CHIPPING NORTON, United Kingdom (Project Syndicate) – The human tragedies and massive economic disruption caused by COVID-19 have rightly caught the attention of public and policy makers for more than six months and should continue to do so. However, in dealing with the immediate crisis, we must not lose sight of the opportunities. The oft-quoted line of not wasting a crisis has seldom been more relevant.
For businesses, governments, households, and multilateral institutions at this troubling time, the fundamental task is the same: to overcome pandemic disruptions in a way that also highlights the silver lining of the crisis.
Now is the time to grasp trends and conditions that will change our society and economy for the better in the long term. With that overarching goal in mind, here are the six best silver linings I see.
The first is that we are living through one of the most exciting and promising periods of medical invention and innovation in history. While the immediate focus is rightly on COVID-19 vaccines and therapies, we should expect the research currently underway to produce a multitude of other discoveries, many of which will yield significant, lasting benefits.
In addition, the crisis is forcing us to face a number of complex problems that affect the pricing and distribution of medicines at home and abroad, and the range of social and other inequalities that we have been allowed to worsen.
Second, deeper cross-border cooperation between the private sector, often outside the purview of governments, drives this process of scientific skipping. In mobilizing against the coronavirus, scientists around the world are sharing information like never before, and pharmaceutical companies are working together in unprecedented ways.
These collective efforts are supported by dynamic public-private partnerships, which show that this development tool can indeed be 'win-win' if it is properly aligned and clearly aligned.
Third, the economic disruptions resulting from the pandemic have fueled several private sector efforts to collect and analyze a wider range of radio frequency data in areas that go well beyond medicine.
In the business discipline, for example, there is massive interest in innovative new methods of measuring economic activity through granular high frequency indicators such as mobility (smartphone geolocation), power consumption and retail traffic, as well as credit card usage and restaurant reservations. These metrics now complement the official statistics produced by governments and provide significant leeway for comparison and contrast exercises that can improve the quality and policy relevance of data collection efforts.
Fourth, the COVID-19 shock has increased our collective awareness and sensitivity to low probability, high impact, "tail risks". Suddenly, many in the private and public sectors are thinking more about the full distribution of potential outcomes, while in the past they have only focused on the most likely events.
Policy makers have become more open to scenario analysis and the wider range of “if-then” conversations that generate such analysis.
In the case of climate change – a major risk that some mistakenly perceive as a distant tail rather than a baseline – the sharp reduction in harmful emissions during the current crisis has provided clear evidence that a new path is possible. And it is now widely recognized that governments play an important role in drawing a lasting and inclusive recovery.
The door is open to more public investment in climate change and adaptation, and there is a growing chorus demanding that the new normal be "green".
This speaks for a fifth silver lining. Country by country, the pandemic has led to a series of "natural experiments" shedding light on a range of issues that go well beyond health and economics. Systems of governance and modes of leadership have been scrutinized and show wide variations in their ability to respond to the same big shock.
These topics were not limited to the public sector. Corporate responsibility has also come to the fore as a company after the company struggled to respond to what was once unthinkable. It has been shown that there is a lack of multilateral cooperation, which increases the threat to all.
After all, the crisis has prompted many companies to hold open discussions about the compatibility of work and family and to develop innovative solutions to meet the needs of employees. There have already been wide-ranging changes in the way we work, interact with colleagues, and consume goods and services, and only some of these are likely to reverse after the pandemic ends.
These six silver linings are just a tentative list of the possibilities the pandemic offers. The point is not to neglect the severity of the shock and uncertainty that the majority of the world's population has faced. The pandemic has lasted much longer than many expected and continues to leave tragedy and destruction on its way.
However, this is all the more reason to make the most of our collective response. The challenge now is to expand and refine this list so that we can take advantage of the opportunities offered and identify more positive trends in the long term.
By acting together, we can turn a time of deep adversity into a time of mutual well-being for ourselves and future generations.
Mohamed A. El-Erian, Allianz Chief Economic Advisor and President-elect of Queens' College, Cambridge, was President of President Barack Obama's Global Development Council. Most recently, he was the author of “The Only Game in Town: Central Banks, Instability and Avoiding Another Breakdown."
This article was published with permission from Project Syndicate – The COVID Silver Linings Playbook.
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