Half the planet is in lockdown. In wealthy countries, Covid-19 is destroying businesses and wiping out jobs at a faster rate than during the Great Depression. Emerging economies are teetering on the brink of catastrophe. Where, in all of this, is global leadership?
That question loomed over the inaugural event of the Bloomberg New Economy Conversation Series, an online gathering held April 7 that explored what a post-coronavirus world will look like. An audience from more than 60 countries joined the interactive discussion.
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People wearing face masks ride bicycles on a street in Wuhan, in China's central Hubei province, on April 1.
Photographer: Hector Retamal/AFP
When it comes to the U.S. and China, both systems have failed, said Joseph S. Nye, Jr., former dean of Harvard University's Kennedy School of Government and architect of the "soft power" concept. Nye lamented that American missteps in the early stages of the virus have "damaged our reputation internationally."
As for China, he said: "Everybody is now extolling China, but China made some mistakes, only of a different type." The Chinese government's "first inclination was denial in January. Their next inclination was censorship, and when they finally got around to clamping down on isolation, it was too late. Now they're engaged in a propaganda war."
Michèle Flournoy, a former U.S. Under Secretary of Defense for Policy, echoed the sentiment. "I'm not sure it's a failure of institutions as much as a failure of leadership and competence," she said. "It's less about some new grand plan for redefining institutions and more about making sure we choose leaders who are competent, prepared, and able to lead us in these kinds of crises."
A second wave
Wall Street seems
remarkably optimistic about an economic recovery in the U.S. and Europe. But no economy will be safe until the entire world has this pandemic under control, a point made by Jason Furman, who served as chairman of the Council of Economic Advisers during the Obama administration. "Even if we have a vaccine for the entire world and you have financial crises around the world, those financial crises will come back to the U.S.," he said.
What concerns Flournoy most is "the extent to which we are largely ignoring—as an international community—what this virus is going to do to the poorest countries and communities." The chaos that would follow a repeat wave of infections in the emerging world is, she fears, "something that I don't think we're paying enough attention to."
Still, Furman sought to allay fears that a new depression is inevitable, or even likely. "We're in for something prolonged, [but] it would take a catastrophic series of policy mistakes…to reproduce something like the Great Depression," he cautioned. "I don't expect us to make those types of catastrophic mistakes. We have fiscal policy, and we know how to use that."
Spend on healthcare
Around the world, Covid-19 has exposed chronic under-investment in healthcare—a mistake now costing thousands of lives and trillions of dollars in lost output. The U.S.,
Britain and other advanced economies have little surge capacity in their emergency wards. Poor countries are virtually defenseless. "Right now, the single best thing you can do economically is to spend money on health," stressed Furman. "It helps peoples' lives, and it will help speed a return to a more normal economy."
U.K. Prime Minister Boris Johnson was hospitalized due to a Covid-19 infection.
Photographer: Andrew Parsons /10 Downing Street
Flournoy went further, suggesting that the pandemic should trigger a reassessment in how the U.S. defines national security. "As a country, [we] have to take more seriously investment in public health, institutions, stockpiles, [and] mechanisms because that's really our first line of defense," she said. "So I think if we define this more broadly, public health is inside the national security boundary."
Where is the G20?
The G20 coordinated the global response to the 2008 financial crisis, but has been largely missing this time around.
Nye urged U.S. and
Chinese leaders to galvanize the G20 into setting up a special fund to deal with Covid-19 in the emerging world. Flournoy agreed that a jointly-led, U.S.-China effort to raise and deploy resources quickly "would have enormous effect on reducing the risk of [reinfection] waves. The problem really is resources. The deployment mechanisms are there."
Global solidarity is also in short supply. "I think a lot of countries are going to be turning inward,
focusing on rebuilding themselves," said Flournoy. "It may be harder to actually resource those goals in the very near-term."
Nye sees "short-term, transactional" steps being taken by the Trump administration. He laments the absence of "something broader, which is in the interest of others: a global, public good. That's what I find seriously missing in the current situation."
Don't count on sweeping change
The Great Depression spurred fundamental change toward a fairer society in America. Our speakers weren't confident of that outcome this time.
"Yes, I think there are going to be changes, [but] I think it's going to be more accelerating trends that were already there rather than day-and-night type changes," said Nye.
Furman's assessment was even bleaker. "Other than some stuff specifically related to pandemic preparedness," he said, "I'm worried we're going to go back to our corners."
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