Wednesday, November 02, 2005
In the US, betting markets accurately predict everything from election results to the weather. In recent elections they have predicted the winning margin of both Democrat and Republican candidates to within 1.5 per cent. In Australia's last election the punters at Centrebet put five times as much money on the Coalition as on Labor. They were right. The press and the opinion polls were saying the election would be close.
In his book The Wisdom of Crowds, James Surowiecki outlines one of the early successes of betting markets. In May 1968 the US submarine Scorpion disappeared at sea. It could have been anywhere in a region 32 kilometres wide.
Instead of asking one or two experts where they thought it was, the chief naval officer assembled a large group of specialists in all sorts of fields and asked each of them to guess the location. The prize was a bottle of Scotch.
Using mathematics to put the guesses together he came up with a spot just metres from where the ship was found. Intriguingly, it wasn't a location identified by any of the experts on their own...
What we really need right now is a market for betting on when, or if, bird flu moves between humans. We know that it sweeps through chickens and that it can jump to humans who handle them, although so far not easily - only about 120 people appear to have caught it, all of them in Asia. But the death rate among these people has been high, about 50 per cent.
Some of them may have already passed it on to other humans. Dick Thompson, from the World Health Organisation, has told the SBS Insight program that there have probably been a handful of limited transmissions in which the virus has moved from one person to another and then stopped. It hasn't yet continued to move on.
The Canadian economist Dr Sherry Cooper, of Harris Bank, has spoken to the world's leading bird flu experts and concluded that its spread among humans is just a matter of time. She quotes them saying that the virus "will learn to do it".
Her report is entitled Don't Fear Fear or Panic Panic. She says for perhaps the first time in history we are watching a global pandemic "unfold in slow motion".
There is a slim chance that we might be able to smother it before it develops. She says there is a 20- to 30-day window in which a huge application of antiviral drugs at the site of an outbreak might slow or stop it from spreading. But that will require international co-ordination on a scale rarely, if ever, seen.
If the disease does spread to humans and go global there will be an unknowable number of deaths. Martin Meltzer draws up the forecasts at the US Centres for Disease Control. He says the point isn't the exact number. "The point is: imagine a lot of people ill in a very short space of time. More than you've ever seen."
The task facing economists is to try to work out how such an upheaval would change things.
Cooper says it would fill all our hospitals and there would be nowhere to take the overflow. In a localised crisis victims can be ferried to hospitals in other towns and health-care workers can be brought in from interstate. But in a pandemic there are no healthy towns to draw beds or nurses from.
As well, the so-called H5N1 bird flu virus is thought most likely to kill or hospitalise those people with the strongest immune systems - typically those aged between 20 and 40. This unusual feature would see it disproportionately remove from the workforce our most productive workers.
The Treasurer is already worried about this sort of effect because of the ageing of the population. A pandemic would bring it forward, worldwide.
Unemployment, as measured, would fall further. Any worker who remained able-bodied would be in big demand and able to command a higher wage. It would be hard for employers to fill shortages with workers from overseas. Fewer 20- to 40-year-olds would mean fewer pregnancies and fewer new workers for decades to come. There would be less demand for houses. Property prices would fall.
Petrol prices would fall as well. With many of us too infectious to go to work and with schools quite probably closed there would be few reasons to drive a car. Coffee shops, restaurants, cinemas and airports would be particularly poorly patronised until the pandemic passed.
Other prices would soar. Among the items swept off the shelves would be face masks, rubber gloves and cans of baked beans as people rushed to stock up on news of the pandemic beginning.
News would become more important with so many of us stuck at home. But it would be news delivered by computers and radio and TV. Few of us are likely to pop down to the shop to buy a newspaper.
A radically different world awaits us if bird flu does begin to spread among humans, and it is entirely possible it will. It's little wonder the punters are interested.
Tuesday, November 01, 2005
The transcript of my prescient SBS Insight program on water: running dry is here. It, and the research on which the program was based contain a lot of useful information, such including the capacity of the rainwater tanks on Malcolm Turnbull's Sydney waterfront property.