Spanish Flu and Coronavirus: What are the economic differences between the two pandemics
Foremost & First
By Robert Davi
July 12, 2020
The coronavirus pandemic has affected many industries. Several hundred million people around the world have lost their jobs. Global GDP has declined so earnestly for the first time since the Great Depression. One and a half billion students worldwide have been affected by the closure of schools and universities. The long-term economic consequences of the crisis in many countries have yet to be assessed.
Stanford University professor of history Walter Scheidel wrote for Foreign Affairs an article comparing the economic effects of the Spanish Flu that the world faced in the early 20th century and the current situation. A hundred years ago, the pandemic did not have such a severe impact on the economy, and how can recovery now look?
How “Spanish Flu” influenced the economy
This may seem surprising, but the Spanish Flu pandemic’s economic impact has been far less dramatic than the current coronavirus crisis. In the United States during the Spanish Flu, industrial production collapsed briefly but recovered within a few months. The retail industry was practically not affected. The number of failed businesses did not significantly exceed the usual time. According to current machine learning analytical data, the US GDP in 1918-19 decreased by no more than 2%, the same can be said about Western European countries’ economies during the Spanish Flu.
At the same time, according to some reports, the Spanish Flu was more deadly than Coronavirus. In the United States, the Spanish Flu killed at least 550 thousand people – 0.5% of the total population. Adjusted for the increase in the number of inhabitants of the country, today such losses would result in a little less than 2 million deaths. However, outside the industrialized countries, the situation was far worse. In total, 40 million people died from the Spanish Flu, 2% of the Global population – in today’s numbers, this would have been 150 million dead.
What is essential is that the Spanish Flu, like the epidemic of other diseases, carries apparent risks for the inhabitants of our planet. At the same time, while the rich and the poor had almost the equal chances of getting sick, there was no race or poverty gap EVERYONE could be infected!
What has changed today with Coronavirus
Over the past hundred years, humanity has taken a big step forward. Antibiotics appeared, medicines for many diseases, social security systems were built, life expectancy and quality of life increased significantly throughout the world.
The growing standard of living also had side effects – for example, economic stratification. And during the new pandemic, it turned out that when states around the world are forced to shut down the economy and, in fact, destroy resources, the conditional rich and poor no longer face the same risks as they did a hundred years ago.
Today, people whose work is related to technology or, thanks to it, can be done from home, and those who are forced to face people face-to-face even at the peak of a wave of infection.
At the same time, the “value of life” in the world, in any case, has grown – both morally and economically. In the USA, this parameter is approximately $ 10 million. Therefore, authorities around the world are taking such strict quarantine measures and reintroducing them during outbreaks of infection.
What our recovery will look like in the end possibly?
The world a hundred years ago and now is too different places in time. That is why, despite significant advances and successes in medicine and the economy, the coronavirus pandemic’s consequences will be longer and more severe than during a more deadly Spanish Flu.
According to Bloomberg, many economists are gradually losing faith in implementing a recovery scenario with a fast V-shaped schedule for the recovery of the global economy. Instead, they suggest a restoration in a torn rhythm. As a result, it will not be a chart in the form of a letter V, U or L.
Here is how Deutsche Bank experts see this chart:
Such a schedule implies a gradual fall, and then recovery in several jerks – this will be facilitated by gradually easing quarantine measures. Also, the situation will be affected by a decrease in demand in the economy, as people will save more possibly hoard items. Such a recovery scenario is one of the most likely.
Stay safe and strong friends and remember to learn from our past to proceed safely into the future.