Posts Tagged ‘covid-19’

Learning from Mistakes in Pandemic Response

As of March 27, 2020, at 2:00 PM EST, there are over 5650,000 infection cases of COVID-19, the novel coronavirus discovered in December 2019, in the world. The number of global fatalities due to the virus has surpassed 26,000.

“Passengers spend St. Patrick’s Day waiting for their luggage at John F. Kennedy International Airport after returning from overseas before a number of airports shut down due to COVID-19 fears [WISE].

The majority of all COVID-19 cases, including those closed, have been concentrated in China, where the virus was first detected, with Italy and Iran trailing close behind. But, as symptoms often present similarly to the common flu, international travel and global trade have allowed the virus to leap between countries undetected—at least at the beginning of the outbreak.

The European Union (EU) is an example of the way that the free movement of goods and people today has enabled contagion; Director-General of the World Health Organization (WHO) Tedros Adhanom called Europe the new “epicenter of the pandemic” last week.

During global crises like COVID-19, there is a consensus that people in all countries must unite against a disease that doesn’t stop at borders. To combat COVID-19,  many states have cancelled or postponed large public events, shifted schools to online learning, and asked anyone feeling under-the-weather to self-quarantine if possible, depending on the severity of the outbreak.

This isn’t the first time that the world has had to respond to a pandemic; countries have grappled with Severe Acute Respiratory Syndrome (SARS), Middle Eastern Respiratory Syndrome (MERS), HIV/AIDS, Ebola, and others just in the past half-century. But, pandemics are not a modern phenomenon; even as far back as 430 BC, the Plague of Athens set fire to Libya, Egypt, and Ethiopia as it made its way to the Roman city-state on the back of the Peloponnesian War. It can be concluded, however, that as humanity grows more interconnected, modes of disease transmission also become more plentiful.

The question is: is there a trade-off between globalization and public health? Or, can we learn from past pandemics—and the world’s response to them—to craft a more conscious, prepared society?

Transmitting Disease

Historically, diseases have grown into pandemics through modes of human interaction. For example, the Black Death was carried from Crimea to North Africa, Italy, Spain, and France by Genoese trading ships in 1347 and 1348. Another outbreak of the bubonic plague, the Great Plague of London in 1665, spread through England via trading ports along the Thames River, and the 1855 Plague was spread from Yunnan province in China to Hong Kong and Guangzhou as the cities grew increasingly connected by mining. Sixty years later, in 1918, the Spanish Influenza was spread across North America by laborers using the Canadian rail system to reach Europe.

These are all examples of disease spread through benign means. Yet, there are also examples of pandemics being weaponized. Before it was spread to Europe, the Black Death was brought to Crimea by the army of Kipchak Khan Janibeg, which catapulted infected corpses into the town that is now Feodosiya on the Black Sea coast in an effort to cripple its population. As armies move, they can also pass infection unintentionally; like the armies that transmitted the Plague of Athens, the Huns were key in carrying the Antonine Plague in 165 AD.

Pandemics pose a clear danger to public health; but, they also hold an element of fear that make them a threat to the mental and economic wellbeing of society. This fear is, of course, due in part to potential fatality—but, what we especially fear is the unknown.

This is especially true with COVID-19. As COVID-19 is a novel, or new, coronavirus—viruses named just for the structure of their cells—information about its spread and possible prevention is still developing. With an unclear picture of the future, public health officials around the world are struggling to outline long-term needs and craft policy that will meet them without usurping resources too hastily.

Social Divides: Manifesting Fear

COVID-19 and the pandemics before it have taught us that fear often manifests in scapegoating. The tenth edition of the Journal of Public Health in Africa characterized leprosy, for example—which mushroomed from its minor existence into a European epidemic in the Middle Ages—as a “social killer” for the stigma it carried as opposed to “serial killers” like malaria.

Now, individuals and businesses of Asian origin all over the world are facing stigma associated with COVID-19, which originated in Wuhan, China. On March 9, two months into the hysteria, Twitter user @winyeemichelle asked followers to “pls consider making your weekly takeout a Chinese takeaway. My family’s businesses have all been impacted hugely by coronavirus panic.”

Similar Sinophobia, or hate of things Chinese, was witnessed during the SARS outbreak of 2002-2003, when a coronavirus originating in Guangdong, China, eventually infected 8,098 people worldwide as reported by WHO.

During the SARS pandemic, “The fact that China’s government initially suppressed information about the virus added to the climate of blame,” Rebecca Onion writes for Slate.

But, racist reactions have not been confined to viruses originating from China. “Our views about race have always colored our views about who is safe or who is contaminated,” Natalia Molina said in an interview with Sean Illing for Vox. “When we already have negative representations of certain groups…then it’s much more likely that we’ll see them as disease carriers or as health burdens.” Think of the stigma associated with Middle Easterners when MERS became an issue in 2012, with Africans during the Ebola outbreak of 2013-2016, and with Hispanics during the Zika craze of 2015-2016.

This ingrained racism manifests even in the way that a virus is named (i.e., “Middle Eastern Respiratory Syndrome”). COVID-19 is being called the “Wuhan Virus.” By marrying a virus with its origin, a label is slapped—intentionally or not—across people from that place identifying them as disease.

Of course, some see “The Wuhan Virus” as a fitting—at the very least, factual—name for a disease that did, in fact, originate in Wuhan. Deputy Editor of USAToday David Mastio wrote for the publication that “Finding excuses to hurl the racism charge over such minor issues as how to refer to a new disease cheapens the currency of a serious allegation.”

Likewise, U.S. president Donald Trump regularly refers to COVID-19 as the “Chinese Virus.” When asked on Thursday to comment on the use of the phrase “Kung Flu” by an unnamed member of his administration—and whether it puts Asian-American community at risk—he said, “I think [the Asian-American community] probably would agree with it 100 percent.  It comes from China. There’s nothing not to agree on.”

The Economic Impact of Social Distancing 

To limit the spread of COVID-19 as much as possible, many restaurants have switched to takeout or delivery-only. Schools and universities, from Northeastern University in Boston to Egypt’s American University in Cairo, have transferred their classes online and evacuated their dormitories. Many restaurants and cafes operate under curfews, and some other workplaces are requesting that employees work from home (though, to be clear, working from home has been a white-collar privilege that largely excludes service workers).

These measures are part of the broad “social distancing” measures that are being followed worldwide. In hard-hit countries like Italy, social distancing is federally enforced; NPR’s March 10 episode of its “Up First” podcast describes conditions inside Italy’s “red zone”, or national lockdown. In what contributor Sylvia Poggioli describes as “the most draconian measure ever taken in a Western country, at least in peacetime”, police cars patrol empty streets, entreating residents over a loudspeaker to stay inside. France and Spain have since taken similar measures.

In countries like Egypt, all airports have closed, and air carriers elsewhere have chosen to limit their flights. The Friday prayer, a staple of religiosity in Muslim countries, has been halted by edict from Saudi Arabian Islamic scholars.

Similarly, shipping and manufacturing have been limited; Honda, Ford, General Motors, Fiat-Chrysler, and Toyota have announced their intent to suspend all production in North America. Public gatherings like parades and sporting events have been cancelled, decreasing money flows domestically and internationally. Stocks have fallen and tourism has been depressed.

The United Nations (UN) Center for Trade and Development has estimated that these trigger points could cost the global economy between $1-2 trillion in 2020. But, economic impact is not distributed evenly; mirroring existing socio-economic disparities, low-income countries and individuals are usually hit the hardest.

The Center for Strategic and International Studies warns that, “At the sectoral level, tourism and travel-related industries will be among the hardest hit.” This has implications for tourism-dependent economies, chief of which are developing Caribbean states like the Dominican Republic and the Bahamas. Additionally, materials prepared by Chicago-based law firm Baker Mckenzie point out the reliance of African countries on Chinese demand for raw materials, which has been severely reduced.

That’s not to say that wealthy countries don’t feel the economic effects of COVID-19; in the United States, trading on the New York Stock Exchange, Nasdaq and TSX on March 10 was all halted as “circuit breakers” cut in to mitigate a selling frenzy. On that day, the Dow Jones fell 10 points, its worst performance since the 1987 market crash.

Within countries, inequity also persists. Consumers have devastated the aisles of supermarkets in “panic buys”: large bulk purchases of enough foodstuffs to last them a potential 14-day quarantine. Don Goldmann, Chief Medical and Scientific Officer at the Institute for Healthcare Improvement, describes the madness in Boston: “I can tell you I went shopping today, to Trader Joe’s, and the place was mobbed. All I wanted was frozen peas, and there was no frozen pea to be had in any store I went to.”

These aisle clearouts disadvantage those who don’t have the financial reservoirs to buy hundreds of dollars worth of groceries at a time; when people who shop day-to-day are met with vacant shelves, that may either eliminate the possibility of dinner or force consumers towards fast-food restaurants, where the possibility of contracting disease is higher. Similarly, without the guarantee of paid sick leave, low-income individuals are more likely to go to work when experiencing symptoms of COVID-19 at risk of infecting others.

Moreover, refugee and homeless populations are left exposed to the elements with little ability to self-quarantine. The UN High Commissioner for Refugees (UNHCR) and the International Organization for Migration have suspended refugee resettlement services. Although the UNHCR has implored individual states to enable resettlement to the extent they are able, widespread border closures make intake unlikely.

Similar social distancing measures were seen in the United States during the 1918 Influenza epidemic, but not after Ebola, SARS, or MERS. Gina Kolata reports for the New York Times that public gathering places in Philadelphia as well as schools and theaters in Albuquerque were all closed in 1918.

Political Crossroads

This outbreak of COVID-19 comes in the midst of primary voting for the 2020 U.S. presidential election, attempts to form a coalition government in Israel, and attempts by Russian president Vladamir Putin to extend his time in office.

Iran held its parliamentary elections on February 21—and saw only 43 percent voter turnout, the lowest since the Iranian Revolution in 1979. “Some people might have not gone to the polls because they were worried that they were going to catch the coronavirus,” scholar Holly Dagres explained in a podcast for the Cairo Review.

In countries undergoing election cycles, COVID-19 has many worrying about the integrity of results when many people are afraid to—and in some cases, have been advised not to—leave their homes.

Even in the United States, the Connecticut, Maryland, Kentucky, Ohio, Louisiana, and Georgia state primaries have been postponed. Some states have tried to maintain voting normalcy while taking precautions; for its primary on March 2, Massachusetts directed voting staff to disinfect polling booths with more frequency. Washington switched from in-person to mail-in and drop-box voting.

On the other hand, it is sometimes difficult to insulate pandemics from politicization. When swine flu struck the United States in 1976, Gerald Ford’s campaign for president added mass immunization to its platform. As David S. Jones writes in the New England Journal of Medicine, “When people fell ill or died after receiving the vaccine, and when the feared pandemic never materialized, Ford’s plan backfired and may have contributed to his defeat that November.” Now, U.S. voters are factoring ability to respond to pandemics into their choice between Joe Biden and Bernie Sanders, the two leading Democratic candidates for president.

The ways that countries are able to respond to COVID-19 are also part and parcel of the existing political context. When COVID-19 hit Iran, for example, it hit a country already crippled by corruption, mismanagement, and the U.S. “maximum pressure campaign” of sanctions—conditions ill-equipped for pandemic response.

“Every time U.S. president Donald Trump threatened to withdraw from the Iran nuclear agreement, European companies were hesitant to invest in the country”, Dagres asserted. As the world combats COVID-19, U.S. sanctions on Iran remain ironclad. “U.S. sanctions have hampered Iran’s ability to purchase or access medical equipment or pharmaceuticals in the international market”, Sanam Vakil said to Middle East Eye.

Have we learned anything?

Yes and no.

Take the United States, for example. In 2014, Beth Cameron was appointed to lead the White House’s National Security Council Directorate for Global Health Security and Biodefense, which was established in a “I wish we had had this” moment after the Ebola scare the same year. In 2017, that center was dissolved by the Trump administration.

Because of this, “When this new coronavirus emerged, there was no clear White House-led structure to oversee our response, and we lost valuable time”, Cameron wrote for The Washington Post. “The job of a White House pandemics office would have been to get ahead: to accelerate the response, empower experts, anticipate failures, and act quickly and transparently to solve problems.”

Yet, dissolving post-pandemic initiatives after a cooling period is hardly an administration-specific response. “Theoretically, we should be really well prepared,” Goldmann told the Cairo Review. “But,” he continued, “in my experience, our memory and our state of readiness tends to…I don’t want to use the word deteriorate, but the urgency wanes over time. And every time we have a new threat—like H1N1, which turned out to be less of a threat than we initially thought it might be—we seem to have to relearn the same lessons over and over again.”

With each pandemic, preparedness (or lack thereof), varies in states all over the world. “Unlike Central Africa, Ebola was not a usual occurrence in West Africa; the necessary elements of community trust and public health decision-making weren’t in place to detect and stop it,” Cameron writes. This, combined with the recognizability of Ebola symptoms and the launch of the Global Health Security Agenda, enabled the U.S. to take the global lead in response.

Goldmann contrasts the readiness of the U.S. federal government to respond to COVID-19 with that of the country’s healthcare delivery system, which doesn’t have to mold itself to changing presidential administrations. In Boston Children’s Hospital, where Goldmann works, staff had been running drills to practice response to potential hospital overload.

There are lessons to be learned by comparing Italy and China, handling their time at the front lines of the pandemic very differently.

On Sunday, a video compilation surfaced of quarantined Italians imploring the rest of the world—particularly Americans and Frenchmen reluctant to stay inside—not to underestimate the virus. “This issue is more serious than most of the world believes,” one man said; indeed, than Italians themselves believed at the beginning of the outbreak.

“What is happening is much worse than you thought it was,” another woman echoed.

For Italians, measures to contain communicable disease, like social distancing, felt foreign. In China and the areas surrounding it, however, measures like wearing masks were already relatively common. Some experts, like Keiji Fukuda, see China as equipped with muscle memory of its response to the SARS epidemic. “Virtually everybody here has been through the drill,” Fukuda said to Today’s WorldView. Indeed, today was the second day that China recorded no new locally-transmitted cases, though global travel still poses a problem for transmission.

However, though China has been effective in limiting viral presence within its borders since lockdown was declared in Wuhan on January 23, it had a potential to respond even earlier that was hampered by government suppression. Ophthalmologist Li Wenliang sounded the alarm in December, when he began treating patients in Wuhan for SARS-like symptoms; shortly after publicizing his worries, Wenliang and seven colleagues were forced to sign an admission of rumor-mongering by the Chinese security police. Because the Chinese government was reluctant to validate Wenliang’s information—and thereby provide him with personal protection while treating patients—Wenliang passed away after succumbing to the virus on February 7.

By contrast, South Korea—which has the same memory of the SARS epidemic—has seen a “highly coordinated government response that has emphasised transparency”, John Power writes for This Week in Asia. They reported 600 new cases on March 3, and just 110 on March 13.

So, maybe the ‘muscle memory’ of some countries and institutions is better than others when it comes to responding to pandemics. As Goldmann succinctly summarizes: “All we can do now is to remind ourselves of lessons from the past, ramp up prevention and control measures (especially physical distancing) as quickly as possible, and remember this experience when we begin planning for the future.”

An earlier version of this article previously appeared in The Cairo Review of Public Affairs and has been republished with permission.

Abortion and COVID-19: why we need to support women’s right to abortion in health emergencies

Clare Wenham, Ernestina Coast, Katy Footman, Tiziana Leone, Rishita Nandagiri, and Joe Strong discuss the UK government’s apparent U-turn over medical abortion during the novel coronavirus outbreak. They draw on their own research and other evidence to make the case for women being able to take abortion medication at home, following a phone or video consultation.

On 23 March, the Secretary of State for Health and Social Care approved emergency measures relating to abortion regulation which would have revolutionised abortion practice in England. Women would be able to take abortion medication in their homes, without having to travel to a clinic first, with a consultation over the phone or video link. This was explained as accounting for self-isolation guidelines and the limited opportunity women would have during the COVID-19 outbreak to seek abortion, potentially  leading to a number of unwanted pregnancies being forced to continue or women being forced to resort to illegal or unsafe methods to terminate them. Moreover, self-isolation may lead to an increase in sexual activity amongst some, not to mention the increased risk of sexual violence within quarantine settings. Thus, this change in regulation was heralded as a major breakthrough for emergency management of COVID-19 and meeting women’s reproductive needs. That being so, it was remarkable that within five hours of this announcement, came the following ‘This was published in error. There will be no changes to abortion regulation‘.

The British Pregnancy Advisory Service has estimated that 44,000 women in England will seek early abortion in the next 13 weeks. There is a clear need to consider the impact of COVID-19 self-isolation on all reproductive health services, and notably abortion. Not only can remote provision of healthcare ease the growing pressure on the health system, but without this option, women who find themselves with an unwanted pregnancy will be forced to choose between exposing themselves or healthcare workers to the risk of infection with COVID-19 in clinic waiting rooms, or to continue with a pregnancy they do not want. Others may choose to access abortion medications online illegally, or resort to using unsafe methods. Within this discussion, there has also been no consideration of access to contraception, and whether this might be affected through supply chain disruptions.

This is part of a broader global debate surrounding the use of medical abortion (the use of misoprostol and mifepristone to interrupt early pregnancy). Considerable research has shown that medical abortion is an effective method for termination in early pregnancy; it is cheaper than surgical abortion; and when women have a choice, they express a preference for medical abortion. There is also evidence to show that the medications can be safely provided using telemedicine, and that there are no greater safety risks to taking the medications at home. Following regulatory changes in Scotland and Wales, regulations in England changed to allow women to take the second set of pills at home, but an unnecessary clinic visit is still required to take the first pill. Two doctors’ signatures are also still required for a woman to access an abortion in the first place, despite advocacy by the Faculty of Sexual & Reproductive Health of the Royal College of Obstetricians and Gynaecologists petitioning for this to be changed during COVID-19 for only one doctor, midwife or nurse required to ensure women can access care and reduce unnecessary burden on the health system.

As with all emergencies, COVID-19 allows for a time for regulatory pause, change, and reflection. We researched the impact of Zika on women’s decisionmaking on abortion in Brazil, Colombia and El Salvador. In places where abortion is highly restricted, requests for medical abortion services through telemedicine portals saw a significant increase during the Zika public health emergency. Whilst the nature of Zika was different to coronavirus – some women may have sought abortion because of concerns about congenital zika syndrome – this COVID-19 health emergency will impact women’s decisions around pregnancy and abortion. Self-isolation puts physical barriers to accessing services, including contraception, and for some women it increases the risk of pregnancy as a result of sexual violence. What we also know is that legislation does not impact women’s decisionmaking about whether to have an abortion. All it means is that women might be forced to consider illegal or unsafe abortion methods, which directly increases social, legal, and health risks to these women. However, as we discovered when we started our research on Zika and abortion, there was no evidence in the public domain on the intersection between health emergencies and abortion.

So much concerning the COVID-19 outbreak is unknown: medical research is desperately trying to come up with answers to how the virus spreads, whether vaccine or treatment options will work, whilst epidemiologists and modellers are deciding on transmission and the utility of public health interventions. Meanwhile, hospitals across the UK are at breaking point with over-burdened health workers and facilities which are putting the NHS on the brink of collapse. With all this uncertainty, some ability to be able to limit unnecessary in-person interaction with health services, which keeps women at home and safe, using evidence-based methods of providing reproductive health care would benefit all involved. Policy-making on abortion has a history of ignoring clinical evidence which makes it so disappointing that this very forward-looking policy of telemedicine for abortion was abruptly withdrawn without explanation or justification, despite parliamentary and public pressure.

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About the Authors

Clare Wenham is Assistant Professor of Global Health Policy at the LSE.

Ernestina Coast is Professor of Health and International Development at the LSE.

Katy Footman is Senior Researcher at Marie Stopes International.

Tiziana Leone is Associate Professor in Health and International Development at the LSE.

Rishita Nandagiri is Fellow in Health and International Development at the LSE.

Joe Strong is a PhD candidate at the LSE.

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: by Priscilla Du Preez on Unsplash.

How LSE Brexit 2020 will change during the Covid-19 pandemic

Brexit has not gone away, but the world’s attention is on the Covid-19 pandemic. Kevin Featherstone, Tony Travers, Roch Dunin-Wąsowicz and Ros Taylor (LSE) explain how our coverage will change.

The LSE’s Brexit 2020 blog, in common with other aspects of life, will have to adapt to both the short and long-term impact of the coronavirus on government, politics, economics and much else. Formally, the UK government is still committed to the existing timetable for the Brexit transition period, which is currently planned to conclude at the end of this year. In reality, there are so many uncertainties affecting government and politics it is impossible to be certain if the Brexit process will finally be completed by 31 December 2020.

We will continue with our work and publish the blog, though, for the time being, with slightly fewer articles than hitherto. We will include regular updates about the Brexit negotiation process, covering the meetings that have taken place, what has been discussed and what decisions have been made. At present, all 27 EU countries and the UK are involved in unilateral, national, actions designed to reduce the immediate impact of the virus. It is possible that in the medium term some form of co-ordinated action will emerge. We will include contributions from experts analysing such initiatives, and assess their longer-term impact on the UK/EU relationship.

LSE Brexit 2020 will therefore become, in part, a response to the coronavirus crisis. The kind of issues we will expect to cover in the coming weeks include:

Emergency constraints on the democratic process

The UK and the EU will be conducting Brexit negotiations (assuming these continue) against a backdrop of reduced capacity for parliamentary oversight. Local elections have been postponed within the UK, Parliament has closed early for Easter and it seems likely other short-term changes will be made to the normal processes of democracy. Media scrutiny is also likely to be reduced. Changes to the operation of Parliament, government, the European Commission and other institutions will significantly affect the Brexit process.

The burden on governments of dealing with two complex issues in parallel

The UK government, those of the EU27 and the European Commission are likely to be operating in ‘emergency’ mode for some time to come. Focussing on the detail of Brexit negotiations and their consequences for the future of the UK and the EU27 against the backdrop of a worsening crisis will, at least for a while, make it difficult for negotiators and government departments fully to concentrate on issues such as fisheries policy, trade deals and migration rules.  Only when the pandemic has been controlled will it be possible to return to normal. The timescale for achieving control is currently impossible to predict.

Possible longer-term effects on trade, trade policy and co-operation

Coronavirus has rapidly led to a suspension of elements of EU competition policy, to nationally-focused restrictions on some exports and to an immediate debate about industrial self-sufficiency. Of course, short-term concerns may abate once the immediate crisis has passed. But others may endure – notably, perhaps, a concern with border controls to ensure appropriate health and safety standards. The experience of coronavirus will likely impact on the agenda of the Brexit negotiations, and interpreting this will be important.

Potential changes in public attitudes to industrial policy, research funding and taxation

It seems almost inevitable that the response to the coronavirus crisis will include a debate about the need (or otherwise) for more national ‘champion’ companies, additional funding for medical research and the near inevitability of a requirement to raise taxes and/or cut public expenditure.  Indeed, the policy approaches adopted to cope with the sudden and massive increase in public indebtedness may potentially frame economic progress for a generation.  Attitudes to the state and regulation are likely to change. EU and UK responses to such issues could profoundly affect the Brexit negotiations.

Changing cultural and societal responses insofar as they affect the EU/UK relationship

In much the same way that the 2008 financial crisis seemingly took more than a decade to affect the public mood in ways that affected elections, policy and trade, the 2020 coronavirus event will inevitably change public attitudes towards government, the power of the state, business and public services. Such cultural and societal sensitivities will again feed through to political parties and electoral outcomes. The way they do so will affect the Brexit process and longer-term attitudes to the EU and national sovereignty.

Impacts on multilateral cooperation

The immediate governmental response to the coronavirus crisis has been remarkably nation state-oriented: there has been little coordinated, multilateral, action. This fact may reinforce an ‘everyone for themselves’ approach or, alternatively, convince governments they need to work together more effectively. Either outcome is important for the EU/UK relationship.

Impacts on economic and fiscal policy affecting the Eurozone

As during the 2008 financial crisis, the recent need to deliver an ECB response to a series of national economic impacts has proved challenging.  The future governance of the Eurozone will also affect the Brexit process and longer-term EU/UK relations.

We plan that all of these subjects and more will be addressed by LSE Brexit 2020 during the coming months. As usual, we invite high-quality contributions on this agenda that will provoke lively debate and impact on current thinking. This is in the best tradition of LSE.

This post represents the views of the authors and not those of the Brexit blog, nor LSE. Image licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

COVID-19: an overview of the government’s economic priorities so far

Paul Anand highlights the key economic policies announced in response to the ongoing pandemic and assesses their likely implications. He concludes that existential threats to economic systems seem not to be as rare as we believed, and so economists ought to be giving more thought to how we respond to them.

The novel coronavirus pandemic has seen policy-makers shift from pondering whether COVID-19 will have much economic impact to, within two or three weeks, scrabbling around to find policies that address existential threats to economic systems around the world. The economic priorities and problems that emerge are doing so on a daily basis, and it will now be clear to many that conventional policy actions simply do not apply, even if basic underlying principles do.

Businesses

At the time of writing, the major economic challenges concern the likely effectiveness of a series of (fiscal) policies announced by the UK government. Initially, the government and the Bank of England seemed to be focussed on supporting businesses and announced a range of measures including loans to tide businesses over. But it is already becoming clear that the devil is in the detail.

There is still a huge amount of uncertainty about how long social distancing will last – perhaps it will be three weeks or three months; in the UK, emergency powers have been requested for two years. As a result, the massive £350bn package of support – which includes business loans – risks being substantially ineffective. Company directors are being asked to take out loans, but where companies have costs and close to zero revenues for several months, they could face the prospect of being without profits for two or three years. For these reasons, banks offering loans even with substantial underwriting by government will not able to easily judge whether and when many businesses will be clearly solvent.

Inequality

I regularly collaborate with the UN and the World Bank, where the concept of human development is an important driver of economic thinking. The UN has an index which monitors health education and gender equality as well as national income, providing this war a focus for what economies need in a way that goes ‘beyond GDP’, a need that economists have increasingly recognised in recent years. From this perspective, COVID-19 is a human development crisis in the making which also demands immediate policy attention.

In the past few days, one UK charity food bank has reported a quadrupling in referrals over the space of a week. At the same time, other food banks and organisations trying to arrange food deliveries for the most vulnerable have reported thefts of food. Supermarkets have been addressing some of the challenges by creating particular times when older people or front-line workers can shop. These latter initiatives are welcome, but local government does need to be empowered to address the issues of hunger that some families are already facing.

There are also huge short- and long-term implications for education and labour markets. The closure of schools challenges both children’s learning and schools’ abilities to offer learning online. But it also throws into sharp relief the extent to which businesses depend on schools for childcare and we should expect the losses of national income to be significant if closures carry on for several months.

Furthermore, there is evidence that those who find it difficult to enter the labour market for the first time because of economic recessions are scarred and achieve poorer economic outcomes over the longer term. This is yet another source of inequality that we should try to combat.

Healthcare

In terms of health and health services, shortages of protective equipment in the NHS are contributing to staff shortages, as doctors and nurses self-isolate or go sick. Matt Hancock has suggested this reflects a logistics problem but whatever the reason, this is a serious constraint on the country’s response and one that makes understandable the reason thousands of NHS staff have complained about the lack of appropriate masks and gowns.

Currently, medics are also suggesting that by early April there will be a need to make decisions about who gets access to a ventilator. The government has, for several weeks, said that it will purchase all the ventilators that suppliers can produce but there are limits to how quickly their production can be ramped up. The fact that doctors and nurses are being invited out of retirement and back into work is an indication of just how dramatic the demands on the service are expected to be and highlights also the fact that other aspects of healthcare will suffer.

Salaries

The pandemic has created unexpected calls for economic policy responses. Over the course of three budgets in nine days, Chancellor Rishi Sunak has acknowledged that this is not just another recession and this is not a time for ideology. Rather, he has shifted to a position where he is listening and responding to the existential risks to large numbers of jobs, to whole industrial sectors, and to vulnerable groups within society. The offer to underwrite 80% of worker salaries up to £2,500 per month is a potentially sizeable and welcome signal that livelihoods should be the focus of economic policy because they support workers and businesses at the same time. In normal times, policies for both seem to be siloed and disconnected – but we cannot afford to think like that right now.

That said, support for the self-employed and those in the gig economy on zero-hours contracts has been slower to work out. There are some five million workers classed as self-employed in the UK and another million working on zero-hours contracts; these cover a diverse set of groups – from high-paid celebrities to working mums and taxi drivers. When they stop work, currently many are entitled to £94.25 per week, a figure that Matt Hancock accepted that he could not live on.

The issue caused some confusion, particularly in the construction industry where many workers have wondered if they should carry on working on the grounds they cannot work from home and need to put food on the table. As a result, the London underground, supposed to be running for emergency workers with passengers keeping two meters apart, has been crowded and remained a hotspot for transmission that undermined the first days of the three-week lockdown.

Following the initialy delay, on March 26 the Chancellor announced a scheme that would give such workers 80% of normal earnings up to £1,700 per month and subject to a means test of no more than £50,000 per year to ensure benefits are targeted to those in greatest need.

Rents and mortgages

There are also issues concerning rents and mortgage repayments that affect most of society. The agreement between the government and the banks that those paying rent or repaying mortgages would be able to have a three-month holiday was welcome a couple of weeks ago. But it now looks certain that those living on low incomes in high-cost cities like London will need much more help if we are to avoid a rise in evictions further down the line.

The COVID-19 pandemic created a twin economic and human development crisis that standard economic thinking is not well-suited to. The Chancellor is to be applauded for moving quickly and dramatically in the right direction but there is still much evidence of what behavioural economists call anchoring and adjustment – that is, failing to adjust enough because our actions are often based on small incremental steps from where we start. The signs from China suggest severe measures can be effective over a three-month period and it remains to be seen whether Johnson’s libertarian inclinations will allow him to pursue the strategy, even though it seems to be supported by most. Existential threats to economic systems are not commonplace, of course, but experience of the financial crisis, the climate crisis, HIV and AIDS, as well as war is beginning to suggest that economists should give more thought to policies and analysis of such situations, which are perhaps less rare and unusual than we might have thought.

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About the Author

Paul Anand is a Professor of Economics at the Open University and Research Associate at Oxford University and London School of Economics.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: by Mick Haupt on Unsplash.

 

COVID-19 and economic lessons from previous pandemics

Looking at past pandemics, Costas Milas expects the economic downturn caused by the novel coronavirus to be significant but temporary. He also explains why some wages rise during such episodes and why unemployment benefits must rise as well.

Diseases cause panic and take a significant social and economic toll. The Black Death, for instance, which lasted between 1348 and 1350, killed between 75 million and 200 million people worldwide and about half of the population in England. It also contributed to a dramatic cumulative GDP fall of 29% and to a ‘flight-to-safety’ increase in the price of gold by 8% between 1348 and 1351. Nevertheless, as a consequence of the scarcity of labour, real farm wages in England went up (cumulatively) by 116.2% whereas real wages of building craftsmen went up by ‘only’ 42.6%, which makes sense if we consider that avoiding a disruption in farm production was a priority. At the same time, flight from cities led to a downward pressure on rents and, therefore, the incomes of the upper class. Last, but not least, the English Parliament was prorogued several times in 1349 and only met again in 1351.

Some of the above observations were repeated during the 1918-1919 Spanish flu pandemic, estimated to have killed 40 million people worldwide. It is difficult to separate the economic effects of the Spanish flu from those of World War I because wartime production arguably put upward pressure on wages as a result of rising labour demand. Nevertheless, research has found that US manufacturing wages increased; indeed, US cities that had greater influenza mortalities experienced higher real wage increases. Data from the UK suggests that the real wages of building labourers in London went up (cumulatively) by 34.2% in 1918-1919, whereas real GDP in the country fell by 6%. On the other hand, house prices increased (cumulatively) by 20.3% in 1918-1919. In Sweden, which was not involved in World War I and so more clear-cut references can be made about the economic consequences of the Spanish flu, the pandemic affected incomes from stocks and rents negatively, whereas wage rates were not affected. Last, but not least, the price of gold increased (cumulatively) by 6.1% in 1918-1919.

Notice some parallels with today’s economic situation. As stock markets drop on fears of a coronavirus-related economic slump, the flight-to-safety investment strategy repeats itself. Indeed, the price of gold hit a seven-year high before dropping again as investors sold gold to cover their losses elsewhere, which serves as a reminder that although gold is a flight-to-safety investment strategy, there are periods in time that it loses, at least temporarily, its safe haven status.

With Britain’s public becoming increasingly anxious about the novel coronavirus outbreak and both monetary and fiscal authorities responding to address the looming recession, it makes sense to explore how rising financial stress impacts on the economy. As can be seen from Figure 1, there is an adverse relationship between financial stress and economic growth. The financial stress indicator pools information from the volatility of the exchange rate, the volatility of the equity market, the volatility of the bond market and the risk premium that investors demand to hold UK corporate bonds rather than the less risky UK government bonds.

Figure 1: UK GDP growth and financial stress, 1970-2019

Financial stress is a good predictor of future movements in real GDP growth. From a historical point of view, a rise in financial stress signals a slowdown in UK growth between one and three quarters prior to growth turning negative. Although data for the first quarter of 2020 is not yet published, we know that financial volatility is on the rise which suggests a significant hit to the economy.

Nevertheless, it is important to look beyond the negative impact of financial stress on the economy and pay particular attention to those who will lose their jobs or take an income hit if they are quarantined. This is really pressing because unemployment benefits in the UK are much lower than those in other countries or the OECD average. Indeed, unemployment benefits in the UK account for 34% of previous incomes for the first two months. On the other hand, unemployment benefits in the US account for 57% of previous incomes for the first two months. Unemployment benefits rise to 60% of previous incomes in the case of Germany and rise further to 64% of previous incomes for the OECD average.

Many will feel uncomfortable at the prospect of central banks taking additional quantitative easing measures to support the economy. Quantitative easing, or large-scale asset purchases, refers to monetary policy actions whereby central banks purchase predetermined amounts of government and corporate bonds in an attempt to inject money directly into the economy. There is pressing need for policy-related action because economic policy uncertainty, both in the UK and worldwide, is on the rise. This halts investment planning and undermines productivity. At the same time, the confidence of our business leaders in the economy is being affected.

Still, with current government bond yields at extremely low levels, it is questionable whether further quantitative easing is an effective way of suppressing sovereign interest rates further and reviving the economy in terms of injecting additional liquidity. In fact, Chris Martin and I have recently shown that quantitative easing loses its effectiveness at very low interest rates. Notice, however, that sovereign interest rates dictate, to a large extent, corporate interest rates within a particular sovereign. Mid-March saw, at least temporarily, an increase in government yields and an even sharper increase in corporate yields. This forced the Bank of England and other central banks to intervene by authorising additional quantitative easing which, in effect, acted as a ‘catalyst’ in driving (again) government bond yields down. Whether this translates also into lower corporate yields remains to be seen. This is because firms are currently operating in (dangerously) sliding supply and demand conditions which makes it more likely than not that they will have to lay off workers even if they secure temporary government support. This is why, as I mentioned above, unemployment benefits need to rise.

Looking at the history of pandemics, there is hope that some wages will have to rise. This should definitely apply, as a matter of urgency, to those who are currently on the front line, such as nurses, whose starting salaries took a hit in real terms after the last financial crisis.

There is another lesson from the economic effects of past pandemics and earlier recessions. As the Economics Editor of the Sunday Times recently noted, recessions tend to be short-lived. If history were to repeat itself, the chances are that we will witness a deep economic downturn. Forecasters predict that the looming economic downturn will be a ‘V-shaped’ rather than a ‘U-shaped’ one. In other words, the downturn should be significant but temporary. To what extent history will repeat itself remains to be seen.

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About the Author

Costas Milas is Professor of Finance, University of Liverpool.

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

European health systems and COVID-19: Some early lessons

COVID-19 is putting unprecedented pressure on European healthcare systems. Tamara Popic draws together some early lessons, arguing that the crisis should prompt a rethink of the direction of healthcare policies across Europe, and that the principle of solidarity must now move to the forefront as countries seek to mitigate the impact of the outbreak.

The spread of COVID-19 has put new pressures on already strained national health systems across Europe. In Italy, the country reporting the highest number of deaths linked to the virus in Europe so far, hospitals are facing severe crises trying to deliver the necessary care, while doctors are making heart-breaking decisions on how to distribute scarce resources. The usual stereotypes of Italian dysfunctionality notwithstanding, the 2018 Bloomberg ranking of the countries with the most efficient healthcare systems around the world places Italy fourth. The Italian population also ranks as the second healthiest population in the world. As one of the most efficient health systems and one of the healthiest populations in the world is struggling under the pressure, there are at least two lessons that could already be learned from the present crisis.

All that glitters is not gold

First, European governments should re-think the direction they have pursued with their healthcare policies over recent decades. A breakdown of coronavirus risk by demographic factors shows that those most likely to die are the old and the sick, population groups most dependent on the public healthcare system. Yet, European health systems in 2020 are less public than they were 30 or even 10 years ago. The logic behind these developments, guided by the New Public Management approach, has been that scaling down of the public sector would make health systems more efficient and responsive to the population’s needs.

The consequence of this approach has been a slow but steady reduction of public spending for healthcare. OECD Health Data show that since 1990 public spending as a share of the total spending for healthcare has decreased in most European countries. In some countries in Eastern Europe the decline has been even higher than 30 per cent.

While this trend has produced a variety of effects, a reduction of hospital capacity is one of the most important. As hospitals deliver costly specialised care and as European hospitals are still predominantly public hospitals, one of the key cost-containment measures has been to reduce the number of hospital beds. The figure below shows there has been a significant decline in curative hospital beds since 1990 across the whole of Europe (with the notable exception of Finland). In Italy, the number of beds per 1,000 people declined from 7 in 1990 to 2.6 in 2015. The tragedy is that these beds are now among the most needed elements of healthcare system capacity in the context of the present crisis.

Figure: Curative (acute) hospital beds per 1,000 of the population (1990-2015)

Source: OECD Health Data 2019

A call for solidarity

Second, the current crisis underscores the key principle of public healthcare – solidarity. A reduction of public spending for healthcare across Europe was paralleled with a series of policy measures that involved privatisation and the introduction of market-like instruments in the provision of medical care. In the hospital sector, these measures involved the privatisation of hospital beds and changes in the model of hospital ownership, including transformation of public hospitals into private-for-profit hospitals and joint-stock companies. The logic, similar to the one applied to reductions in public funding, has been that replacement of the public sector led by the state with private and competitive, market-oriented care provision would make health systems more efficient and responsive.

However, research shows that these types of policy changes have contributed to the creation of two-tiered healthcare systems. In this kind of system, access to necessary care is dependent on one’s capacity to pay for it and solidarity granted by the public system is eroded. And this is happening at a time when the general trend in inequality has spared neither our health nor our health systems, as countries face persistent inequalities in health and in access to healthcare services.

If these developments were not worrying enough, then the current health crisis caused by the coronavirus demonstrates that solidarity matters now more than ever. A quick look at the United States reminds us that having universal access to care is key in responding to the present crisis. News that the UK’s NHS will use private beds for virus sufferers may have seemed encouraging at first, but the subsequent announcement that private hospitals will be charging the NHS £300 per bed suggests that solidarity risks disappearing at the time when it’s most needed. Having resilient, well-funded public health systems with universal access to healthcare is key not only for solidarity, but also for national if not global salvation. It’s time to come together.

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Note: This article was first published on LSE EUROPP. Featured image credit: Marcelo Leal on Unsplash.

About the Author

Tamara Popic is a Research Fellow at the Max Weber Programme of the European University Institute.

A Brexit extension will help stop this crisis becoming a disaster

After a quarter of flat GDP growth, Britain’s economy was hardly in the best position to weather the COVID-19 storm. The prospect of a disorderly Brexit will dent market confidence even further, writes Callum Tindall (University of Nottingham). The government has a duty to ask for an extension so talks have enough time to reach a deal.

On 12 March, the FTSE 100 (index of the 100 largest UK companies) dropped 10.9% – its highest single-day fall since 1987. This follows flat GDP growth in Q4 2019, with almost certain decline expected in Q1 2020. The spread of COVID-19 means investors are extremely pessimistic about the outlook for the economy.

coronavirus
Photo: Radio Alfa via a CC-BY-NC-SA 2.0 licence

And if a deal cannot be reached, Brexit poses a further economic challenge. Market stability is important, as most British citizens are investors through pensions and there is an ongoing risk of business failures.

The UK government began with a paternalistic role, reinforcing the need for good personal responsibility, hygiene and self-isolation if required. The Budget initially committed £12bn to combating COVID-19 to support public services, provide sick pay and business rates relief for small and medium-size businesses. This was followed by a huge injection of £350bn to support businesses, which could further extend as the government vows to do “whatever it takes”.

The Bank of England has cut UK interested rates to a historic low of 0.1%, leaving almost no room for further movement. Following action by the European Central Bank, this was supported by an initial quantitative easing programme adding £200bn into the economy. With ongoing supply-side issues, it’s unclear how effective this will be.

Most of the UK’s consumer economic activity will be suspended by social distancing, so these measures will be welcomed. However, buses, trains and airlines are already vulnerable to Brexit uncertainty and are likely to need additional assistance. Without support, business collapse could cause job losses and further reduce consumer supply, creating a downward spiral of economic contagion.

Those at greatest threat from economic disruption are individuals living in precarity. The government’s £350bn measures cover businesses, but not people. There are almost a million UK workers on zero-hour contracts, without access to full sick pay. Many are living hand-to-mouth and cannot afford income losses. Another government consideration must be for the five million self-employed. Both these groups have yet to be provided enhanced income support, but can claim Universal Credit if unable to work. However, this takes five weeks to receive, and entitles recipients to less than £100 a week per person. There have been calls to introduce a temporary universal basic income to help these people. Additionally, a quarter of British people have insufficient savings. Whilst wealthier peers stockpile non-perishable goods in anticipation of potential quarantine, these people risk food shortages. Also particularly vulnerable are the elderly and disabled.

Throughout this crisis, Brexit negotiations have to be resolved. For all that cannot be predicted about COVID-19, there is much known about Brexit. The transition period following the UK’s exit is due to end on 31st December 2020. The EU has presented a draft treaty outlining its position, although the next round of negotiations has been cancelled – jeopardising a potential resolution in the current timeframe. Boris Johnson has previously indicated COVID-19 disruption will not derail negotiations, suggesting an extension is “not happening”. Foreign Secretary Dominic Raab reinforced the message. Whitehall insiders have nonetheless suggested that the UK may nevertheless be preparing for an extension, which must be decided by 1 July. The Labour leadership contender Lisa Nandy has called for an extension of the transition period, although the frontrunner Keir Starmer has not yet done so. These mixed messages only add to the confusion.

As COVID-19 continues to rampage across Europe, trade talks are naturally of lesser importance than high death tolls and economic shutdown. An extension – perhaps of six months – would be a wise move. It would indicate the UK’s prudent approach to crisis-management and instil confidence in its desire to get a well-constructed deal in the national interest.

Importantly, agreeing an extension does not mean it must be used, but provides a sensible contingency. With only a few months left until the extension deadline and so much unknown about COVID-19, it would quell fears of a second economic slump caused by a no deal exit. While a backlash is likely – as Brexit will have dragged on for almost 5 years – this international emergency cannot be allowed to facilitate a crash out of the EU. Every effort should be made to reduce the market impact of leaving. It also reminds us of the importance of working with neighbouring countries in order effectively manage crises, particularly the European Medicines Agency. In terms of economic relationships, potential loss of further EU trade from a no-deal Brexit at the end of the year could spell disaster when the UK economy will be in a state of recovery. We do not know when the market will bottom out, but for investors with the luxury of time, market wisdom suggests economic recovery will follow. Consumer confidence is likely to return once the COVID-19 threat has abated, if economic order can be restored. While the government must act in line with health experts to limit contagion, alongside the Bank of England it has a role in maintaining economic stability in these volatile times. This includes the prudent measure of extending the Brexit deadline as a contingency.

This post represents the views of the author and not those of the Brexit blog, nor LSE.

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