In 2016, U.S. economist Larry Summers — commenting on the release of a comprehensive National Academy of Sciences/Global Health Risk report titled The Neglected Dimension of Global Security: A Framework to Counter Infectious Disease Crises — said that “relative to its significance, there is no issue that gets less attention” than the risk of pandemics and epidemics.
Summers added: “I am struck by how little attention this issue receives relative to the issue of global climate change.” Summers returned to the virus risk in 2017: “At the moment, the spending and attention given to threats such as terrorism, cyber-warfare, or climate change is an order of magnitude greater than that given to pandemic prevention.”
And so now, scrambling to catch up, the political authorities at the UN’s World Health Organization (WHO) and in towers of power around the world who underplayed the pandemic risk are engaging in a giant social and economic experiment: the temporary shutdown of the $100-trillion world economy to fix a real looming crisis they long ignored.
And it is an experiment. Governments around the world are using the global economy as a test tube for science and behaviour theories that the COVID-19 pandemic can perhaps be managed and controlled by imposing draconian limits on most economic activity.
The economic shock of the policy mix is unprecedented, sweeping the stock markets and changing the lives and fortunes of all businesses and individuals. The catchphrase for the global effort is “flattening the curve,” which is based on a widely reproduced graphic illustration that appears to demonstrate the benefits of squeezing the spread of the COVID-19 virus out over a longer period of time by choking economic activity.
If the disease can be spread out over a longer period, according to the theory, that will relieve the burden on unprepared health-care systems, theoretically save many lives and allow time for the development of a vaccine.
Above is the official global health schematic outline of the intended impact of social distancing measures as nonpharmaceutical interventions for an influenza pandemic. Adapted from similar diagrams in the European Centre for Disease Prevention and Control Technical Report and the Centers for Disease Control and Prevention Guidance Report.
The graphic looks impressive. In recent weeks it has been promoted by health authorities in Europe, the United States and elsewhere, and has been reproduced by the media and online. The graphic dates back to at least 2009 and a report from the European Centre for Disease Prevention and Control. It is not a scientific or economic graph. Rather, it is a schematic diagram, a sophisticated doodle that aims to convey the theory of the hypothetical benefits of imposing economy-wide public health measures, including many of the programs now being imposed around the world: travel restrictions, border closings, quarantines, school closings, cancelled public and international events. A core principle is to enforce “social distancing.”
While economic costs of flattening the curve are acknowledged to be significant, they remained uncalculated and totally unknown. The benefits are even less certain.
“The evidence base supporting each individual measure is often weak,” said the 2009 European report. The objectives of economic controls also appear limited to reducing the peak burden on health-care systems and “somewhat” reducing the total number of cases. The idea is to “buy a little time.”
It is worth observing that the graphic does not imply a reduction in either total cases recorded or deaths. Indeed, the geometry of the graph suggests the total number of cases under the flattened curve would be the same as the surging short-term curve. The only real difference is that the contagion would be spread out over a longer period of unspecified time.
There are flurries of concern during an Ebola crisis or the 2009 N1H1 outbreak, but after the headlines die down “outbreaks are no longer in the headlines, epidemic readiness is frequently displaced … in favour of more immediate and visible priorities.” That tendency, says the WEF report, leaves the world open to panics and reactions that can lead to massive economic upheaval. Another new paper containing the same flatten-the-curve graphic published by the U.S. Centers for Disease Control and Prevention suggests many of the economic and social controls will have limited benefits at high costs.
The authors of the paper — titled Nonpharmaceutical Measures for Pandemic Influenza — found “limited evidence” that workplace measures and closures would be effective in controlling a virus despite their high costs. The benefits of closing schools are open to question due to issues of timing and duration; further research is required, said the paper. Social distancing measures are also uncertain. “The evidence for avoiding crowding is limited,” it said.
The overall verdict on social distancing was ambiguous and unconvincing. “Our systematic reviews suggested that social distancing measures could be effective interventions to reduce transmission and mitigate the impact of an influenza pandemic. However, the evidence base for these measures was derived largely from observational studies and simulation studies; thus, the overall quality of evidence is relatively low.” On home quarantine, the paper said “we found that the evidence base was weak.”
No wonder political leaders such as Prime Minister Justin Trudeau have a hard time explaining the objectives behind the flat curve movement or how long it might take. It could be weeks or it could be months, Trudeau said Wednesday as he waffled through key issues without giving any details.
What is the official objective of the global economic shutdown? Nobody knows, including the disagreeing infectious disease specialists swamping the media. Will fewer people contract COVID-19 as a result of closing down most economic activity?
Probably not.
The economic control experiment could take many months, even longer. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, has been saying for some time that tens of millions of Americans and many more around the world can be expected to contract COVID-19 over the coming year and into 2021. The disease will spread, no matter how draconian the economic curtailment, he said the other day, and could affect 25 to 60 per cent of the U.S. population before the end of the year. Canada would be caught in the same web. China’s apparent control over the virus is misleading, says Osterholm. As soon as Chinese citizens are released from their police-state quarantined lives, the COVID virus will begin to reappear.
Osterholm could be wrong about this, but there are few official sources ready to contradict his assessment that the global economic freeze cannot stop COVID-19. It will have to play itself out, reaching millions and even billions of people who will then become immune. How many will die is the major unknown, with Italy looming as the hard example of a health-care system failure.
Of all the countries in the world, one stands out for its honesty and good sense. In a television address this week, Prime Minister Mark Rutte of the Netherlands clearly spelled out the risks and options. Unlike leaders in Canada, he explicitly stated that “in the coming period a large proportion of the Dutch population will become infected with this virus.” As the disease spreads, he said, more people will become immune, which will benefit those at risk.
The government, said Rutte, will attempt to delay the spread of the disease, but he dismissed the idea of working endlessly to contain the virus. “That would mean shutting down the country completely. Such a rigorous approach may seem like an attractive option, but experts say that this would not be a matter of days or weeks. In this scenario, we would essentially have to shut the country down for a year or even longer, with all the consequences that would entail.”
In a 2017 book, Deadliest Enemy: Our War Against Killer Germs, the University of Minnesota’s Osterholm dissects the global political failure to prepare for an inevitable pandemic. Terrorism, nuclear war and climate change are all manageable, he said, but infectious disease risks remain out of reach due to lack of attention.
To help fix the global infections disease regime, Osterholm calls for a “major overhaul of the WHO, beginning with its governance and financial support by member nations for there to be any effective public health response to the 21st-century world of infectious diseases.” If that cannot be accomplished, he said, we need a new international organization.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
