By Ingo Ploger, Brazilian entrepreneur, President of CEAL Brazil
In this unique and severe global crisis, most of our leaders think local and move to close borders; but more dangerous than that is that they are closing a universal mindset, putting every effort in local actions, forgetting that in the next day the neighbor can be the next higher problem. The quarantine is necessary but not enough; we will not avoid this crisis thinking only in that dimension. Leaders have to think ahead by looking at the end of the battle, if they want to be successful.
Angel Gurría, General Secretary of the OECD, made a very courageous and forward- thinking thought to the world leaders, saying:
“In our global world, many issues cannot be dealt anymore within domestic boundaries, be it a virus, trade, migration, environmental damages or terrorism. Multilateral action creates positive spillovers that will be more effective for each country than if they acted alone.
Cool heads, individual and collective discipline, a heightened sense of solidarity and a shared sense of purpose will allow us to overcome these unexpected and challenging circumstances need a level of ambition similar to that of the Marshall plan – which created the OECD – and a vision akin to that of the New Deal, but now at the global level”.
His proposal looks at global cooperation in the fields like,
- Governments should ensure cooperation in health challenges, like vaccines and treatments, and get regulatory agencies to remove regulatory hurdles
- Governments should join coordinated policies to finance a buffer to cushion the negative effect and speed up the recovery, and coordinate investment programs, notably in health research and development and infrastructure
- Central Banks have already launched bold actions to support the economy but financial regulation and supervision is another area that must be coordinated. Constraints in balance sheets and the risk assessment must be redefined.
- Everything must be done to restore confidence. While the key to that is bringing the virus outbreak under control, it would also help to address the factors that were sapping confidence even before COVID-19 appeared on the scene, including the removal of trade restrictions.
Angel Gurría is a Latin American leader in a worldwide organization who has a voice to be heard and a powerful platform to coordinate policies with other leaders. His vision for a Marshall Plan and a New Deal goes much further than to overcome Covid-19. The world will be different after these pandemics, and he sees a huge opportunity to cooperate in new ways towards a better prospect. The new way to see the global risk shows us that together we can mitigate the disaster faster and much more efficiently.
Nevertheless, a new discussion comes over all, initiating in the USA: the so-called horizontal and vertical treatments. Horizontal, everybody is in quarantine, like in Italy, and the others saying let’s open the doors for lower risk groups and return to work with controlled risk to enhance the economy. In fact, behind that we have an ethical issue, about assuming losses (inevitable or not?). Opponents argue that we are facing two different wars, healthcare followed by the economy. The two high-risk groups are the people 60 and over and the small and medium entrepreneurs who are responsible for more than two-thirds of the employment around the world.
The question of the economic crisis will not be liquidity caused by risk assessment, which is structured not for a wartime but for a good time. Governments and financial institutes have to overcome the limits, like Basel limits, and others to have a limitation of risk in the balance sheets of the companies.
If in one hand the horizontal and/or vertical measures for health and or economy, should be executed by the national authorities, the efficiency is only possible if we find together new ways like those of the OECD proposal in a global perspective. Both are urgent!
Continents like America, Africa and India could be much better helped in a common way and make the world safer and with more wellbeing. Common policies are not only an economic issue but increasingly a political and human pledge for solidarity and comprehensiveness.