Kill quarantine business and economy: understand the example of the epidemic of ‘Spanish flu’ 100 years ago

Most countries are struggling with the coronavirus quarantine, despite the enormous damage to the economy. Others are not in a hurry to enter the business in a medically — induced coma, I am afraid that the cure would be more dangerous than the disease. About it writes BBC.

Убьет ли карантин бизнес и экономику: разбираемся на примере эпидемии 'испанки' 100 лет назад

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And even where the population obediently went home, and shops and offices were closed, the louder voices of the discontented, saying that you can not always stay locked in waiting for the vaccine, so we all go around the world.

Who is right? Who to rescue first: the people or the business?

To answer this question, American scientists turned to the events of a century ago, is painfully reminiscent of today. A large quarantine not news: the world sat on it exactly one hundred years ago when the planet was walking a deadly influenza known as “Spanish flu”. He took 50 million lives; almost every third inhabitant of the planet had been ill, one in ten people infected died.

As now, in 1918, the answer was isolation, masks, closed shops and factories. Like today, someone entered quarantine before someone waited.

Later it turned out won by those who saved the population, not the economy. First, all were equally bad, but return to normal after the flu was faster in those places, where he immediately imposed quarantine, restricted physical contact and pulled hygiene.

“In cities where measures have been taken decisive and urgent business recession was not deeper, than others. But at the end of the pandemic, they grew faster,” he shared preliminary results of their research, economists of the American Central Bank (fed) and the Massachusetts Institute of technology (MIT).

“It became clear that the quarantine measures will not only reduce mortality. They also soften the adverse economic consequences of the pandemic,” the study says the influence of the “Spanish flu” in the United States, where 100 years ago the flu killed more than half a million people.

Die standing or live on your knees?

The pandemic has evolved at a very similar scenario: from East to West, waves. First, the spring was terrible. Second, the winter was catastrophic.

City in the Western United States including Seattle and Los Angeles, took the last shot. With an eye on the experience of a major East coast city they took proactive measures, such as those that we are seeing now — with the exception that the remote work, e-Commerce and digital surveillance of the population.

Just as it is now, closed schools, theaters and churches, forbade the meeting, postponed funerals, restricted trade, stopped public transportation, imposed self-isolation and physical distancing. Promoted hand-washing and other hygiene, forced to wear masks.

“Those who did not hesitate, in the year following the epidemic has been more significant than in other cities, growth of industrial production and banking assets. Economic impact was significant,” the study says.

Scientists found that the difference of 10 days in the timing of the introduction of quarantine measures given the increase of employment in industry by approximately 5% in postepidemic period. And an additional 50 days of restrictions has provided the increase in jobs of 6.5%.

Similar lessons “Spanish flu” will give confidence to politicians in the West, for which the quarantine was a drama not yet written the final. They only feel for the delicate balance that will allow a pandemic to save both the population and the health care system, and the economy. Most made a choice in favor of saving lives, and economists support it.

“The task of saving people and saving the economy do not contradict each other at present. Taking action to curb the epidemic and save lives, we only accelerated the rapid recovery of economic activity in the future,” said “deeply concerned at the prospect of a prolonged recession,” a group of American heavyweights that included former Ministers of Finance and heads of the fed, businessmen and scientists.

In the absence of a vaccine and a sufficient number of beds in intensive care almost all affected countries have taken the path of smoothing a peak — tried to stretch the epidemic in time, which imposed strict restrictions in public and business life. First in Asia, where the epidemic began, from China to Singapore. Then in Europe — Italy, France and Spain. Then in the United States.

Others are reluctant to quarantine. Among the skeptics and defenders of business was the President of the United States Donald trump. He quickly changed his mind and now supports limitations: appears on the TV screen in the background of the awesome graphics, which implies that without the quarantine, the number of victims of coronavirus in the U.S. may exceed 2 million people, and with him there is hope to stay within the 240 thousand.

While not all are convinced.

The President of Brazil Jair Bolsonaro so actively opposed the recommendations of the world health organization that it is to ban Twitter and Instagram. Iran’s President Hassan Rouhani calls the virus a “hostile conspiracy” to intimidate the Iranians and to experience life in the country. He calls people to go to work.

And the Belarusian leader Alexander Lukashenko has not imposed and did not comply with any measures of distancing. He said “better to die standing than live on my knees”, and prescribed to the population of your anti-virus cocktail: vodka, sauna, sports and field work.

As the quarantine hurts and helps the economy

Full stop of life in the country has serious implications for the economy. Negative manifest immediately, but there are favourable.

To begin with the bad.

An active social life is the basis of consumption in modern economies. People go to restaurants and gyms, going to clubs and buying SUVs and dress up brightly with one goal — to communicate, to show yourself and see others.

Imposing quarantine and isolation authorities, therefore, inhibit demand. And the same shot killed the second hare — offer. Since declining labor force (people sit at home, get sick more often and, sadly, dying) and the production of goods and services (limited to Assembly, manufacturing, sport and transport).

As a result, the business ceases to invest in the development that undermines wealth creation in the future. In addition, a growing number of bankruptcies, ruined not only the company but also the people.

This is already threatening the banking system: mass non-payment could lead to financial crisis, Bank losses, reduced liquidity and credit availability.

But there is a quarantine and its charms.

First, it reduces the scale of the epidemic and, consequently, its effects. Hard proactive measures give more opportunity to relax quarantine and shorten its duration.

Second, the quarantine enforcement allows you to avoid more serious economic problems in the future because that smooths the peaks of mortality. If the health system can not cope, the terrible pictures of crowded hospitals and morgues so freak the people that it will sit in the houses is not by coercion but willingly.

In this case, to pull people to the restaurant, to a concert or to the office it will be very difficult; the money will be save and not spend. Collapse of demand for goods and services needed — from furniture and cars to tours of the beach and music lessons. Consumption will be depressed for a long time, the economy will go into a nosedive.

The depth of the coming fall now I will not undertake to predict one. The epidemic of “Spanish flu” of 1918 reduced industrial production in the U.S. on average by 18%. But if not quarantine then it would have been much worse, came to the conclusion the American scientists.

“Pandemic is extremely harmful to the economy, they write. — However, timely action can reduce their size and thereby mitigating the subsequent economic crisis. Thus, quarantine measures will not only reduce mortality but also bring economic benefits.”

They recognize the difference between Covid-19 and the “Spanish flu” that killed the young and healthy working population. And the difference between the archaic economy of a century ago and modern high-tech economy. However, I see more Parallels than differences.

“Countries that without delay got to quarantine, in particular, Taiwan and Singapore, not only limit the spread of infection. Looks like they managed to smooth over the unpleasant economic consequences of the pandemic. Therefore, quarantine measures should not be considered as a source of significant economic losses in a pandemic,” conclude the researchers.

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