Apart from the massive human cost of Covid-19, a lot of discussion has happened on the economic impacts.
The 1918 Spanish Flu was arguably worse than Covid-19, and presumably, brought much of the world economy to a halt.
However, the 1920’s turned out to be some of the most prosperous economic times in history.
So how did the world go from a stand still, to a prosperous post-Spanish Flu era?
Not everywhere, and not throughout the 20s. The UK went through a period of depression as government expenditure was drastically cut in the immediate aftermath of WW1, leading to industrial disruption (both strikes and lockouts), not helped by going back on the Gold Standard in 1924. I suspect, though don’t have the data, that the need to repay loans from the US and elsewhere may also have had something to do with it, and that similar constraints applied elsewhere.
Germany was, not surprisingly, a financial and economic basket case as a result of the demands for reparations, leading to the hyperinflation of 1923.
The stock market boom of the late 20s wasn’t necessarily the sign of a healthy economic recovery, as it turned out.
Spanish flu was the rotten cherry on top of the Shit Sundae known as WW1.
As such the “recovery” as it was, was linked to post WW1 Econ recovery.
The economic effects of the pandemic were blunted if not totally eliminated by the massive inflation of the world economy in World War I. Plus as PatrickLondon noted, the 20s were not as prosperous as people think. In 1921 there was a massive worldwide slump as the effects of the war wore off. In the U.S. economic good times were more of a urban thing, as farmers were plagued by low prices and foreclosures. And in the U.K., unemployment stayed over the 10% rate for most of the twenties.
Also, IANA economist but wouldn’t we expect fast growth following a war?
Rebuilding is arguably easier than building the first time, because you know what you need. And there’s an element of “pruning” to this too; you retool factories, and build infrastructure and services you know are essential. And maybe you never get round to the parts of the economy that gave less bang for buck.
This is not to suggest that a war is overall good for an economy, because this bounce is happening from probably a low point.
If you’ve got the money, which not every country or business did: and in any case, the pre-Keynesian consensus was that debts had to be cleared and currencies had to be stabilised at pre-war levels if at all possible, a.s.a.p. Nor was the conventional thinking inclined to the idea that government should be stepping in to try to level up individuals’ opportunities to participate as customers. And that’s not allowing for protectionist impulses across most European countries (of which there were now many more, just to complicate the trading picture).
I’m not so sure that the concept of “growth” as we use it today was even a thing then - AFAIK the modern idea of GDP didn’t come along until the 30s, and its position as a key indicator didn’t really take effect until the post-WW2 international economic settlements.
You’d think so, but wars change things so there is a tension to taking things back to what they were like in 1914 versus all the people who profited from the war (financially and socially). Plus, I think there was a crisis of trust in government in many countries after the war. As a result, the 1920s became the hey-day of uniformed militarised political groups on both the left and the right. A big part of their ideology was that there was prosperity, but it wasn’t actually filtering down to them (whoever ‘them’ was, usually former servicemen who felt unthanked and bitter).
Some links:
The US (and some other countries) had an economic decline around 1918 and looked like things were getting better in late 1919.
But then things got much worse in 1920-1921.
Neither article mentions the Spanish Flu.
Note that the later event was labeled as a “depression” at the time and still retains that name in some modern writings. Much later one of the many definitions of recession vs. depression became commonplace and by that rule it’s a recession. (One of the consequences of this change is that the depression of the 1980s didn’t happen. It was “merely” a ~double recession. Ah, good times.)
Lots of deflation. Monetary policy was a major factor in the whole thing.
One thing that’s often overlooked is that many casualties of war are permanently disabled and can’t work as long or as hard as they otherwise would have been able to, or need others to work to take care of them.
Buildings are relatively easy to rebuild. People stay damaged for a long time, and have lower economic output for decades.
Yep, point taken, and you also have a demographic hole where men in their late teens and twenties used to be.
I was just speculating I guess. Anyway the topic of whether economies recover, and how quickly, is an interesting one; there are plenty of examples of countries that have managed to grow quickly following brutal wars. But it might be too general for this thread.
This is a medium-lengthy (20 pages body plus references/bibliography) analysis of the US differential mortality, economic impact, and recovery from the Spanish influenza. Written by a research VP of the St Louis branch of the Federal Reserve in 2005.
There were no mass business shut downs because of the flu in 1918. Now that may have also contributed to high number of deaths. But the economic impact due to fighting the flu in 1918, was nowhere near the impact that is currently happening.