Since World War II, Western leaders have embraced globalization, governed by rules for equitable competition, as an enlightened policy to raise living standards. Economics teaches increased commercial ties deepens specialization, spreads R&D costs and distributes technology to poorer nations to boost growth and lower prices for many goods and services.
Now cheaper coffee tables and cell phones from China will look more expensive to Americans if its factories and consumers bear risks from broken supply chains from recurring viral outbreaks from the Middle Kingdom’s rapidly urbanizing population and cultural affinity for unsanitary live markets for wild animals.
Much like the 1973-74 Arab oil embargo, disruption in the supply chains for automobiles, electronics, pharmaceuticals and other industries threatens a “supply-side recession.” And contagions require shelter in place policies and mandatory businesses shutdowns to wipe out pathogens.
Remedies like direct payments to individuals, low-interest rate loans to business, and enhanced unemployment benefits, alone, can’t get the economy up and running.
Too dependent on China
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.
Greater self-sufficiency — or at least reliance on allies for critical products — should now be a national security imperative. The blind worship of globalism and multilateral institutions among academics and other thought leaders that influence American foreign policy may now be tempered by 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.
Similarly, work at home and school closures may accelerate the development of off-site collaboration, networking and distant learning technologies—and business, employee and student acceptance of their efficacy.
Digital monetary policy
Macroeconomic policy making has become decadent. An aging global population saves more and abundant capital pushed down interest rates during the recent expansion. Traditional Federal Reserve tools—lowering the overnight bank borrowing rate, flooding the banking system with liquidity and in a crisis, backstopping money market funds, corporate and municipal bonds and directly underwriting business and consumer loans—have become much less potent.
The Fed 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 adversely impacted companies such as airlines and small businesses and stimulus payments directly to individuals much more rapidly than the Treasury, Small Business Administration and Internal Revenue Service can accomplish.
About one-quarter of all workers—about 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 could make 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 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 also kills many people—is transmitted the same way. That could permanently change how we greet each other during cold-weather months.
Perhaps we should adopt the Japanese bow—and with it, a nudge toward greater civility.
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