The first chapter of the IMF 2020 Fiscal Monitor shows that, as of 8 April, G20 countries had provided 3.5% GDP of fiscal support to respond to the pandemic. To compare, in 2009 they spent 2.1% GDP to respond to the financial crisis. In addition, G7 countries have already put forth loans, guarantees and liquidity injections amounting to over 10% GDP. It is not yet possible to estimate the full economic cost of the crisis. But we are talking in trillions of dollars. To compare, the Global Preparedness Monitoring Board said that the 2003 SARS epidemic costed $40 billions, the 2009 H1N1 pandemic $45 billions, and the 2014-2016 Ebola outbreak $53 billions. And to recall, the Commission on a Global Health Risk Framework for the Future estimated, back in 2016, that global pandemic preparedness would cost $4.5 billion per year. Yes, that’s in billions of dollars. Globally.
I always enjoy Capitalisn’t, the podcast of Georgetown Kate Waldock and University of Chicago Luigi Zingales. In this episode they discuss who is going to foot the bill. They explain how debt works, and how there are two ways to get out of it: growth and taxes. To debate tax options and their effects on inequalities, they invite Nobel prize Gene Fama, challenge his conservative views, and get him to agree that a one-off wealth tax could help pay back in a fair way.
My graph this week is Vivid Economics’ green stimulus index which shows the “green” component of stimulus funding – ie how funds go to sectors improving climate change, biodiversity, and pollution — in 11 countries. And we do not see much green.
My quote this week is from former World Bank President recently-gone-back-to-Partners-in-Health Jim Yong Kim [39’30’’]: “If we are using bazooka and nuclear options in fiscal and monetary policies, why are we using squirt guns in public health policy?”.
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