Breakneck triage nails many diagnoses, but deeper treatment is needed.
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.
It’s a shame that policymakers did not have books such as Joshua Gans’s Economics in the Age of COVID-19 to lay out the issues for them in January. It is remarkable that they do already. Gans completed this book at breakneck speed, by late March. His attempt to explain the economic thinking that should guide policy is useful, but inevitably limited. With the situation and knowledge changing daily, unfurling events will always render some aspects of such an analysis obsolete. In this sense, Gans, an economist at the University of Toronto in Canada, has taken a brave shot at an impossible task. Ultimately, economic thinking will need wider horizons.
The crisis has forced some politicians, especially on the right, to go against deeply held inclinations by implementing interventions and financial handouts that, in normal times, even most of their opponents would deem excessive. 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.
Therein lies the difference from the oft-cited comparison with wartime economics. In that situation, activity continues, but redirected. The present worldwide lockdowns 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 (never have I felt luckier to be a writer). This has sometimes been presented, too simplistically, as creating a choice between saving lives or saving the economy. As many countries have now passed the (first?) peak of infections, discussion has turned to the dangers to health posed by an economy left too long in stasis.
That discussion needs to happen, but it risks becoming facile, too. Presenting lives versus livelihoods as a dichotomy is used in defence of leaders who hesitated to impose a lockdown. That, Gans shows, is mistaken. The highly infectious nature and the fatality rate of COVID-19, which were both clear early on, even if exact numbers were not, meant there was never a gradual trade-off to be had: a dash more economy at the price of a few more deaths. “If you know you are going to shut down the country eventually, there are huge returns to doing it quickly,” Gans writes. It is the only way to keep choices open as more is learnt about the virus and its spread.
This is not hindsight: Gans was writing while the UK and US governments were procrastinating. Nor is it just about saving lives in the short term. “Pursuing public health can be consistent with superior long-run economic performance,” Gans writes.
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 will “keep businesses open and keep engaging in social life”.
Then there’s the question of how to manage the crisis in an economy on pause. Again, ideology might clash with reality. If you urgently need masks or ventilators, then there’s 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’.