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Economic impacts will outstrip medical issues of COVID-19

The coronavirus (COVID-19) crisis – a word that applies more to the economic fallout than the health issues, at least thus far – has brought out the best and worst in us.

The profiteering of those stocking up on the likes of hand sanitizer, for instance, reflects their greed and gullibility of some people given to panic, the same sentiment that applies to those making runs on toilet paper and a host of other grocery store items. It’s a flu pandemic, not the zombie apocalypse.

On the other side of the coin, there are people who are making a concerted effort not only to follow the advised precautions, but to help out friends and neighbours in need of assistance.

We’ve certainly seen unprecedented steps to help curb the spread of the virus, from the suspension of professional through minor hockey games to the restrictions on travel. Public places have been closed and events cancelled, as health officials advise against gathering in crowds. Many businesses have advised employees to work from home.

We’ve not seen the likes of this before. Some of that is an abundance of caution, no official looking to be blamed for failing to act, though there’s been plenty of criticism of governments around the globe, and some praise for their efforts as applicable.

Health issues are paramount just now, as officials look to get a handle on the spread of the virus, which has fanned out around the globe in relatively short order. China, the epicentre of the outbreak, remains the hardest hit, but the pace is slowing even as other countries are behind that curve, having seen cases develop later on. Canada is one of those latter locations, looking to flatten the curve.

While different from its fellow coronavirus, COVID-19 will eventually run its course, with the many unknowns the real sticking point in the battle, and the foundation of our fears. Such apprehension is fuelling the panic, from the stock market turmoil to the shortages on grocery store shelves.

Many of the precautions and most of the stockpiling will likely prove unwarranted. This is not a repeat of the 1918 flu pandemic, which came at a time before antibiotics and even the discovery of viruses. Health care was much more rudimentary at the time, thus ruling out comparisons, writes Jeremy Brown, an emergency physician and author of Influenza: The Hundred-Year Hunt to Cure the Deadliest Disease in History, in The Atlantic earlier this month.

“If the terrible influenza pandemic of 1918 and the current coronavirus outbreak share one feature, it is this: People are terribly afraid. In December 1918, in the midst of the pandemic, 1,000 public-health officials gathered in Chicago to discuss the disease which had by then killed an estimated 400,000 people over three months. They did not know the cause of the epidemic, they had no treatments, and they had little idea how to control its spread. Face masks, which were then being worn by a large portion of the general public, offered no guarantee of protection (and that remains true of face masks today). Many health officials believed that the masks provided a false sense of security. Perhaps that was correct, but there was still a value in providing any kind of security. Chicago’s health commissioner made this clear. ‘It is our duty,’ he said, ‘to keep the people from fear. Worry kills more people than the epidemic. For my part, let them wear a rabbit’s foot on a gold watch chain if they want it, and if it will help them to get rid of the physiological action of fear.’

“The face mask might have offered as much protection as a rabbit’s foot. But it allowed people to feel as if they were doing something proactive, which, even a century ago, was understood to be of great psychological importance.”

We’re going to need much more than masks and rabbits’ feet to deal with the far more reaching harm being done to our economy, however.

What started out as a clear impact on the travel industry, particularly cruise lines where there were outbreaks and much-publicized quarantines, and the airlines, as people first feared to get on an airplane and then countries began to cancel nonessential travel. The International Air Transport Association predicts the novel coronavirus could see airlines around the world lose some $63 billion to $113 billion this year.

Such concerns  quickly spread to all facets of the economy. The entertainment industry is a case in point, as we’ve seen suspensions of the NHL, NBA and MLB, for instance, trickle down through other leagues. Live concerts and theatrical shows have been cancelled. Fears of crowds and public health decrees could add up to a $5-billion hit on the movie industry as box office sales decline.

Given the widespread closures and shutdowns being carried out, layoffs and financial hardships are imminent. The majority of us live paycheque to paycheque or close to that edge, meaning it won’t take long for many people to be under water. Provisions are being made for people struggling to pay their bills – penalty-free deferrals, for instance – and governments are looking at financial supports, but the only effective step is returning to normalcy as quickly as possible.

There’s going to be pain, perhaps rolling into a global recession in fairly short order, so they trade-off between fighting the pandemic and keeping the economy afloat will eventually become an issue, probably sooner rather than later.

The intertwined global economy and the credit/debt-fueled nature of our consumer-driven system is unlikely anything that existed in 1918.

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