Covid will topple governments, transform economies
In a email interview with TOI, American economist and Columbia University professor Jeffrey Sachs spoke of how Covid-19 will bring in a new political and economic world order and countries like India will need to scale up spending on public health
Q: How do you think developed countries have fared in tackling the Covid-19 outbreak, especially India?
A: Cases are rising dramatically, and the epidemic is expanding. India will need to dramatically scale up its public health interventions.
Q: Do you think policies implemented by nations like India are adequate?
A: The key to fighting the pandemic is to implement a range of interconnected public health measures, including personal behaviour — wearing face masks, frequent hand washing and physical distancing — physical isolation of infected individuals, banning gatherings and widespread testing and tracing. These tools have enabled many countries in the Asia-Pacific region to contain the virus. But something is still missing in the Indian context, evidenced by the fact that the case load is rising rapidly.
Q: In India, where the healthcare system has been stretched, what does the future look like?
A: India has always under invested in its public health system. It needs to scale up the public financing for public health. This will be one of the legacies of the pandemic.
Q: Which countries do you think responded well to the outbreak?
A: The Asia-Pacific region has fared the best. This includes China after the initial outbreak, and also Taiwan, Hong Kong, South Korea, Australia, New Zealand, and several countries in ASEAN, including Malaysia, Thailand, Lao PDR, Cambodia, and Vietnam. On the other hand, the US, most of Latin America and much of Western Europe has done quite poorly. Nationalist countries like the US and Brazil are generally doing the worst in containing the pandemic. Nationalism in this era misses the main point — we need global trade and cooperation to solve global problems, including Covid-19. We would have pandemics in any event, but extreme nationalism (such as Trump’s America First policies) only hinder the global cooperation needed to stop the pandemic.
Q: So it will take a while for countries to get back to what we call “normal”?
A: If Donald Trump is thrown from office in the November election, as he deserves to be, this will speed the global recovery. Joe Biden will restore US support for WHO and the UN. Trump has been an utter disaster, an enemy of global cooperation. If he is re-elected, the global crisis will deepen immeasurably.
Q: So we expect Covid-19 to trigger political changes?
A: Yes. The Covid-19 crisis will topple many governments. If we are lucky, Trump will be among the first to go. That would enable the world to move forward. If we are unlucky, Trump would be re-elected but many other countries would then experience profound instability. This is a dangerous time.
Q: Financially as well, a major fallout of the pandemic has been the inability of a lot of poor countries to repay their debts…
A: We will need to forgive the debts of dozens of low-income countries in the future years. These decisions will be put off for now, with the countries getting temporary support, but more fundamental debt relief will have to be revisited.
Q: But, how will governments work effectively amid resource crunch?
A: At the moment, governments need to borrow as they have suffered massive loss of revenues. But they will need to raise taxes in the future. This too will require more global cooperation, because we will need to tax corporations and high net worth individuals. I believe that we will need a new global financial conference, like the Bretton Woods Conference of 1944*, at the end of this massive crisis. The new financial crisis will re-examine international currency arrangements, the IMF’s Special Drawing Rights and the global tax arrangements, especially to close international tax havens.
Q. How do countries prepare for future pandemics?
A: All countries need effective domestic public health systems and the world together needs much better surveillance, preparedness, and cooperation. We have had several newly emerging diseases in the past decades (HIV/AIDS, SARS, MERS, Covid-19 and others) and there will be new ones as well. The misuse of the natural environment is another major risk factor. This is another reason (including climate change, environmental destruction and massive inequality) that we urgently need to turn our efforts towards the Sustainable Development Goals.
* Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference, was a gathering of delegates from 44 nations that met from July 1 to 22, 1944 in Bretton Woods, New Hampshire, to agree upon a series of new rules for the post-WWII international monetary system.