Bas Jacobs, Professor of Public Economics at Erasmus School of Economics, talks about the consequences of the corona crisis. The virus seems to be under control and the economy is gradually opening up again. Nevertheless, there is no vaccine available yet and the economy is still far from where it was before the crisis. How should we prepare ourselves for living with the coronavirus? And how should the government deal with the economic storm that is looming?
Unsustainable situation
According to the Netherlands Bureau for Economic Policy Analysis (CPB), the Dutch economy will shrink by 6% in 2020. Unemployment has never risen so fast and will double in the coming months. In spite of government support and other efforts, many companies will go bankrupt. According to Jacobs, many companies and their business models are no longer sustainable in the current economy. Strangely enough, the government seems to have accepted this already: the entire society and economy are being turned upside down without any political discussion as to whether this is desirable.
The solution
Many economists believe large-scale testing is the best solution to prevent a resurgence of the virus and would enable people and companies to resume their normal daily activities. However, there is always a risk involved: it is unclear how long people will stay immune and how reliable the tests are. Elderly and vulnerable people will probably have to keep their distance for a longer period of time. Jacobs wonders why there is no political party who has come up with a well thought-out plan to realise large-scale and regular testing. According to him, this would be the key to ensure that both social and economic life can be resumed quickly.
Differentiated lockdown measures
And what would we have to do if the virus were to return anyway? The Dutch Minister of public health stated earlier that corona patients have priority over other patients. Jacobs wonders whether giving priority to corona patients can be ethically justified. The probability of someone over the age of 65 dying from corona is more than 60 times greater than the probability for someone between the age of 20 and 49. Therefore, there could be an enormous social gain if lockdown measures were differentiated by age group. This way, the virus could be brought under control more quickly and at much lower economic and social costs than in the current economy.
Back to old habits
No clear answers have come from The Hague to important questions such as how far the government may go in restricting citizens' fundamental freedoms. In the beginning of the crisis, the government supported employees, the self-employed and companies enormously. This response was excellent, according to Jacobs. Now that the virus seems to be under control, it looks as if The Hague immediately has fallen back into its old habits. The focus is turned back on the long run and businesses have to manage themselves again. After all, the government cannot keep the economy going for years. According to Jacobs, however, it is still far too early to draw that conclusion after only a few months. A severe economic storm is on its way and The Hague must focus on making plans for now.
