What if COVID doesn’t end?
Canada’s public policy response to the pandemic is now largely premised on the assumption that it comes to a definitive and relatively speedy end. Some have even suggested the end of the crisis will be like the euphoric celebrations marking victory in the Second World War, as we all pour into the streets to re-establish our social ties and return to economic normalcy.
So it is more than a little disconcerting to see various virus mutations arrive from the united Kingdom, South Africa and brazil. Concerns are already being raised about how effective existing vaccines will be against these mutations, over and above Canada’s obvious lag in administering vaccines in the first place.
These concerns were amplified by an interview last week with Moderna’s CEO Stéphane bancel, one of two pharmaceutical companies producing a vaccine that has actually been injected into the arms of Canadians. bancel described the most likely outcome of the coronavirus as being an endless cat-and-mouse game, with the virus constantly mutating to stay alive and pharmaceutical companies continually adjusting their vaccines to catch up. This would make COVID much like the flu, where annual inoculations are needed and cases fluctuate with the seasons.
The implications are sobering for the economy. Though economists have disagreed on when immunity from the virus would be achieved, they have been more or less unanimous in the belief that it would trigger a return to rapid growth, especially in industries that cannot easily adapt to social distancing, such as restaurants, hotels, airlines and office building services. The most optimistic even hold out the possibility of a prolonged boom like the roaring Twenties, when a burst of dynamism followed the triple shocks of the First World War, the Spanish influenza and the 1920-1921 depression.
Today’s record low interest rates and aggressive money creation are based on the assumption the pandemic will be resolved by vaccines. So is fiscal policy’s even more unsustainable spending to prop up sectors of the economy affected by shutdowns and curfews, supplemented by significant transfers for people largely unaffected by the pandemic. If a mutating virus circulates for an extended period, our approach to managing the economy during a pandemic will have to be fundamentally rethought.
The optimism of economists about a rapid recovery never aligned with the caution expressed by business leaders in the most severely affected industries. Heads of airlines warned it would take two or three years for consumer confidence in vaccines and herd immunity to restore demand to normal levels, a grim realism shared by managers of large office complexes. The prospect of an endless low-level battle with the virus suggests even these business projections may prove overly optimistic.
Human history runs counter to the optimism of policy-makers for a quick and decisive resolution of the pandemic. The idea of an emphatic end to the pandemic reflects our all-too human desire for certainty and a clear path forward. The initial hope was that both the First and Second World Wars would be short-lived — the troops were supposed to be home for Christmas in 1914. Instead, both dragged on for years.
everyone wants the pandemic to end as soon as possible, except the virus itself, which is doing everything it can to perpetuate itself. History suggests SARS-COV-2 eventually will be subdued, but progress will be slow and not friendly to the daily case counts favoured by TV news outlets. Counting on the pandemic to end swiftly, as the Spanish influenza pandemic did a century ago, seems increasingly unrealistic.
As recently as Thanksgiving, Prime Minister Justin Trudeau was still holding out the promise of a normal Christmas, based entirely on magical thinking rather than science. The reality is that almost all major changes in our society have been gradual. Prematurely raising the “Mission Accomplished” banner almost seems to guarantee a problem will not be resolved as quickly as expected.
What is government’s plan if the virus mutates into a somewhat deadlier and crueller seasonal flu? Is it fair to ask young people to put their personal and professional lives on indefinite hold out of concern for the health of older and more vulnerable segments of the population? How will industries adapt that depend on the elderly for more of their business — tourism, for one — if a sizable percentage of their customers stay at home for long periods? And how will governments justify and sustain the enormous cost of policies introduced on the assumption the crisis would end quickly?
Governments have had nearly a year to draw up contingency plans. If they do have a plan for the long, drawn-out battle with the coronavirus bancel outlined, they should share it. If not, they should get to work on one and also begin bracing the public for, as u.s. President John F. Kennedy called the Cold War, a long twilight struggle.