When COVID-19 was declared a global pandemic, Joshua Gans felt like many of us — distracted by the news and overwhelmed by the chaos playing out on social media. Unsure of what to do next, he did what came most naturally to him: he wrote a book.
Gans — who is a professor in the Strategic Management area and the Jeffrey S. Skoll Chair of Technical Innovation and Entrepreneurship at the Rotman School — got to work analyzing the big questions surrounding the economic crisis that was unfolding alongside the global health crisis.
The resulting book, Economics in the Age of COVID-19 (MIT Press First Reads, 2020), goes over the different phases of the pandemic economy — containment, reset, recovery and enhance — and addresses the key questions that arise at each stage.
Readers will quickly find that each phase of the pandemic economy presents its own challenges. During the containment phase — which encompasses the early stages of the outbreak — the changes are drastic. Countries must adopt a wartime mentality as governments introduce price controls and shift resources towards critical areas, such as healthcare.
During this time, economies are upended by new social distancing measures, and governments must move swiftly to pause economic activity in such a way that consumers and small businesses can survive long term.
The best way forward is unclear at this stage. Most governments have wrestled with the decision to either stop bill payments altogether or pay them off while the economy is on pause. It’s a complex dilemma. As Gans explains, on the one hand, stopping payments means that certain individuals (such as landlords and vendors) will be hit harder by the upcoming recession, but paying bills outright introduces the messy problem of processing a massive volume of bills.
The challenges continue into the reset phase, when governments prepare to reopen their communities. Gans explains why widespread and accurate testing will be critical for preventing subsequent viral outbreaks and keeping people productive.
“The pandemic is an information problem. Knowledge will determine how we solve this crisis and how quickly it is done with.”
—Joshua Gans, Professor of Strategic Management
When economies do reopen, during the recovery phase, governments will face a new set of questions and concerns. Individuals will return to work in a staggered way, but how will governments and organizations decide the order in which people return? What new workplace requirements will need to be introduced to prevent the re-emergence of the virus? How can governments drive the development of an affordable vaccine that can be mass-produced and distributed widely?
The book closes by looking ahead to the future — the enhance phase — when the pandemic is successfully resolved, but the work is far from over. Global monitoring and response programs will need to be designed from the ground up.
Ultimately, readers will come away with an understanding of the complex issues that most governments are grappling with now. Along the way, Gans makes a few entertaining references to things like zombie apocalypses and Plague Inc (a popular app that demonstrated how destructive slow-acting, infectious disease can be) and shares notable cases from history to illustrate his points.
By his own admission, he’s not sure what the future holds, but his well-defined arguments will give readers much-needed clarity on the complex economic issues that are arising during this very uncertain time.
“The pandemic is an information problem. Knowledge will determine how we solve this crisis and how quickly it is done with,” Gans says.
Written by Rebecca Cheung | More Rotman Insights »