An economic lesson from SARS-CoV-2

For thousands of years, the Corona family of viruses occasionally killed off our livestock but had only given humans what is colloquially called the Common Cold. In 2002, the first known strain fatal to humans emerged, which drowned 774 people in their own mucus with a fatality rate of 10%. This latest version actually has a lower fatality rate than its predecessor did eighteen years ago, but SARS-CoV-2, its now sequenced genome name, has killed more people and will continue to kill, because it’s far more contagious.

The old protocol to stay at home if you are sick will be insufficient. Many who are infected never show symptoms, but they invisibly spread floating vials of RNA that seize the ACE2 protein on human cell membranes, which can be a death sentence for the people around them with compromised immune systems, high blood pressure, diabetes, or are simply old.

The national socialists who surround our President, from Peter Navarro to Stephen Miller, hope to assert the lesson that such a contagion reveals a cost behind the interconnected free-market Ronald Reagan campaigned for and achieved. That’s the wrong lesson. We’ve tried buying local: it was called the Middle Ages. There were plenty of plagues wiping people out then too.

What’s different today is the unprecedented wealth we enjoy allows us to overcome public health pandemics in ways that humanity was unable to in the past. The current issue of The Economist has an excellent article covering the technical details behind the rapid development of treatments and vaccines in record time.

The real lesson here is to contrast the magnitude of the economic cost shutting down production in China has had on our own economy with the tariffs the U.S. had previously been raising for ostensibly a similar purpose. Our trade with China has been so lucrative for so long, it would have taken far higher tariff levels to induce the kind of market failure the Trump administration was gunning for. There was still a lot of consumer surplus left on the table when our President sought an armistice to his stalemated trade war on January 16th. The costly disruptions to American companies from the supply shock of critical components during a quarantined lockdown are what we would have seen had our tariffs actually been escalated beyond reservation price levels, giving us an opportunity to see the “be careful what you wish for” outcome.

Fortunately, the export embargo from China that SARS-CoV-2 has created will go away, thanks to the advanced biotechnology that global capitalism has achieved. Will this administration learn that lesson? Probably not, but limiting the Alt-right’s rent of the Republican Party to one term might steer our course back to being the party of Reagan and a Grand Old Party once again.

Eric Shierman lives in Salem and is also the author of We were winning when I was there.