We all wonder whether the current pandemic is going global?
The COVID 19 is becoming a global pandemic. We have been caught by surprise. We all thought it was another SARS, with limited impacts compared to what was announced initially. The future, per definition unknown is now less and less predictable as the world is complexifying. The Corona virus could be the famous green swan.
Global pandemic
We all somehow should be pleased by what they call “globalization”. It brought lots of benefits. However, we already faced many negative impacts. Free circulation of assets, goods and people cannot be challenged anymore. Our new ways of consumption cannot be questioned or changed. But it is fait to admit that globalization is should signs of fragility and able to cause huge troubles. The contagion is also “global”. As we can certainly not modify this globalization, we need to better share information and to be faster to react. States must draw practical lessons from this international health care crisis.
Scaring future or just a pandemic?
We can legitimately raise the following question: is the future terrifying or is it just another pandemic? The world is getting more complicated and therefore less predictable. Obviously, the future, by nature, has always been unknown. However, I believe it is become even more complex overtime. When future comes to affairs involving masses of human beings, there is a range of diverging forces altering society in fundamental ways and with major impacts. For example, these forces are among others could be listed as follow: globalization, social networks, internet, interdependence of supply chains and manufacturing, unprecedented travelling level, climate changes and heavy urbanization of cities. The issue resides in the overlap, the intertwine in non-linear ways and the correlation effects which can leave chaos after its passage.
World is getting mad
Pessimistic persons would be tempted to claim the world became crazier, messier and even madder. Some coloured swans are circling around us, closer and closer. Chaos monkeys would be unleashed, according to Nostradamus’ followers. There is controversy, I cannot sort out, about these black (or green) swan events which would be increasing due to global complexity. Men should acknowledge it is tough to be empirically proved. There are some theories backing the concept that more connected and complicated systems should lead to more surprising, unexpected and abnormal outcomes and disasters. Intuitively, it seems to make sense. Let’s take the example of recent COVID 19 which appears hard to contain. This increasing global connectivity could be the reason for it. Do you think Governments were prepared to disease threats generated by the cruise industry which grew fast this last decade? We notice the growing unpredictability of these human pandemics, with a huge number of (bad) surprises endured recently. Our human changes in behaviour and habits is potentially an accelerating or catalyst factor. The collateral damages or impacts could also affect politics. With some key elections coming, who knows the influence pandemic could have on results? The way to react to crisis can help or, on the opposite, penalize the politicians in charge. Politicians don’t consider cautiously what statisticians call tail risk or the possibility of facing unexpected coloured swan events. In the case of green swan, the risk comes from unwarranted certainty and undervaluation of the unknow. Often, we know what could happen even if close our eyes on risks of occurrence. But let’s take another example, the EU Commission has already estimated that the virus will have an impact on growth in Europe. The Commissioner Gentiloni has open doors to relaxation of provisions in the frae of the Stability Pact.
Closing eyes on risks
Pandemics are also compared to terrorist attacks as we know roughly where they originate and who should be the instigator, but we don’t know precisely when the next one will happen.
This collective downfall usually comes from lack of awareness, blindness and over-optimism in Government and experts’ capacity to solve any problems. Technology has made our world “easier” but also get populations asleep. Human is always mentally prepared to compare. For COVID 19, human looked at SARS or MERS as a good reference. Man thought it should be similar in terms of impacts and it looks like it won’t be. Comparison to past event can be dangerous in terms of risk management. It seems to be a human trap, unfortunately common. I remember having discussed with physicians explaining that this Corona virus was a less worrisome danger than the classic winter flu, killing annually thousands of persons around the globe. Is it a more a psychologic crisis rather than a real health care crisis? Some specialists claim it could be. It is tough at an early stage to pretend impacts are exaggerated and that we would be overcautious. Future will tell us…
Global contagion effect
The major risk is the mass overreaction and cascade effects, or even panic mood, restrictions on civil liberties and movements or meetings. We need to act fast to avoid the spreading and uncontrolled consequences and overreactions, leading to economic heavy damages. The contagion effect (I mean not only the medical contagion) is the major danger. I’m sure you have thought in the last days about cancelling a trip, a meeting or even to postpone holidays. Welcome to the age of pandemics, said the gurus. We stand on the edge of a pandemic precipice, the World Health Organization (i.e. WHO) has planned and imagined. We understand that it has envisaged such a disease resulting from a virus originated in animals and that would emerge somewhere on the planet where economic development brings people and wildlife together. It supposed the disease would spread fast and silently in exploiting networks of human travelling and trading across the world. It should reach multiple countries and thwart containment. The prediction was there.
More recently, WHO raised risk assessment of global spread to “very high”. According the organization,” declaring a pandemic means that you are giving up on trying to contain it and moving to mitigation”. Are we there and that far? That’s the question.
Unpredictable swan?
Such a green swan wasn’t that unpredictable. It was imagined, envisaged and considered carefully. Nevertheless, its timing and name was unknown. The paradox is that it could shake financial markets before it achieved the official pandemic status (according to WHO definition). Pandemic are on the rise and we need to contain the process. Although plagues have always been part of our life’s, starting during the fourteen centuries with the famous “black death”, the medical advances aren’t fast enough to offset the increasing spreading caused by globalization.
Fran?ois Masquelier, SimplyTreasury - March 2020