To borrow a famous phrase from history, a spectre is haunting the world—the spectre of Covid-19. Albert Camus, in his novel The Plague, considered plagues a simile of wars and thought plagues and wars always found people surprised and unprepared. Indeed, the world today is the plague-infected city of Oran (the setting of The Plague) writ large.
The coronavirus has generated twin crises: a public health crisis and an economic crisis reminiscent of the Great Depression. The economies of major countries including the United States are facing negative demand as well as supply shocks. Because of social isolation and travel restrictions, many industries in the service sector, such as travel and tourism, sports, entertainment, retail outlets, hotels and restaurants, are facing rapid declines in demand. The supply shocks are induced by disruptions of supply chains in an interdependent world economy and, in some places, by closure of factories.
Forecasts of many organisations predict a severe impact of the virus in the short run and in 2020. The OECD predicted that under the best scenario, the growth rates in 2020 will decline to 4.9 percent in China and only 1.9 percent in the USA. In a more recent forecast, Goldman Sachs predicts a gloomier picture: In the second quarter of this year, the US economic growth will decline, at an annualised rate, by a whopping 24 percent, a figure comparable to that during the Great Depression in the 1930s.
The human toll of the virus can be gauged by exploring the effects on labour markets. According to a recent report of the ILO, the number of workers in the world who could lose their jobs ranges from 5.3 million (under the best scenario) to 24.7 million (under the worst scenario). According to a projection of Goldman Sachs, the number of unemployment insurance claims in the United States may jump to 2.25 million because of the coronavirus. In Canada, the number of unemployment insurance claims recently surged to half a million compared with just 27,000 last year. It is also evident that the coronavirus is widening the divide between low-income and high-income groups. Many low-income and "gig workers" in the service sector, for example, workers in restaurants, delivery workers, "contingent" workers such as Uber drivers, can't afford to work online from their homes.
Advanced countries have been forced to respond with massive expansionary monetary policy and fiscal policy. Central banks in the United States, Canada and elsewhere, have reduced their policy interest rates to near zero levels. Fiscal policies have included billions of dollars of government expenditures to provide financial support to low-income people, laid-off workers, and business companies crippled by the coronavirus. However, policy makers already realise that it is not easy to stimulate a quarantine economy. Indeed, the coronavirus presents a quadrilemma for the virus-ravaged countries: 1) Should the government focus more on reducing the mortality rate by increasing the resources at hospitals by increasing the number of hospital beds and production of medical equipment such as ventilators and other materials such as masks, gloves, and protective gowns for frontline healthcare employees?; 2) Should the government focus more on reducing the transmission rate, known as Ro (the number of persons affected by an infected person), by testing and enforcing social isolation and social distancing?; 3) Should the government lock down cities and communities to protect public health, risking severe economic recessions?; and 4) Should the government bail out workers and low-income people rather than business companies? The responses and resolutions of the quadrilemma have varied across countries depending on the economic and political systems and the capacity and motivation of ruling governments.
What are the lessons that need to be learned by countries from the coronavirus pandemic? First, health is a "global public good", not a "private good." Good health provides social benefits to the local community, the nation, and the world that exceeds the private benefit to an individual. On the other hand, ill health generates social costs to the community, the nation, and the world. The example of the coronavirus clearly indicates how sickness caused by a virus, whether from bats, wild animals, "wet markets", or unknown sources, in one part of the world can upend the physical health and daily lives of people and economic health of the entire world. Accordingly, solutions of the public health crisis caused by pandemics require the collaborative efforts of local communities, national governments, and international agencies.
Second, as levels of incomes have increased in the world over the years, the prevalence of infectious diseases relative to non-infectious diseases has declined because of improvements in hygiene and sanitary conditions. Many in the West with excessive optimism had declared, in the 1960s and later, the end of the era of infectious diseases and plagues. Still, in many developing countries, infectious diseases continue to cause serious problems. Deadly and invisible pathogens like coronavirus have no national citizenship and carry no passports. The emergence of SARS, Ebola, Zika virus, the Swine Flu, the bird flu, the West Nile virus, Dengue, and now the coronavirus demonstrates that no country is immune to the sudden outbreak of infectious diseases.
Many epidemiologists in the West have, for years, warned about the emergence of pandemics like the coronavirus. Mass migration from rural to urban areas, poor public health infrastructure, high mobility of people, deforestation have created imbalances in the eco-system involving human beings, plants, and animals, creating fertile grounds for zoonotic transmissions of viruses from animals to human beings. According to the Centre for Disease Control, Atlanta, 60 percent of known infectious diseases and 75 percent of new or emerging infectious diseases occur through zoonotic transmissions. Accordingly, countries, whether developed or not, can't afford to be blind to the potential outbreak of infectious diseases.
Third, health being a public good can't be left to market forces. The quality of the public health system and preparedness for and management of a pandemic like the coronavirus require an active government that is trustworthy, anticipatory and proactive rather than reactive. It is a false argument that western countries are slow to impose social restrictions and lockdowns because these are democratic and open societies. A truly democratic country must be able to mobilise national resources to manage a pandemic quickly and effectively on a war footing, if necessary.
Fourth, in the post-coronavirus world, countries will have to reconfigure their priorities. According to the Stockholm International Peace Research Institute (SIPRI), world military expenditure in 2018 was more than USD 1.8 trillion. A 10 percent reduction of this amount will generate about USD 180 billion which could be diverted to worldwide health programmes and research related to infectious diseases so that medicines are available at affordable prices. Furthermore, all countries should realise that a relentless pursuit of material progress based on short-term profits and private interests at the expense of the environment, health and human development would be self-defeating in the long run.
Finally, Bangladesh thus far hasn't become a hotspot of the coronavirus. However, as a densely populated country with high shares of slum-dwellers in major urban centres, Bangladesh is vulnerable to infectious diseases. Bangladesh can learn from the success of countries such as Hong Kong, Singapore, South Korea, and Taiwan in managing the crisis through testing, raising awareness of the health crisis, tracing infected people, social isolation, and treatments in early phases. Bangladesh needs to improve its public health system and invest more in preparedness and responses to pandemics. Bangladesh may not be able to produce medicines and ventilators overnight for coronavirus, but certainly it can produce masks, gloves, and protective gowns for frontline health professionals. According to the World Health organization (WHO), government expenditure on public health as a percentage of GDP in Bangladesh has declined somewhat in recent years and was only 0.4 percent in 2017. Furthermore, out-of-pocket payments as a percentage of total health expenditure in Bangladesh has increased in recent years and was 74 percent, which is higher compared to many other developing countries. Sustainable Development Goal (SDG) 3.8 of the United Nations calls for universal health coverage by 2030. According to a report (WHO, 2017), the Universal Health Coverage Index was only 46 in Bangladesh, significantly lower than in countries such as India, Sri Lanka, Cuba, Vietnam, and Sri Lanka. The burden of pandemics on poor people will be lower if a country can provide universal health insurance.
The coronavirus may be over in a year if not in a few months. Yet the world shouldn't be complacent. A new epidemic may threaten the humanity again. As Dr Rieux, the narrator in the novel The Plague, cautions the jubilant crowds in the city of Oran at the end of the plague: "that the plague bacillus never dies or disappears for good; that it can lie dormant for years… that it bides its time… that the day would come when… it roused up its rats again and sent them to die in a happy city." Of course, Albert Camus had a broader meaning of an epidemic which can be not only physical diseases, but also political and moral diseases.
Dr Sadequl Islam is Professor and Chair at the Department of Economics, Laurentian University, Canada.