The mankind has repeatedly passed over different pandemics, but there has never been a large and a conscious debate on such an issue, like we have nowadays. The reason is obvious. Today, the population is much larger and at the same time there are many more educated people, as share in the total population. At the same time, access to information is greatly facilitated by the development of the new technologies and this helps people to better understand some realities that we are all facing in our journey. Otherwise, obvious truths in people’s lives would have been hidden or distorted.
Certainly this pandemic will pass – in one form or another. Sooner or later. And we will remain here, on this earth, looking ahead for a brighter future. We have to do anything that is in our power to make our life better. We have no other option.
The global economy is in a deep decline today. There has never been such a rapid change of the trends in the global economy, like we are facing now. There have never been maximum shocks, both on aggregate demand and aggregate supply, doubled by relevant pressures on the financial and public systems, corporations and small and medium companies. All these events are simultaneous, and evolve with a force not taken into account in the past and with negative accents doubled by the fact that we do not know exactly our enemy’s behavior. Of the SARS-CoV-2 virus that generated the COVID-19 pandemic. The national economies suffer. The global economy is strongly affected. Companies are closed and people are finding themselves with no jobs and no prospect of the future.
Panic. We have reached this point.
But we MUST overcome it.
It is good that governments are involved within the limits of the possibilities that they have. It is mandatory to do so. Moreover, international cooperation is needed to limit the panic and the negative economic effects. After all, this is a war that all the mankind has with the novel coronavirus.
It is the moment to realize that we all are equal in the face of eternity, no matter what country we live in. It is the time to leave the incidents between nations aside. For that all of us must pass through this challenge of humanity, as quickly as possible. Today the population of many countries is set on the recommendation: #stayathome. It is very good now, but for a short period of time.
But what happens in the economy while we stay at home? Many employees are involuntarily placed in a vicious circle that starts with the temporary unemployment. This leads to a direct impact on governmental expenses and revenues, as some employees no longer receive wages, but eventually unemployment benefits, which in many cases are diminished compared to regular incomes, but are paid from public resources. As a consequence, the social isolation measures aimed to protect individual health and to flattening the epidemiological curve in order not to reach to the collapse of the medical system, lead us in another direction: closures of companies, travel bans, quarantines. All this decrease the global demand and at the same time the global supply. Countries and businesses are affected. Both consumers and companies around the world are in a state of waiting: What will happen? How will it be? When will it be? This is the shock of expectations. And expectations will have to be met with appropriate answers. By leaders from governments and corporate sector. By leaders from international organizations and those from regional entities. This COVID-19 pandemic will change the way we perceive our reality and the way we will react in the future for sustaining the economic development of all the world. I call this approach as #coroneconomics. And it has some basic pillars.
Basic pillars of the #coroneconomics
First of all, due to the huge financing needs that states have to cover, it is essential to give up the discussions on budget deficits. The fundamental objective will have to become in the next years the full employment of the workforce. I appreciate that the economic vision that we will have to follow in the next years of economic and social evolution is close to the principles promoted by the new Modern Monetary Theory. Stephanie Kelton is the economist who nowadays explains excellently the correlation of budget deficits with full employment. Answering the question if there is only one level of right deficit, her answer is: no, because, the modern monetary theory can establish for the labor market a public option to guarantee publicly funded jobs, thus ensuring full employment of the population in professional activities.
In the next years, the governments will have to act as catalysts for full employment, adjusting the budgets according to the consumption, net savings and investments made by the corporate sector and by the population. Thus, if the corporate sector wants to invest less, the government will have to take the action to cover the possible reduction of employment, accepting larger budget deficits.
This medical crisis has made us all to see that people are eager to socialize, including at their work place and that the public assistance is a momentary solution. The population must be supported to have jobs and not to expect social aids. These public aids will not be offered in the future by governments for granted and permanently. But, with the risk of increased deficits, governments must push the acceleration pedal of investments and at the same time support the increase of the consumption, having as fundamental objective the full employment. Macroeconomic balances will be adjusted around the full employment of the workforce.
Secondly: what investments should be supported with priority? As we all can see around us, the modern technologies have generated a profound change in the way people interact, the way certain organizations are structured, the way in which international flows of capital and goods are traded and delivered. The industries and the services of the future will need more than ever digitization, robotization, blockchain technologies, artificial intelligence. Governments will need to support companies that are bent on researching, implementing and of course developing solutions based on these technologies. These new technologies, once largely implemented across countries, will not limit the people’s jobs, but will actually increase them, in parallel with improving the productivity in all economic activities, increasing the quality of people’s lives and opening new horizons for each of us. These new technologies will boost the positive evolution of essential areas of our safe development and living: healthcare, education and research fields.
Third: we, the humans and our beautiful planet, are a drop in the ocean of the Universe. Let’s look to the beautiful sky, full of stars and planets. In order to support our humanity and our eternity, we will have to accept the accelerated development and investments in space technologies, which will help us to easier reach at least in the proximity of our solar system. For this noble purpose, a global collaboration should be generated. Of course we have outstanding examples of concerns in this regard, but these ones will have to be supported by direct interventions and unconditional support by governments and – I emphasize – through global collaboration.
Finally, but not least, it is essential to include the respect for climate and environment in the equation. Massive investments in this regard will be needed. Our planet needs respect. We need healthy lungs. Our children will need a friendly place to play and enjoy freedom and life. Respect for the climate is also a respect for ourselves.
As it is stipulated in the provisions of the #Horasis Declaration – Our Commitment to Principled Leadership in times of Disruption: at the dawn of a new decade, humankind faces unprecedented challenges to the wellbeing of our planet and the prosperity as well as survival of our species. Confronting the perils of climate change, economic, racial, ethnic and gender inequality, and most recently disease outbreak, urgently necessitates increased international and inter-generational collaboration and collective creativity.
If we have the courage to accept these basic pillars of the #coronaeconomics and to open ourselves towards a profound collaboration between our nations, then we will have the chance to offer to the people all over the world, what they really deserve: a decent life, shared joy and respect for ourselves and for the nature, safety for today and for tomorrow. We will not be able to achieve these goals alone. But only together.
Ciprian Dan Costea, PhD
Vice Chairman of the BD of Autonova & member of the National Liberal Party, Romania