A trial and error response to the Coronavirus

Europe cannot afford this kind of approach when the economy is in free fall, argues László Andor.
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By László Andor

László Andor is the Secretary General of the Foundation for European Progressive Studies (FEPS) and a Former European Commissioner for Employment, Social Affairs and Inclusion.

15 Apr 2020

​Since the outbreak of COVID-19, it has been widely publicised that the medical significance of hand washing was discovered by a 19th century Hungarian doctor, Ignác (Ignaz) Semmelweis.

It may as well be striking how recent this discovery is, but also that the doctor introducing it was facing ferocious resistance from the medical establishment of the time.

There is, however, another important aspect of the Semmelweis story that should help understand recent and current developments in Europe: that is the role of trial and error in discovery and human behaviour.

Trial and error was also observed in the great financial crisis that devastated Europe a decade ago. As soon as the first signs of a public debt crisis emerged inside the Eurozone area, the parade of bad ideas began.


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Angela Merkel and Nicolas Sarkozy, the most powerful leaders of the time, realised that they may have made a mistake by creating a precedent about private investors profiting and taxpayers bringing all the credit risk on themselves. So, in October 2010, at Deauville, they announced that the private sector would also be expected to face losses.

This move created such an uncertainty that credit spreads jumped across the board, and very shortly two more countries, Ireland and Portugal followed Greece into quasi-insolvency, preparing the ground for a full-blown Eurozone crisis.

The debacles continued until it was left to the new leader of the European Central Bank, Mario Draghi, to reverse the tide by announcing a host of unconventional measures ("whatever it takes") in July 2012.

"While it might as well be seen as an inevitable part of the lock-down strategy, closing national borders may not be such an obvious measure when our economic systems in Europe are so very integrated"

The current COVID-19 crisis is another case where trial and error has been playing a greater than necessary role, and it probably applies to both the medical and the economic aspects of crisis response.

Perhaps the most well-known example of a failed trial is the British strategy of herd immunity, which became unpalatable as soon as it was understood that it is based on the calculable death-ratio of the older generation.

And the UK was not alone with this approach, it can be found in the Dutch as well as the Swedish anti-COVID-19 policies, and in every other country where the enforcement of the lock-down strategy is not too forceful.

Heard immunity is surely not the only flawed idea of this period when, in the absence of a vaccine, there have been two ingredients for the successful suppression of the virus: extensive testing of the population and a very strict lock-down ("social distancing").

For example, some governments attributed a lot of importance to contact tracing, i.e. a process of identifying persons who may have come into contact with someone who is already known to have been infected.

This approach would probably be excellent, if a country could not import the virus from multiple directions at the same time, and if football matches (as in Milan) or street demonstrations (as in Madrid), would not have been proven as sources of exponential growth of the infection.

Perhaps a more controversial question is the closure of national borders. While it might as well be seen as an inevitable part of the lock-down strategy, closing national borders may not be such an obvious measure when our economic systems in Europe are so very integrated.

"In recent weeks, we have seen a lot of hesitation, high-level mudslinging, as well as an appetite to resort to proxies. The lowest common denominator principle of EU decision making is well and alive, as are false references to subsidiarity"

Once all Member States are affected by the virus, one way or another, the closure of national borders may be less obvious for stopping the spread of the virus, while it becomes very effective for disrupting the supply of goods and services and thus deepening the recession.

For example, the health services in Burgenland, which is the Easternmost region of Austria, are highly dependent on the mobility of Hungarian nurses, so the closure of the Hungarian—Austrian border is no more justified than closing off East-Hungary from West-Hungary along the River Danube.

What can we say about the economic crisis response today? Can we afford trial and error when the economy is in free fall?

In recent weeks, we have seen a lot of hesitation, high-level mudslinging, as well as an appetite to resort to proxies. The lowest common denominator principle of EU decision making is well and alive, as are false references to subsidiarity.

Since, however, the risk we are facing is unprecedented, overdosing the crisis response would be the smaller risk compared to fighting the deepening recession and rising unemployment with modest and complicated instruments.

Doing our utmost against the disintegration of our economies, societies and democratic political systems involves EU-level solidarity, not only when the crisis is already here, but also in the long run.

Fiscal risk sharing in a monetary union in various forms should be as obvious as hand washing against infections.

Note: A longer version of this article first appeared in "Progressive Post."

 

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