Economics and pandemics: a relationship past, present and future
Cyclical highs and lows persist in all aspects of life, and needless to say, this is also a fundamental in developing economies across the globe. Throughout history, human society has continued to become more developed and economically sophisticated, beyond what generations before could ever have dreamed of. But whether it is now or centuries ago, some things never seemed to change. Epidemics, or pandemics when spread across a wide level of capita, continue to be one of the most unpredictable and injurious natural catastrophes to human life and the protective walls of our economy.
Outbreaks of disease, in the same way that the economy behaves, are ‘cyclical’ themselves; the sense that they are a chronic part of life and perpetually evolving. Take a step back and consider all the major global health challenges humans have confronted. The bubonic plague. Smallpox. HIV. Multiple strains of influenza. Diseases that continue to evolve and reappear, seemingly out of nowhere. Diseases that could potentially send 100 people onto hospital beds.
Or, potentially, 100,000 people onto their death beds.
Historically, the likeliness of infectious diseases spreading increases as humans become more civilised and advanced. One of the World Health Organisation’s papers on globalisation and infectious diseases explored four ‘spheres’ that influence the nature of outbreak occurrences – economic, environmental, demographic and technological. A major point was that epidemic infections are much higher in urban communities and regions where there is an abundance of population mobility, global trade and industrial progress [2]. Despite public health services and medical studies advancing in their ability to respond to disease, globalisation and population growth exposes the economy to heavier socio-economic losses. Since 2011, there have been over 200 epidemic happenings per year. Pandemics cause an average annual loss of $570 billion, rivalling the economic scale of climate change [3]. The more society evolves – from hunter-gatherer tribes to overpopulated nations – the more volatile global health crises become. Put simply, the higher one climbs, the harder one falls.
Consider arguably one of the worst outbreaks in history with the highest recorded mortality rate, the Black Death. The plague tore through Eurasia, killing 75 to 200 million people. The economy at the time was drastically different, in which the societal effects were severe but not as diverse as what one would see if a similar outbreak occurred today. In the feudal 14th Century, loss of life was perpetuated by a lack of developed healthcare and medical awareness, as economies were driven by labour workers, primarily in agriculture and manufacturing. The Black Death did not really deplete resources or capital, but decelerated productivity and redistributed income from those labour workers to landlords and capital owners who could afford to resist the plague [4].
Nowadays, there is much more at stake. Intercontinental transport and a growing population have leveraged human exposure to various bacteria and viruses, generally with zoological origin. Now, society consists of multinational businesses, share markets, education systems, tourism; a whole range of industries that operate both globally and locally. Industries that rely on thriving economies to survive, and hence are more vulnerable if the economy collapses.
Which brings us back to these past few months. When one considers all the costs to the economy and the costs to human life that outbreaks of disease have curated over the course of history, one may come to a realisation. A realisation that the economy is never peaceful. A realisation that people and their livelihoods are vulnerable; the jobs we secure, the money we exchange and the goods we trade are all subject to change. A realisation that in spite of all the work done to establish pandemic response plans and public policies, humanity can never win against nature. This is the reality of economics and pandemics. It’s a relationship that brings out socio-economic devastation and loss of life in an endless cycle.
Is COVID-19 temporary? Most likely, yes. Will another pandemic happen? Most definitely. Will it change the way global leaders perceive disease and the effects it has on people’s lives and the economy? It is crucial that this is the case. The current economy is relentlessly advancing. Human processes are constantly evolving at rapid speed and it can be difficult for health organisations and governments to keep up. If another outbreak occurs that may potentially trigger a similar level of economic disruption, the world should take on the lessons of history and think twice or maybe three times before saying, ‘it’s just another cold’. This outbreak should be a wake-up call, for future world leaders and generations to come, to act faster and consider the bigger picture, because the opportunity cost of acting too late far outweighs the cost of being just extra careful when that single first case pops up on the news. The relationship between economics and pandemics is something that will never change. But what can change is the way the world responds to this relationship and controls future outbreaks for the sake of generations to come.
[1] https://www.weforum.org/agenda/2020/03/a-visual-history-of-pandemics/
[2] https://www.who.int/tdr/publications/documents/seb_topic3.pdf
[4] http://www.paolomalanima.it/default_file/Papers/THE_ECONOMIC_CONSEQUENCES.doc.pdf