The novel coronavirus has created unprecedented challenges that were unpredictable two years ago. The University of Denver Newsroom spoke with faculty experts about issues arising or exacerbated due to the pandemic. Yeo Hyub Yoon is an Assistant Professor in the Department of Economics at the College of Arts, Humanities and Social Sciences. He shares his thoughts on the economic impact of COVID-19 in this interview with the DU Newsroom.
Now that we are two years into the pandemic, what could be the long-term disruptions to the global economy?
Looking at empirical trends over the past two years of the pandemic, recent studies have generally found that the impacts of COVID-19 have been wildly unequal across different industrial sectors, workers, and families. While high-tech companies, financial institutions and high-income people have mainly benefited from the pandemic, either through accelerated automation or the asset market boom, those most vulnerable in terms of income, health and social/biological status have been hard hit by illness, unemployment, loss of income and other societal shocks. In the macroeconomic dimension, exacerbated inequalities will worsen the structure of the economy on the demand side. In addition, hard-hit sectors of the economy are likely to impact the rest of the economy, making a full economic recovery impossible.
The other major disruption to the global economy is financial market instability. This problem is rooted in the socially harmful rent-seeking behaviors of global financial investors. Harnessing the desperate commitment of governments and central banks to economic recovery and betting on the belief that central banks will support private financial markets, especially during the global health crisis, financial investors, tech companies and the highest-income families increasingly took financial risks in investing, which in turn eventually shaped another extreme madness in the history of asset bubbles. Many experts predict that there will be financial panics and debt restructuring crises in national and global economies, but we do not know if they will be orderly or not.
We haven’t had a pandemic of this magnitude in 100 years. Were there any surprises in how economies responded to COVID-19?
I think that the novelty of the COVID-19 crisis compared to past health crises lies in an epistemological issue on which economic actions are based. While every crisis involves a degree of uncertainty that hurts household consumption and business investment, the current COVID-19 has been a case of fundamental uncertainty about its nature and the future course of its impact. . A convention in dealing with future events is to assume that tomorrow would be similar to today, and by doing so we were able to avoid panic.
At the start of 2020, when we saw that many key aspects of disease spread, such as speed of transmission, death rates and widespread asymptotic cases of infection, are radically different from past endemics, it is became clear that the only rational response to curb its spread was an economy-wide lockdown. As some commentators have said, I also think this was a crucial political decision in the sense that the global political community decided to prioritize the protection of life and health over short-term profit. term of the markets. Additionally, the implementation of social distancing and people’s heightened fear of contact-based services have created new opportunities for some business ventures, such as Amazon and Zoom. They could easily exploit the current health crisis by multiplying new online services and delivery services. Apparently, the pandemic has widened the threat of automation, negatively affecting high-contact service workers and low-skilled jobs. All of these changes are likely to worsen income inequality for some time.
Are there any economies that have become stronger and more resilient since the pandemic?
Over the past four decades, people have failed to pay enough attention to the importance of public health care, and continued budget cuts have been made to the most essential social protection programs in most parts of the world. . The combined effect of these, coupled with worsening economic/social inequalities, has made people more vulnerable to a virus and a pandemic.
However, around the world, there are still substantial differences in how this COVID-19 crisis has been handled with respect to the success of countries in ensuring the health of their population and promoting socially beneficial behaviors. As examples of successful countries, New Zealand, Taiwan and South Korea have done an excellent job of containing the virus while minimizing economic losses during the pandemic. These are the countries where there is a universal national health system; where an already established public health emergency system has learned from past epidemics; in which citizens know how their behaviors could affect the life and liberty of others; where citizens’ confidence in science and their government is high; and in which there is a well-functioning social provisioning system for confined people.
COVID-19 may be here to stay in one form or another. How could economies prepare for future disruptions?
Taken as a whole, the events unfolding in the pandemic have manifested a complete failure, especially in addressing the public health crisis, of current global neoliberal capitalism in most global economies. Extending the main criteria of a successful economic system to resilience, sustainability and equitable growth suggests possibilities and the need for alternative ideas of value in our society. In this sense, I think we should envision a post-pandemic economy by valuing social provisioning, public health, and multidimensional social/biological equities.
In the economics profession, our COVID-19 experience has amplified our awareness that the neoclassical economics framework that has dominated our economic thinking for a century, rooted in individual utility/profit maximization, is socially dangerous to learn by young students. Note that the dominance of neoclassical economics and neoliberal capitalism did not emerge from a vacuum, but rather was achieved through continued and intentional class actions by financial rentiers, big business, and conservative politics and government. academia. As a college-level economics teacher, I believe that high school and university-level economics training is essential to shaping the worldview of the next generation. The post-pandemic world demands that many of us step in to reform economic education by addressing the financial, ecological and social crises we currently face; and with a methodological framework integrating interdependence, cooperation and conflict in economic analysis.