This is the first in a three-part series studying the unintended consequences of the novel coronavirus on island and worldwide from an economic standpointThe dilemma that governments of the world are facing right now is finding the least painful combination of social isolation and economic shutdown.They have to choose between saving lives or jobs. They must rely, however, on prediction models over the course of the pandemic whose results are contingent on the decisions they make. It is a challenging time for policymakers.At this point, we know that the health crisis unleashed by the coronavirus has a lethal power similar to that of the Great Pandemic of 1918, the so-called Spanish flu, in which 40 million people died — 2 per cent of the world’s population at the time. The subsequent economic downturn spanned a decade and created the breeding ground for nationalist revanchism and, ultimately, the Second World War. Fortunately, the advancement of medicine and the ability to quickly adopt measures of social-distancing could today shield us from this extreme scenario. Much progress has been made, it is true, but it is difficult to comprehend that a century later we still do not have the capacity for developing vaccines in a timely manner; nor do we have a health system capable of emergency response in the event of pandemics. This is a true dereliction of duty on the part of advanced societies, which we hope will be remedied after the present shock. Economists like to develop models to simulate and predict the future. Many of the curve charts that we see daily in the media, with estimates of the possible evolution of the pandemic, come from adaptations of a model developed in 1927 by two Scottish epidemiologists and biostatisticians (Kermak and McKendrick), based on the experience of the Great Pandemic.When Angela Merkel warned in her much quoted March 11 statement that 70 per cent of the population would catch the coronavirus in several waves, she did so in line with this model. If a vaccine were not available in the foreseeable time and confinement was not applied, this would be the figure that would allow a progressive immunisation of the world population and, as a consequence, the end of the pandemic. The different trajectories of the simulations depend very much on what measures are taken and how severe they are in terms of social-distancing and paralysis of economic activity. They also depend on how prepared health systems are to deal with the emergency, on the availability of test kits and protective equipment and, mainly, on the time presumed for a vaccine to be widely available. It would make a huge difference in terms of human lives and job losses if the vaccine were available in the early autumn of this year rather than by mid-2021. Hence, the model projections regarding the number of infected, number of deaths and duration of the pandemic depend on so many variables, and on so many choices, that one must be careful when giving figures and time frames. To say that the emergency could last two months or 18 months does not help to guide the general public. But what the models do make clear is that we are facing very difficult dilemmas when deciding what to do, encompassing sanitary dilemmas, economic dilemmas and ethical dilemmas. In the absence of a vaccine within a reasonable time, the higher the number of people who become infected and immunised, the faster the pandemic ends and the sooner economic activity can resume — but at an absolutely indefensible cost in lives. There is also a clear trade-off between social isolation and economic activity, between health and employment: the more severe and long-lasting the social-distancing measures are, the greater the cost in terms of job destruction and economic recession. On the other hand, the more severe the social-distancing, and hence the higher the economic cost, the more need there will be to relax social-distancing at some early point at the risk of second and third waves of contagion because not enough people will be immunised.Unfortunately, these dire dilemmas that governments are facing have no way of being subjected to democratic scrutiny beforehand, despite the ability to affect the life or death of millions of citizens. This is the time for politicians: the burden of decision rests on them. Voters will have the duty of rewarding or punishing them for their performance only later on. Faced with the uncertainty of vaccine availability, almost all countries have focused on the objective of “flattening the curve” of the epidemic through social-distancing. This is a sensible policy. The criterion to define the level where you want to flatten the curve is the number of infected that the health system of each country can handle without being overwhelmed. Again, there is here a trade-off between the quality of the health system of a country and the cost of economic paralysis you have to accept to tame the pandemic: the better the health system, the less severe and shorter the social-distancing measures need to be and the fewer jobs are lost. We can harbour reasonable optimism that well-organised countries are going to flatten the infection curve relatively soon. May-June seems to be the moment in which — very progressively — some activities could be restored, with due precautions. Regrettably, time frames will be very different in poor countries where many people cannot afford to stay at home and their health systems are riddled with inefficiencies and scarcity. • Miguel I. Purroy, an economist, political scientist and director of Hotelco Bermuda Holding Ltd, is the author of Germany and the Euro Crisis. A failed Hegemony