Economic Lessons from Past Pandemics


Hey Originauts! I’m here in my apartment (working from home,
binge watching TV and trying to abide by social distancing guidelines) because we’ve all been
impacted by the spread of COVID-19. And one of the ramifications dominating the
headlines is the economy and how it’s impacting the lives of people worldwide. But this isn’t the world’s first pandemic
— so what were the economic outcomes of past disease disasters? And, more importantly, can we learn from them? So today on Origin of Everything we’ll be
examining the seismic economic shifts that have occurred around epidemics and pandemics
and why we look to the past in times of crisis. One of the challenges of tracing the economic
impact of epidemics and pandemics as you’ll see in this episode is that these tragedies
don’t occur in a vacuum. Therefore it can sometimes be difficult to
determine which changes are the result of epidemics and which ones are the result of
other social factors. However, the research discussed in this episode
attempts to trace the types of economic shifts that can be tied directly to the outcomes
of disease outbreaks. Part One: 14th c. “Black Death” First up we’ll be discussing the plague
of the 14th c, AKA “the black death.” The start of the outbreak in Western Europe
is traditionally dated to October of 1347 when 12 ships returning from the Black Sea
docked in Messina, a Sicilian port. Much to the surprise and horror of the people
on shore, they discovered most of the sailors had died and the ones who survived were deathly
ill with black boils that leaked pus. Although the ships were ordered back out to
sea the resulting spread of disease proved to be fatal. In just a few short years approximately 20
million people in Europe died of the plague, an estimated one third the population of the
continent. The epidemic went on until approximately the
1350s. The disease wreaked havoc on the countries
that were impacted. Soon after the infected men–and fleas– arrived
in Messina, similar outbreaks happened in the port city of Marseilles in France and
the port of Tunis in North Africa. It soon spread through important trade centers
like Rome and Florence. It wasn’t until the 19th century (over 500
years later!) that biologist Alexandre Yersin discovered the germ that causes the plague,
Yersinia pestis. Along with the devastating human toll of the
disease, there were also unexpected economic consequences. Historians and economists are still debating
the impact of the original “black death” on the economic systems of Europe. But some argue that the spread of disease
possibly led to the weakening and eventual disappearance of the feudal system in places
like England. In the broadest possible terms, the feudal
system was a medieval practice where peasants were given plots of lands by their lords in
exchange for various types of service and payment. These arrangements came in handy particularly
when those pesky lords decided to fight wars and needed men to join the front lines. The plague greatly reduced the number of peasants
and peasants were the backbone of feudalism. And fewer peasants meant the whole system
was a lot weaker. According to an article in the Economist,
the plague lead to an increase in real incomes because there were fewer workers to farm the
land, giving them more leverage. This made the feudal system even weaker, and
some argue, led to its demise in the same period. Part two: the 17th c. Plague The plague returned to Europe over the centuries,
most famously in the 17th, and despite advancements in science and society, it caused turmoil. In the mid 17th century an estimated 10 percent
of the population of England and Wales perished from the resulting outbreak, while a whopping
40 percent of the population of some regions of modern Italy were decimated by this new
wave of the plague. But although the plague spread throughout
Europe the economic outcomes of the outbreaks were not evenly distributed. At least according to economist Guido Alfani’s
article. Alfani notes that, “ Interestingly, during
the century, the fastest-growing areas were those less affected by plague.” His analysis shows that there may be a relationship
between areas of Europe that were least impacted by the plague and periods of increased economic
growth. He notes that England was hit considerably
less intensely by the 17th c plague than areas like Northern Italy. As a result, England’s economy continued
to thrive and trend upwards during the century while Northern Italy’s stagnated. So while many countries were impacted negatively
by the reemergence of the plague in the 17th century, the impact was also unevenly spread
based on the severity of the outbreak. Part three: Spanish Flu 1918 Although disease outbreaks continued around
the world in the intervening years, the world saw a major pandemic (or an epidemic that
impacts multiple countries and regions worldwide) with the Spanish Flu of 1918. The flu killed an estimated 40 million people
worldwide and an estimated 700,000 in the US alone. The first wave of the disease appeared mild,
with symptoms including fever, chills and fatigue. As a result there was an initially low mortality
rate. But it wasn’t until the second wave of the
Spanish Flu hit that doctors began to see the mortality rate skyrocket. According to history.com:
“Almost 90 years later, in 2008, researchers announced they’d discovered what made the
1918 flu so deadly: A group of three genes enabled the virus to weaken a victim’s bronchial
tubes and lungs and clear the way for bacterial pneumonia.” In the US the disease spread from east to
west. According to a 2003 book on the Spanish flu
by historian Alfred W. Crosby: “Spanish influenza moved across the United
States in the same way as the pioneers had, for it followed their trails which had become
railroads…the pandemic started along the axis from Massachusetts to Virginia…leaped
the Appalachians…positioned along the inland waterways…it jumped clear across the plains
and the Rockies to Los Angeles, San Francisco, and Seattle. Then, with secure bases on both coasts…took
its time to seep into every niche and corner of America.” Additionally the death toll was considerably
higher than it could’ve been because it struck during World War I. But this pandemic had a few unexpected economic
outcomes. First, according to economists Elizabeth Brainerd
and Mark V. Siegler, American states that were more impacted by the disease tended to
grow faster in the aftermath of the pandemic. They found that higher rates of death were
associated with an increase in average annual growth of real income, although this undoubtedly
came with great suffering. In the report from the St. Louis Federal Reserve,
the author Thomas Garrett notes that one of the unique features of the Spanish Flu was
that it was more likely to cause death in people aged 18 to 40, and proved more fatal
to men than women. This was because, “In general, death was
not caused by the influenza virus itself, but by the body’s immunological reaction
to the virus. Individuals with the strongest immune systems
were more likely to die than individuals with weaker immune systems.” He goes on to note that of the 272,500 US
men who died of influenza in 1918, 49 percent of them were between the ages of 20 and 39. As a result: “The fact that males aged 18
to 40 were the hardest hit by the influenza had serious economic consequences for the
families that had lost their primary breadwinner…the significant loss of prime working-age employees
also had economic consequences for businesses.” So while some individuals and families may
have seen a spike in income due to the reduced number of workers, others suffered because
they had lost primary breadwinners and family members who could contribute to the household. Part 4: Modern Implications Today, as we struggle through the challenges
of COVID 19, it’s impossible to say what the lasting economic outcome and human toll
of this moment will be. And perhaps that’s what makes it so frightening. But in the last decade, many different groups
have tried to predict when the next pandemic would strike and how that would affect our
economy. When Garrett wrote his report, he attempted
to estimate the impact of a pandemic on contemporary economics: “The World Bank estimates that a global
influenza pandemic would cost the world economy $800 billion and kill tens-of-millions of
people. Researchers at the U.S. Centers for Disease
Control and Prevention calculate that deaths in the United States could reach 207,000 and
the initial cost to the economy could approach $166 billion, or roughly 1.5 percent of the
GDP. Longrun costs are expected to be much greater. The U.S. Department of Health and Human Services
paints a more dire picture—up to 1.9 million dead in the United States and initial economic
costs near $200 billion.” However a 2006 report from the European Commission
(a branch of the European Union) estimated that a potential pandemic at that time would
not have a lasting effect on the European macroeconomy. The researchers note that, “…although
a pandemic would take a huge toll in human suffering, it would most likely not be a severe
threat to the European macroeconomy.” But both of these studies were conducted in
the mid aughts based on predictions and economic models. That does not mean that, like any research,
the results are infallible. Today we’re watching as the stock market
fluctuates wildly and businesses across the country and the world grind to a halt. However the thing that can’t be predicted
is the human response to a crisis, which can have the greatest impact on the outcome of
any given situation. Government stimulus packages, human actions,
and a slew of other factors may ultimately serve a greater role in determining the outcome
of our current economic crisis than we can even predict. Although we can look to the past for models
and precedents for our present moment, we can’t use past catastrophes to see the future. But history can offer insights into human
behavior and lend comfort when we feel like we’re traversing unknowable terrains. We can look to the economic upheavals and
disease outbreaks of bygone eras to note how people adapted, adjusted and survived in times
of great uncertainty. We can learn lessons from their mistakes and
take some level of solace in their successes. Today we don’t know what the political,
economic or medical future holds. But we can see that even though past epidemics
and pandemics followed similar patterns, they had vastly different outcomes based on region,
efficacy of treatment, and economic structures. So perhaps we don’t share much in common
with feudal Europe, but we can trace the ways society recovered from disaster and take heart
knowing that there are roads to recovery. So what do you think? Anything else to add to this timeline? Drop your citations, ideas and comments down
below. Stay inside and stay safe. And I’ll see you here next time.

Comments 14

  • I did try my best to save my patients ??

  • Thank you for making this! The economic and social movement onset by a tragedy like this has been on the top of my mind, and I knew from the second you posted this that you would answer so many of the questions I have been having in isolation. You are a hero of mine! Thanks again!

  • Great video! Exactly what we need right now!

  • Awesome video! Thank you for the information

  • How are your braids so nice? I've been isolating for a couple weeks and I'm a cave troll

  • Thanks for this video! As a so-so economist, this is a much more researched take on what I’ve been thinking will happen: every Pandemic is different and how it will effect the economy depends on the effects, how transferable it is, which demographic group is most impacted, and it’s duration. In true economics fashion, it depends. Thanks for putting this together, and stay safe!

  • I LOVE you're video sooo much but a part of me didn't want to see more stuff related to our current Pandemic but then I remember this quote, "It's always darkest just before the dawn!"~Winston Churchill. In order to get to the dawn, one must go through the darkness first. And being as informed about this Coronavirus the better I'll be once dawn comes!

  • Damn, Northern Italy can't catch a break.

  • Wow so this new pandemic could help create a economic revolution

  • I feel like we learned a lot more from the Spanish flu, such as the lessons in social distancing. A lot of cities issued intense shutdowns early on, before anyone thought it was a big deal, and those cities had much lower death rates. This is crucial to how we fight COVID-19 today

  • It is also interesting to note how the 14th-century black death affected the silk road, closing trade routes all the way from China to northern Africa. Right before the black death, Ibn Battuta was able to travel these trade routes from Morroco to China through these trade routes, but they started closing just as he returned with the plague right behind him. I don't know much else on this topic, and I understand if information on the impacts in Europe were easier to come by, but I assume that there were also some rather large effects in the rest of Afro-Eurasia.

  • BUY UP ALL THE STOCKS WHILE ITS CHEAP!!

  • Stay well Danielle! ❤️?
    Thanks for your insight and devotion.
    If I may: the most important thing is to save lives. The whole “herd immunity” thing is so callous.
    We will not sacrifice lives to save profits.
    And maybe the planet is teaching us a lesson? Let’s hope we start to act local and think global.

  • Thank you for this…

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