As news of the global spread of coronavirus disease (Covid-19) emerged, global financial markets reacted pessimistically and behaved in ways not seen since the 2008 financial crisis. But fully understanding the potential future economic impact of the virus, which leads to this disease, remains difficult – because spread of a disease on this scale is unprecedented in the modern world.
The closest parallel is the 1918 influenza pandemic, popularly known as the Spanish flu (because it was first reported in Spanish newspapers). So what are the lessons from this historic pandemic for policymakers today?
The 1918 flu was the last truly global pandemic, its potency exacerbated in an era before the existence of international public health bodies such as the World Health Organisation. About one-third of the world’s population caught this acute respiratory-tract infection.
Conservative estimates put the death toll at 20 million, but it could have been more in the region of 50 million. By comparison, 9 million people died in combat during the entire First World War.
Probably about 2-3% of those who caught this virus ended up dying, but much of the mortality was the result of complications – such as pneumonia – rather than the flu itself. There were several waves of flu and most deaths occurred within a week of each outbreak. The last outbreaks took place in 1919.
The pandemic spread globally because of the particular set of circumstances in which it first arose. The world war had just ended, and entire armies were being demobilised, with men returning home en masse, an environment ripe for a pandemic to take hold. Outbreaks spread along major transport routes.
Moreover, much of the world’s population was already weakened by the privations of war, and susceptible to disease, particularly in Germany. There was also an absence of transparency and little policy coordination in addressing such emergencies. Wartime media censorship was still in force and governments were preoccupied with planning for peace.
Those who perished were typically in the prime of their lives, between 15 and 40 years of age. Aside from these deaths, exposure to the flu had serious permanent long-term physical and mental health consequences on many survivors, especially the very young. There were also immediate and long-term consequences for the economy.
Urban populations proved particularly susceptible to this strain of flu, partly because of pollution. Researchers recently found that many more people died in the more polluted cities in 1918, suggesting a direct causal link between air pollution and influenza infection.
The immediate economic consequences of the pandemic stemmed from the panic surrounding its spread. Large US cities, including New York and Philadelphia, were essentially temporarily shut down as their populations became bedridden. As in Italy, businesses were closed, sports events cancelled and private gatherings – including funerals – were banned to stem the spread of the disease.
Economic consequences included labour shortages and wage increases, but also increased use of social security systems.
The long-term consequences proved horrific. A surprisingly high proportion of adult health and cognitive ability is determined before one is even born. Research has shown the flu-born cohort achieved lower educational attainment by adulthood, experienced increased rates of physical disability, enjoyed lower lifetime income and a lower socioeconomic status than those born immediately before and after the flu pandemic.
Three lessons from the past
The lessons from 1918 are stark. Firstly, the public health response to the spread of the disease must focus on containment. The reason the pandemic resulted in so many deaths was that so many people had caught the disease to start with.
They were exposed because policymakers had failed to stop its spread. Indeed, their actions helped spread the flu more widely.
The repatriation of troops to their countries of origin was probably the main culprit in the spreading of the flu.
communicable disease policy works
Researchers found that US cities which implemented efforts to reduce infectious contact between people early in the 1918 outbreak had significantly lower peak death rates than cities that were later to adopt disease containment policies.
The second lesson is that good information is key to disease control.
One cannot afford a media blackout or, worse, an active disinformation campaign. One can already see the dire consequences of such policies in Iran.
The truth always comes out eventually – there is nothing to be gained from hiding it.
Indeed, governments stand to lose if censorship leads to social unrest.
Political scientists are already speculating on the long-term political impact of media manipulation of coronavirus news in China.
Preparing for worst-case scenario
The third lesson is that we must prepare for the economic and human consequences of the virus and act to minimise its impact. This pandemic is both a shock to demand and supply. The disease results in an economic crisis.
The labour lost from implementing the recommended 14 days of self-isolation for suspected cases alone will have serious economic implications. Closing down entire regions or countries as recently enacted in Italy will no doubt cause a recession. The emergency lowering of interest rates in the US and the UK must be the first of many policies aimed at mitigating the economic impact of Covid-19. New fiscal policy measures must now also come into play. Individuals in low-paid precarious employment deserve targeted attention. Where medical care and sick leave are costly this can force people to go to work even if they are still carrying the virus.
As in 1918, people in more polluted, urban areas are likely to be particularly at risk. These are populations already more susceptible to respiratory illness. Special measures to help these groups must be considered..This article was first published in the website The Conversation.com. Chris Colvin and Eoin McLaughlin are senior economics lecturers at Queen’s University Belfast and University College Cork, respectively.