Lambert here: “Narrator: They didn’t act.” I hope I’m wrong!
By Erik Berglöf, Director, Institute of Global Affairs at the London School of Economics and CEPR Research Fellow, and Jeremy Farrar, Director, Wellcome Trust. Originally published at VoxEU.
To G20 leaders,
Advanced countries have started now to see the impact of the COVID-19 pandemic, and there is worse to come for most countries. But delaying emergency measures in emerging and developing economies will lead to unimaginable health and social impacts which will come back to haunt us for decades. The G20 must act now.
As advanced economies struggle to cope with the spread of COVID-19, emerging and developing countries are facing an unprecedented collective threat to human life, social cohesion and economic devastation. The virus is now reaching countries with fragile health systems and weak institutions, with the potential of creating huge numbers of deaths, particularly among the 70 million globally displaced people. Massive economic losses will be incurred as countries desperately try to cope, people will migrate out of fear as the epidemic takes hold leading to social disruption, violence and security issues. Moreover, in the likely case that they fail, the virus could become endemic, producing new waves of destructive outbreaks regionally and around the world.
We have a rapidly closing window to ensure that we give these countries at least a fighting chance to manage the crisis and provide some light at the end of a what could be a long tunnel. Africa, South Asia and Central and South America are still at the very beginning of what could be a long epidemic cycle. As of this writing, 43 out of 54 countries in Africa have registered cases of the virus and there has been a six-fold increase in case numbers over the last 8 days. Yemen and Syria have just joined the list.
Just as governments in richer countries are trying to protect their most vulnerable citizens, they have both an obligation and a self-interest in shielding vulnerable countries. The fight must be waged globally on two fronts: public health and economic policy. On the health front, we must immediately support the World Health Organisation and shore up domestic institutions managing the healthcare response, guarantee logistics and supply chains for health and other essential goods. In parallel we must immediately accelerate the global effort to find vaccines and therapeutics, manufacture and distribute them fairly across the world.
We must also provide emergency resources to countries facing devastating fiscal outlays and massive capital outflows. The economic impact on these countries will be much greater than anything experienced during the global financial crisis. With little fiscal space, high debt levels and little external capital left, their capacity to protect their populations is very limited.
First and foremost, we should ensure that the WHO has sufficient resources to continue leading the global response. The entire UN system and the associated international financial institutions, the World Bank and the IMF, will be tested in a way that they have not been since they were created in the wake of two man-made catastrophes and the Great Depression.
There is an immediate funding gap to be filled for fighting the epidemic. The Global Preparedness Monitoring Board has requested at least $8 billion in emergency funding, including $2 billion to strengthen the WHO’s emergency and preparedness response, $0.75 billion for diagnostics, $3 billion for development, distributed manufacturing and delivery of vaccines, and $2.25 billion for therapeutic drugs to prevent and treat COVID-19.
The efforts to address the economic impact will, of course, require efforts of a completely different magnitude. It has taken 2trn dollars so far to try to fix the US economy – we can only imagine what it will take to fix the countries that are falling apart because of the collapse in commodity prices, tourism and remittances, and to protect those most vulnerable. The World Bank and the IMF have produced welcome quick responses, but what will be needed will be of a different order of magnitude. We need to find new and innovative ways to use the global financial muscle to back up these institutions and the countries affected.
We, as 20 engaged healthcare professionals and economists representing our professions, are now urging you, the leaders of the G20, to urgently provide the necessary resources to reduce the losses in human life and back up those most vulnerable. The required investment is minute compared to the social and economic costs of inaction. History will judge us harshly if we do not get this right.
Signatories
Kaushik Basu, former WB Chief Economist and President of International Economic Association; professor, Cornell
Erik Berglof, former EBRD Chief Economist; professor, LSE
Tim Besley, former President of the International Economic Association; professor, LSE
Victor Dzau, President, National Academy of Medicine
Jeremy Farrar, Director, Wellcome Trust
Ahmed Galal, former Finance Minister, Egypt
Sergei Guriev, former EBRD Chief Economist; professor, Sciences Po
Bengt Holmstrom, Nobel Laureate; professor, MIT
Anne Krueger, former World Bank Chief Economist; professor, Johns Hopkins
Justin Yifu Lin, former WB Chief Economist; professor, Beijing University
Nora Lustig, founder of the Latin and Central American Economic Association; professor, Tulane.
Ngozi Okonjo-Iweala, former Managing Director, World Bank; and finance minister, Nigeria.
Christopher Pissarides, Nobel Laureate, professor, LSE.
Dani Rodrik, Incoming President, International Economic Association, professor, Harvard
Michael Spence, Nobel Laureate; professor, New York University
Nick Stern, former WB and EBRD Chief Economist; professor, LSE
Joseph Stiglitz, Nobel Laureate and former WB Chief Economist, professor, Columbia
Andrés Velasco, former finance minister, Chile; Dean. LSE School of Public Policy
Leonard Wantchekon, founder African School of Economics; professor, Princeton
Shangjin Wei, former ADB Chief Economist; professor, Columbia
18 comments
Comments are closed.
only 8 billion?
Yeah, my thoughts exactly. The banking cartels will be receiving a check of a lot more than that!
Gosh! That’s a little more than a dollar per head! How much more could they want?
Back in ancient times, I was a young, impressionable journalism student. The professor who taught us Editorial Writing would pull out an article like this and politely call this a “Zasu Pitts Editorial”.
Zasu Pitts was a 1930s actress who was type cast as an airhead who everytime something bad would happen would run around like a chicken with its head cut off and yell, “Someone has to do something, right away.” Nothing specific. Nothing concrete. Welcome back Zasu!
Debt relief to developing countries from the WB, IMF and other foreign creditors will go a very long way. These countries now pay more in interest charges than they do in healthcare and education. Funds freed from said relief can be channeled towards urgent medical supplies and other initiatives to fight the virus.
The Zasu Pitts you describe hardly fits this case. I think you might do better reaching back in time … Casandra … this is a “Casandra Editorial”.
Brilliant riposte!
Here in SA we go into complete lockdown at midnight, a little late in my opinion as I’ve been telling everyone who cares to listen that this should have been done weeks ago when the first few confirmed cases became known. We are now on 709 cases as of yesterday with two cases in ICU, but things are about get much worse as tens of thousands of people are currently making their way out of Gauteng province, SA’s economic hub and viral epicenter of sorts to spend the lockdown period in their homes in less well developed parts of the country (the result of a 72 hour lockdown notice giving people enough time to make a beeline for the exits heading out of the province). Much like the masses of people that are rumoured to have carried the virus out of Lombardy to other parts of Italy in a misguided attempt to escape an impending lockdown, this has the makings of a disaster waiting to unfold. It’s important to note that most people living in these rural and semi-rural areas are the elderly parents of those who work in the more developed regions of the country, and hence the cohort most susceptible to succumbing to the virus.
Another noteworthy point not mentioned in the letter is the toxic mix of a high incidence of chronic immuno suppressing diseases like HIV and TB in Africa especially, and chronic malnutrition, all three potentially devastating accelerants to a high mortality rate that lies in wait if nothing is done to curb the spread of covid 19.
My only hope lies with the decisiveness shown by most Sub-Saharan African countries, who chose to go into complete lockdown with the emergence of the first few confirmed cases, and have as a result shown a much more gradual increase in the infection rate. SA has by far the most well developed healthcare infrastructure in Africa, yet we have less than 4000 ICU beds available across both the public and private sectors, for a population of 55 million. If the curve is not flattened, the system will very quickly become completely overwhelmed, and if this happens in SA, I shudder to think what will become of other countries in Africa.
The optimist in me hopes that developed countries will indeed heed the call and marshal the resources required to avert a disaster in the developing world, and that such aid will be given on a purely humanitarian basis sans any stealthy imperial agendas.
Make that 927 confirmed cases in SA as of today.
Don’t hold your breath for a moratorium on imperialism. I would expect the opposite.
Unfortunately international cooperation is at record lows. Rich countries more than ever focused on themselves. See how cooperation is working at EU level (badly) as a symptom. Instead, everybody playing the blaming game.
Well we can always hope but I see no sign of this happening now. I read Robert Sapolsky’s book _Behave:The Biology of Humans at Our Best and Worst_ a year of two ago (time flies). In the book he discusses how humans are hard wired to differentiate between us and them. We can turn the them into the us but that is not our first hard wired response.
Here is a short YouTube video where he discusses the issue.
https://www.youtube.com/watch?v=lrzXE5XttOE
Here is a low wage worker with a bad attitude /s
Completely unwilling to impale himself on the poisoned sharpened stakes in the moat so that the wealthy and political class can safely walk across him so they won’t get too severely impacted.
https://www.marketwatch.com/articles/im-a-low-wage-worker-im-not-sacrificing-myself-for-the-stock-market-51585230908?mod=home-page
We need to find new and innovative ways to use the global financial muscle to back up these institutions and the countries affected.
There is obviously no way to accomplish what needs to be done without widespread wealth confiscation. Get my pitchfork!
If G20 really wanted to act they would kick China out until they get rid of the “wet markets” that are generating these new viruses and diseases in the first place.
Yeah it’s been 100 years since the Spanish flu, but it won’t be another hundred years until the next major pandemic if nothing changes in China.
The G20 countries aren’t doing such a wonderful job of caring for their own populations. This post is completely unrealistic, and as pointed out in the first comment here — the amount of money proposed is ridiculously small — even for an unrealistic request … and exactly how will: strengthening the WHO’s emergency and preparedness response; diagnostics; development, distributed manufacturing and delivery of vaccines and therapeutic drugs to prevent and treat COVID-19 … help. There are no effective vaccines and therapeutic drugs and the prospect for discovering and developing them in any effective time-frame is remote. Distributed manufacturing of facemasks for caregivers might be doable. Support for keeping the Populace at home, and guidance for wise laws to support a long-term economic shutdown might be doable — it could create an exemplar some of the G20 countries might have followed in their own handling of COVID-19.
On a related topic: a google search “Covid 19 Mexico” shows that AMLO Is blundering epically, refusing to acknowledge the gravity of the situation in order to protect the Mexican economy. Socially distancing is random and local, not national. The epidemic in Mexico will likely be orders of magnitude worse than the US. The border may need to be sealed completely. (As always, the linking function for comments doesn’t work for my machine.)
Ain’t gonna happen. The G20 countries are already clambering over each other for what inadequate supplies of basic equipment are ‘in the market’ and frantically calling doctors and nurses out of retirement to try to meet their own medical needs, needs arising from chronic underfunding – sorry, ‘savings’ – during the good times when only a few experts were warning of the consequences.
And consider. Even if you might be heroic enough to accept watching your parents or grandparents die a horrible death in a hospital lobby if not their own beds because the resources that might have saved them had been sent to Africa, do you think other voters are? I’m sure that’s right at the front of politicians minds at the moment.
I’m afraid what needs to be done just can’t be done even if the will was there, which it isn’t.