When and how to resume economic activity
When panic over the acceleration of Covid-19 contagions erupted in late February, the dilemma between saving lives or jobs was resolved in favour of lives without further hesitation. There was no way to preserve jobs, as long as the runaway pandemic was not tamed.
Now, in view of the economic destruction that general social-distancing has caused in just a few weeks, the anguish has mutated: we are realising that unemployment, poverty and despair — all of them creatures of the recession — will also claim lives, even if they are not visible immediately.
Paradoxically, the solution to the old dilemma has reversed: more and more every day, we need to save jobs to save lives.
We don’t know how many deaths the pandemic is going to cause this year globally, but it will be for sure only a small fraction compared with the deaths caused each year by poverty (avoidable diseases), despair (alcoholism, drug addiction and suicides) and crime.
The exacerbation of these three elements encompassing the economic crisis will be more lethal in the medium term than the virus itself.
Social isolation has also begun to test citizens’ tolerance with the strict impositions of quarantines. Especially in advanced countries that are making good progress in taming the pandemic, people are showing “annoyance” and increasing disrespect for isolation rules. In poor countries, the harsh facts of daily survival make the policy of social containment even more intolerable and more justified its chaotic noncompliance.
As the pandemic gets progressively controlled, it is imperative that governments reopen social and economic activities as soon as possible.
When and how much?
Nowadays, economic decisions such as this one are first and foremost dependent on medical advice, which should prevail. Never have been medical and economic science so intertwined as today. Medical-epidemiological experts have identified the conditions that would allow the progressive lifting of widespread quarantines without risking further outbreaks of infection that would cause even greater damage.
The following conditions must be present concomitantly:
1, A sustained reduction in new cases of infections for at least 14 days
2, Sufficient capacity of the health system to treat infectious cases without being overwhelmed, by providing effective therapeutic treatment
3, Ability to test all symptomatic persons, all essential personnel and ample representative samples of asymptomatic persons; provide proper treatment and isolation of positive cases
4, Once tested, ability to trace and reconstruct the networks of infections and take effective containment measures
The ability to test and trace cases has proven to be key throughout this pandemic process. There has been a clear correlation between this capability and the reduction of the rate of infections.
Countries who do not test and trace are simply blind, ineffective and have no choice but to punish their citizens with more isolation than would have been needed if better information had been at hand. The strategy is to move from generalised to precision quarantine.
In the first stages of the pandemic, the painful widespread quarantines were necessary to allow governments and health authorities to develop these four capabilities. Those who have not done their homework will have to extend the quarantine internally and themselves will be subjected to isolation by the rest of the world. Citizens will have to hold them accountable for the continued unpreparedness.
Let no one expect, however, that the reopening of the economy will be as simple as switching from off to on. It will be a slow and gradual process. The easy and logical start is to resume activity in those industries that closed latest before the total quarantine, such as construction and manufacturing, because they are the ones that allow a better social-distancing at the workplace.
Italy, Spain, Austria, Germany and the Scandinavian countries are already taking steps in this direction, also including home deliveries, takeaway of food, etc. Then, wholesalers and stockists should also be able to resume and get prepared to replenish the retail network, which will gradually come to life starting from small establishments to larger areas.
Restaurants should also be able to open to the extent that their physical layout permits maintaining the necessary social distance. Same rule of social distance applies for public transport as well. And so it goes progressively in other areas.
It is not going to be easy for businesses, either. Even if some industries are allowed to reopen, the low demand because of lack of confidence will make life hard for them. Some of the hardest-hit sectors will be tourism and activities with large gatherings such as shows and conferences.
It will take time until the people venture to travel to places whose level of health safety they do not know or trust. In any case, international travel restrictions are probably going to be one of the latest to be lifted by national authorities, probably not earlier than autumn this year, which means that 2020 is practically lost for international leisure tourism.
Special consideration deserves the case of schools. They were the first to be closed, so the damage to the education of children, particularly the ones in early years, has been huge. On the other hand, children and youth have shown resilience to the pandemic.
A growing number of experts are recommending to gradually resume school activities. They think it is a risk worth taking. This decision would also facilitate the return of parents to their work activities. Obviously, parents and educators must opt in and schools must organise home learning for those who choose not to send their children to school.
These are times of great responsibility for decision-makers. Covid-19 will be among us at least until mid-2021 and will demand a lot of wisdom from political as well as from business leaders.
• Miguel I. Purroy, an economist, political scientist and director of Hotelco Bermuda Holding Ltd, is the author of Germany and the Euro Crisis. A Failed Hegemony
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