Covid-19 - what next?
The starting point is where the world is now. Sweden stands alone as a nation that chose to let the virus do its work in the hope of achieving herd immunity without the death rate being too horrendous. The Swedish economy was not locked down and so has not been battered as hard as those of other nations.
Courtesy,Spooner, The Australian
Much lower death rates have been achieved by the four nations of New Zealand, Taiwan, Australia and South Korea. Their health authorities adopted a policy of suppression. Businesses have been locked down, although in Australia the export of iron ore and coal has continued. Australia's third largest export, educating overseas students, was limited by closing borders and Chinese leaders warning students not to come to Australia. Whether the large cost to the economy is justified by a lower death toll (of mainly old people) has not yet been subjected to any serious analysis in these countries.
Failure to act firmly and decisively lead to the crisis in the UK becoming almost as bad as the USA. 'Suppression' has not been a serious strategy within these economies, thought many businesses have been locked down. President Trump joked about the virus and later as deaths kept rising asserted that the Covid would soon disappear.
In the UK, Prime minister Boris Johnson also did not take the pandemic seriously to begin with. He then caught the virus and spend time in hospital on a ventilator. Valuable time was lost.
Many medical experts are working hard to find a vaccine, and some claim their baby is already being tested. Others are looking for treatment therapies and several old drugs apparently show promise. Let's hope success in either form comes quickly but few people expect success until 2021 at the earliest. Most experts predict two years will be needed for a successful vaccine.
Short of the fast production of a vaccine, let us assume an immediate future will be much like the recent past. First, more deaths involving old people. These deaths will result in sadness for relatives and friends, and work for undertakers. However in high death countries, the result may eventually be regarded as net positive, with savings in the cost of life in old persons homes, respite accommodations and nursing homes.
The big issue however is what will be the longer term economic effects . First and most obviously unemployment will soar. And if in the end 10 % of younger people, aged 15 to 65, die, a reasonable estimate of production lost might be 10 %. Some productivity gain may make output higher, which survivors will presumably find welcome.
Many small and medium businesses will struggle to survive, especially in the case of cafes, hairdressers, bars and restaurants. The going will be tough, especially during periods of slow release or renewed shutdown. My best guess is that unemployed people will remain for many years well above the pre-Covid level, that is well above 5 per cent for adult unemployment and over 20 %, perhaps well over 20 %, for young people aged 15 to 20.
The net result will be smaller nations, less able to find income for the unemployed, the handicapped, and less able to spend on old age pensions, medical research, military efforts and other worthy causes. With a viable inoculation program and helpful therapies available quickly, these effects may not be too serious. But without vaccines and therapies there will probably be a long period of declining incomes and hard times.
Fiona Prior visits the fascinating and at times tragic footprints of Cultural Wars. More here.
image: Students in Tiananmen Square Massacre in 1989. Deja vu?