OPINION:
The battle against COVID-19 is reaching into every facet of American life — as churches and corporations, events and business strategies are disrupted, and leaders are required to adjust in ways similar to a national mobilization effort for a major war. In its wake, this will radically change how Americans think, engage with the world and behave.
Since World War II, economists have promoted globalization governed by rules for equitable competition as an enlightened policy to raise living standards. Increased trade and capital flows should instigate beneficial specialization, spread R&D costs and technology to poorer nations, boost growth and lower prices for everything from cars to computers.
Foreign policy experts embraced economic interdependence as a pillar of defense against aggression. Nations that depend on one another for their critical necessities and prosperity were posited to be less likely to launch missiles and send troops across national frontiers.
Now cheaper coffee tables and cellphones from China will look a lot more expensive to Americans if its factories and ports are not running full tilt again quite soon. Much like the 1973-74 Arab oil embargo, disruption in the supply chains for automobiles, electronics, pharmaceuticals and other industries threaten a “supply-side recession” that orthodox demand-boosting stimulus spending and monetary policy can’t address.
Granted the knock on effects of factory layoffs and canceled events will reduce demand, but remedies like a payroll tax cut and infrastructure spending won’t help nearly enough if store shelves can’t be restocked, assembly lines restarted and cinemas reopened.
Revelations about dependence on China for essential ingredients in life-saving drugs lay bare the folly of intense integration with an authoritarian regime that suppressed warnings from doctors who first detected COVID-19 and enabled the disease to spread through weeks of denial.
Great self-sufficiency — or at least reliance limited to competent allies for critical materials — should now be a national security imperative. The blind worship of globalism and multilateral institutions among the academics and other thought leaders who influence American foreign policy should now be discarded for a more sophisticated realism.
World War II accelerated the development of aerospace, communications and many other technologies with broad peacetime benefits — the mundane microwave oven descended from wartime radar technology. Now new techniques — aided by artificial intelligence — are being applied in the breakneck race for drugs and vaccines to combat COVID-19. Success will make those permanent approaches applied in pharmaceutical research.
Macroeconomic policymaking has become decadent. An aging global population saves more and abundant capital has pushed down interest rates during the recent expansion. Traditional instruments of Federal Reserve policy — lowering the overnight bank borrowing rate and flooding the banking system with liquidity — have become much less potent tools.
The Federal Reserve has resisted issuing digital dollars — letting every business and individual have electronic checking accounts at its regional branches as banks do. That would permit direct, quick injection of aid to the most adversely impacted companies such as airlines and small businesses. Instead the Fed quixotically pushes down the already low Federal Funds rate with a promise of only limited benefits, and the administration struggles to find tools to quickly boost businesses.
This crisis along with experiments with digital currencies in China and other Western nations could result in radical innovation — and perhaps new leadership — at our central bank.
About one-quarter of all workers, an estimated 34 million, do not receive paid sick leave. Some states and localities provide benefits financed by payroll taxes but economists caution those raise labor costs and reduce employment. Now, the specter of fast food and other public facing employees with COVID-19 showing up at work and spreading the contagion makes a national mandatory sick leave program a public health imperative.
Contributions to World War I efforts helped enact full women’s suffrage in 1920 and 1928 in the United States and Great Britain, whereas it was only attained in 1971 in neutral Switzerland.
African-American valor in World War II and Korea ultimately desegregated the U.S. military and added great impetus to the civil rights movement.
Coronavirus is spread by respiratory droplets and simple touching, and bumping and smiles are replacing hugs and handshakes. The ordinary flu — which will kill more people over the course of a season — is transmitted the same way. That awareness should permanently change how we greet each other during cold weather months.
Perhaps we should permanently adopt the Japanese bow — and perhaps a nudge toward greater civility.
• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.
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