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The Pandemic and the Role of Governments

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Udaya Wagle
May 26, 2020

The coronavirus pandemic has once again brought back the question of governance: What is the role of government and what is its optimal power? First, there are questions about the ability of governments to contain the virus itself and minimize the loss of lives. Second, governments are having to design and execute interventions swiftly in order to curb the precipitous fallout in the economy and people’s livelihoods.

Governments around the world are currently facing twin challenges—public health and general well-being. Because protecting public health is the most immediate task at times of crisis, what matters here is the efficiency needed to prepare for an impending crisis and the ability to mobilize all available resources to mitigate the crisis and minimize both morbidity and mortality. Currently, this involves travel restrictions, testing and contact tracing and also isolation, quarantine, systemic lockdowns and caring for the sick and vulnerable. All of these interventions cost money and require proper coordination among all relevant agencies and across all levels of government.

One way to assess the efficacy of governments in mitigating crisis is to link the mortality rate with the system in place and the resources invested, especially in healthcare. While high income countries (used only for comparison purposes) spending between six and seven percent of GDP in public healthcare, on average, have witnessed the rates of coronavirus-related deaths greater than double those of high income countries spending less than six percent, this average is comparatively lower for those with public healthcare spending greater than eight percent.

But these quantitative measures are only preliminary and do not capture the differences in 1) the timing and severity of crisis due to factors unrelated to healthcare, 2) the overall composition and health of the population to begin with, and 3) the structure and efficiency of healthcare systems. The universal system of healthcare in and of itself, for example, does not guarantee lower rates of fatality because nowhere is it designed for pandemic-level infections. Neither are there meaningful comparisons with China, India, Russia, South Korea and a host of other nations that have witnessed much lower fatalities despite having less advanced healthcare systems and spending less than five percent of GDP in public healthcare.

As much of the non-essential activities have come to a standstill globally and countries begin or contemplate cautious reopening, the job loss has been overwhelming, causing havoc in countries especially with a weaker social safety net. Governments have also come to the rescue in different ways. Whereas most of Europe provides unemployment compensation that replaces up to 85% of the regular earning of workers, the European Union has already passed a stimulus package worth $590 billion in order to support both businesses and workers. A part of the over $2.5 trillion stimulus package passed by the United States government supplements its otherwise meager unemployment insurance with extra relief for workers facing COVID-19 related layoffs. Many other countries have passed their own legislation (e.g., Japan at $1 trillion and UK at $81 billion) in order to support businesses and workers. While many countries including China and India have yet to announce bold stimulus packages, those that are already unveiled in some way dwarf the response received by the 2008 Great Recession.

The human toll of this global pandemic has been devastating with the loss of lives now inching close to 300,000, leaving behind an unprecedented level of suffering. The commitment of enormous public investment in addressing the economic fallout has already proved that only the government has the power and resources needed to tackle this epic challenge. Most of the stimulus packages announced so far have also targeted businesses that are hardest hit by the pandemic: hospitality, transportation, restaurants and hospitals. But future interventions are sure to expand to a wide range of businesses and local governments in order to jumpstart the recovery.

One of the central questions in governance relates to the power of governments relative to that of the private sector, which commands most of the economy. Since economic growth is driven by private investment, government’s role may remain at the backburner during peacetimes. When it comes to making systemic corrections, however, governments that lead the unified national response can protect lives and livelihoods more swiftly and sustainably. What once seemed to be the province of the private sector—jobs, growth, livelihoods and even healthcare in some countries—are not completely private after all.

Author: Udaya Wagle is professor and director of the School of Public Affairs and Administration at Western Michigan University

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