WHAT DO COVID AND THE BANK CRISIS HAVE IN COMMON?

Published April 17, 2023

By Peter Katona, Kavita Patel, and Seth Freeman  

“money” (per Milton Friedman and Allan H. Meltzer, in the Encyclopedia Britannica) “a commodity accepted by general consent as a medium of economic exchange… The piece of paper labeled 1 dollar, 10 euros, 100 yuan, or 1,000 yen is little different, as paper, from a piece of the same size torn from a newspaper or magazine, yet it will enable its bearer to command some measure of…[the] goods of life while the other is fit only to light the fire...modern money is a social contrivance. People accept money as such because they know that others will.”

Put another way, money only works because of social trust.  When social trust disappears, the entire system can crash with disasters like the recent demise of Silicon Valley Bank.  When a bank’s depositors feel that their money in the bank is unsafe, they usually try to take it out.  When all or most of the depositors do that at the same time, there is a run on the bank. 

Successfully managing a pandemic also requires social trust.  People need to trust that others will act in ways that protect not only themselves but everyone around them just as every day millions of people drive on the right of the road and don’t cross the center line into oncoming traffic.  Masking, getting vaccinated, isolating when you have symptoms, testing, and social distancing together comprise the pandemic equivalent of driving on the right side of the road.  In addition, during a pandemic, individuals and families need to trust that the public health and medical personnel in charge will be doing their best and – this is critical – that what they say can be believed.  Citizens must be able to trust the information they receive, from official outlets but also from reputable sources of news. 

The initial response of the United States government to the threat of SARS-CoV-2 consisted in large measure of a frontal assault on social trust, with devastating consequences.  Hundreds of thousands of Americans unnecessarily lost their lives and many more were permanently impaired because the president at the time felt that the truth about Covid would be detrimental to his re-election prospects.  The administration downplayed the pandemic threat (“One day, it’s like a miracle, it will disappear”) and, more insidiously, muzzled the CDC (a CDC physician: “All of us knew tens of thousands were going to die, and we were helpless to stop it”).

In analyzing the success that Australia had combatting Covid compared to the US, the New York Times noted, “Australia’s Covid playbook produced results because of something more easily felt than analyzed at a news conference…a lifesaving trait that Australians displayed from the top of government to the hospital floor, and that Americans have shown they lack: trust, in science and institutions, but especially in one another.”

Some cultures are better than others at nurturing social trust, most notably in Scandinavia –Norway and Denmark in particular.  As Danish economist Gert Tinggaard Svendsen writes, “The high level of trust in the Nordic countries indicates that the citizens are less likely to panic during a crisis, and for example rush to the bank to withdraw their money, simply because they generally are less mistrusting and have more faith that others will not panic either.”  He points out that, not coincidentally, “Besides being world champions in trust, the Danes are also world champions in happiness.” 

From the beginning of the pandemic, the public understanding of Covid in the U.S. was skewed by purposefully misleading information.  The country has learned in recent weeks, through materials released from the Dominion lawsuit, that Fox Broadcasting, the loudest platform spreading a false narrative about the disease and its treatments, consciously and cynically lies about important issues because telling their viewers what they want to hear, rather than the truth, enhances their audience share, their bottom line and the bank accounts of their on-air personalities.  They poison the public conversation with toxic misinformation, eroding social trust, simply to make a profit.  This conduct may be legal, but it is also lethal.

The Covid-19 pandemic is still not behind us although the situation at present is far less severe than at the height of the crisis.  Assuming that we will continue to gain ground against this corona virus and that it will become endemic and manageable even if it doesn’t entirely disappear, there will still be other pandemics in the future.  Have we learned the lessons of Covid-19?  In particular have we learned from our mistakes?

Apparently not.   “Conservative and libertarian forces have defanged much of the nation’s public health system through legislation and litigation as the world staggers into the fourth year of covid.” (Washington Post, March 8, 2023).  Per the Post, “When the next pandemic sweeps the United States, health officials in Ohio won’t be able to shutter businesses or schools, even if they become epicenters of outbreaks. Nor will they be empowered to force Ohioans who have been exposed to go into quarantine. State officials in North Dakota are barred from directing people to wear masks to slow the spread. Not even the president can force federal agencies to issue vaccination or testing mandates to thwart its march.”

Over the last few weeks, the Federal Reserve has made innovative use of the few tools at its disposal and stabilized the banking crisis.  People now trust that their bank will remain solvent and responsibly manage deposits.  The CDC and the public health community in general have far less power and a more limited set of tools than the Fed.  For the most part, physicians, nurses and public health officials have to rely on messaging to encourage people to behave in ways that mitigate an epidemic, and clear, accurate, helpful messaging in the current informational environment has become increasingly difficult.

The dangers of both Covid and the banking system crisis have thus both been magnified by an overarching epidemic in our country, a highly contagious, venomous, and virulent epidemic of mistrust.  Clearly, closing America’s trust gap would not be easy, but does that mean we shouldn’t try?  It would help if, instead of weakening public health officials around the country through political meddling, we strengthened their authority.  And, although you can’t legislate honesty in broadcasting, the decent people in both parties need to be outspoken in denouncing falsehoods and holding the liars accountable.

Social trust is essential to combatting a public health crisis, and trustworthy information is critical to nurturing public trust.  People have to trust that, when you get guidance from public health officials and responsible news sources, you can take it to the bank.

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Peter Katona, MD, is clinical professor of medicine at the UCLA David Geffen School of Medicine and adjunct professor of Public Health at the UCLA Fielding School of Public Health. He chaired the UCLA Covid-19 Infection Control Working Group.

Kavita Patel, MD, MS, is a Stanford University biodesign policy adviser and medical contributor to NBC. She served in the Obama administration as director of policy for the Office of Intergovernmental Affairs and Public Engagement. She currently practices in Washington, D.C.

Seth Freeman, MPH, is an Emmy-winning writer/producer for television, a playwright and a journalist, who writes about technology, policy and public health. 

The views and opinions expressed here are those of the author(s) and do not necessarily reflect the official policy or position of the Pacific Council.