It certainly looks like another example of crying wolf. After bracing ourselves for a global pandemic, we’ve suffered something more like the usual seasonal influenza. One month ago the World Health Organization declared a health emergency, warning countries to “prepare for a pandemic”. Senior officials prophesied that millions could be infected by the disease. But as of last week, the WHO had confirmed only 4,800 cases of swine flu, with 61 people having died of it. Obviously, these are low numbers; “What did we get wrong?”
Why did the predictions of a pandemic turn out to be so exaggerated? Some people blame an overheated media. I think there is a broader mistake in the way we look at the world. Once we see a problem, we can describe it in great detail, extrapolating all its possible consequences.
Take swine flu. The virus had characteristics that led researchers to worry that it could spread far and fast. They described what would happen if it went unchecked. But it did not go unchecked. In fact, swine flu was met by an extremely vigorous response at its epicenter, Mexico. The Mexican government reacted quickly and massively, quarantining the infected population, testing others, providing medication to those who needed it.
The noted expert on this subject, Laurie Garret, says, “We should all stand up and scream, ‘Gracias, Mexico!’ because the Mexican people and the Mexican government have sacrificed on a level that we as Americans would not be prepared to do in the exact same circumstances. They shut down businesses, restaurants, churches, sporting events. They basically paralyzed their own economy. They’ve suffered billions of dollars in financial losses, still being tallied up, and thereby really brought transmission to a halt.”
Every time one of these viruses is detected, writers and officials bring up the Spanish influenza epidemic of 1918 in which millions of people died. But the world we live in today looks nothing like 1918. Public health-care systems are far better than anything that existed during the First World War. Even Mexico, a developing country, has a firstrate public-health system—far better than anything Britain or France had in the early 20th century.
One can see the same pattern of mistakes in discussions of the global economic crisis. Over the last six months, the doomsday industry has moved into high gear, comparing the world situation today to the 1930s. What they fail to consider is that there is much greater and more widespread wealth in Western societies, with middle classes that can withstand job losses in ways that they could not in the 1930s. Bear in mind, unemployment in America rose to 37 percent in the 1930s. Unemployment in the United States today is 8.9 percent. And government benefits—nonexistent in the ‘30s—play a vast role in cushioning the blow from an economic slowdown.
The biggest difference between the ‘30s and today, however, lies in the human response. Governments across the world have reacted with amazing speed and scale, lowering interest rates, recapitalizing banks and budgeting for large government expenditures. In total, all the various fiscal-stimulus packages amount to something in the range of $2 trillion. Their actions are already taking effect. That does not mean a painless recovery. But it does mean that we should retire the analogies to the Great Depression, when policymakers— especially central banks—did everything wrong.
We are living in a world in which deep, structural forces create stability. We have learned from history and built some effective mechanisms to handle crises. Does that mean we shouldn’t panic? Yes, except that it is the sense of urgency that makes people act—even overreact—and ensures that a crisis doesn’t mutate into a disaster.
