Coronavirus and the Great Lockdown: A Non-Biological Black Swan

The following article is from my colleague, Paul Roderick Gregory, in Real Clear Markets

We stand on the precipice of  the greatest economic disaster since the Great Depression. It is associated with the exogenous shock of  a novel Coronavirus that originated in Wuhan China and quickly spread into a worldwide pandemic.

The sequence of events leading to this crisis, not the virus itself,  deserves to be called a “Black Swan.” Biology dictates that pandemics will recur and at unpredictable intervals. Pandemics claim human lives, ruin health, and depress economic activity, but they are not expected to alter the shape of society as we know it. The Medieval Black Death is an exception. Coronavirus could be as well with wrong policy choices.

The Coronavirus Black Swan is due to what the International Monetary Fund calls the Great Lockdown; namely, the political and administrative decisions to shut down much of the world economy in the hope of mitigating the Coronavirus pandemic. World leaders, with few exceptions, deliberately opted in favor of our ongoing “non-biological Black Swan” emanating from Coronavirus.