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How will you restart the economy? There is no perfect answer

There are likely to be unknown unknowns and, with that, a high risk of collateral damage & unintended consequences.

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The tentative optimism in parts of Europe and the U.S. about a turning point in the rate of coronavirus infection is encouraging more people to start thinking about how and when to restart economies. It is a crucial and complex issue involving an unusual range of risks, uncertainties, difficult judgments and trade-offs.

I certainly don’t have an easy answer, and neither do people I talk to whom I respect greatly. With a view to generating ideas, how about collectively engaging in the following thought exercise?

Imagine you, as the leader of a liberal democracy, have to make the decision based on the following conversation among three sets of experts — which, for simplicity, we will aggregate into a single expert each on health, the economy and social behavior.

Health Expert: I have good news. Because of our social-distancing policies, we are seeing a turn in the rate of infection of citizens.

Social Behavior Expert: That’s great news, especially as I hear that more people are starting to wonder whether the huge disruptions to virtually every aspect of their daily lives were worth it. Adjustment fatigue is really setting in.

Economic Expert: It’s great news indeed. We need to urgently lift the sudden stop to economic activity. Unemployment is soaring. Even otherwise-viable businesses are facing bankruptcies. And our relief efforts are not just costing a lot, but they are less effective than we had hoped for because of the need for better delivery pipes. Can we start normalizing economic activity as soon as possible?

Health Expert: Not so fast! Yes, we are doing better, but we are nowhere near out of the woods. Immunity is at least a year away, if not longer, be it through a vaccine or herd immunity. Our ability to treat the ill is still limited essentially to just keeping them alive and comfortable as they fight this dangerous virus. We don’t have proper drug treatments yet. And let’s not forget the difficulty we have in identifying the asymptomatic carriers of the virus. Without that, we can’t even think of effective tracking and tracing. If we lift social distancing now, we risk a dangerous relapse that will overwhelm our health system.

Social Expert: Wow, that’s well said. We would also risk a general loss of trust in medical advice. The government would lose credibility. And the risk of social unrest would increase.

Economic Expert: Yes, but if we continue with the sudden stop, we invite multiplying short- and longer-term problems. Our economy, indeed our society, is not wired for social distancing. We are inflicting real damage that risks undermining not just this generation but future ones. The longer we maintain this economic standstill, the more we risk turning an already unavoidable deep and sudden recession into a financial crisis and, with that combination, a multiyear depression.

Social Expert: You have a point there. We are worried already about the risk of domestic violence and a deeper opioid crisis.

Health Expert: You all have valid points. But every day we gain is a big victory, and not just in terms of flattening the curve. We are also getting to know this terrible virus better, helping us in efforts to develop better treatments and vaccines. Our testing capabilities are increasing, as is the supply of personal protective equipment, ventilators and other crucial material. And let’s not forget about what we are learning from other countries that were hit before us, including on testing and post-crisis tracking. Time is in our favor. We are seeing an enormous effort by private industry, and not just pharma and tech.

Social Expert: Tracking and testing? You mean this idea of a passport that would allow us to run a multi-track society, with one “safe” segment re-engaging in normal activities and another having to wait? This needs to come after we develop more buy-in for the intrusive method of granting and maintaining the passport, especially as we will have to do a lot of random testing and disseminate sensitive health information, not just about the coronavirus but also pre-existing conditions. It only works if we have broad-based buy-in and, even better, if there’s a bottom-up effort that we can capitalize on. We are not China. We are a liberal democracy with more respect for privacy and individual rights. And we also have to be honest about the need to address both conscious and unconscious biases that such selectivity brings out, even if it’s health based.

Economic Expert: Can’t we at least start with partial reopenings. The answer to unusual risk and unsettling uncertainty is not paralysis. There is risk in whatever we do. I would opt for opening up parts of the economy before it’s too late to avoid the cure being worse than the disease.

Health Expert: Yes, there are risks and uncertainties involved. And that’s exactly why we cannot afford a relapse and the spike in infections and deaths that would come with that.

Social Expert: And if we reopen too early, households themselves may hesitate to re-engage in normal life. That would defeat the point of taking the risks in the first place.

Now it’s up to you, the decision-maker. The best that these three experts can do is to offer you alternatives and to make explicit the trade-offs that come with them. And it’s far from perfect given that we are still operating in a fog-of-war context. There are likely to be unknown unknowns and, with that, a high risk of collateral damage and unintended consequences — whatever decision you make. – Bloomberg

Also read: Global economy faces a $5 trillion hit due to Covid-19. That’s more than Japan’s GDP


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  1. 1. I think for revival of economy post-corona pandemic, we need to undertake “Strengths, Weaknesses, and Opportunities & Threats” or SWOT study of economy. SWOT should be as unbiased as possible, and it should not shy away from finding facts about past blunders in economic management. 2. One biggest past blunder is neglect of interests of small & marginal farmers and also overlooking fact that over 70% of rural households own less than two hectares of farm land, on an average. 3. I feel that our political leadership and bureaucrats have not demonstrated political and administrative will to implement schemes for increasing income of the rural households of small & marginal farmers and also of landless workers who are compelled to migrate in search of livelihood. 4. We must reassess impact of various measures our governments have taken in following areas: (a) To improve farm productivity, (b) to promote activities like processing of farm produce and (c) to revamp/improve ease of marketing of saleable farm produce, which is an activity that could fetch long term benefits to rural India. It is necessary that all these areas be accorded top priority in coming years. 5. Incidental observations: (i) It is true that the Coronavirus pandemic has exposed serious flaws in our healthcare system. (ii) The pandemic has brought under scrutiny this system’s weaknesses, especially, shortage of medical personnel (doctors, nurses, and paramedical and support staff), medical equipment, even as we struggle to deal with a huge number of corona positive patients. (iii) In this connection I feel that we must find out how to utilize services of lakhs of medical professionals trained in three medical systems, namely Ayurveda Homeopathy and Unani, to improve our public healthcare system. (iv)Is it not true that much desired revamp of public healthcare system, particularly of the Primary Healthcare Centres or PHCs, is a subject matter with which no doctor working or practising in urban areas would like to be associated with? Therefore, I say that if we wish to revamp public healthcare, we must not be dictated by very influential lobby of Allopathy medical practitioners in India.

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