Economic response to coronavirus: increase physical distance and reduce intellectual distance, and replace nation state idiocy with the Republic of Science

Climate change and pandemics such as coronavirus illustrate the supreme idiocy of leaders who think their arbitrary nation state borders are hermetically sealed off from the world.  The stable genius leading the state with the greatest global heft decided that coronavirus was no worse than the flu, until he flipped into closing the borders long after the virus had established itself within his own country.

The UK Prime Minister is keeping borders open so that the continent is not isolated from civilization.  This is worthy and other-centred, however he seems to be accepting mass spread in the hope of achieving herd immunity (!) Failure will be hugely consequential.

The good news is that the Republic of Science laughs at nation state borders and communicates in a common language.  Within days of coronavirus becoming salient scientists cooperated internationally to understand it and start work on response strategies.  Citizens of the Republic of Science share their knowledge of technology such as test kits rather than reinvent what is already in the public domain.

After a nervous start, New Zealand’s response to coronavirus is the right approach, and will become more decisive.  What is yet to be established is the economic response to a pandemic that magnifies an emerging recession in a global secular stagnation environment where monetary policy lacks traction.

Absolute priority must be given to health services needed. This will be the best economic investment we can make.  Basic income needs must be met for the vulnerable, including those who fall ill.  It is too soon for economy-wide fiscal stimulation, and in any case how effective can it be if we expect people to stay home and avoid shops, sporting and other events that set the tills ringing. What therefore can we do?

Most economic activity requires people working with and transacting with other people, thereby risking further spread.  However, in the Republic of Science people can work together without being together.  We need to increase the physical distance and reduce the (internet-enabled) intellectual distance between people.

Distance from people is not distance from nature: most New Zealanders have access to uncrowded parks, public gardens, and walking and cycling tracks and trails.  Access to green space makes working from home more palatable in New Zealand than in other countries.

We can risk-buffer or subsidize time away from work.  For those who cannot work from home, we can encourage them to learn from home.  This can include recommending online learning resources that suit their needs, and prompting them to engage.  Coursera’s “Learning how to learn” course is one of many examples of free online learning resources that can be life-changing for many workers who discover how easy it is to become better learners.

A challenge would be deciding how to link specific individuals or worker cohorts to the online learning resources that can most benefit them.  However, we have the data to do this, and the entrepreneurial people and startup and other IT companies that can rise to this challenge if targets are set clearly and financial incentives are in place.

Encouraging mass online learning can create an inflection point.  For example, the ANZAC frigate project in the 1990s required companies bidding for work to submit tenders online.  This forced many digitally-challenged New Zealand companies to lift their IT and online capabilities, to their long-term benefit.  The coronavirus crisis therefore offers a chance to prompt hundreds of thousands of New Zealanders to become online learners and workers, with widely spread and long-term economic benefits.

Secular stagnation partly results from a lack of new technology-based businesses that are worth the cash-rich investing in.  Major countries have failed to take climate change seriously enough to invest in the mass adoption of green technologies that are already economic and that the Republic of Science has helped gift to us.  These include wind and solar power, pyrolysis carbon capture and storage, energy-efficient buildings and electric vehicles.

New Zealand has been especially slow in adopting and applying new international technologies to our own opportunities.  Doing so often requires local R&D investment as well as the capital investment needed to commercialize the results.  We also need a more supportive regulatory framework for adoption of some new technologies, for example GM-based pastoral plant breeding.

We could substantially increase funding for long-term research and applied technology development that focuses on “the Pasteur quadrant”.  This would expand New Zealand’s technological possibility frontier in the long run rather than counter short-term recession.

It takes time to ramp up R&D capabilities, and it is only fair that those choosing research careers can be assured of long-term income security. The low interest rate environment and our low net public debt position makes it possible to finance such long-term investments and in so doing help diversify and risk-buffer the economy against future shocks, pandemic or otherwise.

The light is getting darker and will turn black for some.  However, in putting health first and trusting the Republic of Science we can ameliorate economic loss and leverage a painful inflection point to lift our technology adoption, long-term learning, knowledge creation and productivity.

 

 

 

About Peter Winsley

I’ve worked in policy and economics-related fields in New Zealand for many years. With qualifications and publications in economics, management and literature, I take a multidisciplinary perspective to how people’s lives can be enhanced. I love nature, literature, music, tramping, boating and my family.
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