Daily Archives: March 24, 2020

India has just finished a day of curfew and clapping to practise social distancing and to express gratitude to the millions of health and essential services workers amid the COVID-19 pandemic. It was a laudable initiative by the Prime Minister to rally the nation together. The nation is truly at war, as he alluded to, and it can be won only by everyone coming together in this tragedy of the commons.

Also read: Janata Curfew: You created festival-like conditions in an atmosphere of fear and concern, Sanjay Raut tells PM Modi

But just two days before our clapping, the Indian-origin Finance Minister of the United Kingdom unveiled the U.K.s biggest economic recovery package in its history, as an antidote to the crisis; there is no fixed cost to it. The United States is finalising a trillion-dollar economic recovery package, while Germany is going ahead with unlimited government financing for the disruptions due to the outbreak. France, Spain, Italy and the Netherlands have all launched a half-a-trillion dollars combined in recovery measures. If this reads like panic, consider this one data point the number of people who lost their jobs, in just the last two weeks in America is the highest ever weekly job losses recorded in its history. These large, developed economies are expected to not merely slow down, but to contract and experience negative growth. The economic devastation will be much more painful and longer than the health impact.

While the rest of the world has sprung into action, India has merely announced the setting up of a task force under the Finance Minister to explore economic recovery options. This lackadaisical approach is unconscionable. Contrary to rhetoric, neither will India be immune to this imminent economic crisis nor will some preternatural force insulate us from this epidemic. It is prudent to swing into action right away to soften the inevitable economic blow.

There are already reports that a third of all restaurants could shut down in the formal sector alone and shed more than 20 lakh jobs, in the coming months. The entire automotive sector is shutting down its factories, putting at risk the incomes of a million people employed in this sector. When people lose their jobs, entire families suffer, consumption drops and overall demand collapses. When businesses close down, then they default on their commercial obligations down the chain and to their financiers. This freezes up credit flow in the economy and halts production. Since this is a global crisis, it is not even possible for India to import and export its way to recovery. Under such painful conditions, India needs a comprehensive recovery package that will first cushion the shock and then help the economy recover.

In my discussions with former Finance Minister P. Chidambaram and economists, there was near unanimity that the package should rest on four pillars: providing a safety net for the affected; addressing disruptions in the real economy; unclogging the impending liquidity squeeze in the financial system, and incentivising the external sector of trade and commerce. So here is a broad plan for a COVID-19 Economic Recovery Package for India.

The destruction of jobs, incomes and consumption can be addressed through a direct cash transfer of 3,000 a month, for six months, to the 12 crore, bottom half of all Indian households. This will cost nearly 2.2-lakh crore and reach 60 crore beneficiaries, covering agricultural labourers, farmers, daily wage earners, informal sector workers and others. It is important that this is not just a one-month income boost but, instead, a sustained income stream for at least six months for the millions who have lost their incomes, to provide them a safety net and a sense of confidence. The Pradhan Mantri Kisan Samman Nidhi (PM KISAN) programme with a budget of 75,000 crore can be subsumed into this programme.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) must be expanded and retooled into a public works programme, to build much-needed hospitals, clinics, rural roads and other infrastructure. This can be achieved by integrating MGNREGA with the Pradhan Mantri Gram Sadak Yojana and the roads and bridges programme. These three programmes together have a budget of nearly 1.5 lakh crore. This must be doubled to 3 lakh crore and serve as a true Right to Work scheme for every Indian who needs it.

In addition, the Food Corporation of India is overflowing with excess rice, wheat and unmilled paddy stocks enough excess stock to provide 10kg rice and wheat to every Indian family, free of cost, through the Public Distribution System.

This combination, of a basic income of 3,000 a month, a right to work and food grains, will provide a secure safety net.

COVID-19 testing, treatment, medical equipment and supplies capacity can be expanded through the private sector and be reimbursed directly for patient care. This will need a budget of 1.5- lakh crore for testing and treating at least 20 crore Indians through the private sector. This will help create a large number of jobs in the private health-care sector, with trickle-down benefits.

The Reserve Bank of India (RBI) announced a 1.5-lakh crore liquidity and credit backstop facility on Monday, which is a very welcome move. Further, the RBI should show regulatory forbearance and also set up a credit guarantee fund for distressed borrowers for credit rollover and deferred loan obligation.

The central bank must also immediately reduce interest rates drastically to spur business activity. A two-year tax holiday and an appropriate incentive scheme must be designed for exports and service sectors that have been devastated (airlines, tourism, hospitality, entertainment, logistics, textiles, leather). This could cost the exchequer between 1-lakh crore and 2-lakh crore.

In sum, the total incremental expenditure for the recovery package will be between 5-lakh crore to 6-lakh crore for FY2021. The next obvious question is: Where is the money for this?

The 5-lakh crore to 6-lakh crore recovery package can be funded largely thorough three sources reallocation of some of the budgeted capital expenditure, expenditure rationalisation, and the oil bonanza.

Given the extraordinary situation the world is facing, it is important to reprioritise our expenditure plan in the near term. The government had budgeted more than 4-lakh crore in capital expenditure for FY2021. This will, unfortunately, have to be reworked and some part of it allocated to the COVID-19 recovery package. For example, there is a budget of 40,000 crore for the revival of the telecom public sector units which can be delayed and the amount reallocated.

Similarly, the budget of nearly 1-lakh crore for national highways, roads and bridges can be rationalised to reallocate this to the recovery package. It is possible to extract a total of 1-lakh crore for the package out of the 4-lakhcrore budgeted capital expenditure for FY2021.

Fifty-four ministries in the Union government of India made a demand for grants and a total of 30-lakh crore has been budgeted as total expenditure for FY2021. Of these, 13 large ministries account for as much of the Budget expenditure as the remaining 41 ministries combined. There is ample scope to rationalise expenditure in these 41 ministries to extract 2-lakh crore for the recovery package.

The blessing in disguise for India is the dramatic fall in global crude oil prices from $40 a barrel to an estimated $20 a barrel which can help save nearly 2-lakh crore; this can be used to fund the recovery package or make up for shortfall of tax revenues.

To be sure, there will be a fiscal implication of this stimulus package and the fiscal deficit will rise driven both by increased expenditure and shortfall of revenues from the slowing economy. But now is not the time for fiscal conservatism.

It is often asked why the States cannot embark on an economic stimulus plan. The States combined incur an expenditure of 40 lakh crore. There can be some sharing of expenditure of the recovery package of 1-2 lakh crore by the States. But after Goods and Services Tax (GST), States do not have the fiscal freedom to raise tax revenues on their own. They are largely dependent on the Centre for their tax revenues through direct taxes and GST.

In summary, India needs an immediate relief package of 5-lakh crore to 6-lakh crore targeted across all sections of society and sectors of the economy. Though daunting, the money for this can be found through detailed analysis and some bold thinking. The global economy is headed for a dark phase and it is our duty to rise to the challenge to secure the future of all Indians.

It is time to think big, bold and radical to pull our economy out of this crisis. This is Indias moment for the equivalent of the New Deal that U.S. President Franklin Roosevelt launched in America after the Great Depression of 1929.

Praveen Chakravarty is a political economist and a senior office-bearer of the Congress party. The article has been written with inputs from former Finance Minister P Chidambaram and other economists and policy experts

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A pandemic, an economic blow and the big fix - The Hindu

Armenia has the 34th freest economy in the 2020 Index of Economic Freedom published by the Heritage Foundation.

Armenias economic freedom score is 70, a 2.9 point increase due to a significant spike in the fiscal health score. Armenia is ranked 18th among 45 countries in the Europe region, and its overall score is just above the regional average and well above the world average, the report says.

Economic freedom has remained fairly constant in Armenia during the past 15 years, with the economy vacillating between moderately free and mostly free. GDP growth in the past two years has been especially robust as the economy has rebounded from a 20152016 regional slowdown. The government is pursuing structural reforms, export promotion, and greater foreign investment to boost future economic growth.

According to the report, to attract greater investment and finally break out of its holding pattern to move higher into the mostly free category, Armenia will need to focus more intently on improving judicial effectiveness and government integrity.

As for Armenia's neighbors, Georgia is 12th, Azerbaijan is ranked 44, Turkey is 77th and Iran is 164th.

Singapore tops economic freedom index.

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12:28 Heritage Foundation: Armenia needs to improve judicial effectiveness to have freer economy - Information-Analytic Agency NEWS.am

In February, the United States Navy announced that it would cut production of the legacy F/A-18E/F Super Hornet, to instead accelerate the development of the next-generation carrier-based fighter program. According to the service's newly revealed Fiscal Year 2021 budget request, next year's order of two dozen of the tactical aircraft would be the last in the program. This comes after Super Hornet maker Boeing won a $4-billion multi-year contract to build 78 of the strike attack aircraft through FY 2021.

This would bring to an end the F/A-18 program that began in the 1970s with the development of the McDonnell Douglas designed twin-engine F-18 fighter and attack aircraft. The F/A-18 E/F Super Hornet is the final variants of that original multirole fighter aircraft, and features a 20% larger airframe, 7,000lb. empty weight and 15,000lb. heavier maxim weight than the original Hornet. The Super Hornet can also carry 33% more internal fuel, which can increase its mission range by 41% and its endurance by 50% over the earlier aircraft. Moreover, despite the increase in size, the F/A-18E/F actually has 42% fewer parts than its predecessor the F/A-18C/D.

The F/A-18 E/F Super Hornet, which is now manufactured by Boeing following its merger with McDonnell Douglas in 1997, is produced as two distinct versions. The single-seat F/A-18/E and the dual-seat F/A-18/F.

It also has a multirole fighter that can serve as an attack aircraft via the use of different external equipment, as well as its advanced networking capabilities, which allow it to accomplish very specific missions. In this way it is seen as a "force multiplier" that allows it to be deployed to meet the various challenges that a carrier might face. In its fighter mode, it can serve as an escort and provide fleet air defenses from enemy aircraft and other threats, while in its attack mode it can provide force projection, interdiction and close and deep air support.

The Super Hornet has 11 weapons stations, including two wing store stations, and it is able to fulfill a range of armaments that include AIM-9 Sidewinder, AIM-7 Sparrow and AIM-120 AMRAAM air-to-air missiles, guided air-to-ground weapons such as Harpoon, SLAM/SLAM-ER, GBU-10, GBU-51, HARM and Maverick; and free-fall air-to-ground bombs, Mk-76, BDU-48, Mk-82LD, Mk-82HD and Mk-84. The aircraft is also equipped with a General Dynamics M61A2 20mm Gatling-style gun, a hydraulically driven, six-barreled, rotary action, air-cooled, electrically fired weapon that offers selectable rates of either 4,000 or 6,000 rounds per minute.

The first operational use of the F/A-18/E was with Strike Fighter Squadron 115 (VFA-115), known as the "Eagles," which was operating from the USS Abraham Lincoln (CVN 72) on July 24, 2002, and the aircraft saw it first combat action on November 6 of the same year when the squadron took part in hostile targets in the "no-fly" zone in Iraq. The F/A-18E/F was also used deployed as part of Operation Iraqi Freedom in March 2003.

Despite the Navy's decision to stop further production of the F/A-18E/F Super Hornet, it will remain the primary strike power from U.S. carriers for the next decade.

Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He is the author of several books on military headgear including "A Gallery of Military Headdress," which is available on Amazon.com.

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Why the Navy's F/A-18 Super Hornet Is Still One Dangerous Fighter - The National Interest

D4 Billion Debt Repayment in the face of a Pandemic

A slowdown in economic activity caused by the Coronavirus outbreak and a sustained closure of the countrys air space & bordersare expected to account to a contraction thisyear.

Recent twitter postings show the International Monetary Fund (IMF) boss, Kristalina Georgieva, interface with various world leaders seeking bailout draws, or just about enough breathing space in debt repayment regime alas focus soon turned closer to home.

In the midst of it all that is Friday night highlight of a hazy rush, a chilled evening breeze soon drew me into focus, although a flash of Coronavirus lurks large in the city. So, what is a man got to do on government imposed isolation observing social distancing?

The issues with Gambias debt trap are extremely complex, evidenced by poorly financed agreements. Try to ask any Gambian on the high street about the debt situation and gauge their reactions: I assure you few will have understood, or aware of the extremeburdens it places on effective governance.

As it stand The country pays a truck load of cash on the principal loan contracted over the past many years under Jammeh, as well as thecurrent administration. Monthly repayments total as much as D500,000,000 ($10,000,000)in interest servicing alone.

While the finance minister would boast that monthly collections at the port outstrip debt repayment regime, these valuable assets could have otherwise used to rebuild the countrys vast crumbling infrastructure, dilapidated public structures, libraries and cleaner streets.The imposed repayment framework signed under clouds of darkness then sold to the population as gold dust is indefensible reprehensible indeed.

The IMF yesterday announced that it will offer up to $50bn in emerging financing for countries stricken by the coronavirus outbreak.In a statement, it says:

The IMF is making available about $50 billion through its rapid-disbursing emergencyfinancing facilities for low income and emerging market countries of which $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility.

I urge the administration to sort access to the latter at zero interest conditional to favourable terms with the current debt portfolio. The cash could be used to shore up the economy protectlocal businesses from collapse, saving jobs. It is understood the administration already has put aside D500 million in Corona Corona fight. That is admirable but is it resolved to explain to parliament (and public) how that extra cash came about? Overnight, I was made aware that former minister of finance, Sidi Sanneh, has written to Mambury Njie, the finance minister, seeking clarity on the origins of the aforesaid figure I hope the ministry possesses the courtesy to respond!

It is worth remembering that former president Jammeh seized power at a time of a strong dalasi, low inflation, low debt economy fromthe fiscally considerate Jawara government.That regime then succeeded in destroying fiscal discipline in place against no-frills spending spree invitation to predatory loan sharks.

President Barrow, to his credit, inherited arigged economy with GDP/Debt ratio of some 107%. But lack of fiscal maturity has seen the administration shoot the deficit cliff wide open to a whopping 120% GDP. The disaster, in my view, was the failure to map out a vision to reshape economic revival post-dictatorship. Then step in Mambury Njie, an appointment Id cheered on account of technocratic baggage. Yes, inflation was brought undercheck, economic growth all but steady. Of late however, the minister has appears to prove his detractors right who protested his appointment. He needs to wean off the Gambia from debt addiction and for parliament to mobilise on debt ceiling legislation, as argued by the economist, Nyang Njie.

I will say this: GDP growth rate projected for 2020 are obsolete therefore needs to be revised. For a start, Gambia is not amanufacturing nation nor an export oriented economy to mitigate balance of paymentdeficit. The country is stuck poor with a sizeable trade imbalance to Senegal, China, India, and every other country it does commerce. That cannot be right, notsustainable either concern the minister of trade has failed to address!!!

The administration should take its case to the IMF & World Bank demand incapable of fulfilling terms of the loan. I recogniseexcellent efforts by the Commonwealth helping the finance ministry to better coordinate the vast expansive cadre of loan sharks. The technical component and skillstransfer will be of tremendous value long term if standards are maintained in line withprocedures.

The financial year 2020, the country will pay in excess of D4 billion in debt repayment. Given the high rate of poverty and unemployment, having that money sustainable and accountable invest incommercial rice value chain, surely, will redress lots of ills in society. While one admitnot versed in economic reading or technicalities of the sort, events on the ground and common sense inform this argument. For God sake here is a country which a river runsthrough it, blessed with fresh water lakes yet successive govts cannot designate all year round mechanised commercial farm ventures. What upset most is see the country reduced to a beggar nation. That, I have a fundamental issue with. The leadership must address the rate of poverty in the country, uphold rule of law and ethics in governance.

Gibril Saine

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D4 Billion Debt Repayment in the face of a Pandemic - Freedom Newspaper

Eduardo Bolsonaro, a federal lawmaker and son of Brazils president, said that Covid-19 was Chinas fault and that freedom for people was the solution. Predictably, Chinese officialdom was outraged. The Chinese embassy in Brasilia charged that he had caught a mental virus. In the US, President Donald Trump was questioned for calling it a Chinese virus. He stood his ground. China had expelled journalists from top American newspapers. The Wall Street Journal had carried an article early in February with a title that said China was the sick man of the world.

Separately, China is sending shipments of medical supplies to Italy and Spain (China Ramps Up Coronavirus Help To Europe, Financial Times, 19 March 2020). Newspaper articles repeatedly intone that Chinese students studying in the West find China a safer haven from the virus. Gideon Rachman wrote (How Beijing Reframed The Coronavirus Response Narrative, 16 March 2020) in the Financial Times that the financial meltdown of 2008 triggered a loss of western self-confidence and a shift in political and economic power towards China. The coronavirus crisis of 2020 could force a much bigger shift in the same direction." Really?

Yes, the president of the US is wrong in calling it a Chinese virus, because he should be calling it a Chinese export. On 19 March, Nikkei Asia Review carried an article which stated that three days of inaction by China have given us a global corona virus pandemic. Even after locking down Wuhan on 23 January and suspending group travel within China, it did not issue any order prohibiting locals from travelling overseas. Notably, it did not stop individuals from moving to other places as they saw fit. Chinese travellers fanned out to Japan, South Korea, Italy, Spain, France, the UK, Australia, North and South America. Shadi Hamid, a senior fellow at the Brookings Institution, does not mince words in assigning China the blame for this, and noted pointedly that after the crisis (whenever that happens), the worlds relationship with the Peoples Republic cannot and should not go back to normal (China Is Avoiding Blame By Trolling The World, The Atlantic, 19 March 2020).

Now that readers have been adequately reminded of where the virus started and why it spread, let us examine the prospect of a shift in political and economic power towards China. Such predictions were made in the aftermath of the crisis of 2008. More than anyone else, China took them seriously. In 2008, the country had panicked and exulted simultaneously. As demand collapsed in its trading partner-countries, China assembled a massive stimulus package. That was panic. It did so under the belief that it could get away with such vast state spending and the debt accumulation it entailed. The Peoples Bank of China issued discussion papers on the need to develop a new global monetary regime that was less reliant on the US dollar. These were illustrative of its exultation. None of these have since materialized.

Chinas currency may be one of the few that make up the International Monetary Funds (IMFs) Special Drawing Rights. But, the currency has hardly inspired confidence in non-residents. Its value against the US dollar has not plummeted only because of severe capital controls that still remain in place. So much for making the yuan a convertible currency. As for its debt-induced economic recovery, it has resulted in the IMF publishing its own estimates of Chinas fiscal deficit and public debt every year in its Article IV assessment of Chinas economy. Its potential growth rate lies somewhere between 4% and 5%, while China prints an official growth rate of 6% or more.

Then, in 2015, the country launched its famous Silk Road or One Belt, One Road (OBOR) initiative. Commentators were in awe again. Some called it Chinas Marshall Plan. India exercised admirable judgement and refused to join the bandwagon. Five years later, OBOR has fizzled out. Countries that signed up to be part of it now realize that doing so only gained them the status of perpetual debtor nations. So, OBOR is unlikely to be Chinas gateway to global superpower status.

Let us assume that Chinas economy has recovered and that its production lines are working at full capacity again. But, its economic model has not changed much. It continues to rely on exports and an old economy. Fathom Consulting, an independent research firm based in the UK, estimates that the share of high-technology exports in Chinas overall exports are only 15% as opposed to the official and World Bank (oh, well) estimate of 30%, and that its urban unemployment rate is close to 15% rather than the official estimate of 3%.

Regardless of the theories floating around on social media platforms about why only select Western nations are affected by the virus, the truth is that China will also go down if the West goes down. The US still has many levers it could pull to ensure that happens. It is too premature to celebrate or dread the end of the West and the beginning of the rise of the East. This would be simply wrong.

V. Anantha Nageswaran is a member of the Economic Advisory Council to the Prime Minister.These are the authors personal views

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Opinion | The world should be wary of smoking the China pipe again - Livemint

Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell both emphasized Thursday that federal aid to big businesses such as airlines planned as part of the administrations proposed stimulus package of $1 trillion or more is not a bailout.

The administrations plan, still subject to negotiations with Congress, calls for $50 billion in loan guarantees for passenger and cargo air carriers as well as $150 billion for other severely distressed sectors of the U.S. economy, such as cruise operators and hotel companies.

The stimulus package would also provide $300 billion for loans, not grants, to small businesses affected by the pandemic.

Were not talking about so-called bailouts for firms that made reckless decisions, McConnell said. None of these firms not corner stores, not pizza parlors, not airlines brought this on themselves. Were not talking about a taxpayer-funded cushion for companies that made mistakes. Were talking about loans which must be repaid.

Mnuchin has struck a similar note. This isnt a bailout, he toldFox Businesson Thursday. We're not going to force things on people, but people who need liquidity, we're going to make sure that the taxpayers are compensated fairly.

The Washington Posts Robert Costa and Philip Rucker report that Mnuchin also sought to ensure that Senate Republicans were careful about the language they used when he met with them on Tuesday:

[T]he secretary pleaded with them not to use the politically charged word bailout in describing the proposed relief for Boeing, one of many large corporations that stands to benefit from the administrations plan. One senator raised a hand and asked if they should instead call them freedom payments, which prompted laughter, according to a person briefed on the closed-door meeting who spoke on the condition of anonymity to be candid about the discussion.

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Mnuchin and McConnell Say Cash for Companies Is Not a Bailout - The Fiscal Times

The coronavirus shutdown of 2020 is perhaps the most remarkable interruption to ordinary life in modern history. It has been spoken about as a war. And one is reminded of the stories told of the interruption of normality in 1914 and 1939. But unlike a war, the present moment involves demobilisation not mobilisation. While the hospitals are on full alert, the majority of us are confined to quarters. We are deliberately inducing one of the most severe recessions ever seen. In so doing we are driving another nail into the coffin of one of the great platitudes of the late 20th century: its the economy stupid.

Once upon a time we thought we knew what was up and what was down. According to the lingua franca of the 1990s, in the wake of the cold war, it was obvious that the economics were the fundamentals, and the rest followed. It was the wests economic success that felled communism. And the economy ruled not only over creaky communist dictatorships, it defined the scope of possible politics in democracies. Arguing against globalisation, Tony Blair insisted, was as absurd as arguing against the seasons.

Then came 2008 and we were left wondering who the economic masters of the universe actually were. It was followed by the extraordinary, politically induced catastrophe of the eurozone debt crisis, in which conservative fiscal populism and dogma disguised as expertise ruled over the need to ensure employment and grow the pie. Then in 2016 the UK referendum delivered a majority for Brexit in the face of predictions of economic disaster. Months later, Donald Trump, a narcissistic billionaire, was swept to power by working-class votes in the face of opposition by the great and the good. Both the UK and the US have since pursued policies of spectacular economic irrationality without fear of a crushing veto by the markets. Liberal elites waited in vain for the market vigilantes to arrive.

And now Covid-19. Imagine if blunt economic interest was, in fact, dictating our response. Would we be shutting the economy down? What we know about the virus tells us that it most often kills what are by the numbers the least productive members of society. The majority of the working population experience symptoms barely more significant than a regular flu. Unlike regular flus it does not threaten children, the future workers. The virus may be bad, but simplistic economic logic would dictate that until we have a vaccine it would be best to keep life going, because, you know, its the economy stupid.

That was indeed the first reaction of the British government. The headline was that Britain was staying open for business. Journalists with good memories dug up Boris Johnsons fondness for the mayor in Steven Spielbergs Jaws who insists that despite the fact that a sea monster is eating his constituents the beach should stay open. The higher wisdom of public health, we were told, was that the productive workforce would acquire immunity. We know how that bold experiment in heroic economism has ended: a panic-driven withdrawal in the face of the disastrous scenario of hundreds of thousands of excess deaths, overwhelmed NHS hospitals and a crisis of political legitimacy.

It suddenly became obvious that when matters of life and death are concerned the calculus is different. Of course, old and sick people die. We all will in due course. But it matters fundamentally how and under what circumstances. A huge surge in mortality, even if it is limited to vulnerable populations with pre-existing conditions, is existentially unsettling. So too are the apocalyptic scenes that will unfold in our hospitals. In an earlier age, they might have remained behind a decent veil of obscurity. (No doubt the NHS and the BBC will work out the protocols for embedded reporting from the clinical frontlines.) But the words and images that have already come to us from northern Italy and Wuhan are bad enough. Faced with all of this, the stupidity lies in not recognising promptly that we must act, that we must shut down, that even the most essential individual activity of the market age, public shopping, has mutated into a crime against society.

This is not to say that economics is not shaping the crisis. It is the relentless expansion of the Chinese economy and the resulting mix of modern urban life with traditional food customs that creates the viral incubators. It is globalised transportation systems that speed up transmission. It is calculations of cost that define the number of intensive-care beds and the stockpiles of ventilators. It is the commercial logic of drug development that defines the range of vaccines we have ready and waiting; obscure coronaviruses dont get the same attention as erectile dysfunction. And once the virus began to spread, it was the UKs attachment to business as usual that induced fatal delay. Shutting down comes at a price. No one wants to do it. But then it turns out, in the face of the terrifying predictions of sickness and death, there really is no alternative.

It is once you have overcome that political, intellectual and existential hurdle to realise that this is a matter of life and death that economics enters back in. And it does so with a vengeance. The logic revealed by the well-organised Asian states is that it is best to conduct a severe quarantine regime in the hope of being able to return to normal activity as soon as possible. The Chinese economy is already resuming step by step.

In the west, the scale and breadth of the epidemic is such that our response now will have to be a blanket shutdown. And that begs gigantic questions of economic management. Even conservative governments on both sides of the Atlantic are pulling every lever of monetary and fiscal policy. In a matter of weeks they have embarked on gigantic interventions on a scale comparable to those in 2008. They may be able to soften the blow. But it is an open question how long we will be able to persist, how long we will be able to freeze the economy to save lives.

In making the difficult choices that lie ahead we have at least gained one degree of freedom. The big idea of the 1990s that the economy will serve as a regulating superego of our politics is a busted flush. Given the experience of the past dozen years we should now never tire of asking: which economic constraints are real and which imagined?

Adam Tooze directs the European Institute at Columbia University and is the author of Crashed

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Coronavirus has shattered the myth that the economy must come first - The Guardian