Marketplace Scratch Pad

Walking a thin swine

Scott Jagow Apr 27, 2009

Governments and health organizations are in a precarious position with the swine flu outbreak. On one hand, they must act swiftly and decisively, lest this threat actually turns into a pandemic. On the other hand, if they overreact, they could endanger the already-depressed economy and their credibility.

The LA Times looks back on 1976, the last time the US saw a swine flu threat, one that never materialized:

What did materialize were cases of a rare side effect thought to be linked to the shot. The unexpected development cut short the vaccination effort — an unprecedented national campaign — after 10 weeks.

The episode triggered an enduring public backlash against flu vaccination, embarrassed the federal government and cost the director of the U.S. Center for Disease Control, now known as the Centers for Disease Control and Prevention, his job.

For your viewing pleasure, the swine flu Public Service Announcements from 1976:

The stock markets clearly reacted to the threat of swine flu today. Losers – airline stocks, hotels, cruise ship companies, even Mastercard and Visa. Winners – surprise, surprise – drug companies.

There’s been plenty of research on the possible economic consequences of a major pandemic. We seem to get that information every time a bird flu or a SARS occurs. From the Wall Street Journal:

In a research note, Julian Jessop of Capital Economics compared the swine flu outbreak to the SARS crisis of 2003, which led to a loss between 0.6% and 2.0% of regional GDP in Asia, and found reason to be hopeful. He said that swine flu so far appears to be responding to drugs, and the world is more prepared to deal with crises of this sort following experiences with SARS and bird flu. “Finally, even in the case of SARS, the economic costs turned out to be much less than initially feared, and activity soon recovered,” he said. Though, he adds, “admittedly, the global economic backdrop was much more favorable then.”

Which is why government overreaction is especially dangerous now – for example, closing borders or halting trade. So far, it seems the government’s response is wisely being informed by the past — cautious but not overdone.

Dr. Richard Krause, one of the health officials that dealt with the 1976 threat, probably said it best: Public health officials involved in the next pandemic flu threat “have my best wishes.”

If you want to keep up with all the latest developments, Reuters has started a Twitter feed on swine flu.

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