with the many issues facing the world; of global inequality and conflict, of consequent migration, of climate change and managing a complex global ecosystem. The medical crisis has shown that no country can solve all of these issues on its own.