– March 12, 2020
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In the last few decades there have been a succession of panics, each of which has for a while attracted much attention, been taken seriously by much of the media and even parts of academia, and in some cases influenced public policy. One fondly remembered example was the Y2K panic in which it was thought that the advent of the millennium would result in the general collapse of computers and automated systems due to a design fault in their operating software and mechanics. Another was the belief that temperate forests and waterways would be wiped out by acid rain. Both of those faded away, rather suddenly in the case of Y2K. 

Others recur such as the notion that we are all suffering a range of mysterious ailments because of the accumulation of ‘artificial’ toxins in our bodies – this one gets an outing every few years. There are some panics that never really get off the ground, such as the idea that the wireless transmissions of the mobile telephone system are causing widespread health problems. While there is no shortage of this, panic debunkers such as the British peer and writer Matt Ridley have a fulltime job on their hands debunking them.

However, it is illogical and dangerous to conclude that because most scares turn out to be without foundation we should therefore reject any such alarms. Sometimes the problem is genuine, and we should indeed be concerned. In some of those cases there is a relatively simple solution: this was the case with the damage to the Earth’s ozone layer for example. More serious are cases where the problem is real, is severe or potentially severe, and does not have an easy solution. In those cases we should be alarmed, indeed very alarmed. 

A few years ago a then colleague of mine asked me if we should be concerned about the problem of antibiotic resistance in bacteria. She expected me to say this was nothing to worry about and was dismayed when I told her I thought it was a serious problem with potentially far-reaching effects. Right now we are confronted with another such case, of a problem where we really should be worried – as Matt Ridley himself has recently said. 

This is of course the coronavirus outbreak, almost certainly now a true pandemic. Ridley explains why the biology of the virus and the way we live today both mean that this is a threat we should take very seriously. The boy may have been crying wolf repeatedly but eventually the wolf really did come. This time it truly has and we do not yet know how badly we shall be bitten.

Biology and epidemiology and medicine are obviously the disciplines that can help us to best evaluate the risks posed by a pandemic, and to devise the most effective response. In this case, as Ridley explains, the heart of the challenge is that we are dealing with a new virus that has not yet adapted to its host (us) by becoming milder and which currently has the dark combination of a long incubation period, high levels of infectiousness, and a relatively high mortality rate. 

All this explains why it is a real problem and a serious one. To understand why this is happening now though, and to have a better grasp of what the non-medical consequences might be if we are not careful, we should turn to the disciplines of history and economics and their combination in economic history. 

Epidemics are a regularly recurring feature of human history. Some are regular, even annual. Most are localised. Some though are major events, with epidemics that affect a significant part of the planet’s surface and settled population or even the entire settled world (a pandemic). These often have extensive and long-lasting consequences and can be seen with hindsight or even at the time to have played a major part in history. Such major epidemics and pandemics do not however happen randomly and unpredictably, without any warning. 

They are not ‘black swan events,’ which are unknowable and unpredictable. Rather, they are ‘grey swans’ – we can work out what circumstances make them more likely but the problem is that we cannot say precisely when or where they will happen. For the economist the analysis of the historians on this topic is sobering but it also suggests warnings about what to do and not to do.

Historically, pandemics and epidemics that affect a large part of the planet and its population tend to happen towards the end of long periods of economic growth, increased trade and urbanisation, and a move towards significant economic integration and division of labour. They typically happen in, and have the biggest impact upon, the parts of the world where those processes were most sustained and advanced. 

At a theoretical level this makes sense. Trade and economic specialisation means lots of goods and people moving around, along with parasites, pathogens, and hosts such as rats. The more trade and economic integration there is, the easier it is for a novel pathogen to travel long distances and infect large numbers of people over a wide area. 

The urbanisation that goes along with economic development means large and concentrated populations (often historically with inadequate sanitation) make the spread of a disease much easier and means that a true epidemic (in which until the peak is reached each case gives rise to at least two new ones, so producing exponential growth) is much more likely. So major epidemics are the dark consequence of good things such as economic development and the growth of trade and exchange.

We can see this clearly if we look at some of the best-known major epidemics and pandemics. The influenza epidemic of 1918 happened not just at the end of a world war but at the close of a 40-year episode of globalisation (the so-called ‘Belle Epoque’). The Black Death, a true pandemic that wiped out about half of the population of Eurasia in the fourteenth century, came at the end of another 200-year period of intensifying trade and exchange connections between the various parts of Eurasia, particularly in the thirteenth century after the Mongols had united most of it in the vast empire of Genghis Khan and his successors. 

The ever closer integration of the lands around the Mediterranean and most of the Middle East in the first and second centuries (with a network of trade connections between those lands and both East and South Asia and deepening links within both of those regions) came to an abrupt halt with the massive plagues of the third century, which had a devastating effect on both the Roman and the Han Chinese Empires. 

The recovery of the later fourth and fifth century was then followed by the great Plague of Justinian, which laid waste to urban society around the Mediterranean and carried off a large part of the population of both the East Roman and Sasanian Empires. In all of these cases, soldiers and merchants were among the most important transmitters of the diseases and we can trace how the epidemics spread along long-distance trade routes.

So past experience and the biology of the coronavirus should both lead us to be very alarmed. This time something really bad is coming down – we do not yet know how bad (although it will not have the catastrophic results of the Black Death or Justinian’s Plague). History though should have told us to be worried about something like this for some time now, and to prepare for it or take pre-emptive action. To be fair many governments and their scientific advisors have been quietly worried about this for some time (as they also are about antibiotic resistance) and there have been contingency plans – which they can now test. 

The problem is that several features of the way we live at the moment make major epidemics or even pandemics more likely than they would otherwise be. The principal one is the one already alluded to – increased economic integration. The problem is that this means a lot more travelling and people moving around. The key factor here is not so much the number of people moving in a given time or the distances they travel on average (although both of these do matter for epidemiology) but rather the number of journeys, which is larger than the number of people because of the relatively small number of people who make frequent journeys. 

In previous epidemics it was soldiers, sailors, and merchants who spread the illnesses and disproportionately died from them – we may have to add other categories now such as conference-attending academics. Urbanisation also makes large-scale outbreaks of infectious disease easier. The other big factor is the way modern agriculture works, above all livestock farming which is a fertile ground for the development of novel pathogens and their jumping across species barriers. So, the way the world economy has developed in the last few decades has actually heightened the risk of a pandemic, particularly when coupled with other factors such as modern farming.

So we should have been worried for some time, should be alarmed now, and should be very alarmed if the exponential spread of the coronavirus continues much longer. What we should not do is panic. The natural human response to an epidemic is to panic and to engage in various kinds of behaviour that are not helpful and may make the situation even worse – such as running away. In his Peloponnesian War, Thucydides gives a gripping account of the plague that visited Athens during the war and captures the psychological effects of the epidemic as well as its physical ones. His account is worth reading again to see what social effects a pandemic may produce. The major epidemics just described did not only come towards the end of episodes of economic development – they also brought them to a close. 

It is very unlikely that the coronavirus itself will do that this time for two reasons. It is not as lethal as the bubonic plague and modern sanitation and medical knowledge and technology gives us an advantage our ancestors did not have. 

What is quite possible though is that we will panic and react in the wrong way at the level of policy in a way that means future historians will be able to speak of how an era of globalisation and world growth was brought to an end except that this time it would not be the illness itself but an ill-judged response to it.

The immediate risk is that the epidemic and the steps taken to contain it will together push the world economy into a severe recession. We must obviously follow the advice of medical professionals and one of the things they say is that many things the public and politicians think will help may actually not be very useful while having bad economic results. It may also lay bare problems that have nothing to do with it, such as the derangement of investment markets and risk pricing brought about by over a decade of ‘unorthodox’ monetary policy. 

The great danger though is that it will give a huge push and impetus to something we can already see starting, which is a move away from economic integration and towards localism and economic nationalism. Just as in the 1930s this will not end well. What though about the genuine heightening of risk brought about by economic integration and the more frequent travelled closer connections that it brings? The answer is that there are all kinds of things we can do and should be doing to manage, mitigate, and even eliminate those risks. 

Matt Ridley points to some of them in his piece that I have referred to. Some of what we should be doing is strategic and proactive, such as encouraging the development of synthetic meat and alternatives to intensive farming. Another is developing more effective treatments for both viral and bacterial diseases (the latter involving dealing with the other rising problem of antibiotic resistance by developing things such as designed bacteriophages). 

If we realise what the real risks are and take effective action that makes use of the advantages we have compared to our ancestors then we can survive a major pandemic. If we panic, however, and do things that seem to make sense but actually make the economic and social effects worse, then the prospects are bad.

Stephen Davies

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Dr Steve Davies, a Senior Fellow at AIER,  is the Head of Education at the IEA. Previously he was program officer at the Institute for Humane Studies (IHS) at George Mason University in Virginia. He joined IHS from the UK where he was Senior Lecturer in the Department of History and Economic History at Manchester Metropolitan University. He has also been a Visiting Scholar at the Social Philosophy and Policy Center at Bowling Green State University, Ohio. A historian, he graduated from St Andrews University in Scotland in 1976 and gained his PhD from the same institution in 1984. He has authored several books, including Empiricism and History (Palgrave Macmillan, 2003) and was co-editor with Nigel Ashford of The Dictionary of Conservative and Libertarian Thought (Routledge, 1991).

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