Globalization didn’t cause the coronavirus pandemic, and global ties might help as countries fight the disease, Western Michigan University economist Susan Pozo told WMUK. She also said that restarting the economy now would only damage it in the long run.
Some people think a less connected world would have less of a coronavirus crisis, but Pozo is skeptical. She notes that the 1918 flu had no trouble spreading when things were much less connected.
Pozo said the coronavirus has affected supply chains for things like masks and ventilators – and that’s why it’s important for countries to cooperate.
“There are lots of benefits to globalization. There’s the benefits of being able to take advantage of the economies of scale to ramp up production quickly in certain areas,” she said.
Pozo says nations would need to coordinate anyway to help countries that can’t make all their medical supplies in-house.
Stay home to protect the economy
Sending people back to work before coronavirus cases decline would not “save” the economy – quite the opposite, Pozo said. She said that any appearance of things humming along would quickly fall apart as cases spiked.
That’s because you need humans to make goods and services, not just machines and other “physical capital” that the word “economy” might bring to mind, Pozo explained.
Illnesses would take people out of the workforce and so, obviously, would deaths. Pozo said those people's absence would make the economy smaller, “because there is less human capital available, and therefore potential GDP in the long run would be lower.”
Such a contraction could shrink the economy by eight percent or more, according the estimates she’s encountered, Pozo said.
“To keep those projections as low as possible, it’s really important to practice this social distancing,” she said.