Too closed for comfort

Thorvaldur Gylfason, Arne Jon Isachsen 22 April 2020

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The Covid-19 pandemic raises several vital questions. Why has Sweden thus far suffered so many more deaths relative to population than Finland next door, even though the first diagnoses were made only two days apart, 29 and 31 January, in the two countries? Why has the United States thus far suffered 27 times as many deaths relative to population as South Korea, even though the first cases of contagion were diagnosed on the same day, 20 January, in both countries? And what are we to think of China? 

Peace injuries?

Among several explanations offered, it has been suggested that Sweden, having lived in peace for more than 200 years, had become too relaxed about external threats. The prime minister, Stefan Löfven, has acknowledged that Sweden welcomed the end of the cold war by downgrading her defenses. Before, Sweden had 35 makeshift military hospitals with 7,000 beds, but then gave most of them away and now has only two such hospitals left. Further, Sweden reduced its emergency stockpiles and closed warehouses, burning millions of medical masks that are now sorely needed. Meanwhile, Finland, with its long border with Russia, maintained its stockpiles. Sweden’s per capita death count due to the pandemic is nine times that of Finland, four times that of Iceland and Norway, and twice that of Denmark where the first cases of Covid-19 were diagnosed 26, 27, and 28 February. Others suggest that the Swedish authorities may have made a different assessment of the relative importance of protecting freedom of movement, economic activity, and the buildup of herd immunity. 

Stellar performance in Asia

When the first cases were diagnosed in the United States and South Korea 20 January, the Koreans reacted by immediately starting widespread testing, contact tracing, and isolation or confinement to quarantine. This prompt reaction has kept the per capita number of deaths due to the virus far smaller in South Korea than in the United States. The difference is twenty-seven-fold and rising. The lack of preparation for the pandemic in the United States has manifested itself in various ways. Due to a dire lack of equipment, the states are unable to organize necessary testing and contact tracing and several of them complain that the federal government is unwilling or unable to help. According to the government´s own Centers for Disease Control and Prevention (CDC), the projected need for hospital beds to deal with the pandemic ranges from two million to more than twenty million compared with less than a million beds available. To deflect his administration‘s lack of preparedness, President Trump blames the WHO as well as China, stoking nationalist zeal at home as well as in China. 

Taiwan diagnosed its first case of contagion 21 January and reacted much like South Korea. Neither country had forgot the SARS outbreak of 2003 when, in Taiwan, more than a fourth of those infected lost their lives, 181 out of 668. Yet, measured by the numbers of infections and deaths, the SARS epidemic was mild compared with the Covid-19 pandemic. Deaths in Taiwan due to Covid-19 thus far have been few, which is remarkable in view of the heavy traffic between Taiwan and mainland China. The success of the Taiwanese is also remarkable given that China has stood in the way of Taiwan‘s membership in the WHO. A star performer in the battle against the pandemic is not permitted membership. Taiwan has responded by donating ten million medical masks to Europe and the United States. Since 1995, Taiwan has provided universal health insurance to its citizens.

According to data provided by The Johns Hopkins University in Baltimore, several other Asian countries have attained comparable success in their battle against Covid-19, including Hong Kong and Singapore despite the high population density of those two city states. 

China is a chapter unto itself. The authorities’ first reaction to the outbreak in Wuhan was to silence the whistle blowers. Shortly afterward, however, the authorities saw the light, notified the WHO, and took strong measures to contain the outbreak. They succeeded. The per capita number of deaths due to the pandemic in the United States is 36 times that in China and keeps rising. This difference seems likely to damage the reputation of the United States around the world. 

Deep cracks

The United States, the current epicenter of the pandemic, is another chapter unto itself. The pandemic has exposed deep cracks that can now be seen to cost a steadily rising number of lives. Persistent racial discrimination, compounded by increased inequality of incomes, wealth, and health, has thus far failed to motivate the powers that be to change course. We could see on our television screens who needed to be saved from the rooftops in New Orleans when the city was flooded in 2005. Mostly, they were blacks but they were saved, nearly all of them. But when 70 percent of those who keep dying from Covid-19 are African Americans in cities where only 30 percent of the population is black, perceptions must change. 

The US health care system is broken. It has, in the words of Anne Case and Angus Deaton of Princeton University, become an engine of inequality. Americans spend twice as large a proportion of their national income on health care as most European nations while the Europeans live on average four years longer than the average American. The pharmaceutical companies largely responsible for hundreds of thousands of deaths of despair each year keep five lobbyists in Washington for each member of Congress. Sky-high medical bills remain the single most common cause of personal bankruptcy in the United States. The fact that most private health insurance in the country is employment-based exposes workers to a double jeopardy. To the nearly thirty million Americans without health insurance will soon be added millions more who have lost their health insurance along with their jobs. One reason why the purchasing power of ordinary wages in the United States has remained roughly stagnant for 40 years while the highest incomes have risen rapidly is that rising health insurance costs have reduced the ability of employers to pay higher wages. The Federal Reserve Board reports that four in ten households in the United States cannot cope with unexpected expenses of $400 or more, approximately the cost of changing the tires on a typical car. 

This is no place to be for a country that expects respect from its allies and adversaries. When a pandemic exposes such deep cracks compounded by incompetence and moreover results in massive loss of life, the majority of American voters must say: Enough is enough. 

Back to China

One may wonder whether China will emerge as a winner in terms of soft power after the crisis.

We don’t think so. Too closed for comfort. Had the pandemic started in an open society, a free press would have informed the citizens so that the outbreak could have been handled properly at an early stage. Free press is off the table in China. As are democracy and human rights. Perhaps more surprisingly, civil society is under attack. Why? Because people could come to discuss topics threatening to the rulers.

“Document 9,” which came to the attention of the rest of the world in the fall of 2013, and which lays out Mr. Xi’s view of how to handle ideas in liberal democracies, says it all. Universal values are a nonstarter in China. Individual rights and an independent judiciary do not go down well in a country where the Party leads everything “…, government, military, civilian, and academic; east, west, south, north, and center,” as declared by the Chinese Communist Party (CCP) in October 2017. The return to a Mao-era mantra of absolute CCP control is the making of Xi Jinping, China’s paramount leader, who sincerely believes Mao’s political legacy is relevant today. 

Confucian values, deeply rooted in Chinese culture, can be used to maintain order and support leaders in their quest for stability. Not surprisingly, Xi Jinping frequently refers to Confucius in his speeches. How does that square with Mao’s ”Criticize Lin (Biao), Criticize Confucius Campaign”? Observes the French journalist Francois Bougon: “The alliance between Confucianism and Marxism, which defies logic to an outside observer, is probably a means of compensating for the regime’s weakness.”1

One of us remembers visiting Fudan University in Shanghai in the early 2000s, with a group of about twenty businesspeople, listening to a professor giving a talk on China’s economy. Much to our surprise, he spent a considerable amount of time on The Great Leap Forward. His research indicated that 22 million Chinese lost their lives. Also, that miscarriages and babies born with defects due to malnutrition were quite prevalent in China in the early 1960s. 

In Xi’s China, however, there is no room for critical evaluation of China’s past. “Historical nihilism” that may be detrimental to the governing party is forbidden. 

If China aspires to take over the mantle of global leadership, being honest about her own history and more open in her dealings with the rest of the world would certainly help.

Endnotes

1 Inside the Mind of Xi Jinping, by Francois Bougon, 2018, page 139.

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Topics:  Covid-19

Professor of Economics, University of Iceland; Research Fellow, CESifo and CEPR Research Fellow

Professor Emeritus, Department of Economics, Norwegian Business School

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