Sunday, March 8, 2020
COVID-19 Exposes Economic Limitations
written 1 March 2020
published 8 March 2020
Reality is whole. Whether we believe it or not, whether we like it or not, we are all in this together. The new coronavirus, named COVID-19, has gotten everyone's attention.
Viruses barely qualify as being "alive", since they can't reproduce on their own. Whole cells have biochemical 3D molecular printers which take nuclear code and produce the proteins and molecules cells need to function, repair, or reproduce more cells. Viruses lack that function, being just nuclear material in a protective casing. To make more virus copies, it must invade a whole cell and highjack the printing function. Viruses that infect humans don't discern race, religion, sexual orientation, or wealth. To a virus, we are all potential dinner.
On December 31, 2019, China reported to the World Health Organization that several cases of an unusual pneumonia were detected in the city of Wuhan. China's centralized government responded swiftly. Businesses were closed, travel was suspended, and two 1,000 bed hospitals were constructed within 10 days. Massive food convoys supported those in quarantine, and testing was implemented everywhere.
By January 24, 2020, human to human transmission had been confirmed, cases in China had increased to 830, and 13 cities were locked down, affecting over 40 million people. By February 14, the numbers had risen to 75,000 cases, 50 cities locked down, affecting 500 million people. This helped limit the spread of the virus, but at great economic cost.
China is the second largest economy, with 13% of global trade, growing at 6% a year, stimulating the rest of the world. The effort to contain the virus has affected 50% of the country, reducing growth in China by 25% for the first quarter. The economic impact of the virus in this one country slowed global economic activity, and caused a slump in oil prices.
In addition to being a large economy, China is a manufacturing powerhouse, the result of decades of investment capitalizing on cheap labor. As a result, it is the sole source for critical parts in key industries, specifically electronics, automotive, and pharmaceutical. The world has shifted to "just in time" manufacturing, which eliminates warehouses of inventory, but depends of global shipment of parts arriving "just in time" for production. The disruption of this system means that companies all over the world have to shut down, or reduce production, for lack of parts or feedstock material. No other country has this disproportionate economic impact.
New cases in China have peaked and are declining, but their economy is still disrupted indefinitely. Since the virus is now widespread within their population, there is no telling how long it will be before "normal" production can resume. Despite China's extraordinary public health response, the virus was not contained. Incubation takes as long as 2 weeks, and not all infected people are symptomatic. By the time the first case was identified, global travel had taken the virus outside China. Additional countries reported cases generating growing alarm.
I am writing this on Sunday, March 1. The first impact in the US occurred last Monday, February 24, 2002, when the DOW index dropped over 700 points. By the end of the week, it was down over 3,500 points, wiping out two years of increase. Goldman Sachs suggests the American economy will stagnate this year.
Three days ago, the first case of "community transmission" was detected in the US, with no know contact with previously infected people. This means the virus is already within the community. As of today, there are four American cases of "community transmission", two in California, and one each in Oregon and Washington, for a total case load of 73, including infected people evacuated from overseas. The virus is now detected in 66 countries, and as many new cases were reported today in both South Korea and Italy as in China.
In a pandemic, people need health care, not health insurance. Public health is an essential socialist structure, since the health of everyone is at risk if anyone in our community is ill. This virus is no hoax. Thoughts and prayers won't get it done, we need competent leadership and effective action, not bluster and hostile sound bites. COVID-19 will test our national leadership in a manner visible to all.