Assessing the Economics of Pandemic-The Politics of National Response in Times of Global Chaos
In the art of policy and statecraft making, one of the maxims that have always fascinated me is this: Think tragically to avoid tragedy. In simpler terms: those who prepare for the worst possible scenarios are better able to face the tragedies and disasters in the business of governance. As governing becomes more complex because of the global systems and challenges, national policies face a twin challenge: Their relevance can be wiped out on the face of global catastrophe (COVID-19; climate change) but they still matter for their citizens who reside in the respective borders (think aggressive monetary easing in the face of rapid global slowdown). In other words, it is an issue of the domestic grid not being powerful enough to either resist the global grid or too small to be overwhelmed by its failure. What started out and remains as a global health challenge, is now a full-blown economic mess. Unemployment and defaults have risen across much of the world and sectors such as tourism, retail and hospitality have taken a major business and output blow where in some estimates, between 30-45 percent of the activity has stalled and much worse is expected in these sectors. This pandemic lockdown has not been helped by an already fragile global economy. Before the COVID-19, the global trade was not promising and the national economies around the world were showing many signs of weakness. On the oil front, for example, the Saudi-Russian oil war had nearly halved oil prices globally. With much of manufacturing hit by supply-chain disruptions, and broad segments of the service sector more or less paralyzed, corporate defaults and bankruptcies among small and medium-size businesses are set to spike, despite fiscal and monetary stimulus.