Reflections on a Plague Year
It may be too soon to draw firm conclusions about which pandemic-induced changes are likely to prove long-lasting. But some of the most significant could include enhanced vaccine development, increased government spending, accelerated digitalization, and the continued rise of China.
From Moonshots to Earthshots
The pandemic has highlighted the cost of neglecting public investment, both in the welfare state and value creation. But the crisis has also created a huge opportunity to pursue industrial policies beyond traditional sectoral and technological silos, and to restore mission-driven governance in the public interest.
LONDON – COVID-19 has exposed the myriad weaknesses of modern capitalism. And in many countries, past cuts to social services and public health have amplified the damage wrought by the pandemic, while other self-inflicted wounds to the state have led to inadequate policy coordination and implementation. Mass testing and tracking, production of medical equipment, and education during lockdowns have all suffered as a result.
By contrast, countries and states that have invested in their public-sector capabilities have performed much better overall. This has been most striking in the developing world, where Vietnam and the Indian state of Kerala stand out.
Instead of acting as investors of first resort, far too many governments have become passive lenders of last resort, addressing problems only after they arise. But as we should have learned during the post-2008 Great Recession, it costs far more to bail out national economies during a crisis than it does to maintain a proactive approach to public investment.
Too many governments failed to heed that lesson. Faced with another society-wide challenge, it is now clear that they have relinquished their proper role in shaping markets, allowing public institutions to be hollowed out through outsourcing and other false efficiencies. The retreat of the public sector has given way to the idea that entrepreneurship and wealth creation are the exclusive preserve of business – a perspective endorsed even by those who advocate “stakeholder value.”
In fact, the more we subscribe to the myth of private-sector superiority, the worse off we will be in the face of future crises. To “build back better” from the current one, as US President Joe Biden’s administration and many other governments have committed to do, will require renewing the public sector, not just by redesigning policy and expanding the state’s organizational capabilities, but by reviving the narrative of government as a source of value creation.
As I explain in my new book Mission Economy: A Moonshot Guide to Changing Capitalism, landing a man on the moon required both an extremely capable public sector and a purpose-driven partnership with the private sector. Because we have dismantled these capabilities, we cannot hope to repeat earlier successes, let alone achieve ambitious targets such as those outlined in the Sustainable Development Goals (SDGs) and the Paris climate agreement.
The Apollo program demonstrated how a clearly defined outcome can drive organizational change at all levels, through multi-sector public-private collaboration, mission-oriented procurement contracts, and state-driven innovation and risk taking. Moreover, such ventures tend to create spillovers – software, camera phones, baby formula – that have far-reaching benefits.
The original moonshot model offers insights and inspiration for pursuing “earthshots” today. For example, to achieve the 17 SDGs, we should transform each into several clearly defined missions that would lay the groundwork for more multisectoral, bottom-up innovation. A plastic-free ocean, for example, will require investment and innovation in areas as different as marine transport, biotech, chemicals, waste management, and design. That is what the Apollo program did by sparking innovation in aeronautics, nutrition, materials science, electronics, software, and other areas.
A mission-oriented approach is not about government “picking winners,” but about choosing directions for change – like a green transition – that require investment and innovation in many sectors. The full power of policy instruments should be used to create projects that elicit solutions from many different willing actors. NASA designed its procurement contracts to focus on goals, while encouraging bottom-up solutions and including “no excess profits” clauses and fixed costs, so that going to the moon involved sharing both risks and rewards. This is an important lesson for many governments that have suffered higher costs and lower quality from outsourcing.
Earthshots have much in common with moonshots, but the two are not synonymous. Among their similarities, both require bold, visionary leadership from governments that have been properly equipped to “think big and go big.”
Consider the COVID-19 vaccine. The collective spirit and outcome-driven approach to vaccine research and development last year recalled the Apollo program.
While technological breakthroughs can provide new tools, they are not necessarily solutions in themselves. Earthshots require attention to political, regulatory, and behavioral changes. Safe and effective vaccines were created and tested in record time through public-private collaborations, with public investment proving absolutely crucial. But a disparity in vaccine acquisition between high-income and lower-income countries appeared immediately and has only deepened.
When it comes to an earthshot like global vaccination, technological innovation is only as useful as its real-world application. “Vaccine apartheid” – rather than a People’s Vaccine – would constitute a moral and economic catastrophe. If pharmaceutical companies are serious about their stated support for the principle of stakeholder value, they should be sharing COVID-19 vaccine patents, data, and know-how through the COVID-19 Technology Access Pool, which remains unused.
Governments, too, must truly embrace the principle of stakeholder value, which does not apply only to corporate governance. Public-private collaborations also must be governed in the public interest, and not repeat the failures associated with today’s digital economy, which emerged in its current form after the state provided the technological foundation and then neglected to regulate what was built on it. As a result, a few dominant Big Tech firms have ushered in a new age of algorithmic value extraction, benefiting the few at the expense of the many.
Technology alone will never solve social and economic problems. In applying the moonshot principle to complex challenges here on earth, policymakers must pay attention to myriad other social, political, technological, and behavioral factors, and capture a common vision across civil society, business, and public institutions.
Thus, earthshots must also involve extensive citizen engagement. Carbon neutrality, for example, must be designed with citizens where they live, such as social housing. By truly adopting an inclusive stakeholder approach, a mission can develop into a powerful civic platform and an engine of sustainable growth, as envisioned in calls for a Green New Deal, Health for All, and plans to bridge the digital divide.
These lessons could not be more relevant to the Biden administration, which will be able to tap the power of an existing entrepreneurial state comprising organizations like the Defense Advanced Research Projects Agency and the National Institutes of Health, which invests up to $40 billion per year in drug innovation.
There is now a huge opportunity to pursue industrial policies beyond traditional sectoral and technological silos, and to restore mission-driven governance in the public interest. A modern industrial strategy aimed at a Green Renaissance, for example, would require all sectors – from artificial intelligence and transportation to agriculture and nutrition – to innovate and pivot in a new direction. President John F. Kennedy had his moonshot. Biden’s mission is to bring it home.
Taking National Investment Seriously
“Build back better” has become a popular slogan precisely because most people want to look forward and create a brighter future after the COVID-19 pandemic. Achieving this will require governments to increase investment and recalibrate national balance sheets by doing more to nurture natural and social capital.
CAMBRIDGE – This has been a brutal year, with the COVID-19 pandemic forcing governments around the world to close down many aspects of normal everyday life while supporting workers and businesses with extraordinary emergency measures. And the crisis certainly is not over yet.
But with COVID-19 vaccination programs now in sight, policymakers and business leaders should change gear in the new year, and move from reacting to events to determining a strategy for the future. “Build back better” has become a popular slogan nowadays precisely because most people want to look forward and create a brighter future rather than going back to the way things were. So, what will it take to restore a sense of progress to bereaved families, struggling communities, and fractured economies in 2021?
The short answer is investment, which means incurring effort and expenditure now for a return later. Investing in assets in the expectation that they will yield benefits down the line is a vote of confidence in the future, which is exactly what the world needs now.
Public-sector investment in improved and greener infrastructure will be particularly essential for economic recovery in the short term. Government spending of this kind has large fiscal multipliers, especially in downturns, and will help to create demand for new skills and technologies. Initially, major projects will have to be publicly funded, because no private firms will commit to them at a time of such uncertainty. Yet, provided that governments invest competently and stimulate growth, adding to public debt now will prove to be the best way to reduce government-debt ratios over the medium term.
Investment is also an essential form of compensation to younger people, who have been one of the hardest-hit groups in the economic downturn. Many who had the bad luck to enter the job market during this crisis may find their career and lifetime earnings prospects damaged as a result.
Even before this year’s catastrophe, I often reflected on the confidence that the visionary policymakers of the nineteenth century expressed in their society’s future, reflected in the infrastructure, buildings, and institutions we still use today. They thought 150 or 200 years ahead, and we need to adopt the same mindset to recover from the shocks of 2020.
Building a sustainable and resilient economy and society requires a wide range of investments. A society’s wealth depends on an assortment of assets that correlate with one another like those in any investment portfolio. Some, like infrastructure and productive capital, are familiar. Economists have long emphasized human capital, or a population’s skills, but have often measured it narrowly, in terms of formal educational qualifications. We have learned in 2020 that health, including mental health, is an important component of human capital, too.
Moreover, policymakers have all too often overlooked other assets when thinking about the national balance sheet. Natural capital – including clean air, biodiversity, and global climate stability – has largely been omitted from economic measurement, despite being fundamental to human life, as well as to narrower outcomes such as agricultural productivity or freedom from wildfires. But this is starting to change as statisticians develop definitions and data to include nature and natural resources in national accounts.
Economic policymakers have also largely ignored social capital – the trust among strangers that is vital to any sustained economic effort. Many regard the concept as too fuzzy and hard to measure, but it is the most fundamental component of a national asset portfolio. As the pandemic has demonstrated, we are all worse off if everyone acts only for themselves.
Crucially, decision-makers need to adopt a longer-term perspective. For too long, horizons in business and politics have been getting shorter and shorter. Many chief executives, citing the mantra of shareholder value, make decisions aimed solely at boosting quarterly earnings, while venture-capital exit horizons of just seven or eight years are seen as long term. Politicians, meanwhile, have gone from chasing soundbites in the next television bulletin to typing a few hundred characters in their next tweet.
Likewise, older people, particularly the baby-boom generation, have coasted on earlier generations’ consumption sacrifices. Shockingly low maintenance spending has resulted in bridge collapses and disintegrating roads, while natural resources have been despoiled and depleted. In some OECD countries, including the United States and the United Kingdom, businesses have underinvested for decades, compensating for a lack of capital by employing workers in low-quality, low-wage jobs.
Unsurprisingly, there are both encouraging and alarming signs of significant generational shifts in views. For example, young people care more than older generations about protecting the environment, but are increasingly dissatisfied with democracy.
Some governments are taking seriously the need for a longer-term perspective on national wealth. Iceland and New Zealand, among others, have adopted well-being policy frameworks, while public bodies in Wales have a legal responsibility to safeguard future generations’ well-being. Many more governments need to shift to a similar framework.
The current health and economic catastrophe arrived little more than a decade after the global financial crisis. If it does not bring about systematic change in policymaking and business, it will be just one of many crises to come, because the unsustainable can never be sustained. One hopes there is still time to shape how change comes about.
Building Back Broader
Developed countries are spending enormous amounts of money in an attempt to recover from the pandemic, and should not waste it on old and tired schemes that have rarely worked. Instead, national or state governments should fund innovative local projects with high levels of community involvement and engagement.
CHICAGO – US President Joe Biden wants to “build back better” after the pandemic. It’s a widely shared goal. But what exactly does it mean, and how should we do it?
Clearly, we should build back with more equality of opportunity. Many communities in the United States and elsewhere in the developed world would not look out of place in a poor country: decrepit schools, crumbling infrastructure, and rising levels of social dysfunction, including crime and substance abuse.
These communities have shrunk as people with opportunities elsewhere have left, leaving everyone else in an even thicker miasma of hopelessness. Some of these communities have been disadvantaged for a long time, having been hammered by a previous wave of trade- or technology-induced joblessness. Others have fallen behind more recently, albeit for similar reasons.
But technology and trade have also created new possibilities for economic activity in these communities, and thus the potential for economic revival. The COVID-19 pandemic has forced many to work from home and connect with colleagues via the internet, greatly reducing any stigma previously associated with this arrangement. After the pandemic ends, many firms will offer their employees the option of coming to the office only when necessary.
In that case, a worker’s home need not be in the same county, or even the same state, as their office. As skilled workers in cities search for cheaper, less congested places to raise a family, some may want to return to their roots – to places they left long ago. And with in-person business meetings becoming more dispensable, entire firms also may relocate. These trends will boost demand for local goods and services, creating more local jobs.
Technology not only helps to spread economic activity geographically, but also can connect remote areas to markets everywhere. As Adam Davidson points out in his book The Passion Economy: The New Rules for Thriving in the Twenty-First Century, online platforms allow small enterprises to advertise niche products globally, and enable specialized potential buyers to find them. For example, the Wengerds, an Amish family in Ohio, have built a flourishing business selling state-of-the-art horse-drawn farm equipment – a niche market if ever there was one – to other Amish farms across the US.
Not every community can flourish even under these changed circumstances. Years of underinvestment in infrastructure, including broadband, parks, and schools, may render some communities unattractive to well-paid professionals and their families. High levels of crime and substance abuse could keep businesses away. And local workers may need retraining for new skilled jobs. Communities may need to change in order to attract economic activity, but how do they do so without more economic activity in the first place?
The tempting but wrong answer is to centralize the solution. Massive one-size-fits-all programs devised in a national or state capital cannot tackle a local community’s specific challenges. For one community, the biggest problem may be the absence of fast and affordable access to transportation networks; for another, it may be the lack of safe outlets for youthful energy. A community’s inhabitants are in the best position to understand the most pressing needs.
The answer certainly includes more outside funding, including further tax subsidies to encourage investment in “opportunity zones.” But that is not enough. Without a committed local leadership devising plans to address specific local challenges, and an engaged community to aid and monitor their work, funds are more likely to be wasted than not. Unfortunately, years of hopelessness can exhaust a community’s leadership and leave its members apathetic.
What could induce change? One possibility is for the national or state government (or philanthropic institutions) to create grant competitions to fund groups with innovative proposals for projects in their communities. Ideally, a project would have the backing of the official community leadership (such as the mayor’s office), but that need not be essential if it can proceed without their support.
The extent of proposed community involvement and engagement in the project would, however, be an important criterion for funding. So, for example, a public garden created and maintained by the community would be preferred to a contractor-built park. Stronger community leadership and broader local engagement should be important legacies of funded proposals.
Project leaders would also be given access to professional consultants, who could help remedy weaknesses in the proposal, as well as to leaders of similar projects elsewhere so that ad hoc support groups emerge. Not all proposals would be funded, of course, but the process of private citizens coming together to devise a project can create the kernel of a new local leadership if the current one is asleep at the wheel. If the grant competition can revive or generate broader local energy, it will have worked.
Moreover, unsuccessful applicants could resubmit their project proposals in subsequent competitions after addressing earlier weaknesses, thereby sustaining the enthusiasm the initial proposal engendered. Finally, the lessons from successful initiatives could be shared with other communities seeking projects of their own, with the aim of establishing a learning network that could share ideas, expertise, best practices, and common pitfalls.
This is not idle theorizing. Developed countries like Canada have been creating such networks to encourage bottom-up remedies to local problems that have hitherto defied solutions.
Developed countries are spending enormous amounts of money in an attempt to recover from the pandemic. It would be a real shame if this were wasted on old and tired schemes that have rarely worked. The money should go to those who desperately need new opportunities, and know how to create them. That may be one of our best hopes for building back better.
Solving the Prison Dilemma of COVID-19
Congested prisons with poor sanitation and overstretched medical facilities are hotbeds of infectious diseases such as COVID-19. Policymakers in Malaysia and elsewhere should couple immediate prisoner releases to reduce overcrowding with coordinated training and support programs to prevent recidivism.
KUALA LUMPUR – Few good things will come out of the COVID-19 pandemic, which has now killed more than 2.2 million people worldwide. But one possible silver lining could be serious prison reform – including in Malaysia.
In September 2020, an initially small COVID-19 cluster, centered around the Lahad Datu police headquarters and Tawau prison on the island of Borneo, quickly exploded into the biggest cluster of Malaysia’s second COVID-19 wave, infecting 1,146 people. And in the current third wave, at least 23 of the country’s prisons have reported a disproportionately high rate of COVID-19 infections.
As of December 2020, 1,160 of Malaysia’s 66,791 prisoners were infected, along with 125 prison staff and family members. By the first week of 2021, Malaysia’s overall caseload had doubled, with new prison clusters occasionally accounting for up to 20% of daily new cases.
Prison-related infection clusters in Malaysia and elsewhere appear to share one common cause: overcrowding. According to the World Prison Brief, at least 118 countries have exceeded their maximum occupancy rate. Such congested environments, with poor sanitation and overstretched medical facilities, are hotbeds of communicable disease. Trapped behind bars, prisoners are helpless to protect themselves from outbreaks of both mild and severe infections, ranging from the common flu and scabies to tuberculosis and now COVID-19.
But a pandemic can be an opportunity to right systemic wrongs. In January 2021, the COVID-19 crisis prompted members of Malaysia’s parliament from across the political spectrum, including me, to establish the first All Party Parliamentary Group (APPGM) on Reform of Prisons and Detention Places.
Risk-mitigation strategies such as enhanced cleaning protocols and hygiene, efficient COVID-19 testing, and access to vaccination programs are vital to tackling the pandemic in prisons. Encouragingly, the Malaysian government’s joint committee on vaccine procurement has announced its intention to include high-risk groups such as prisoners among the first cohorts to be vaccinated – one of the APPGM’s top priorities.
But prison overcrowding renders other pandemic-mitigation measures – especially physical distancing – almost impossible. Decarceration, or early release, then becomes just about the only option for managing overcrowding and rapid COVID-19 transmission in prison.
The pandemic has led to the release of a significant number of prisoners in some countries, including Indonesia (39,000), Turkey (45,000) and Iran (70,000). Similarly, the Malaysian government has announced a scheme to release about 11,108 prisoners. Other than release through the Licensed Release of Prisoners mechanism, prisoners are also being absorbed into rehabilitation centers, where, with private-sector support, they will receive training in construction, carpentry and plantation work.
Moreover, to reduce systemic overcrowding, the Malaysia Prison Department has, since 2019, wanted to release on parole at least 75% of the country’s 22,000 eligible inmates. But the power to act resides with the minister of home affairs, and despite pronouncements made, so far only 500 prisoners are known to have been released.
Plans and targets notwithstanding, policymakers often do too little too late on prison reform. Longstanding systemic challenges reflect chronic underfunding and policy neglect. Improving prison infrastructure and upgrading medical facilities are necessary steps, but need time, planning, and additional resources. Overcrowding, on the other hand, can be solved relatively efficiently with available means.
Above all, policymakers should couple immediate prisoner releases with coordinated training and support programs to prevent recidivism and re-incarceration. Several projects in Malaysia have shown promise. For example, the Prison Department established a partnership with Microsoft and local non-profit organizations to develop a digital-skills program for juvenile prisoners, enabling young offenders to acquire valuable information-technology know-how while serving their sentences. As a result, 100 young inmates were admitted to university programs, leading to their early release.
Adopting a rehabilitative, rather than retributive, approach to prison management effectively breaks the cycle of poverty, cruelty, and violence that often leads to imprisonment in the first place. Mechanisms such as release on license, work-release schemes, home leave, and counseling programs all crucially depend on successful rehabilitation – in line with the Prison Department’s official mandate of “spearheading correctional support.”
Countries with prison systems that focus strongly on rehabilitation, such as Norway and Sweden, boast some of the world’s lowest recidivism rates. Norway, for example, applies “restorative justice,” which seeks to remedy the harm caused by the crime. Inmates are given opportunities to train and learn new skills in a supportive environment, with prison officers acting as role models and mentors. Similarly, in Sweden, rehabilitation centers on the need to treat inmates “like human beings, not like criminals,” which has resulted in the closure of many prisons across the country.
The COVID-19 pandemic has not only highlighted systemic inequities, but also provided governments with an opportunity to change their approaches to tackling them. Malaysia and other countries should seize the chance to reverse the trend of prison overcrowding, promote restorative justice, rehabilitate prisoners, and change societies’ mindsets.
We are duty bound to protect the dignity of all human lives, and ensure that incarceration during a pandemic is not tantamount to a death sentence. Instead, the COVID-19 crisis could offer a much-needed second chance to those behind bars – as well as to those in power.
The COVID Revolution
The COVID-19 pandemic has highlighted the need to revitalize postwar institutions, address shortcomings in democratic governance, and launch a global attack on the virus. Ending the pandemic and building a better future will, above all, require the world to develop new norms to replace worn-out, insular beliefs.
OTTAWA – In December 1862, in the throes of the American Civil War, which pitted the norms of slavery against the norms of freedom, US President Abraham Lincoln presented his emancipation plan to Congress. “The dogmas of the quiet past are inadequate to the stormy present,” he declared. “The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew.”
In the wake of the COVID-19 crisis, that is our task as well.
Lincoln saw clearly that the Civil War would utterly change the United States, and that in the world that would follow, old norms and mindsets would no longer suffice. He was right. The tragedy is that he only partly succeeded in persuading his fellow Americans to accept the new norm he proposed – equality for all. Some political leaders thought and acted in a new way, but too many sought to revive the past. Instead of heeding Lincoln’s call to think and act anew, the southern states built a new regime of segregation and discrimination.
Three-quarters of a century later, another epic conflict would again shift hitherto prevailing norms. World War II erupted in a late-industrial world that by today’s standards was local and slow. True, motor vehicles had replaced horse-drawn transport, and early commercial aircraft were flying a privileged few to faraway places. But much remained as it had been for decades. Men controlled business, industry, government, and finance, with women largely relegated to the domestic sphere. Vast swaths of the world – including India, Africa, and South Asia – strained under the yoke of colonialism.
WWII changed everything. In its aftermath, cars became faster, and planes sleeker and swifter. Women assumed a growing role in society, the economy, and governance. But the nuclear age loomed large, bringing with it the new threat of mass destruction.
The world thus needed new ways of thinking and acting in order not to blow itself up. Governments and statesmen rose to the occasion, establishing new multilateral institutions such as the United Nations and forging treaties aimed at deterring nuclear attack. New global agencies like the Food and Agriculture Organization and the World Health Organization tackled problems of starvation and illness. And while all this was happening, new independent countries emerged from colonial domination.
Fast-forward another 75 years, and the world is once again facing a radical challenge to norms it had come to take for granted. The pandemic, it turns out, is not only a scourge but also a source of revelation. It has revealed that postwar institutions, though still functioning, are tired and need revitalizing. It has exposed the costs of systemic weaknesses that enabled populists and extremists to gain power in many places. Above all, it has demonstrated that, regardless of where we live, we are all in this together.
If the fear after WWII was nuclear annihilation, the fear now is global disease. COVID-19 – and the recurring pandemics experts tell us to expect in the future – is a global phenomenon from beginning to end. We are accustomed to seeing the same diseases in different parts of the world, but never had we faced one requiring every country to take the same precautions, at the same time, lest we all fall victim. The cure for COVID-19 – although the disease is unlikely ever to be fully eradicated – must be global, too.
Within days of China releasing the genetic composition of the novel coronavirus on January 10, 2020, scientists around the world were working to develop vaccines. The effort relied on global science, with international nanotechnology research leading to a new form of vaccine (messenger RNA). This again proved Louis Pasteur’s observation that “science knows no country, because knowledge belongs to humanity, and is the torch which illuminates the world.”
But we have now run into a roadblock. While we have developed vaccines internationally to fight a global contagion – new thinking and new action for a new case, as Lincoln would have put it – we are reverting to old nationalist norms at the delivery stage. Countries and blocs of countries – largely in the affluent West – are adopting an “us-first” attitude that makes no moral or practical sense.
Morally, we know that relegating poorer developing countries to the back of the vaccine line is the wrong thing to do. And, as a practical matter, we know it won’t work. In the past, a country’s population might have been able to shelter from disease behind reinforced borders. But this will not work in a hyper-connected world.
Because none of us will be safe from COVID-19 until everyone is, the only way to defeat it is by attacking it globally. As long as there are countries or pockets of people where the virus is being transmitted, there will be new cases and, even more frightening, new variants. Some of these may prove more lethal and – the great fear – impervious to the vaccines that represent our only hope of conquering the virus.
Global challenges require global solutions, and today the occasion is again piled high with difficulty. To end the pandemic and navigate the stormy present, we must heed Lincoln’s call and develop new norms to replace our worn-out, insular beliefs.
What’s in a War?
Channeling the spirit of America's entry into World War II, President Joe Biden has promised a mass mobilization of people and resources to tackle the COVID-19 pandemic. But if defeating a virus is like waging a war, several important historical lessons and caveats should be kept in mind.
PRINCETON – US President Joe Biden started his term with a beautifully crafted speech that caught the spirit of a country exhausted by Trumpism and COVID-19. Biden has promised a “full-scale, wartime effort” against the pandemic. But hasn’t our tired world already been in the trenches for a year now?
On March 19, 2020, when Donald Trump belatedly started to act as though the coronavirus might be serious, he referred to “our big war” and promised to “continue our relentless effort to defeat the Chinese virus.” Similarly, Chinese President Xi Jinping on February 6, 2020, declared a “people’s war” against the virus.
Of course, Trump’s war quickly went off the rails, as have previous US attempts to deploy the war analogy outside of a military or diplomatic context. In June 1971, President Richard Nixon, calling drug abuse “public enemy number one,” launched the “war on drugs,” which President Ronald Reagan expanded. Fifty years later, this mobilization is almost universally recognized as having failed.
Likewise, the “war on terror,” declared by President George W. Bush following the attacks of September 11, 2001, succeeded merely in preventing a precise repetition of that event. Not only were there plenty of other attacks elsewhere, but terror proliferated, becoming a tool for groups like US white nationalists and Trump supporters. The warriors against terror were fighting a tactic, not a target.
So, what does it take to win a war? For starters, victory requires a complete mobilization of people and resources. We cannot even hope to succeed against COVID-19 unless we marshal the contributions of many different individuals – most of them low-paid, disadvantaged workers in health, transportation, logistics, and other critical sectors.
Historically, wars have been waged with the promise that those who fought them would be rewarded. World War II was transformative in the sense that not only was the enemy defeated, but a better world was built in its aftermath. Health care, education, and infrastructure were extended to the benefit of society at large.
Victory also depends on “great logistics,” as a spokeswoman for the courier and freight service UPS pointed out during a White House event early in the crisis. But great logistics hasn’t happened. Instead, COVID-19 test results are still routinely held up for the oddest reasons, and the United States has scarcely even bothered with virus monitoring or contact tracing.
Without sound logistics management, everything else can fall apart. In World War I, Czarist Russia produced more than enough grain to feed its population, but the big cities endured terrible starvation. Officials blamed the inadequate rail system. In fact, there were plenty of railcars to transport grain, but they were in the wrong place. Rail workers had no shoes, and thus could not turn up for work.
Pandemics, like wars, produce shortages of critical resources, whereupon decentralized procurement can trigger bidding wars, with local and state agencies pushing up the prices of protective equipment, medical supplies, or vaccines. Disputes about prioritizing vaccination are likely to create tension between organized groups, from pensioners and medical providers to teachers and other essential workers. In wars that are waged successfully, the management of supplies is centralized to prevent their diversion to inefficient or undesirable uses.
Wars also give rise to international competition, which can fuel anger of the kind expressed by European Union citizens who see vaccinations proceeding faster in the United Kingdom and Israel than in their own countries. The companies that produce vaccines – Pfizer, AstraZeneca, Johnson & Johnson, GlaxoSmithKline, Merck, Moderna, Novavax, and Sanofi – have facilities in many countries. But they need to be able to operate worldwide without worrying about how production will affect pricing strategies in segmented markets.
Another issue for suppliers is transient demand. Vaccine manufacturers face a problem analogous to that of armament manufacturers before and during wars: if they invest in gigantic production plants, they will end up with massive unused facilities when the war is over. Hence, there needs to be more clarity (and creativity) about how the infrastructure used against COVID-19 can be repurposed. At least the novel techniques used in the mRNA vaccines will be useful to combat a wide range of diseases and disorders in the future.
Wars also need to be paid for. In the past, countries facing the prospect of a massive war bill assumed that in victory they could impose the costs on the defeated power. The Trump administration tried this approach when it insisted that China should pay a “big price” for its role in the pandemic, especially considering that it had already returned to economic growth before the end of 2020. In any case, even friends and allies will squabble over the settling of war debts. In the case of COVID-19, the only realistic scenario is that no one else is going to pay; demands for reparations will merely poison international diplomacy.
Finally, the war on COVID-19 has involved massive fiscal and monetary stimulus, far beyond the levels in response to the 2008 global financial crisis. As such, it is important that governments start preparing long-term stabilization programs to prevent bottlenecks, shortages, and price increases when the emergency is over.
This may sound like attempting to square a circle. The key is to focus precisely on the need of the moment, while accepting that many other needs cannot be easily determined. We need instruments for today that can also be used in different ways tomorrow. And while we look ahead to a better future, we also should prepare for higher taxes.
There is a model for managing such temporal dilemmas. The post-WWII vision relied on a surge of economic dynamism that provided a bridge from war to peace. Without strong, shared growth, the burden of the war would have been unbearable. Only a transformative vision of a generally healthier society can help us overcome today’s dismal reality.
LONDON – It is probably premature to offer an assessment of the COVID-19 pandemic’s possible consequences, not least because there may well be many more twists and turns to come. And once we defeat the coronavirus, some of the pandemic-induced changes to our lives might turn out to have been temporary. But with these caveats in mind, it is possible to begin drawing some conclusions.
First, it seems reasonably clear that once a new, highly infectious and dangerous virus appears, it pays to act aggressively to stamp it out as soon as possible, rather than wait and hope that we learn more. More than a year after the initial COVID-19 outbreak in China, many of the (mostly Asia-Pacific) countries that took the most aggressive steps to tackle the coronavirus seem to be in a much stronger position than the West.
Recently, for example, Western Australia reacted to a single COVID-19 case by locking down the city of Perth for five days. Here in the United Kingdom, by contrast, the clamor to reopen resurfaces as soon as there is evidence that current hospital admissions and reported deaths have passed a peak, even though the daily rate of new infections is well above 15,000. Ending lockdown is obviously desirable, but as the UK has learned, any easing of restrictions will be temporary unless the number of active cases declines dramatically.
Second, some countries are vaccinating their populations faster than others. Early leaders include the UK, which partly explains the loud calls to ease the lockdown. Initial evidence suggests that the COVID-19 vaccines are not only helping to reduce the scale of serious illness, but also reducing transmission. This could turn out to be spectacular news, and – if stronger signs of the vaccines’ efficacy emerge – mark the beginning of the pandemic’s end. But if governments lift lockdowns too soon, the risk of new coronavirus mutations resistant to current vaccines will increase.
Third, although the first approved COVID-19 vaccines were adapted from research already underway for other purposes, the pandemic may well permanently improve the entire vaccine development process, from research to clinical trials and regulatory approval procedures. If so, this should help us to combat future variants as well as new pandemics.
The pandemic may also boost the pharmaceutical sector’s overall efficiency and productivity (as opposed to its profitability). So, perhaps drug firms will also be able to develop new antibiotics far sooner than conventional wisdom would have us believe.
Fourth, the COVID-19 crisis has shown that governments can spend a lot more money without upsetting markets than most people thought. Although high and increasing levels of government debt have raised huge questions, the fact that financial conditions have remained so benign – with bond markets, in particular, seemingly untroubled – raises the possibility that governments can be more fiscally ambitious than many believed.
This could have profound consequences for economic-policy debates, ranging from whether the eurozone should scrap its fiscal rule limiting government debt to 60% of GDP to whether governments should maintain a permanent presence in some sectors where they previously were absent.
For example, it seems obvious to me that we need a major overhaul of government expenditure accounting that results in a clear distinction between investment and consumption (or maintenance) spending. If government investment spending is a source of future private-sector economic growth, especially in areas with a large positive multiplier, this crisis has demonstrated the silliness of treating all government spending equally. This applies to aspects of health and education in particular, but to many other areas, too – including how governments try to tackle climate change.
Crucially, governments must also play a bigger role in ensuring that all citizens have access to digital technologies (in the same way that they should ensure universal access to education and health care). Unless everyone has access to technology, major national initiatives, such as COVID-19 test-and-trace schemes, are unlikely to succeed.
Fifth, whatever the post-pandemic norm for remote work may be, work habits are set to become more flexible. This will have a host of positive consequences, including much less time wasted commuting, less pressure for conventional transport infrastructure upgrades, larger and more “liquid” labor markets, and perhaps even a rise in productivity.
Sixth, the crisis has accelerated the shift toward technologically enhanced tools, especially for consumers, thereby casting doubt on the future of many brick-and-mortar retailers. Policymakers will therefore presumably need to rethink some aspects of taxation, including finding new sources of revenue from online businesses. This might allow many traditional retailers at least to have a fairer chance of playing a continuing role in our shopping habits.
Seventh, the function of urban real estate, especially perhaps in large conurbations, will need to adapt. This will require new ideas about the spatial relationships between offices, shops, and homes, as well as about transport. The idea of flexible and shared office spaces may well become embedded into the next generation of workers.
Finally, the COVID-19 crisis has accelerated Asia’s global rise in terms of relative economic growth, with China driving the region’s ascent. The contrast between China’s governance structure and that of Western democracies – in terms of both global governance arrangements and managing bilateral relations – will thus become an even bigger issue for many leaders than it already is.