The Covid-19 pandemic has exposed the already deepening crises facing the world. Traditional economic theories did not provide the solutions needed to address these problems as it is limited to cost-benefit analysis and mathematical models. Post Covid-19, economists should focus on precautionary action that can help the world cope with unforeseen disasters.
Richard Murphy, professor of international political economy at the University of London, shared an article on how orthodox economics is proving ineffective during the current Covid-19 pandemic. The article notes that the world was already facing a number of crises before the pandemic including climate change, inequality and robots replacing humans.
Conventional economic theories have not been helpful in addressing these problems as solutions were often disregarded as being unaffordable and counter-productive. The article notes that the traditional cost-benefit way of decision making should be avoided and a bottom-up approach to economics must be adopted.
This pandemic has exposed the uselessness of orthodox economics | Jonathan Aldred https://t.co/CXM0p6spRn Excellent article from a good economist – well worth reading
— Richard Murphy (@RichardJMurphy) July 6, 2020
Rachel Glennerster, a development economist, shared forecasts made by the International Monetary Fund (IMF) and the World Trade Organisation (WTO). The IMF forecasts that global GDP is expected to contract by 4.9% in 2020 and rebound to 5.4% in 2021.
The WTO forecasts that world trade is expected to fall between 13% and 32% in 2020. Emerging markets focussed on the production of commodities are expected to be most affected.
Global demand and trade have fallen substantially. The IMF forecasts a contraction of 4.9% in GDP while WTO projects a fall in world trade of between 13 and 32% in 2020. Commodity producing emerging markets are forecast to do particularly badly. pic.twitter.com/fwMXH4DVGZ
— Rachel Glennerster (@rglenner) July 5, 2020
Charlie Robertson, global chief economist at Renaissance Capital, shared charts related to the rising number of Covid-19 cases in the US. He noted that considering the amount spent by the US on healthcare compared to other nations, it has not been able to control the Covid-19 pandemic.
The US has reported some of the highest deaths per 100,000 people in several states, according to the charts.
Given how much the US spends on health care vs any other major nation … it is shocking to see how poorly it has managed the #coronavirus. Deaths per 100,000 people in the right-hand chart – US states (light orange) and countries pic.twitter.com/uAt2gOicwD
— Charlie Robertson (@RencapMan) July 6, 2020
Stephany Griffith-Jones, an economist, shared an article on some of the policy changes needed to recover from the damage caused by the pandemic. The article notes that the US government should avoid bailing out firms that have already been on the decline to avoid creating underperforming companies.
The focus should rather be on companies that can contribute to social and racial justice. Public spending should be directed towards green transition and labour intensive opportunities to address both the climate change and unemployment issues.
— Stephany Griffith-Jones (@stephanygj) July 6, 2020
Christophe Barraud, an economist, shared an article on US trade groups urging US and Chinese officials to implement phase one of the trade agreement signed in January.
The trade groups noted that implementing the trade agreement is essential to restore the damage caused by the pandemic and stimulating growth. The agreement includes the purchase of $200bn in goods and services by China from the US over the next two years.
— Christophe Barraud🛢 (@C_Barraud) July 6, 2020