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Will coronavirus destroy the global economy? Show more Show less
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How will the coronavirus pandemic affect the global economy? The virus is fast spreading across continents, causing major corporations to close their offices and airlines to go bust. Coronavirus has already been blamed for the record-breaking one day fall in the US economy. What's next?

The coronavirus is bringing down ill-prepared national economies Show more Show less

Think global, act local. Coronavirus might be colonising every corner of the globe, but its economic impact is limited to a select few nations.
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The US economy was affected by a climate of fear

Fearmongering and uncertainty amongst US investors is causing share prices to plummet at record speeds.
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The Argument

Despite relatively few cases in the US at the time, the US stock market decreased in value by $1.7 trillion in a two day period in late February 2020.[1] This is not for any material reason. Instead, it is because of an overblown culture of panic that is surrounding the spread of the disease. This is consistent with documented patterns of human behaviour.[2] Humans tend to overreact to risks that are out of the ordinary and that generate widespread fear, while under-reacting to more everyday risks that might be more likely. People are more likely to fear dying in a place crash than in a car accident. The market crashing is a reflection of this. Stocks and the economy do not exist in a vacuum. They are largely driven by human behaviour. The coronavirus is not impacting the economy - human emotion is.

Counter arguments

Premises

[P1] Humans have a tendency to overreact in times of panic. [P2] This tendency extends to the economy. [P3] The economic downturn in the US economy is a reflection of this, rather than a long-term crisis.

Rejecting the premises

References

  1. https://www.cnbc.com/2020/02/25/coronavirus-wipes-out-1point7-trillion-in-us-stock-market-value-in-two-days.html?__source=facebook%7Cmain&fbclid=IwAR3avxsXkxXIcCLL6F5xu_GV9cMVijae6fuvXpK6rV0-UU6ZBYx1nZGt88Q
  2. https://theconversation.com/fear-spreads-easily-thats-what-gives-the-wuhan-coronavirus-economic-impact-130780

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This page was last edited on Monday, 20 Apr 2020 at 06:44 UTC

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