Economics in the Time of COVID-19
The outbreak of the novel coronavirus (COVID-19) in Wuhan shows some interesting
parallels to the situation in Marseille in 1720. There, too, the local authorities initially
reacted incorrectly, which made the spread of the disease possible. In Wuhan and
Marseille, there was a drastic restriction of mobility for people in the affected region to
prevent the spread of the disease. In both cases, the mass quarantine was only partially
crowned with success. It is still unclear whether the world will get away with a black
eye like in 1720, despite the spread of COVID-19 outside of China, or whether there
will be a worldwide pandemic with millions of deaths.
The fundamental question that arises, however, is: how much mobility can and should
a globalised world have? In other words, are we, the globalised world, to blame for the
outbreak, like the greedy textile traders in Marseille in 1720? When SARS broke out,
China was responsible for about 4% of global economic output; today, China’s share of
the world economy is 16%, and growing. With the increase in economic strength, the
interdependence with the rest of the world has exploded. Millions of people travel to
and from China every year. Over 70 international flight connections from the Middle
Kingdom enable fast travel to the far corners of the earth. The same applies – if not to
the same extent – to the movement of goods and people with other regions of the world,
which are constantly producing new pathogens such as Ebola and HIV.
Interestingly enough, modern medicine is almost as helpless in containing the outbreak
and treating the sick as it was in 1720. Vaccination is not available, and no effective cure
exists. In China itself, numerous doctors have already died as a result of COVID-19.
Only the same primitive measure as in Marseille and Wuhan – quarantine – offers some
protection. Just as Louis XV’s France protected itself with soldiers, orders to fire and
the Mur de Peste, today entire cities in China, Italy and Korea are cordoned off and
cruise ships are isolated in port. The basic question, however, is: should normal traffic
be massively restricted to known starting points for new infectious diseases, just as early
modern societies in Europe protected themselves from the plague? Are we taking the
first step towards the downfall of an exaggerated, unsustainable form of globalisation?
This question can be divided into two elements. First, is a massive restriction of mobility
desirable? And second, is it feasible at all? An economically rational answer to the first
question should begin with the value of a human life. With all the reservations that
one can have against such calculations from a philosophical point of view, cost-benefit
considerations without numbers for the value of a human life are not feasible. However,
estimates regularly show an enormous range; the average is around US$10 million per
person (Viscusi and Masterman 2017). This means that even before the epidemic has
peaked, COVID-19 caused an immediate cost of $26 billion in deaths. If the epidemic
ends with a maximum of 10,000 deaths (four times the current value), the value of life