I guess that Swine Flu is a bit like the financial crisis, in a way. One started in the US on the back of bad policy – forcing banks to lend to minorities who couldn't repay, bad regulation, the government creating lenders who were too big to fail – and the other came from Mexico, with bad farming practices.
They both infected other countries with alarming speed, thanks in one case to modern electronic communications and in the other to daily international air travel. They remind us what a small, interconnected global village we now live in.
They are both things we have not seen before, since 1933 in one case and 1918 in the other, and since then, things have changed (financial institutions and trade, viral strains). So we don't really know how to cure them.
They've both caused panics which seem disproportionate to the reality. As ASI author Terence O'Halloran pointed out in a letter to the Daily Telegraph on Friday, 36,000 people a year routinely die of seasonal flu in the United States, but there was hysteria over a single death from Swine Flu. And both have a real impact on the economy and on output.
Ultimately it will not be elaborate technologies that defeat them, but basic, sound, common sense. Keynesian makework programmes, massive borrowing and quantitative easing will not cure the financial problem. Only sound money, freer trade, lower tax and regulatory burdens on business and better (not more) regulation on the banks will cure the financial problem. And sound hygiene, and putting infected people (like infected assets) into isolation will have more effect on Swine Flu than any of the latest anti-virals.
And we will learn that, just as the human body has amazing powers of fighting infection and recuperating from it, so does market capitalism have amazing powers to restore itself to health. Provided that the policy doctors let it, of course.
