COVID 19 Economics
There has never been a harder time to be a political leader. The choices that must be made are enormous, the consequences potentially catastrophic, the science guiding those decisions
uncertain - and there is no precedent. As a result, the COVID 19 pandemic has revealed some of
the best and the worst in the World's leaders: from opportunism and denial to compassion and clarity.We can't afford as a society to create the fire brigade once the house is on fire. We need
that fire brigade ready all the time hoping that it never has to be deployed.
Countries have tried to freeze their economies and prop up the absence of liquidity and wages with eye-watering subsidies until the wheels start turning again. We know what to do bring back our economy back to life. What we do not know how to do is to bring people back to life. Therein lies the difference from the oft-cited comparison with war time economics. In that situation, activity continues but redirected.
The present worldwide lock downs have drastically shrunk the workforce. Aside from essential workers - in health, care, food and transport, say only those jobs that can be done alone from home can safely continue.Without food, there can be no exit from pandemic.Countries must join forces to avert a global food crisis from COVID 19. This has sometimes been presented, too simplistically, as creating a choice between saving lives and saving economy. As many countries have now passed the first stage of infections, discussion has turned to the dangers to health posed by an economy too long in a period of state of inactivity. The discussion needs to happen, but it risks becoming facile, too. Presenting lives versus livelihoods as a dichotomy is used in defense of leaders who hesitated to impose a lock down.
And to be effective, that decision to shutter must be made with resolve, clarity and transparency. If leaders downplay the enormity of the crisis, prevaricate or issue weak behavioural guidelines-rather than expectations with consequences- then individuals will "do as they often do and pursue their own interest" and they will keep businesses open and keep engaging in social life.
Then there is the question of how to manage the crisis in the economy on pause. Again, ideology might clash with reality. If masks and ventilators are needed urgently, then there is no time to put it out to tender and let market mechanisms make the choices about who gets the contract and the product. There must be centralized decision - making and allocation even if that risks a degree of 'inefficiency'.
And how to keep economy in suspended animation,without the onset of necrosis - death of most or all the cells in an organ.? Governments have generally realized that they must help to cover lost wages, but the details are very dicey. The options of providing financial assistance to cover bills e.g. mortgages and rents suspending those costs or covering them directly are not equivalent. The solution is repayment of Govt. loans over time through taxation.
A good time in fleshing out the requirements for an exit strategy i.e. need to invest in testing economy for example to establish who can safely return to work and to monitor workplace
safety. Countries that are able to test, trace and then isolate the infected are able to contain the
virus quickly and reopen their economies sooner. Even with a vaccine, testing is likely to be a
part of daily lives for many years.
There is a moral case for thinking inequalities in light of what we have learnt about who is truly essential for society.s functioning Some aspects of neo liberals economic policy are fundamentally in conflict with the needs of a fragile world, with greater risks to come.The behavior of some leaders
has pointed out the dangers of an information economy that has become a 'marketplace for truth'. And economics itself must incorporate the revision of past preconceptions and habits that will be demanded of the rest of us.
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uncertain - and there is no precedent. As a result, the COVID 19 pandemic has revealed some of
the best and the worst in the World's leaders: from opportunism and denial to compassion and clarity.We can't afford as a society to create the fire brigade once the house is on fire. We need
that fire brigade ready all the time hoping that it never has to be deployed.
Countries have tried to freeze their economies and prop up the absence of liquidity and wages with eye-watering subsidies until the wheels start turning again. We know what to do bring back our economy back to life. What we do not know how to do is to bring people back to life. Therein lies the difference from the oft-cited comparison with war time economics. In that situation, activity continues but redirected.
The present worldwide lock downs have drastically shrunk the workforce. Aside from essential workers - in health, care, food and transport, say only those jobs that can be done alone from home can safely continue.Without food, there can be no exit from pandemic.Countries must join forces to avert a global food crisis from COVID 19. This has sometimes been presented, too simplistically, as creating a choice between saving lives and saving economy. As many countries have now passed the first stage of infections, discussion has turned to the dangers to health posed by an economy too long in a period of state of inactivity. The discussion needs to happen, but it risks becoming facile, too. Presenting lives versus livelihoods as a dichotomy is used in defense of leaders who hesitated to impose a lock down.
And to be effective, that decision to shutter must be made with resolve, clarity and transparency. If leaders downplay the enormity of the crisis, prevaricate or issue weak behavioural guidelines-rather than expectations with consequences- then individuals will "do as they often do and pursue their own interest" and they will keep businesses open and keep engaging in social life.
Then there is the question of how to manage the crisis in the economy on pause. Again, ideology might clash with reality. If masks and ventilators are needed urgently, then there is no time to put it out to tender and let market mechanisms make the choices about who gets the contract and the product. There must be centralized decision - making and allocation even if that risks a degree of 'inefficiency'.
And how to keep economy in suspended animation,without the onset of necrosis - death of most or all the cells in an organ.? Governments have generally realized that they must help to cover lost wages, but the details are very dicey. The options of providing financial assistance to cover bills e.g. mortgages and rents suspending those costs or covering them directly are not equivalent. The solution is repayment of Govt. loans over time through taxation.
A good time in fleshing out the requirements for an exit strategy i.e. need to invest in testing economy for example to establish who can safely return to work and to monitor workplace
safety. Countries that are able to test, trace and then isolate the infected are able to contain the
virus quickly and reopen their economies sooner. Even with a vaccine, testing is likely to be a
part of daily lives for many years.
There is a moral case for thinking inequalities in light of what we have learnt about who is truly essential for society.s functioning Some aspects of neo liberals economic policy are fundamentally in conflict with the needs of a fragile world, with greater risks to come.The behavior of some leaders
has pointed out the dangers of an information economy that has become a 'marketplace for truth'. And economics itself must incorporate the revision of past preconceptions and habits that will be demanded of the rest of us.
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