That America and the West finds itself led by Donald Trump at this moment in history counts as a tragedy worthy of the Ancient Greeks. After weeks of ‘twittering’ from the president, someone got through to Trump and persuaded him – belatedly – that this is an emergency.
Unfortunately, he then decided to address the nation in a televised performance that exposed his shortcomings as a leader. From the office that was occupied by leaders such as Roosevelt, Eisenhower and Kennedy, Trump delivered a message so inept that it further alarmed the world’s markets. Despite suddenly declaring himself “war leader”, Trump has failed to convince.
The contrast with three other leaders I observe most closely – Boris Johnson in Britain, Giuseppe Conte in Italy and our own, Prime Minister Robert Abela – is quite striking. Unlike Trump, these three prime ministers have gravitated quickly towards relying on scientific and expert medical advice.
These are leaders who have grown in stature. They have risen to the occasion with an approach that is serious, measured, rational and open. They are doing well by speaking clearly and managing calmly in a desperate situation. The leaders most likely to succeed during this epic economic and social shift in our lives are emphasising reassurance as the best way to steer their countries into calmer waters.
With a global recession likely, it will take multilateral action within and between nations to prevent COVID-19 becoming something like the 1930s’ Great Depression. In 2008, a crisis that began in the financial system triggered a butterfly effect that rippled through the global economy.
World leaders, realising that the international architecture was ill-prepared for a storm of this magnitude, pledged to do “whatever it took”. Cheap money through quantitative easing helped save the wider economy from a deeper depression.
We should console ourselves that all this will pass. Not soon. But it will
The pandemic is an international and national wake-up call. What we are facing today goes way beyond the financial crash a decade ago. We are talking about companies facing collapse even if they have no exposure to COVID-19, or the second order impacts like workers being confined at home or customers cutting back on purchases.
These are the scenarios worrying institutions like the International Monetary Fund, the European Central Bank, and the Maltese government.
If the stock markets are to be believed, we are in the early stages of a global economic recession. The falls are so significant that they are taking on a momentum of their own. COVID-19 is one virus. Anxiety is another. Another early casualty in a time of fear is perspective. All available data from China indicates that the vast majority of people who develop this frightening new disease will survive it.
Although the virus might yet take a heavy toll, history will record that this crisis is much more an economic and social one as one of public health. It is vital that, despite ingrained ideological political differences, the Maltese public can, over the next few difficult months, consider the government a force for stability and calm. Curbing anxiety is a significant part of the government’s role.
But there is only so much any government can do. This is an economic downturn that will have to be endured. The role of policymakers is to support households on the financial edge and to help businesses to survive until better times return. They must try to prevent a nasty recession from turning into something even worse by targetting money to the most deserving cases to ease the immediate concerns of those whose businesses and livelihoods are most at risk.
The role of government in these circumstances is to ensure that businesses and households have enough liquidity to continue paying their bills until the current exceptional restrictions on consumption, movement and international travel are eased. Businesses need the breathing space to survive.
This is what the government’s financial aid package – equivalent to around 13 per cent of GDP – announced last week aims to do.
Assessing the economic impact on Malta is like catching a falling knife. Does Malta brace itself for a short sharp shock, or a long economic winter? The consolation is that, if Malta is going into a period of economic difficulty whose length and depth cannot be known with certainty, there could be worse places to embark on this journey than a country whose economy has been growing at about four per cent a year for the last seven years.
But it is fanciful to think that even this injection of government support will be sufficient to draw a line under an economic crisis that is fast unfolding. It is probable that other interventions may almost certainly be needed to support the jobs and incomes of those facing the loss of their livelihoods.
This is the first big world-wide epidemic of the global information age. It is not the only virus that is going viral. Myths, hoaxes and fake news are, too. If I were to take a deep breath – while any of us still can – I could probably fill the rest of this column with simple lies and untruths about coronavirus which have been spreading around the global consciousness.
What is clear is that in the absence of any medical breakthroughs, it will be many months – perhaps a year or more – before there can be any prospect of life returning to normal. We should console ourselves that all this will pass. Not soon. But it will.
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