Bloomberg New Economy: The Pandemic’s Long Economic Tail

Bloomberg New Economy: The Pandemic’s Long Economic Tail

How do pandemics affect the economy? It may seem obvious that sickness destroys livelihoods and hurts growth. Yet the Black Death in the 14th Century was followed by an age of prosperity.

The grim irony of that health catastrophe was that mass casualties improved the prospects of the survivors: in an agriculture-based subsistence economy, they had more land to till. And labor shortages drove up wages.  

There is no such parallel with Covid-19, noted Harvard economist Edward Glaeser. In today's services-based economy, many unskilled workers find employment exists only in jobs that require face-to-face interactions, which are precisely the positions that have disappeared, many perhaps permanently.  

Edward Glaeser, professor of economics at Harvard University

"Selling a latte with a smile is a safe haven in a world of automation," Glaeser explained. "That urban opportunity disappears when the smile turns into a source of peril rather than a source of pleasure."  

Cities Day at the four-day Bloomberg New Economy Forum on Tuesday brought little cheer on the economic front, even as global markets respond with jubilation to company proclamations of promising vaccine tests. Christine Lagarde, president of the European Central Bank,