Nothing demonstrates the necessity for good leadership and strong governance better than a crisis. The COVID-19 pandemic has reiterated that markets are inherently political structures. As the virus gained momentum in Asia and parts of Europe in early 2020, it was difficult for Americans to comprehend the scale of its infections and the drastic measures that would necessary in order to combat it. The United States was warned by China and Italy that preventative measures were crucial if the U.S. wanted to avoid a pandemic that matched their same curve. However, in spite of this warning and many others, the United States’ biggest blunder was not acting soon enough. Because politics and markets are so intertwined, every error that the United States government has made in its handling of the pandemic has negatively affected the economy as well, causing crises in every sphere of American life.
The most important political lesson that the U.S. can learn from the Coronavirus pandemic is that quality administrations led by people able to follow the advice of experts are crucial. The significance in the strength of government responses is visually clear on graphs and in numbers when examining countries and states whose leaders actually took the proper precautionary actions (and continued to do so, well into the crisis) as compared to those who denied the need for such drastic measures until the pandemic was staring them in the face. In my Politics of Globalization class, Professor Colgan used the example of two neighboring states, Kentucky and Tennessee, to demonstrate how Kentucky’s stricter, more calculated response to COVID-19 from the onset of the virus in the area led to a dramatically smaller amount of cases within its borders (48 cases) than across in their neighboring state, Tennessee (298 cases) as of March 20. This variation in response is a microcosm of the same phenomenon happening among countries. One can only hope that the catastrophic effects of the pandemic will emphasize the necessity of effective, strong leadership not just retroactively but proactively as well.
Stemming from this problem that a lack of action has resulted in, comes a lesson in the level of political polarization in the U.S.; specifically, how it can be extremely problematic for circulating information. Because individuals tend to view the virus through their own ideologies, the polarized bipartisan divide in the US has caused a gaping rift between conservatives and progressives regarding the proper response. Because this crisis is inherently scientific, the erosion of trust in science that has resulted from political polarization in recent years has proved especially problematic. Political conservatives––the President included––are reluctant to take advice from medical professionals, such as Dr. Fauci, who are providing life-saving information. Therefore, another standout political lesson is how far-reaching the negative effects of political polarization are in the US, and how crucial it is to reduce this gap in order to handle crises more effectively in the future. It will be very interesting to see how President Trump’s poor coronavirus response affects his reelection efforts, and consequently, U.S. politics in general.
In terms of economic lessons, it’s clear how problematic some structural parts of the American economy are, and how stronger systems could have alleviated economic consequences and burden. For example, the coronavirus epidemic has demonstrated that the majority-privately owned U.S. Healthcare system is a disaster. From inundated hospitals lacking equipment to the obstacles facing pharmaceutical testing and approval from the FDA, it is clear that the US will need to make changes to its healthcare system so that it is better equipped to handle an event like this in the future. A sensible start to these changes would be to reintroduce the White House-level positions aimed at preventing pandemics, which were removed by Trump earlier in his term. Additionally, the rapid changes in Trump’s management approach––executive orders regarding stimulus checks, visas, small-business bailouts, and shelter-in-place mandates––demonstrate the extent to which governments are continually experimenting with economic policy, as well as how drastically those policies can affect citizens. Because unemployment is at its highest rate since the Great Depression (with around 22 million people unemployed as of last week), production and consumption have come to almost a complete halt. Oil prices have also plummeted. This public health crisis has transformed into a financial crisis as well. European governments have depended on their welfare states and wage guarantees to help cushion the blow of the crisis, while Americans have received a meager $1,200 stimulus check via snail mail that has been largely spent on food. It’s clear that the U.S. will need to pursue an alternate method of promoting economic growth, however it’s unclear what exactly that method might be.
This pandemic has demonstrated how directly the government affects the economy, and therefore the importance of political decisions in determining and mitigating market outcomes. It’s crucial that in the future, the U.S. has a more proactive, organized, unified, and enforced response from the government, thereby affecting the market and the American people.