It is a fact that we have been hit by a crisis we were unprepared for. Fighting a pandemic has not been top of the priority list for humans. We have not elected presidents that will ensure that we come out of a pandemic crisis with minimum damage. Electoral policies have revolved around oil prices and unemployment, which seem to be the more pressing issues. In the current environment, such policies seem short term. For our future policies we may learn a lot from the crisis. The crisis is global; it does not discriminate. It is also very personal; it has affected all of us in one way or another. To respond to a crisis with such broad impact, our perspectives and our strategies need to evolve. I hope they do. I don’t know if they will.
The terms “rebooting life” and “rebooting the economy” are being used widely these days. If we are going to reboot, it is better to re-strategize based on the new information we have gathered through the health and economic crisis. The problem is that most of us rely on internet as our information source, and internet is a place which equally brings to us articles from level-headed sources as well as ones from completely unreliable far-from-fact sources. The crisis has been muddled with dangerous conspiracy theories and “expert-opinions”. For instance, the 5G conspiracy theory in Britain claims that there is no Covid-19 pandemic. The governments want people to stay home so they won’t discover how harmful the 5G frequencies are. 5G infrastructure has been harmed due to this theory in some places. The example of a dangerous expert opinion is the US president Donald Trump suggesting injecting infected lungs with disinfectants such as bleach to kill the virus in a minute. The following is my attempt to separate facts from opinions and analyse the health- and economy-related impact of the strategies to fight the crisis.
The initial (delayed) response to the pandemic in many countries has been imposing very strict lockdown to recover from the health crisis. Many countries, not all. This is understandable as lockdown measures hit businesses, especially in emerging markets and low-income countries where people survive on their daily wages. My home country Pakistan is one such country.
In the first world countries like the United Kingdom, the delayed response has come as a surprise for many. The initial government policies were based around two factors: (i) What percentage of infected population would need intensive care, i.e., the availability of resources to treat the sick, and (ii) In the absence of a vaccine, is ensuring herd immunity through infection spread an option? In the case of the UK, health advisors speculated that only 15% of the 30% admitted to the ICU required ventilators. This was based on information coming from China, which reported 15% ICU-admitted cases being treated using pressurized oxygen, with no invasive mechanical ventilation required. Keeping this in mind, and the availability of the health care resources, policy makers opted for developing herd immunity through infection of the general population, while protecting the elderly and at-risk communities. When new information arrived from Italy stating that pressurized oxygen was ineffective, stopping the infection spread through lockdown measures appeared to be the only option, as the hospitals were not well-equipped enough to treat such large numbers.
The question that remains is: In the absence of a vaccine, are we not prone to witness a second wave of infection once the lockdown is lifted? How hard is this wave going to hit us? Researchers from Imperial College London address these questions simulating infection spread models. Such models may make simplified assumptions about many variables, for instance homogenous infection probability of the entire population. Though exact predicted values may not hold in reality due to these assumptions, the simulation results may provide insight into the future infection spread trends. According to the simulation study, the stricter the containment measures, the higher the expected peak of the second wave in terms of demand for critical-care beds per a population of 100k. With very strict containment measures, developing herd immunity via recovery from the infection may not be possible[1].
The lockdown has economic implications. Increasing number of anti-Lockdown protests are being reported each day. The protestors claim that their economic and civil liberties are under threat. Unemployment claims reported in the US over a four-week initial period are 22.03Mio which is more than 8 times the numbers reported in any previous crises[2]. The economic impact of lockdown is expected to be severe, with a study by the Center of Budget and Policy Priorities predicting the US state revenue losses of up to $500bn over the next three-year period. With such predictions and unrest, a prolonged lockdown may not be sustainable. A gradual reopening of economy is necessary with complete transparency from the governments. If a government fails to report the actual number of infected cases, it may not expect people to understand the gravity of the situation. Cooperation will follow the transparent spread of knowledge.
For the low- and middle-income countries (LMICs) the situation is more tragic, both regarding healthcare and economy. The first world countries may be quick to acquire the available emergency equipment such as ventilators. Just like the “toilet paper problem of the COVID-19 times”, the distribution of ventilators will be unfair. According to a report by CNN published on 18 April 2020, Italy has distributed 2700 ventilators to its affected areas so far, while South Sudan has 4 ventilators for its entire 12Mio population. According to a Financial Times report, the only ventilator producer in Italy, Siare Engineering, is requested by the Italian government to produce 500 ventilators each month, up from its usual production of 125 units. This translates into cancelling of all foreign order. Each ventilator is reported to cost €17k. All this information does not bode well for the LMICs.
On the economic front, the LMICs have already been handed a blow before their business closure due to internal lockdowns. The crisis and lockdown in developed countries resulted in investment outflows and decline in remittances. According to a March 31 Financial Times report[3] portfolio outflows of more than $80bn had been recorded, which is 4 times the value in the financial crisis of 2008. Similarly, as reported by World Bank on 22 April[4], the global remittance flows dropped by 20% since the beginning of the year. The report also predicts a more than 35% fall in foreign direct investments for LMICs emphasizing further the importance of remittance flows. To top it all, the LMICs will suffer from the issues that developed countries face too: decline in tourism and business closure inside the countries. According to the IMF managing director, Kristalina Georgieva, handling the crisis will cost LMICs at least $2.5tn.
Economically, the situation looks bleak. This highlights the need for re-evaluating our strategies more than ever. With all the fear regarding a second outbreak, the economies still need to reboot. While saving humanity from the virus, we may sentence some to death by starvation if the right measures are not taken. The important question is how to restart and recover, and at what cost? In order to answer this question, we need to be proactive in re-strategize with expert opinion, rather than reactive. Unfortunately, the current government response seems to tackle issues based on the amount of pressure from certain interest groups on a first-come-first-served basis.
Whether for policy makers or for common people, these are trying times, but challenges bring with them new opportunities for growth. On a collective as well as an individual level, humans tend to aim for growth. We can rebuild and regrow. We can build on the positive teachings in hard times to get out of self-inflicted as well as externally imposed negative situations.
With my expertise I hope to contribute to the rebuilding of our economies. I have been working to establish a tech-startup[5] for a couple of years now. Like many businesses, business ideas have also suffered from the crisis. Investors may prioritize saving. Budget redistribution may also impact government funding schemes for new businesses.
In my opinion, new businesses and startups will play a major role in the economy reboot. These help to alleviate unemployment, which will be one of the major challenges to handle after the crisis. More importantly, new businesses may introduce the possibility to change the landscape of the labour market. Social distancing and lockdown measures have put a high demand on delivery services and etailers such as Amazon. According to a TechCrunch report, Amazon limited the shipment of certain products, and the delivery times for some products have increased to a month as compared to the previous average 5 working days deliveries. Though goods transport services experience high strain, people transport services such as taxi services are experiencing a decline in business. For instance, a Vancouver based Yellow Cab company has reduced its fleet by two-thirds, while surrey-based Kuber Taxi Service has halted operation altogether. Goods delivery and human delivery services are experiencing two very different types of challenges. Companies like Uber explore opportunities in these challenges by introducing services such as Uber direct and Uber Connect. Traditional Taxi services seem to be following a soon-obsolete business model. A shift in labour market towards more futuristic jobs may be necessary and regulating such shift for a smooth transition should be a priority for policy makers. The changing regulations may offer a better post-crisis world as compared to the pre-crisis one.
Not all that came out of the crisis has been negative. There are healthy debates discussing the impact of the unintended push in certain sectors (robotics in hospitals, big data analysis for emergency surveillance of people under lockdown[6]), as compared to the slowing down of life in general. One very positive side-effect of the lockdown measures has been that we identified our impact on nature. We have realized that the smog-filled skies are not an eternal presence. The blue skies are not lost forever, and we know what can bring them back. We also realized that we occupy so much space that there is no space left for our wildlife. When we back out a little bit, we may even be able to co-exist and inhabit the same spaces. Lockdown has also proven on an individual level that “degrowth economy” may be a sustainable concept, and a strategy worth pursuing moving forward post-crisis.
I would like to end with one of the most raging debates that came out as an outcome of the Covid-19 crisis: the impact of globalization. People are urging business and policy makers to bring the production of goods closer-to-home, as many businesses suffered from the lockdowns imposed in China. My two cents in this debate are based in Allen Watts’ teachings. Humans desire to stand out; we often feel like it’s “me against the world”. This concept doesn’t work in ecology and biology, according to Allen Watts. Every being depends on every other being for sustenance: We are all parts of one organism. No country is self-sufficient in resources, either natural or labour. Our future strategies based on individualism may not be sustainable. If we bring our complete production chain home, we may still suffer if the country from where we acquire our raw material goes under lockdown. A more sustainable solution is to work together to fight any crisis that comes humanity’s way. I believe that humanity is one organism with each part benefitting from others, whether we admit it or not.
[1] https://www.nature.com/articles/d41586-020-01003-6
[2] https://www.ft.com/content/2f8c724a-eee5-4238-9283-5af070cc1f30
[3] https://www.ft.com/content/777cd7da-7269-11ea-90ce-5fb6c07a27f2
[4] https://www.worldbank.org/en/news/press-release/2020/04/22/world-bank-predicts-sharpest-decline-of-remittances-in-recent-history
[5] https://bellatrace.gmbh
[6] https://www.ft.com/content/19d90308-6858-11ea-a3c9-1fe6fedcca75
About the author Samira HAYAT: https://www.linkedin.com/in/samira-hayat-9950624/