I graduated in economics at ISE, Lisbon, and I was an economics teacher and authored several books and economic studies. I have also been linked to the creation of financial software and the European Zero Energy Buildings project.

The Coronavirus pandemic has caught me in the middle of writing a book made up of small economic stories (stories for economists and those who hate economists, as I like to say).

Some of the stories involve pandemics, I mean, economic pandemics – which has encouraged me to go ahead with this blog.

Let me explain what I am trying to say.

Consider financial crises. When a big country like the US gets “sick”, countries that depend on US demand, or markets, or capitals, will also be in trouble.  The “virus” can spread wide, striking different economic sectors in various degrees. Financial crises are well identified pandemics, with typical stages, that can spread worldwide.

But there are other types of economic pandemics.

Think about the role of spices – cloves, nutmeg, cinnamon, myrrh, frankincense, pepper and so on. For Europeans, in the sixteenth or the seventeenth centuries, they weren’t what they now are. For them, spices had highly revered culinary merits, and medicinal and even aphrodisiac virtues.

This is false, or largely false. But it didn’t matter. The ideas associated with spices took possession of the minds of millions of people, as if they were a virus. And they led the infected people to assume or to make long-haul journeys in small wind-driven boats just to get the coveted spices – and the profits they provided.

And something similar happened with gold and silver, or even with sugar. Their present role is, to a great extent, an outcome of past manias and a cause of economic pandemics, involving “mental viruses” that have survived and mutated throughout the centuries.

Take the case of sugar. Sugar is now a food staple, beloved by billions. But sugar has also been, for centuries, the biggest force behind African slavery; sugar has led colonists to enslave millions of people and to bring them to America, to work in plantations.

And, unfortunately, sugar hasn’t ceased to have a dark side. Sugar is a cause of serious environmental and healthcare pandemics.

As a matter of fact, besides its contribution to soil depletion and deforestation in some parts of the world, sugar is responsible for hundreds of millions of obese people and diabetics – a trend that is spreading steadily. Sugar is a cause of pandemics that are overwhelming national healthcare systems with sick people and undermining state finances: obesity and diabetes cost public budgets trillions.

And we don’t admit it (I am thinking about billions of people addicted to sugary drinks and food). Sugar, tobacco… or meat are a new sort of spices.

Yes. Meat, too…

We often ignore that the world economy comprises one billion cows, two billion pigs and more than twenty billion hens to fulfill human insatiable and unsustainable appetite for meat, and that these numbers will rise (unless a big pandemic destroys our societies and their engines of economic growth).

People like to ignore that human preference for meat is the cause of the methane emissions associated with livestock, and also of significant deforestation and other devastating environmental effects. And in ignoring it, we are feeding a kind of virus that is spreading in nature and all over the planet, causing climate change.

But there are other examples, in other economic sectors.

Take banking, for instance. Banks do not have to be organized as they are. Money is now mostly electronic registers in the database of banks, and we could separate daily payments from investments and money creation in order to avoid financial crises and to better allocate savings.

In the 1930’s – following the dramatic effects of the Great Depression – some economists suggested new forms of bank organization, to avoid financial crises. Some of the proposals – like the Chicago Plan – were very reasonable and would have saved a lot of trouble.

But they have been ignored.

And presently, economists that dare to suggest banking and financial reforms are treated as fools, just like one hundred years ago, when insightful economists proposed the demonetization of gold to avoid depressions and social suffering. In other words: we continue to ignore the issue of banking and stock market rules, with ruinous consequences.

With present rules, most credit and fluxes of capital are largely allocated to real estate and to finance luxury industries or non-green investments. And that is contributing to the economic pandemics I have mentioned earlier.

This is what I mean to say with economic pandemics and the policies intended to combat them. The present biological pandemic may not be the worst we have to endure in the next few years or decades.

Eduardo Reizinho            Email
Setúbal, Portugal

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