April 30, 2009

Why No Quarantine for Travelers from Countries with Swin Flu Outbreaks?

After the American Century

This semester I have been teaching a course on disasters and culture. Eerily, each time we took up a new kind of disaster as a topic, the news media reported on just such a catastrophe. We read about earthquakes and shortly afterwards several Italian towns were rocked to their foundations. We examined fires, and immediately a large area in Australia broke into flames. We took up floods, and in Fargo and vicinity the Red River rose to the highest levels ever recorded. So I had some trepidation as we took up the subject of epidemics, a case study based on a documentary film about the 1918 flu epidemic. And sure enough, shortly afterwards, the swine flu burst out in Mexico. Before going further, I want to reassure readers that we have completed the assigned readings now, so even if the course was somehow provoking disasters, that should be over now.

As the swine flu outbreak heads towards what seems certainly to be pandemic status, I keep thinking about the familiar notion that all human beings are potentially no more than six degrees of separation away from one another. I realize that being able to reach just about anyone with no more than five or six intermediaries, using telephones, emails, and other communication systems, is not at all the same thing has the movement of a disease through direct human contact. The flu virus enters someone's body about a week before he or she knows it, during which time the illness spreads to strangers, friends, and family. The epidemic spreads rapidly because during the early stages the illness has not yet manifested itself. During this period, when the flu is only latent, an infected person can unintentionally give the flu to countless other people, especially if they travel during that time. And all of these newly infected people are just six degrees of separation from me, or you.

I am not a mathematician, but it seems obvious that as the disease spreads, its separation from me diminishes not as a straight line, but geometrically, and my increasing proximity to being exposed to someone with it would be graphed as a sharply curving line. In short, avoiding exposure is not going to be easy. So far, at least, no one taking my course has come down with swine flu. But then, it has not yet officially reached Denmark, though it has been diagnosed in a German patient in Hamburg and one man suspected of having the illness is being held for observation in Copenhagen.

The disease seems to be moving very fast, and it seems that health authorities are only able to react to help those who are sick, not retard the swine flu's progress. Curiously, back in 1918, an illness moved more slowly, because almost no one then flew. And yet in 1918 it was common to hold travelers in special quarantine facilities if they were merely suspected of carrying a deadly illness. Ninety years ago, it was likely an illness would manifest itself before a ship passenger crossed either the Atlantic or the Pacific. Don't we need to establish quarantine facilities near all airports? If a planeload of people arrives from Mexico, where the swine flu began, does it make sense to let them disperse into the general population? Or does it make sense to hold them all for observation, regardless of whether they seem ill or not? That would be expensive, you say. Well, how much is a human life worth?

April 17, 2009

Real Test of Obama Begins Now

After the American Century

President Obama has now been in office for three months or so, and his first hundred days will be over soon. While he clearly has had some successes and remains far more popular with the voters than George W. Bush was last year, this is still a period of transition. The massive deficit spending is only beginning to have an effect on the economy, which has continued to weaken overall, measured in terms of rising unemployment, the drop in housing starts, and declining real estate prices. GM and Chrysler remain on the brink of collapse, and banks are still struggling. These are not problems the Democrats created, but the weak economy does distract from attempts at larger reforms. Obama knows this and has kept calling for an overhaul of health care, energy policy, pollution control, education, and defense procurement. In all of these crucial areas, the new administration has not yet achieved very much, precisely because of the financial mess that had to be cleaned up first.

The question now is whether his own party will keep itself disciplined and rise to the occasion. In 1933 FDR's Democratic Party made fundamental changes. We have not seen a 100 days to match his achievements. Arguably, the crisis is not (yet?) as dire, but it is serious and the Democrats need to stick together. Obama has been abroad more than any other president at this point in his administration, and he has shown once again that he is exceedingly popular overseas, whether Germany, the UK, the Czech Republic, France, Turkey or Mexico. This is a good thing, but it may not translate into legislative achievement at home. Arguably, he should stay in Washington most of the time for a good while, and let Secretary of State Clinton do the globe trotting for a while. The real test of whether Obama can deliver his program has begun.

April 01, 2009

Is the Mortgage Crisis Being Solved?

After the American Century

According to the Financial Times, in the United States more than one out of every nine homeowners (11.9%) is in trouble with mortgage payments. This is the personal side of the larger banking crisis. If these millions of homeowners go down, the rest of the economy goes with them.

For those who are confused about the Obama plan to refinance American banks, there is an excellent short article in the New York Times by a Nobel Prize winning economist to explain things. In it, Joseph Stiegltiz argues that what the Obama team is doing is (Step one) to separate profitable assets from unprofitable ones and then (Step two) agreeing to protect investors from losses on those that are unprofitable. This might sound good, but in practice it will mean that US taxpayers will definitely lose while the bankers who over-leveraged their investments will be protected. For more details, see his article.

Stieglitz argues that nationalization of the banks would be cheaper and preferable. I think he is right. The Obama solution seems to be a case where American laissez-faire ideology has gotten in the way of common sense. In order to protect the "free market" this rescue plan makes sure that there is no free market, for if there were one, then many banks would collapse or be taken over by the FDIC, which insures the ordinary citizens' deposits.

I am missing something? What is so wrong with letting the free market decide which banks live or die, with the government taking over those that die, running them for a little while, and then selling them as soon as possible? This is what the government has been doing for years, after all.

For millions of Americans the problem is quite personal. In February, there were 290,631 legal foreclosures, an increase over January. Assuming an average family size of a bit less than 4, that means one million people lost their homes. About 300,000 of these people are in California. The hardest hit state appears to be Nevada, where one out of every seven houses has been foreclosed in just one month!

Yet often the problem is worse, because sometimes the bank refuses to foreclose on people who cannot afford to pay. In other words, they are abandoning foreclosures. Such banks have begun foreclosure proceedings, meaning that people are told to move out, only for the bank to discover that the legal costs are so great that the value of the building does not warrant the effort. So, the owners, having been evicted, suddenly find that they still own the empty property even though they cannot afford it. Often this news comes in the form of a letter demanding real estate taxes. It gets worse. Empty, low value (often inner-city) properties are often vandalized, and become uninhabitable. This drives down the value of adjacent properties and hurts the already weak market.

Banks that initiate foreclosure and then do not follow through leave property in limbo and people on the street. Do such banks deserve to live? Are they not community destroyers who act irresponsibly?

In other words, the situation is even worse than the statistics suggest. In the end, who cares about the banks? The homeowners should be the government's absolute top priority.