The good thing about coronavirus

Charles Wyplosz

Graduate Institute, Geneva and CEPR

It is far too early to know whether the coronavirus epidemic will have been just a huge scare or a major disaster. Some epidemiologists fear that half of the world’s population may be infected.

How can one think of a ‘good thing’ about this immense threat, then? So far, at least, the epidemic looks like a giant Rorschach test, those coloured inkblots that reveal your personality, except that it reveals the nature of governments and, more widely, societies. It is fascinating to observe how governments are reacting to the threat. Even if the epidemic soon disappears, eventually its fallout could be spectacular - for the better or the worse.

Take China, a country whose government has been keen to promote worldwide its autocratic and secretive regime. The initial cover-up was unsustainable and forced the government into a U-turn that all citizens could see - a rare event. The famous hospital built in ten days looked like a massive achievement, until it backfired when the health system became visibly overwhelmed, in effect abandoning scores of sick people. The tight limitations imposed on the population may eventually be efficient, but they have violated elementary human rights. Even though most citizens are under no illusion about the nature of the regime, this is a traumatic experience.

Similar observations apply to other autocratic and secretive regimes. Iran’s unbelievable numbers of reported cases and deaths will eventually blow up. Russia is likely to follow the same path, as it did with AIDS a while ago. As we know from the Chernobyl case, people are deeply hurt when they discover that their governments chose to protect the regime over their own lives.

Trump’s initial denial of the issue will be soon be revealed as yet another lie. Perhaps the US health system is better equipped to deal with the epidemic than most others, but the president will suffer badly if it emerges that his early denial has led to scores of avoidable deaths. The Italian and South Korean governments also reacted very slowly. Either they were not aware of what was going on or they were clueless about what to do, they were just incompetent. In France, politicised trade unions of health workers immediately blamed a lack of resources on the government, which is acting fast, forcefully and transparently. Divisions will rise in an already deeply divided country.

The cruise ship moored in Yokohama has been turned into a petri dish. Amazingly, the Japanese health authorities tested only a minority of the stranded passengers, officially due to lack of equipment. At the same time, another cruise ship was quarantined in Hong Kong and all passengers were promptly tested. Japan hardly qualifies as a poor country short of technical skills, but its narrow political elite and its bureaucracy are well- known for their bad habits, as the Fukushima disaster already revealed.

A telling contrast is Switzerland. As soon as the first two cases were identified, the government built up testing centres and required that large events (more than 1,000 people) be cancelled. Highly expensive exhibitions, such as the Geneva auto show or the prestigious watch show, were instantly cancelled. For a country frequently derided for being slow in everything (except maybe downhill skiing), its speed of reaction stands to reduce the extent of the epidemic even though its borders remain widely open. Then look at Israel, which is turning back foreigners coming from some infected countries when they land at the airport. They are not even allowed to disembark, while Israeli citizens coming in from the same countries are immediately taken care of.

Epidemiologists worry about the impact of the epidemic in poor, ill-equipped countries. Kazakhstan and Cote d’Ivoire have built brand new capital cities, but they lack elementary health systems, like many other countries whose armies sport advanced weaponry. Development economists have long identified health systems as a priority that public and private donors should focus on. They stand to be proven right, but the proof might be cruel.

These examples, and many more that will occur in the coming weeks, should not go unnoticed when the epidemic finally tempers down. They all will reveal what is deeply wrong, and sometimes reassuringly good, in each country. These things mostly went unnoticed because they have been part of the landscape for very long, just a normal fact of life. If many lives are lost, they will be exposed for all to see. Hopefully, it will be much more difficult to ignore the facts or blame foreigners for national failings. This could be the silver lining of the disaster that awaits the world. It would be a tragic failure if the lessons that we are about to learn were to end up wasted.

Meanwhile, depending on its extent and duration, the epidemic will hurt economic growth. Will these differences in treating the epidemic also characterise the economic policy responses? The linkage is unlikely to be straightforward. The Chinese authorities all but shut down the economy with one click; they can order a restart as easily while pouring in cash to soften the economic and political blow. Italy has already started to ask for leniency from the European Commission regarding its budget deficit. The large central banks have signalled that they are monitoring the financial markets carefully and the Bank of Japan has started to buy shares. This may suggest that the less adequate the treatment of the epidemic itself has been, the more forceful will be the economic policy reaction - as if “money can buy me love”.

The deeper question is what drives the differences. This is a huge question. The simple answer is institutions, but institutions are the result of history, culture, ethnic divisions, political regimes and election laws where applicable. Deeper still is the question of the price that societies attribute to the value of life, which brings in religion and spiritual values. Maybe the only safe prediction that can be made is that, in the years to come, researchers in many fields will be busy disentangling these issues.