The Pandemic Possibility - Apr 28

Hope you're paying attention to what's happening in Mexico. It's certainly not 'The End', but it does represent one of many birth pangs we read about in scripture (see Matthew 24).

Johnny Cash

The world is suddenly facing the possibility of an influenza pandemic following outbreaks of swine flu. Indeed, the U.S. Centers for Disease Control and Prevention has declared a public health emergency — though largely for administrative and management purposes — to facilitate efforts to deal with the flu outbreak. We say “possibility of a pandemic” because, at this moment, it does not seem to us that anyone has a clear handle on either the likelihood of the virus’s dispersion, nor of its virulence. As of this writing, Mexican authorities suspect that as many as 86 people have died from the disease, although only 22 swine flu deaths have been officially confirmed. Sunday was rife with reports of cases emerging in states from California to New York (as well as in Canada, New Zealand, Spain, Brazil and Colombia), though there have been no reports of deaths or indications that deaths are imminent in these countries.

It might be the case that the virus is so widespread in Mexico that those who died from the disease represent a small percentage of the infected, whereas in the United States the virus has not finished incubating and thus has not yet begun to show its effects. At this point, virulence as a percentage of infection is not clear to us. Nevertheless, U.S. authorities have called a public health emergency, and the international disease control community is struggling to come up with a predictive model.

This situation is outside our area of expertise, though we are able to say that the traditional authorities on such matters appear to be quite unclear on what we are facing. What we can discuss are the potential implications of an influenza pandemic, even one substantially milder than what struck in 1918-1919, 1957-1958 or 1968-1969. In the first case, more than 500,000 people died in the United States alone; tens of thousands died in the United States in the latter two cases. (Flu season runs through the winter, traditionally peaking around February-March, with effects felt into the early summer.) Given the current time frame and the economic crisis, the implication of a new pandemic could be significant, even if it resulted in a much smaller death toll.

The world is currently struggling to emerge from an economic crisis, and at this point some minor headway appears to have been made. The most important impact of this virus would be economic. Apart from absences from work –- or even the potential loss of a portion of the work force — a pandemic could be utterly disruptive.

It is difficult to avoid catching the flu, but one way to decrease the odds is to avoid exposure to others, particularly in crowds, and to stay out of the office if they begin to experience symptoms — and for several days after symptoms cease. In the case of a pandemic, that advice would almost certainly be given.

That in turn could drive a stake into the heart of consumer spending, which is already more than a little weak. If the disease — or popular perception of the disease — were to reach pandemic proportions, consumers could begin to view an impulse trip to the mall as potentially a life-or-death choice. Discretionary spending would collide with discretion, as individuals started to forgo trips that would bring them into contact with large numbers of people –- not just at major sporting events and public rallies, but also movies and restaurants.

Depending on the extent of the virus’s spread, it could directly affect production: Offices and factories would shut down in areas where the flu was particularly rampant, amid efforts to control it. International travel and trade might well be affected, both voluntarily (as people avoided travel and refused to buy goods from countries heavily infected) and involuntarily (as states acted to protect their populations).

The greatest effect would be psychological. In a world where consumer confidence has already been deeply affected by the economic downturn, a pandemic would dramatically darken the mood of the international system, with potential impact on governments.

We are not trying to be alarmist. As stated, we do not really know what these swine flu infections and deaths mean, and as with many other scares, this situation might dissipate in a matter of days. There have been plenty of scares about avian strains of the flu virus breaking through the human-to-human transmission barrier, and so far they have been unfounded. Even the widely hyped outbreak of Severe Acute Respiratory Syndrome (SARS), which spread rapidly from China to a number of other countries in 2002 and 2003, ultimately was contained. Fewer than 800 fatalities from SARS occurred worldwide, with only eight confirmed cases (and zero deaths) in the United States, despite widespread concern that the disease could severely impact the American populace.

But timing can be everything. We are acutely aware that if a deadly flu pandemic were to strike right now — whether actually proving to be, or just creating the perception of, a rapidly spreading and lethal disease — the effect on economic recovery could quickly become dramatic, and therefore the nature of politics in many countries would shift. This is not a geopolitical event in itself, but given the worst-case scenarios, it well might have a geopolitical effect.