Recently the International Monetary Fund has released a report that summarizes the key economic responses taken by 196 economies to limit the human and economic impact of the COVID-19 pandemic based on information publicly available or provided by the respective authorities of these nations.
Several governments have taken various discretionary actions such as providing tax and spending concessions and support, relaxing norms in case of loans and guarantees, increasing liquidity in the financial system through monetary instruments, and improving foreign exchange management in order to enthuse exchange rate flexibility and secure uninterrupted services in addition to policy measures and social safety nets that are already in place in their respective domains to mitigate the adverse impact of covid19 on their economies.
Covid19 has hurt both the health and wealth of nations
In 1776, Adam Smith, the father of modern economics wrote the classic book titled “An Inquiry into the Nature and Causes of the Wealth of Nations”. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages”, is a widely quoted metaphor that gave economists a broad perspective to lead economic thinking into various forms or schools of thought.
Covid19 may give a new dimension to contemporary economic thought. This pandemic has caused a lot of disruption in the way people live and organizations work. Many people lost their lives. Many others lost jobs as the businesses closed or pruned their operations due to mass lock-downs.
It was not just an issue that concerned the wealth of nations, it also impacted the health of nations. And the governments, irrespective of the differences in their political systems or ideologies, could not be a passive observer of the havoc and the panic created by the sudden onslaught of the pandemic on the households and businesses.
The governments are playing an active role in the revival process
Covid19 has changed the perspective of the way economic systems work. Households or businesses, as rational decisions makers, are the drivers of economic activities.But with people locked inside their houses and businesses struggling to keep operating at a normal pace, the governments needed to respond so that the rhythm of economic activity is somehow restored and the people are brought back to work as usual.
The way the governments and other authorities all over the world are easing out the controls or extending support to their respective economies all at the same time, it seems as if we are moving more toward laissez faire sort of regimes. However, the businesses may not be seen as the economic entities who would work in regard to mere self-love. Here we talk to them of our necessities and offer support to work for mutual advantages.
There is going to be a change in the perception that business, society and government may have for each other. Driven by mutuality of interest, they may rather be compelled to support one another in a bid to save lives of people, secure viability of businesses and protect sovereignty of nations.
There is an old story about the hunter and the pigeons in the Indian classic “Panch-Tantra” I read in my childhood. It is about a flock of pigeons who start eating the grains and get trapped in a net laid over the grains by a hunter. Just as they realize they all are unable to fly and start losing hope, their leader asks them to fly together up in the sky. They do so and carry the net with themselves. The hunter runs after them but is unable to catch them as they have risen up high in the sky beyond his reach.
The pigeons fly towards a ground where a mouse, who was a friend, lived. The mouse cuts the net through and frees all the pigeon.
Greater coordination and increased cooperation hold the key
Panch-antra Stories always had a moral. And the moral of this story was: “Unity is strength”. If we are united, everything is achievable. So when a disease like covid19 has trapped every nation into a lock down, then only combined effort of the peoples, businesses and governments at regional, national and global level may lead the way out.
The IMF report, presents a systematic account of major disruptions caused, the re-opening strategies adopted and policy responses at both micro and macro levels undertaken in respective nations to tackle covid19 pandemic as well as the resultant economic crisis.
Though there are differences in the length and breadth of the economic stimulus, monetary easing decisions, fiscal measures and foreign exchange operations undertaken by its member countries but the fact that so many governments are working in the same direction with the same motive to protect and free their people and businesses from getting trapped in this pandemic, is going to give extraordinary results in the years to come.
There must be greater effort to build trust, wipe out differences and increase cooperation at the helm of every sub-system of the economic system. At global level, there has to be an environment of mutual trust and cooperation and reaching out to each other in a combined pursuit to tackle covid19. Geo-political issues have thrived for years across some nations, it may be only prudent to put them on hold for a while and make a combined endeavor to protect the world, which is defined as the earth and all the people, places, and things on it. And so every nation is part of the world and all things and people it has belong to the world!