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The confrontation with the 2019 coronary virus disease has become a comprehensive war.China seems to win the first battle.Hong Kong, Taiwan, Singapore, and Japan have also achieved significant success in curbing the epidemic, which is undoubtedly because they have accumulated experience in Saus in 2003.On the other hand, Europe and the United States began to wake up from the fantasies that the knife and guns could not enter.As a result, the popularity is raging throughout the West.
At present, the most important western countries are Italy, and it has a particularly close economic connection with China.Northern Italy has become a new Wuhan (the first Chinese cities with coronary virus).The Italian health system is overwhelmed. The government has stepped on the brakes, closed the retail economy, and isolated the entire country. All stores except pharmacies and supermarkets have closed.
People are notified to stay at home. Only when necessary shopping or work commuting, they can enter public places. A large number of public and private debts (such as rent and interest) are suspended.Italy tried to slow down the economic clock and wait for the coronary virus to die.
At the same time, there are few cases of coronary virus deaths as of so far, but the number of infections is as rapid as other countries.In order to cope with the crisis, the German government has adopted a short -term work permit system and issued generous credit subsidies, guarantees and tax deferred for the trapped companies. Public activities across the country were canceled, and students were notified to stay at home.
Austria has already closed the border with Italy, and schools, universities and most stores have also closed.In the beginning, France adopted a relatively relaxed strategy, but now it has also closed schools, restaurants and shops.The same is true of Spain.Denmark, Poland and the Czech Republic closed the border with Germany.
US President Trump has announced the state of emergency.Congress approved a $ 8.3 billion emergency plan to prevent big popularization.The larger amount is waiting for the Senate for approval.The federal government also issued a travel ban. It was originally targeted at China and Iran, and now it also includes Europe.
From the global perspective, not all crisis response mechanisms have clear goals, and there are not enough measures to have enough measures.The most worrying thing is that some government believes that they only need to delay virus transmission without having to take measures to completely block the spread.It is not difficult to predict that many hospital hospitals are overcrowded and exposed this complacent stupidity.
In terms of economy, serious declines are inevitable. Some economists have called on the government to take measures to stimulate the overall demand, but this proposal is not enough because the global economy is under unexpected supply shock.People are unable to work because of illness or isolation. In this case, demand stimulus will only push up inflation, which may lead to stagnation, that is, weakened or decreased in domestic GDP growth, and price increases occur at the same time.This was the case of the oil crisis in the 1970s, and another important production investment at the time had a shortage.
To make matters worse, measures for demand side may even be counterproductive, because they will encourage interpersonal connections, which will affect the efforts of curbing virus transmission.When the government closes the store and forced everyone to stay at home, what are the benefits of sending money to the Italians?
The same logic is also suitable for liquidity support.There is no lack of liquidity in the world, and the nominal interest rates in almost all regions are close or lower than zero.It may help the stock market to reduce interest rates to a high level below zero, but it will also cause cash jelly.
Popular diseaseologists say that they must cruelly reduce economic activities, which means that the stock market will inevitably be hit hard. The central bank's policy and concentrated debt of excessive funds have caused unsustainable bubbles.The central bank has gently gathered ammunition when it is inappropriate, and they must be responsible for the bubble that is now crushing.
What really need is to take financial measures to rescue the company and banks on the edge of bankruptcy, so that they can recover quickly after the end of the popularity.Decision makers should consider taking various tax reductions and giving government guarantees to help enterprises borrow when necessary.However, the most promising option is a short -term work permit. Germany has tried and tested this policy to compensate for the lack of employment labor, just like the unemployment insurance that has been implemented.It is better that there is almost no cost because it prevents the loss caused by increasing unemployment.All countries should copy some German policies to prevent employment losses.
But the most important thing is that all governments must imitate China and take direct measures to crown diseases.The front line must not lack funds, and the hospital's intensive care unit must be expanded; temporary hospitals must be built; ventilator, protective clothing and masks must be produced on a large scale, and they must respond.
In addition, public health organs must also obtain necessary resources and funds to disinfect factories and other public places.Hygiene is the most important thing at the moment.Large -scale population testing is also particularly important. Each case of confirmed cases can save many lives and must not surrender to large popularity.
Author Hans-Werner Sinn is a professor of economics at the University of Munich, chairman of the IFO Institute of Economics, and a member of the Consulting Committee of the German Ministry of Economic Affairs
English Title: The World is at War
Copyright: Project Syndicate, 2020
