gros133_Robin UtrechtSOPA ImagesLightRocket via Getty Images_coronavirusemptystreet Robin Utrecht/SOPA Images/LightRocket via Getty Images

The West’s COVID-19 Learning Curve

If central bankers and governments can keep financial markets working and prevent mass bankruptcies during the COVID-19 pandemic, then the now unavoidable global recession could be followed by a vigorous recovery once the virus has been contained. But protecting public health requires Western societies to learn and adapt quickly.

BERKELEY – Politicians sometimes belittle military leaders with the charge that they always fight the last war. But that potted wisdom applies equally to policymakers – and it’s not always a bad thing.

For example, because the memory of the 2008 global financial crisis (GFC) remains fresh, governments and central banks have a keen sense that financial markets might collapse at any time. Faced with the COVID-19 pandemic, they are using every lever at their disposal to avoid a repeat of the financial-market freeze that proved so damaging a decade ago.

The policy reaction to the GFC was somewhat delayed and initially confused, especially in Europe, because policymakers and the public had not experienced a financial crisis or government defaults. But governments and central banks in Europe and the United States learned their lessons, and are now applying them on a vast scale in an effort to mitigate the pandemic’s economic impact.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.



Register for FREE to access two premium articles per month.