Public policy and the pandemic

Even at this early stage it would be well to focus on the economic impact of the crisis

Shahid Javed Burki March 30, 2020
The writer is a former caretaker finance minister and has served as vice president of the World Bank

How should those holding the reins of power respond to unanticipated and unprecedented crises? This is, of course, an important question as policymakers operating out of Islamabad and the provincial capitals deal with the effect of the coronavirus and its unrelenting spread across the globe. The first step, of course, is to gather information about the virus and Covid-19, the disease it causes. This requires accumulated knowledge on the part of those who study these matters and work in the institutions that specialise in the science of epidemiology — the study of disease origin and their spread. Unfortunately, Pakistan has very few of these institutions and individuals that can inform the making of public policy. With that being the case, we need to look outside the country and learn from abroad and apply the gained knowledge to the design of public policy.

The second area for gathering knowledge and information is to understand how a virus causes infection and why the resulting infection can lead to serious illnesses, even death. This information comes around from both research and experience and there is considerable accumulation of that in the countries that are at the forefront of managing this particular crisis. The experts in China, the country where the coronavirus first emerged and then began to do great harm, have gained most of the knowledge. The question why China became the birthplace of the virus still has only anecdotal answers. The generally accepted opinion is that the vector of transmission was from birds to human beings.

Several of the known cases clustered around a food market in Wuhan, a city of 11 million people on the Yangtze River. Boeing, an aircraft manufacturer, has a large plant in the city that makes fuselages for the large B-787 passenger aircraft. In fact, the company gave the new aircraft that name since “8” is considered to be a lucky number in China. Many early cases had links to a food market in Wuhan that sold exotic animals that were meant for human consumption. Large apartment buildings and a major train station surrounding the market helped the spread of the disease. That was a perfect setting for an outbreak.

When I was working on China for the World Bank, I was shown a food assembly plant in the south of the country. Birds, mostly ducks, were kept in the top tier and pigs were in the plant’s second level that consumed bird droppings. Fish in the bottom rung ate the fecal matter produced by the pigs. Fish were then sold in the markets for human consumption. That then was the origin of the disease called avian or bird flu. The Chinese were not concerned by this way of producing food for human consumption since an effective vaccine had been developed that was administered every year at the start of the flu season.

For Covid-19, it is believed — although evidence for that is still sketchy — that the coronavirus originated with bats that somehow got into the food chain. For avian flu, the origin of the disease is mostly of academic interest because of the developments of the vaccines. The flu virus also mutates but science keeps one step ahead, developing new vaccines that are given at the start of every flu year. For Covid-19, it is a different matter.

Covid-19 spread quickly in China since it appeared a few weeks before the start of the Chinese Lunar New Year when a large number of the country’s citizens travel to visit their relatives. About seven million people — more than half of the city’s population — left Wuhan for various destinations in the country taking the disease with them if they happened to be infected. By then there were 363 known cases in Wuhan.

The Chinese took time to tell the world about what was happening in their country. On December 31, 2019, they alerted the World Health Organization about the appearance of a new virus but released a reassurance that the disease was “preventable and controllable”. On January 21, Chinese officials finally acknowledged the risk of human-to-human transmission but by then local outbreaks were already seeded in large cities such as Beijing, Shanghai, and Shenzhen. After the first case was reported in Wuhan in December, the virus quickly spread to more than 300 cities in the country, infecting at least 80,000 people.

Two quite different approaches are being followed around the world in dealing with Covid-19: mitigation and suppression. The first focuses on dealing with the extreme cases that result from being infected by the virus. This requires timely and sometimes intensive intervention by the medical community. The second way is to adopt measures — even extreme measures — to suppress the spread of the disease. Most epidemiologists are of the view that mitigation is better than suppression. The first improves immunity for those who are healthy so when the second wave of the disease arrives much of the population would be ready and able to deal with it. In case of suppression, the population would succumb to the second wave. Mitigation for a year or two would also buy the time to develop a vaccine or vaccines.

Two models are being followed even when suppression is the preferred option. The first is to opt for a centralised approach in which even large countries are using the same way of dealing with the crisis. This is essentially what China eventually did and India has decided to do in the programme announced by India’s Prime Minister Narendra Modi on March 23. The United States has decided to leave controls to the states where different governors are following different approaches. The result of the latter way of handling the crisis is to create a great deal of confusion.

Even at this early stage it would be well to focus on the economic impact of the crisis. The impact will differ in the systems where local authorities have been allowed greater space to deal with the situation. On the morning of March 26, the United States Senate passed a huge bill that would inject as much as $2 trillion into the American economy with immediate effect. This includes immediate transfer of $1,250 to all tax-payers earning less than $75,000 a year. Those who have lost their jobs would be provided more unemployment insurance. States will be given assistance to shore up their hospitals so that they can handle the extremely ill by providing help in intensive care units. Some industries will receive subsidies from the government in return for the government taking share in ownership.

During a video conference on March 25, leaders of the world’s major economies (G-20) said they were committed to restoring confidence, preserving financial stability and reviving growth. They said they were determined to resolve disruptions to global supply chains and asked finance ministers and central banks to coordinate regularly with international organisations to develop an action plan in response to the pandemic.

Published in The Express Tribune, March 30th, 2020.

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