As long as pressures from the COVID-19 pandemic remain, the magnitude of governments spending and the size of government bureaucracies will not decrease, markedly; very costly political pressure like the COVID-19 pandemic will be responsible for some costly policies. Lets remember the depression that stimulated the creation of numerous New Deal reforms, around 1930 or ’32. ( Not enough, a pressure?) How about the worldwide security burden that led to the establishment of a large defense establishment after 1945? Can somebody remind me of a similar political pressure that caused a rise in government employment?

Today’s COVID-19 pandemic carries with it problems of huge government spendings without increase government employment. What, What and what are the benefits accruing from the depression caused by the COVID-19 pandemic? Are there policies the word can derive benefits from as a result of this pressure caused by the virus?

Lets read what the UN Director on Globalization and Development Strategies, Kozul-Wright, has got.

According to the UN’s Trade and Development Agency, UNCTAD, earlier March, that apart from the tragic human consequences of the COVID-19 coronavirus epidemic,the economic uncertainty it has sparked will likely cost the globe $1 trillion in 2020. “We envisage a slowdown in the global economy to under 2% for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September”, said Director on Globalization and Development Strategies, Kozul-Wright, at UNCTAD.

Mr. Kozul-Wright warned that few countries were likely to be left unscathed by the outbreak financial ramifications, following launching the UNCTAD reports as world financial markets tumbled over concerns about supply-chain interruptions from China and oil price uncertainty among producers.

He said one doomsday scenario in which the world economy grew at only 0.5% would involve a $2 trillion hit to gross domestic product, adding that collapsing oil prices had been a contributing factor to that growing sense of unease and panic.

While it was difficult to predict how the international financial markets would react to COVID-19 impact, he said “what they do suggest is a world that is extremely anxious”. “There is a degree of anxiety now that is well beyond the health scares which are very serious and concerning”.

Mr. Kozul-Wright insisted, to counter these fears “governments need to spend at this point in time to prevent the kind of meltdown that can be even more damaging than the one that is likely to take place over the course of the year”.

When asked about how different countries might react to the crisis including the United States and China, the senior UN economist said that the Chinese government would likely introduce significant “expansionary measures” – shorthand for increasing spending or tax cuts. “It will almost certainly do that”, he said. “Will the US government in an election year also need to respond in a way other than simply cutting taxes and reducing interest rates? I suspect it will do”.

What are your thoughts?