version
Well-known member
This is unsettling,
https://www.bloomberg.com/opinion/a...-economic-shock-can-be-contained-and-reversed
Think of what is happening as a huge paradigm shift for economies, institutions and social norms and practices that, critically, are not wired for such a phenomenon. It requires us to understand the dynamics, not only to navigate them well but also to avoid behaviors that make the situation a lot worse.
The bottom line is that the economic disruptions immediately ahead will be more severe and widespread than the ones experienced by the bulk of the population in advanced countries.
We live in a global economy wired for ever deepening interconnectivity; and we are living through a period in which the current phase of health policy — emphasizing social distancing, separation and isolation — runs counter to what drives economic growth, prosperity and financial stability. The effects of these two basic factors will be amplified by the economics of fear and uncertainty that tempt everyone not just to clear out supermarket shelves but sadly also reignite terrible conscious and unconscious biases.
All this will have stressful and immediate negative effects on institutions. Policies will be designed under “fog of war” conditions, including that awful trade-off between the critical need for urgency and both imperfect information and the absence of a playbook. The effectiveness of traditional measures will wane at a time of repeated need for streamlined and yet highly coordinated decision-making at the local, regional, national and international levels. And, if we are not careful, our own behaviors could compound this considerable list of challenges.
Wherever you look, economic activity is shutting down through a combination of government directives and social behaviors. U.S. travel bans, European border closings, nationwide shutdowns and office and school shutdowns have become normal.
The phenomenon is accelerating also at the level of local communities — a popular restaurant’s Friday reservations fell by two-thirds compared with those just a week earlier, and its walk-in traffic declined even more — and it is now reaching critical mass when even isolated and less-fear prone segments of the population will be forced to disengage (after joining the panic buying of supplies). With that, economic damage will be even more immediate and even more widespread. And because it will also be unprecedented for many, it will turbocharge the type of uncertainty, fear and feeling of powerlessness that results in either total paralysis or massive over-reactions
I worry that this combination, by yanking so many out of their comfort zones, will also make us lose sight that this shock can be contained and reversed. And when the economic turnaround comes, and it will come, the economic snapback will be sharp (though, as I will detail in the future, there will also be longer-term implications, including a further impetus for deglobalization).
https://www.bloomberg.com/opinion/a...-economic-shock-can-be-contained-and-reversed