The wealth and health of nations :: Mmegi Online

The COVID-19 outbreak’s implications for the global economy are highly uncertain but potentially disastrous. To understand the risks, one should remember Adam Smith’s insight about the true engine of wealth creation, the division of labor, which itself is dependent on the size and extent of markets. WILLEM H. BUITER* writes

NEW YORK: COVID-19’s implications for the global economy are highly uncertain but potentially disastrous. As of March 5, the World Health Organisation had identified 85 countries and territories with active COVID-19 cases – an increase from 50 countries the previous week.

More than 100,000 cases and 3,800 deaths have been reported worldwide, and these figures almost certainly understate the scale and scope of the outbreak. To understand how the epidemic could cause a global recession (or worse), one need only Adam Smith’s Wealth of Nations, Book I, Chapter Three:

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