Over the past few years, I have often written about the need to give priority to the common good over individual economic considerations. Last week, I also wrote about the role of government post-COVID-19. I argued that the government’s role in the economy may well continue to be more significant than it has been in the last four decades, and rolling it back may eventually prove to be impossible.
Whether one thinks this is a positive or negative thing depends on one’s perspective of the economy. If more government means more focus on the common good and that economic considerations are subject to the common good, then I believe it is a positive thing.
It is difficult to predict what the post-COVID-19 situation will look like but the general feeling among analysts is that we will not be going back to where we were. It will not be business as usual. Electorates around the world are very unlikely to allow governments to reduce their presence in the economy.
The reason why it is difficult to predict what the post COVID-19 situation will look like is that there is as yet no talk of any change in the way institutions are run. What we have had so far is a suspension of the rules. Taking the EU as an example, so far, all that member states have been told is that they do not have to abide by the rules related to the fiscal deficit. However, they have not been told that the rules have actually been changed.
COVID-19 is posing a challenge to governments to think afresh as we are indeed starting afresh
The same applies to the classical distinction between fiscal policy and monetary policy. I wrote about this a few weeks ago. Prior to COVID-19, there was great clarity as to who was responsible for what around the world. A country’s central bank operated independently of the government of that country in its management of monetary policy. On the other hand, governments retained responsibility for fiscal policy. COVID-19 made that allocation of responsibilities less clear.
At this juncture we now need to move to the next stage. The situation needs to evolve where there is a rethinking of the way financial markets operate, of the way the way the economy needs to work for the common good, of the way banks operate, of the role of the government in the economy.
Within the EU this may not be an impossibility. There are various reasons for disagreements between member states such as the issue of migration. That can happen as long as one or more countries have a problem which others don’t. However, the economic impact of the coronavirus has been such that all countries are facing the same problem. All are and will be experiencing high unemployment and a shrinkage of the gross domestic product. This is bound to shift focus from individual economic priorities to the common good.
Last Saturday, we celebrated the 70th anniversary of the Schuman Declaration, which paved the way to the setting up of the European Union, with various intermediate stages. Europe was still bruised by two world wars over the space of 30 years and the onset of the Cold War. It had required a great deal of creativity to propose the first steps of European integration, but circumstances had pulled people together. Seventy years later, we can say that it has worked.
COVID-19 is posing a challenge to governments to think afresh as we are indeed starting afresh.
In 1950, Schuman and other statesmen had felt that the merging of economic interests would help raise standards of living and be the first step towards a more united Europe. That same principle needs to be applied again to rebuild our economies post- COVID-19, this time with the participation of countries outside Europe, including China, the US, Russia, and other countries.
A number of political leaders may wish to take us back to the way we were. However, there is still hope that matters will continue to evolve and the common good will prevail.