According to economist Simon Johnson, economists can learn a lot from the swine flu public health response--and, while he might not mean it, that says a great deal about economics. And you thought the Mad Biologist can be pessimistic:
Experience from the past two years surely teaches us that economics is in a position similar to that of medicine before the germ theory of disease, and we should plan accordingly.
Johnson argues that there are five advantages public health has over the field of economics. The first is that "we take public health professionals very seriously" which is due to "the big progress of medical knowledge over the past century -- doctors know much more about preventing death than they did in the 1930s."
His second advantage, I think, is really critical:
Public health officials have really figured out the public communication part of their work (e.g., look at the government's integrated Web site on pandemic flu). They need to tell us there is an issue and to raise our awareness, without creating a panic; and, if things get worse, they need to inform us how best to adjust our behavior. Look at the mainstream news media over the past week -- full of stories aimed at getting your attention without creating inappropriate levels of fear.
Contrast this with how former Treasury Secretary Henry M. Paulson Jr. communicated with Congress and the country back in September 2008; we jumped from complacency to pervasive financial fear overnight. And try to find an integrated crisis response Web page for the United States and the global financial situation even today -- start with Treasury or the International Monetary Fund, and good luck!
Of course, that success feeds on his fifth point:
The biggest issue, of course, is that pre-emptively organizing for and dealing with health pandemics does nothing to ruffle the feathers of powerful interests in the health sector, be it doctors, health care providers, insurers or drug companies. They have built a system that derives its value partly from our being (appropriately, for the most part) worried.
In contrast, while finance talks a lot about risk, those involved in it have tried to create the impression that they understand and can manage risks -- so, for a (modest?) fee, you don't have anything to worry about. This, it turns out, is incorrect.
I would go farther and argue, given the intersection of politics and economics, that there are those who view an economic crisis as an opportunity to push a certain political agenda (e.g., using an economic downturn as an opportunity to cut government spending regardless of the consequences of those cuts). One other point that I didn't entirely agree with was this:
The underlying message from public health, of course, is quite different from what the supervisors of our financial system like to convey. Public health officials and doctors tell us that we are potentially vulnerable and we need to be vigilant.
Financial officials, in contrast, feel that any sense of uncertainty will immediately lead to self-fulfilling panic (e.g., see the G-20's most recent communiqué). This is exactly the wrong attitude -- what really causes panic is the sense that officials have been blindsided and the government has no ready responses in hand.
I don't think it's the 'blindsided' part--after all, we don't really have a treatment for swine flu. Tamiflu lowers the mortality rate, but is not a cure-all, and there's no vaccine currently. What public health officials have learned is the need to be truthful. If you lie, your credibility is shot. You have to tell the truth. Imagine if there were the swine flu equivalent of the bullshit Geithner 'stress tests.' Everybody would be absolutely right in freaking out.
Just some thoughts. What do you think about Johnson's piece?
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"we take public health professionals very seriously" is an unfortunate choice of words, though. In the business world "We take X very seriously" is code for "We don't give a damn about X and aren't going to do anything about it."
Usage:
"Mr. Cheatum, your company, Conglomco released a product which kills 2/3 of its users due to the use of substandard parts and the cost-cutting choice to make your child safety seats out of nitroglycerine. What is Conglomco doing about this?"
"Well, Ms. Leftwingliberalreporter, at Conglomco, We Take Child Safety Very Seriously. That's why I've authorized a special committe to investigate any possible wrongdoing that could have led to this clearly unavoidable and totally not our fault quality-adjustment issue."
or
"Mr. Madoff, you've been accused of running the largest ponzi scheme in the history of ever. How do you respond?"
"We take business integrity very seriously, which is why I'm convening a special investigation to determine if anyone actually did anything wrong."
I like the spirit of this post. I wish a central agency like the World Bank could act like the WHO or CDC. But I don't think it can.
Specifically, there is little cost or harm in having a central body issue a health warning. Hand washing might go up, as might the sales of germ masks. But there's little other downside.
In contrast, the panics that would be caused by agency warning about economic 'outbreaks' could freeze consumer spending and lock up markets - resulting in more harm than good.
I would go farther and argue, given the intersection of politics and economics, that there are those who view an economic crisis as an opportunity to push a certain political agenda (e.g., using an economic downturn as an opportunity to cut government spending regardless of the consequences of those cuts). One other point that I didn't entirely agree with was this: