What can we learn from COVID-19 and past crises?

The global coronavirus pandemic is turning into one of the most trying challenges for humanity in recent memory, as the COVID-19 disease has infected more than two million people across the world, closed borders and slowed economic activity. Significant fluctuations in financial markets highlight the extent of disruption and uncertainty.

In the past few weeks, researchers have been attempting to provide policy guidance in these rapidly changing circumstances. This commentary focuses on the necessity of collaboration, an essential precondition to global recovery, and outlines a few key questions and challenges for policy makers and their respective communities to consider for the path forward.

COVID-19 occurred at a point in time where the world has experienced significant changes from technological advancement, globalization and demographic shifts. As a result, managing the coordinated effort needed to combat COVID-19 is particularly challenging. Several facets to this challenge require a multi-policy approach, global coordination, technology support and a new type of social contract between individuals and society.

Multi-policy response

While immediate public health anti-virus measures are the most effective way to save lives and prevent the public health system from being overwhelmed by rapid transmission, these anti-crisis measures should be supplemented by fiscal and monetary policies to flatten the “economic recession curve”, taking special consideration for the most vulnerable economies, and implementing measures to support each other without bringing the global economy to a standstill.

A multi-policy response should be constructed in light of the challenge of climate change, shifting demographic trends in our societies, and the tools now available to us as a result of rapid technological advancement.

To combat this pandemic, large-scale stimulus plans have been introduced. However, we should rethink the impulse of directly jumping back to the previous growth trajectory. In the aftermath of the 2008 financial crisis, the fossil fuel industries received a significant share of the bailout money. There are benefits to considering green alternatives in the post-virus economic recovery plan. Compared with 12 years ago, green investment options are plentiful today, spanning across industries such as renewable energies, high-speed data transmission, electric vehicle chargers, fiber-optic infrastructure, and so on.

COVID-19 also reminded us of a less visible source of strain – demographic risk. The world is getting older. COVID-19 disproportionately affects older people, reminding us to be better prepared to protect our most vulnerable citizens, innovate to better serve them, considering the disproportionate effects on seniors for whom retirement funds may be scant. It also serves as a call to action to optimize pension systems in view of sustainability.

Global coordination

A coordinated effort as a global community is crucial. The 1918 Spanish flu pandemic claimed 100 million lives and the Black Death is estimated to have claimed the lives of even more people. Both occurred when the world was more fragmented and information sharing limited. The 2014-2015 Ebola virus, a more recent example, was contained through an effective joint response from the international community. The unique challenge of COVID-19 as a highly infectious respiratory disease highlights the urgency of such an effective collaborative effort in public health, but also in trade and commerce, as it directly impacts the distribution of resources.

The pandemic-induced shock to the global economy occurred at an interesting juncture. Having gone through rapid globalization, the world had just begun to renegotiate trade terms and experience, to a certain extent, a roll-back of global integration.

Many had lamented the “noodle bowl” effect for reducing economic benefits of trade as a result of increasing complexity in trade agreements. The recent disruptions in global supply chain and logistics showed that a bowl without “noodles” was perhaps worse. This crisis thus provides an opportunity to re-examine the frameworks of globalization and enact improvements with appropriate governance.

Effective communication channels are crucial in enabling a successful implementation of multi-lateral efforts. In the critical moment of a global pandemic, it is more meaningful to grow from mutual learning than to let differences or pre-existing notions hinder productive outcomes.

Technology support

Technologies have affected all industry sectors and are now being deployed as powerful tools to combat COVID-19. Artificial Intelligence, for instance, has enjoyed a boom and played a critical role in this anti-virus war.

Over the past few years, companies with business in China have developed capabilities in healthcare. With the ability to learn quickly from the virus-related data, algorithms have saved human time in sequencing the genome of Sars-CoV-2, designing lab tests, analyzing CAT scans and developing new vaccines. Beyond the boundaries of healthcare, improvements in software and online marketplaces have allowed a portion of the population to carry on work, receive education, and obtain basic necessities where it was not previously possible.

Individuals and society

In crisis, the juxtaposition between individual and collective interest is heightened. When resources become scarce, individuals often rely on governments to provide coordinated bailout relief. Yet, this effort also evokes a moral dilemma, as individuals retain the ability to choose how to behave within the boundaries of law. Their actions are further guided by cost-benefit analysis for their own interests in conjunction with, and sometimes taking a priority over, interests of society as a whole.

It is therefore important for individuals, corporations, and governments to establish a framework delineating responsibility while preserving values which underpin the foundation to each community. The realignment of incentives is necessary to build up reserves during the best of times so as to provide an effective buffer and a response mechanism for downturns.

The Chinese word for crisis carries the dual meaning of risk and opportunity. As the world unites, the global community will find constructive methods of collaboration and a collective path forward.