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Economic recession and a pandemic – correlation

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It appears this correlation appears to be quite high. The last economic crisis hit in 2001 with the dot com and telecom bubble burst and that was instantly followed by 9/11 and then the SARS crisis in South East Asia and the Anthrax cases in USA.

This time, there was an economic crisis that hit the world in 2007 end, (with the bird flue at about the same time in UK leading to the culling of millions of chickens worldwide in affected areas) then the economic crisis further deepened in September 2008 (led by the fall of the collosal Lehman Brothers) and now it has been followed by the Swine Flu Pandemic.

In 1987 and early 1990’s there was a recession again ( and though not worldwide, but India did have a plague epidemic of gargantuan proportions (mainly due to sanitation problems in Surat, Gujarat, India but spread quickly to the whole country – suddenly dead rats were a red flag event to flag to the local city municipal corporation!) in 1994. BTW, India was plague free from 1966 to 1994 when this epidemic hit and after that, thankfully due to better sanitation and hygiene, we have not witnessed an epidemic of that proportion again in India so credit has to goto the Municipal authorities for maintaining hygiene and cleanliness. I will abstain from criticizing my country at any time where even good work has been done – I only took this Plague thing as an example and we will stop it here since it should not deviate our original topic focus).

So, what is this with epidemics and a financial crisis? Makes an interesting topic to research on. Some thoughts to ponder on:

– Is it that healthcare gets more unaffordable leading to neglected infections at first and epidemics at large?

– Is it that the correlation between organizations such as the WHO and UNICEF and Red Cross and other local healthcare organizations did not spread the world quickly enough to alert travelers and prevent people from affected countries to travel?

– It is a known fact that Western countries press the panic button sooner than their lesser developed Eastern countries. ex: the USA would raise a red flag to the slighest of an epidemic and issue travel warnings to their citizens to not to travel to affected countries in say, Africa or South East Asia or the Indian sub continent. Why don’t their South East Asian and Indian sub continent counterparts react the same way with the same speed?

– Is it just that the healthcare systems worldwide are not able to bear the brunt of the social burden of supporting the ones covered under Government healthcare (we know the systems are already crumbling with the US having a gaping social security hole and medical care benefits are skyrocketing all the while).

– Is it just to do that healthcare with private companies and labor unions (read: GM and UAW) no longer works and due to this a large # of unemployed workers now cannot afford medical benefits and are hence susceptible to  healthcare concerns and epidemics of this kind?

– Is it that the the human immune system is just going weaker by the day and hence there is nothing the state can do to prevent such a crisis.

– Is it the obvious – cost of healthcare is rising all the time making it out of reach to the general mass populace and hence leaving them susceptible to all sorts of medical epidemics and infections at large.

– Is it that with all the hue and cry, the Central Government machinery in various countries is just not advanced enough or ill equipped to handle severe pandemics such as the Swine Flu or the Bird Flue?

In summary, I think it is all of the above. While stats on this will take time to collect and collate which I migth eventually put up for my readers, for now, it is safe to assume that all of them bear a collective responsibility though I would rate the failure of local State and Central Governments to protect their citizens in providing basic healthcare and protection against pandemics of this kind. If you observe, most of the countries have followed a proactive system of reacting to such epidemics till they become pandemics and do not adopt reactive measures to contain and control the epidemic to a particular area/geography.

Either there is infrastructure loss or information loss or both.

What has to be remembered is that these epidemics cast a huge dent on the exchequer each time such a mega catastrophic event strikes since Government machinery and the healthcare system (already in shambles in most countries of the world) is working overtime to just contain. This means, more cost to the economic system as a whole. Insurance co’s end up paying more (reducing their float – of Warren Buffett’s age), Government spends millions and sometimes billions of dollars to contain and control the spread of the epidemic and because there are so many affected worldwide, travel, tourism, and the indirect economy gets affected. Not to mention, the local private workers would end up working less due to fear of epidemic spreading and hence cause an indirect net effect on the domestic economy as well. So, the ramifications of such an epidemic are both micro and macro. 

The only industry that benefits from all this is the Pharma industry. On last count, India had a stockpile of over 1 million TamiFlue vaccines which would help control Bird Flue (not sure of Swine Flue).

Be safe.


Written by Naveen Athresh

April 29, 2009 at 10:58 am

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