Coronavirus, some months later

Recently we have seen how the pandemics cooled down in Europe, but has spread to the rest of the world, which is no surprise. The pandemic cannot be stopped, it will go its rounds. In Finland, Norway and Estonia the epidemic is in control. Economy has suffered, but mainly this is because the world trade has decreased and many countries are dependent on export markets. Sweden is a special case as they tried a different strategy. Now we can say that their strategy was a complete failure.

            This strategy had two goals. The first goal was to protect the most vulnerable people, who were known to be the aged, especially with some underlying health condition. Sweden failed to protect the old and the mortality ratio in Sweden is one of the worst. Much of it was because nursing homes were not protected in the beginning. This problem was foreseeable. Not in the meaning that anybody initially thought of nursing homes, France was the first to notice the high death toll in nursing homes. But it was foreseeable that there will be surprises. A risky strategy, like the Swedish, has risks and some risks are realized. These problems are now solved. Sweden can protect its elderly people. It also means that Swedes cannot visit their old and ill relatives because the Swedish strategy implies that coronavirus is relatively common in the population.

            The second goal was that the virus would pass through the population in one-two months, infect 60-80% of the population and give herd immunity. I saw similar simulation plots produced by Finnish health authorities and had hard time believing that my compatriots can be so naive. But so they were. A disease does not infect 60-80% of the population in one run. Even the Black Death of the Middle Ages did not do so. It killed one third of the population. As about 60% of infected died from bubonic plague before antibiotics, this means that half of the population was infected. But they were not infected in one epidemic wave. It required several passes over a few years. We can estimate that in one pass possibly 10-20% were infected and the rest managed to avoid the infection. They were not immune: they simply did not contract the disease. In Sweden there are 80,000 known infections of the coronavirus. We can estimate that somewhat over four times more have got infected. That means that about one in thirty, 3.3%, of the population have got the virus. Clearly, Swedes have not gained herd immunity against this virus. Only the small group of risk takers, some 300,000, has some level of immunity. They are the people going to pubs, gyms and such places. The majority of people in the population have either: changed their behavior and tried to avoid the virus, or have seldom visited the places that were closed in lockout countries even before the pandemic. This group of some 300,000 risk takers is renewed each year by newcomers: usually people going to pubs and gyms and such are in a certain age range. Also the group in the highest risk of dying (i.e., elderly with an underlying health condition) is renewed each year as people get older. If we wait for a year or two, and there is no vaccine or medicine, there will be a new epidemic in Sweden: the virus stays in the population because of the chosen strategy. Thus, what has Sweden gained by the strategy? The population does not have herd immunity. The number of infections and new deaths is dropping to the same level as in the other Nordic countries, but the death toll is higher. Well, they did manage to keep pubs open, so some firms did not bankrupt.         

            But this bankrupting in a time of a crisis is a feature of the market economy and free trade. It is one of the reasons why I am critical of free trade. Let us think of a small example.

            Consider a population consisting of potato farmers and fishers. Farmers sell potatoes to fishers and buy fish. Both group eat fish and chips. Let us ignore where they get the oil and salt. Probably they have to import at least the oil. In the original economy both farmers and fishermen keep a good price on their products. Food is expensive, but as both earn on their products, they eat quite well. Then we introduce competition. Competition lowers the price levels of both potatoes and fish to the profitability margin. Food is cheaper, but earnings are lower. These people eat just as well as before, not better. What changes is that both groups now live on the profitability margin and cannot collect any capital needed for surviving worse times. Thus, if for some external disturbance, like a lockout because of coronavirus, or war, or a stock market crash in the USA, their earnings drop, they cannot survive the crisis and have to sell their farms or fishing boats. The original economy could tolerate these shocks. However, higher prices are possible only if starting new business is relatively difficult: only farmers own the fields and buying a fiend is too expensive, and only fishermen have the relatively expensive ships. But foreigners have their own resources and free trade removes these barriers. Consequently, free trade makes the economy more vulnerable to shocks. Free trade is praised because everywhere you can buy the same products for low prices and it looks like the economy is better, but it is not necessarily so. OK, so there is some error in their logic.

            The coronavirus pandemic continues. Basically only one virus was ever completely removed: the smallpox virus hopefully is confined to some military laboratories and will not be released (we trust those guys, yeah?). No other virus has totally disappeared. With mass vaccinations they can disappear locally, but the world is large and they reappear from somewhere. The same will be with the coronavirus. It will not cause similar high death tolls in the future because the virus will become more widespread and it, among with very many other diseases, will kill a portion of the elderly with an underlying health condition. You will most probably not even notice this effect in the total mortality statistics when the deaths are spread over 5-10 years. Then it may look like the virus mutated into a less dangerous one, though in reality only the most vulnerable die before they can form a larger group. There is also the effect that when conditions change, the number of vulnerable people changes. In the time of the Spanish flu the most vulnerable were first the soldiers in trenches and POW camps. After the war this group disappeared, but them managed to transport the disease to the main population, especially to India, causing the second wave. But as it is, medicine develops and cures to this coronavirus disease will be found.

            This does not change the fact that this pandemic most probably is not the last to come. We can very well get a much worse new pandemic, killing working age people, like the Spanish flu. So far the effects are largely economic, but this is a feature of free trade, not really of the virus. Isolation is an ancient strategy that always works with any infectious disease and it does not need vaccines, medicines or tests, but what side effects it has depends on the structure of the economy. Economy should have some level of tolerance without the need to take huge debts. At the moment it does not tolerate pandemics. Like Southern European countries are too dependent on tourism. Fortunately, there are not that many tourists dreaming of going to Finland. Finally some good feature in our weather. But that may change. We have to stop the global warming. It may make Finnish weather tolerable. That would be the end.