COVID-19: Health or Wealth?


Can the pandemic be separated from the economy? As the pandemic continues in Europe and the United States but seems to be subsiding in Asia, more and more questions are being raised about how to relaunch the economy. The importance of public health is being opposed to opening for business. The battle in the U.S. Senate over how trillions will be spent is indicative of two economic problems: Should businesses function in spite of the virus? How should money be spent to relaunch – from the top down or bottom up?  

The medical necessity of social distancing and staying home has had dire consequences for the global economy. Consumers are not spending. Many companies are closing or limiting activities. Employees are being laid off or given partial compensation. Independents are stranded. Business people like Donald Trump are eager to get rolling again.
What should governments do? Should they allow businesses to open? Obviously businesses that provide essentials such as food and its distribution as well as all that relates to medical services should function, although one can certainly question why President Trump has not nationalized the manufacture of masks, respirators and other medical necessities. If fighting the virus is equivalent to fighting a war, as French President Macron said, then the manufacture of masks and ventilators should be front and center as was the manufacture of tanks and bombers during World War II.
The pandemic has also revealed inherent problems in federal systems. Contradicting orders from the national and regional levels have shown a lack of centralized power. Swiss cantons have given different instructions to their citizens. As much as the Federal Council has repeated that it is the highest authority in extraordinary times, the cantons still maintain certain independence. (Fortunately, the canton of Uri’s decision to oblige people over 65 years to stay at home unless of extreme necessity was overruled by the Federal Council.) That is inherent in any federal system as much as it is disadvantageous in national emergencies.
There seems to be some agreement that governments should step in to alleviate the financial suffering. That is accepted, but where they should step in is not clear. The Swiss union chief Pierre Yves Maillard proposed to get money out as soon as possible to those in need such as small enterprises and independents so that people could pay rents, mortgages and buy food. He said that bureaucratic regulations could wait. On the other hand, U.S. Republicans prefer a top down approach to help large businesses, hoping that the money will trickle down to employees and independents.
All of these economic questions assume that the pandemic will slow down and that there will be some return to normal. Behind the arguments over how much money to spend and where to spend it is the assumption that focusing on the medical is another matter. The doctors will take care of the medical, the economists will take care of business. Different sections of society have their own priorities.
At a time when hospitals are overwhelmed and lacking basic medical services, how can we focus on the health emergency and financial crisis at the same time? Is it possible to have a holistic approach to both? Or, as I suspect, is each segment of the population focusing on its own needs instead of seeing the larger picture.
That individuals will profit from this emergency reflects human nature as does applauding health care workers from balconies at a specific hour. Emergencies show the best and the worst in people. And there is no question that economic considerations cannot be ignored during the pandemic. People are out of work. Many are without pay. Somehow bills must be paid. The end of the month is approaching. The post-pandemic economy cannot be ignored.
The problem is how to weigh the economic with the medical. If businesses open too quickly, the pandemic will continue to spread. If money is given to large companies, such as the banks during the 2008 subprime debacle, the average person will not be helped. Trickle down economic policies have not proven successful to the middle class.
A lack of testing equipment, masks and ventilators reflects poor decisions about where public spending should go. It will be interesting to see how an upcoming popular vote in Switzerland on military equipment such as fighter jets will be affected by the pandemic and insufficient hospital resources. (The former French Minister of Health has been criticized for her 2009 decision to cut back on stockpiling equipment that is now lacking.) The pie cannot grow unless increased national debts are accepted. Guns and butter (or masks and ventilators) has never worked. You can’t have it all.
And, finally, the pandemic has shown the limits of democracies. The Chinese seem to have turned the emergency around because of highly centralized, authoritarian decisions. Chinese doctors are now traveling around the world showing other countries how best to contain the virus while federal systems remain divided at different levels and different departments. It’s not always easy to understand who is in charge.
The dilemma of health or wealth depends on who is in charge. In an ideal world, one authority would be able to balance the two. In democratic, federal systems, the answers are more complex. The final result may be that neither side will dominate. Hopefully, that will also mean that neither side will suffer unnecessarily. 


Lien permanent 8 commentaires


  • You have said it all, Mr Warner.

    A propos de démocratie, je dirais que la chose a éviter dans un moment pareil est de confier tout le pouvoir a une seule personne (autocratie). La Chine n`est pas une démocratie parlementaire, mais meme avec Xi Jinping, ce n`est pas une autocratie. La Russie est une autocratie, mais elle a la chance d`avoir a sa tete un Poutine et non un despote idiot. En Hongrie par contre, ou Orban vient de mettre en veille (temporairement?) ce qui restait de parlementarisme, il est difficile de rester optimiste meme mais s`il faut reconnaitre que son Opposition n`a jamais été capable que de se chamailler et, lors des élections, de se tirer dans les pattes.

    Quant a l`économie, je ne sais pas si ce qui arrivera aux USA, mais je crois qu`apres cette pandémie, l`Union Européenne aura bien plus de sens pour tout le monde qu`il n`en a eu jusqu`ici et le national-populisme en prendra plein les gencives.

  • BEACH Stocks: $332B in Value Washed Away

  • @Rabbit Pas mal d`actions ont dégringolé, mais le boursicotage n`a jamais été aussi frénétique. Des foules entieres achetent des actions pour les revendre le jour suivant avec souvent 15-20% de bénéfice. La seule chose qui a changé est la logique derriere ces achats: avant on achetait en tablant sur l`accroissement des bénéfices d`une entreprise, désormais on achete en faisant le pari que l`action a touché le fond et qu`il va maintenant remonter par escaliers. Croissance économique ou catastrophe, tout est bon pour la spéculation boursiere.

  • Je comprends votre détresse, Jean: jusqu'en 2001, on faisait du 30% juste avec le SMI. Easy money, quoi ! Maintenant, il faut être "game changer" (comme on dit): spéculer sur les masques, les gants et les respirateurs artificiels...


  • @Rabbit On faisait peut-etre du 30% / an, mais maintenant certains se font du 30% par semaine alors que des millions de gens se retrouvent sans emploi. La simple décence voudrait que les bourses soient suspendues au-moins pendant la pandémie.

  • J'abonde tout a fait dans votre sens, Jean, c'est un véritable scandale (comme disait le regretté Georges Marchais). Mais, bien que j'accorde une certaine probité à vos paroles, je crois que nous sommes en dessous de la réalité des chiffres : c'est bien de 30% de bénéfice par jour et d'une dizaine de milliards de gens sans emploi, dont il faut désormais tenir compte.

  • Ce qui m`étonne, c`est la rapidité avec laquelle le virus s`est propagé sur tous les continents. Si l`origine du virus est naturelle, il n`a pu apparaitre simultanément en plusieurs endroits, mais alors comment expliquer que tant de Chinois en partance pour les quatre coins du monde aient pu etre infectés dans les quelques semaines de janvier avant leur départ. Car enfin, le nombre des Chinois qui voyagent régulierement au long cours ne doit pas etre bien grand. J`ai de plus en l`impression qu`il manque un morceau fondamental dans ce puzzle diabolique.

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