Lessons from Covid-19

By Michael Collins | More Articles by Michael Collins

Severe acute respiratory syndrome, or SARS, hit Taiwan hard in 2003. The virus tore through several hospitals and Heping hospital in Taipei was hastily closed, imprisoning staff and patients, after the head nurse became one of the 181 people to die from the China-born virus. The island’s 23 million people fell into “a collective panic”.

The trauma offered lessons. Foremost of all, Taiwan made provisions for a command centre to marshal efforts during future pandemics. In January 2020 when Taiwan recorded its first covid-19 infection, the command centre was activated. The preventative steps worked and Taiwan was judged the model for suppressing the virus. Not so now. Relaxed quarantine rules for aircrews, complacency over tracing, and a government and a public blasé about vaccinations led to flareups. In May, Taiwan recorded 1,200 infections a week.

Success and failure, in either order, is a common theme, it seems, of the pandemic. Australia, Canada, Japan and India and East Asian countries have followed a similar slide from triumph to disappointment since the delta variant appeared. Many advanced countries experienced failure first before vaccines contained the health emergency, while the emerging world has only suffered defeat.

What has the world learnt? Humbling lessons include that humanity is subservient to nature, something that will flow into the climate-change debate. Others are how little we know about the virus, even its origins, and how hard it is to contain. People have gained a new appreciation of risk and a realisation that modern society is as vulnerable to the same unforeseen traumas as were earlier generations.

Good lessons include the value of simple protection measures. Others are that gain can come from misfortune (messenger RNA vaccines), a feat that shows the value of big business and the profit motive. We learnt that tech enables society to function at an adequate level under lockdown.

Harsh lessons include that climate change is not the only risk, that even innocuous things can get politicised (masks), that people have limits (riots over lockdowns), the world lacks global leadership (the World Health Organisation lost credibility), that many risks are hidden (the fragility of supply), and disasters come with a domino effect (health responses trigger social and economic costs). Another, especially if you are young, is that while politics governed much decision-making the politics of intergenerational equity has little bite. The biggest undecided lesson relates to the political choice between lives versus livelihoods. It’s too early (and may prove impossible) to judge whether the lives saved from covid-19 will be worth the long-term economic and social price including future lives lost and ruined.

The main lesson that can be assessed so far? Arguably the most important is that competence matters when adversity strikes but is hard to achieve. China, foremost, failed to contain the outbreak but so did every other country. Even in advanced tech-savvy countries, administrations had scant capacity to fight a pandemic (no mass-testing ability and a lack of protective clothing). Health authorities were often bewildered as they juggled how to balance “a revival of the walled city in an age when prosperity depends on global trade and movement”, in the words of Henry Kissinger, and often failed to safeguard the general public (leaky quarantines and no prioritising the vulnerable, especially those in aged care). Officials, in some cases, reported to politicians whose experience, judgement and temperament were unsuited to crisis management (most notably, US President Donald Trump and Brazilian President Jair Bolsonaro).

The result is that few governments have employed strategies that have contained the virus at a seemingly acceptable economic cost. The virus remains a menace because it is too contagious, society is too interconnected and winning strategies often provoked reactions that undermined them. The most obvious unintended consequence of successful elimination strategies was that it led to public complacency and hesitancy about vaccinations that left populations vulnerable when the delta variant appeared.

The worry is that governments are reaching the end of the financial support they can provide locked-down societies and they will need to pivot to allowing semi-vaccinated populations to live with the virus. Split expectations within society – that ever-more-powerful governments can protect people clashing with lost faith in their ability to do so – are among the health, economic, social and political challenges confronting the governing classes as the world approaches the third year of the pandemic.

To be sure, the virus is not beaten so this should be framed as ‘some lessons so far’. The prompt development and rollout of vaccines have restored much confidence in the ruling elite. Those in charge often learnt from mistakes. Officials, for all their failings, might have prevented worse outcomes, a feat that lacks political reward. Given the viciousness of the virus and its ability to spread and mutate, perhaps much of the criticism policymakers attract is too harsh.

But the repeated errors and lapses in competence hark to tougher conclusions about political leaders and their bureaucracies. The fact is the world struggled against a virus only as deadly as the largely forgotten flu of 1957 that society then, under smaller government, absorbed without lockdowns until a vaccine arrived within three months. Today’s health crisis needs to inspire today’s leaders to be better prepared for the emergencies across all spheres of life that always arise. It’s pretty much the same lesson Taiwan learnt from SARS.

 

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About Michael Collins

Michael Collins is an investment specialist at Magellan. Since 2000, Michael has worked as an investment specialist/commentator for money managers, AMP Capital, IOOF/Perennial, Barclays Global Investors (now BlackRock) and Fidelity International.

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