The COVID-19 pandemic is first and foremost a public health crisis, but it brings along with it an economic crisis that is no less devastating. The public health crisis and the economic crisis are closely interrelated, especially in a country like India. India’s healthcare system lacks the resources to withstand the potential pressure posed by a population the size of India’s if the contagion spreads widely.At the same time, higher population density and incidence of poverty make social-distancing and enforcing lockdown difficult, raising the risk of contagion and a potential collapse of the healthcare system. At the individual level, poverty and the disease will tend to reinforce each other through a depressingly familiar vicious cycle: the poor are more exposed to the health risk because their living conditions and economic vulnerability lessen their ability to self-isolate and to access or afford treatment if they fall ill.As India and the rest of the world struggle with the immediate impact of the crisis and the lockdown, the main short-term economic challenge is two-fold. One is to keep the healthcare system, other essential services, and supply lines to meet the basic subsistence needs of people all running, in the face of formidable logistical problems.The other is to keep people who are not wealthy or do not have guaranteed jobs (more than 90% of the population for India) financially afloat so that they can survive the shocks to their livelihoods. As we scramble to find ways to achieve that, what are some of the longer-term economic lessons to be learnt from this crisis?In hindsight, if we could go back in time and change things, the two obvious major pillars of defence against this crisis would have been greater investment in our public health infrastructure and a stronger social safety net. Yet, in the West, the dogma of fiscal austerity, and in India, the reformwallahs’ belief that expenditure on the social sector and anti-poverty programmes are wasteful have systematically undermined investments in these two key areas.Also read: Equity, Not Equality, Should Be the Principle for Combatting the CoronavirusThe welfare state and the national health services in the UK and Western Europe emerged after the devastation caused by World War II. One would similarly hope that the COVID-19 crisis in India and elsewhere in the world would lead to a renewed realisation that strengthening public health and the social safety net is not wasteful but as important as national security and essential for our survival.While the exact origin of the contagion remains unclear, there is no doubt that our relentless pursuit of economic growth and the demand for land and natural resources have made us encroach on the natural habitats of wild animals and disturb the ecological balance in ways that pose serious risks not just to the environment but also to public health. This crisis should make us realise that preservation and protection of nature and wildlife is not a luxury, but the key to the survival of humans as a species.This crisis also makes it hard to ignore the dark side of the current model of globalisation. There is a strong case to be made that trade, migration, and the flow of technology have immense potential for raising standards of living, both directly and indirectly, by raising the demand for labour in developing countries. However, the terms under which the process of globalisation has proceeded – at breakneck speed – did not pay sufficient attention to national institutions and regulations for governing the environment and public health, and to international mechanisms for countering the global dangers of regional health crises.On a national level, the plight of migrant workers in India has made visible the underbelly of the gated-community model of development that we have unthinkingly pursued. The comfortable life of the affluent classes in our cities is based on the labour of the poor who leave their villages in the hope of a better life, work for low wages with no security, and are left to fend for themselves when a crisis like this hits.One need not have a bleeding heart to see the danger this poses to public health or to the health of the economy. We need a safety net for those who work in the informal sector and the gig economy that underpins most of the service sector. Given the insecure nature of these jobs, the argument for some version of basic income seems compelling, for humanist as well as pragmatic reasons.There are also lessons to be learnt from our daily lives in the lockdown period. The first one is that it is possible for those who are not poor to live on less. The lifestyles of the well-to-do often have a lot of excess and wastage built into it. Other than the pressure this puts on the environment, it also involves prioritising private consumption at the expense of tax-funded public resources that could be used for improving systems of healthcare and other essential services.Also read: Coronavirus Pandemic: How to Mitigate the Lockdown Impact on Vulnerable PopulationsThe second lesson is about the importance of community. Friends, family, neighbours, and volunteers are providing lifelines at a time when the invisible hand of the market and the visible hand of the state are demonstrably unable to tackle both the public health and economic aspects of the crisis. But “community” too is not a natural resource. It needs to be fostered and nurtured collectively by contributing time and resources, something that is not encouraged by the blind pursuit of individual economic goals.More broadly, the crisis also gives us an opportunity to really think through what an economy is. Some of those urging workers to get back to work for the sake of the economy, despite the health risks, seem to think that workers are either not a part of the economy or are a replaceable resource.But even leaving these extreme voices aside, we need to reflect on a fundamental issue: what is an “economy” and what do we want from it? Is the economy a machine that churns out consumer goods and profits in ever-growing amounts, or is it an interdependent ecosystem where all of us are interconnected through a web of reciprocal and mutual needs? If it is the latter, then isn’t the protection and preservation of the human and natural resources essential for our own survival?The current crisis demonstrates that the relentless pursuit of growth does pose a clear and present danger – that of uprooting the tree that bears the fruits. “Profits over people” does come with a health warning – no people, no profits. I hope that “public austerity, private prosperity” as the governing principle of the before-Coronavirus (BC) era will be replaced by the motto “private austerity, public prosperity” in the after-Coronavirus (AC) era.Maitreesh Ghatak is Professor of Economics at the London School of Economics. He tweets @maitreesh.
