Date: Sat, 16 May 2009 22:37:49 -0700 (PDT)
Local: Sun, May 17 2009 1:37 pm
Subject: Why the world hasn't collapsed: Fareed Zakaria
Fareed Zakaria is a favourite editor of mine. When all the other
editors of Newsweek, a magazine that I used to subscribe, had made
mistakes, especially about Islam, Fareed Zakaria was the only one
sounding the words of wisdom.
His analysis of the current economic and health disasters is an
excellent article. Don't be fooled by the "wolf cry" at the first
paragraph. Read on and find out how we should be vigilant while
finding out why the world is still safe now.
In summary. It is not that there are no threats but the world has
progressed far in responding to them but it is the fear of these
historic disasters that made the world respond the way it is.
A lot of people dismiss the current Swine Flu as a normal flu very
remote from the Spanish Flu but it is not true. The reason why there
are few casualties are due to the advancement of our health care
Similarly for the depressionary effects of the collapse of banks
currently. The impact is not as great because there are now social
security benefits given out by governments in addition to the massive
support given to banks.
It certainly looks like another example of crying wolf. After bracing
ourselves for a global pandemic, we've suffered something more like
the usual seasonal influenza. Three weeks ago the World Health
Organization declared a health emergency, warning countries to
"prepare for a pandemic" and said that the only question was the
extent of worldwide damage. Senior officials prophesied that millions
could be infected by the disease. But as of last week, the WHO had
confirmed only 4,800 cases of swine flu, with 61 people having died of
it. Obviously, these low numbers are a pleasant surprise, but it does
make one wonder, what did we get wrong?
Why did the predictions of a pandemic turn out to be so exaggerated?
Some people blame an overheated media, but it would have been
difficult to ignore major international health organizations and
governments when they were warning of catastrophe. I think there is a
broader mistake in the way we look at the world. Once we see a
problem, we can describe it in great detail, extrapolating all its
possible consequences. But we can rarely anticipate the human response
to that crisis.
Take swine flu. The virus had crucial characteristics that led
researchers to worry that it could spread far and fast. They described—
and the media reported—what would happen if it went unchecked. But it
did not go unchecked. In fact, swine flu was met by an extremely
vigorous response at its epicenter, Mexico. The Mexican government
reacted quickly and massively, quarantining the infected population,
testing others, providing medication to those who needed it. The noted
expert on this subject, Laurie Garrett, says, "We should all stand up
and scream, 'Gracias, Mexico!' because the Mexican people and the
Mexican government have sacrificed on a level that I'm not sure as
Americans we would be prepared to do in the exact same circumstances.
They shut down their schools. They shut down businesses, restaurants,
churches, sporting events. They basically paralyzed their own economy.
They've suffered billions of dollars in financial losses still being
tallied up, and thereby really brought transmission to a halt."
Every time one of these viruses is detected, writers and officials
bring up the Spanish influenza epidemic of 1918 in which millions of
people died. Indeed, during the last pandemic scare, in 2005,
President George W. Bush claimed that he had been reading a history of
the Spanish flu to help him understand how to respond. But the world
we live in today looks nothing like 1918. Public health-care systems
are far better and more widespread than anything that existed during
the First World War. Even Mexico, a developing country, has a first-
rate public-health system—far better than anything Britain or France
had in the early20th century.
One can see this same pattern of mistakes in discussions of the global
economic crisis. Over the last six months, the doomsday industry has
moved into high gear. Economists and business pundits are competing
with each other to describe the next Great Depression. Except that the
world we live in bears little resemblance to the1930 s. There is much
greater and more widespread wealth in Western societies, with middle
classes that can withstand job losses in ways that they could not in
the1930s. Bear in mind, unemployment in the non-farm sector in America
rose to 37 percent in the 1930s. Unemployment in the United States
today is 8.9 percent. And government benefits—nonexistent in the '30s—
play a vast role in cushioning the blow from an economic slowdown.
The biggest difference between the 1930s and today, however, lies in
the human response. Governments across the world have reacted with
amazing speed and scale, lowering interest rates, recapitalizing banks
and budgeting for large government expenditures. In total, all the
various fiscal--stimulus packages amount to something in the range of
$2 trillion. Central banks—mainly the Federal Reserve—have pumped in
much larger amounts of cash into the economy. While we debate the
intricacies of each and every move—is the TALF well -structured?—the
basic reality is that governments have thrown everything but the
kitchen sink at this problem and, taking into account the inevitable
time lag, their actions are already taking effect. That does not mean
a painless recovery or a return to robust growth. But it does mean
that we should retire the analogies to the Great Depression, when -
policymakers—especially cen-tral banks—did everything wrong.
We're living in a dangerous world. But we are also living in a world
in which deep, structural forces create stability. We have learned
from history and built some reasonably effective mechanisms to handle
crises. Does that mean we shouldn't panic? Yes, except that it is the
sense of urgency that makes people act—even overreact—and ensures that
a crisis doesn't mutate into a disaster. Here's the paradox: if
policymakers hadn't been scared of another Great Depression, there
might well have been one.
Zakaria’s latest book, The Post-American World, about The Rise Of
India, China And Òthe rest,Ó has been released this month as a
paperback by W.W. Norton & Co.