Managing Complexity and COVID-19

Life, Liberty, or the Pursuit of Happiness

Aurobindo Ghosh, Amit Haldar, Kalyan Bhaumik

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032115160
• eBook ISBN: 9781000598087
• Topic: Business
• Subtopic: Business General
• Index: Business

This book brings together insights and perspectives from leading medical, legal, and business professionals, as well as academics and other members of civil society, on the threats and opportunities to life during the COVID-19 pandemic. It provides a uniquely interdisciplinary perspective for policymakers, researchers, and medical professionals to assess the different practical strategies, and risk and crisis management processes available to them in addressing the very difficult choices with which they are presented and their implications.

The book presents a framework for the different facets of strategic choices faced by policymakers between life and livelihood, and the challenges of protecting health versus reopening the economy. It also evaluates the intense challenges faced by frontline medical professionals and scientists during an unfolding catastrophe. Finally, the authors explore the societal and human elements of the pandemic and its impact on family dynamics, society, education, and business, including the technology, creative, entertainment, and leisure industries.

This book is deliberately short and captures key insights on the COVID-19 pandemic to form an interdisciplinary overview for professionals, policymakers, and business leaders to consider the long-term implications of the pandemic and lessons for future crises.

PART I STRATEGY IN A PANDEMIC Financial Economics of the Strategic Choices

1 Strategic Debate on Financial Inclusion: Is Life or Livelihood a False Choice?

Aurobindo Ghosh

DOI: 10.4324/9781003218807-2

…Four historic crises. All at the same time. A perfect storm.

The worst pandemic in over 100 years. The worst economic crisis since the Great Depression.

The most compelling call for racial justice since the 60s. And the undeniable realities and accelerating threats of climate change.

So, the question for us is simple: Are we ready?..

– Democratic Presidential Nominee (and now President) Joe Biden reflected on a US or maybe a global challenge (Pramuk, 2020)

Introduction

In March 2020, at the onset of the global pandemic Dr Anthony Fauci, Director of the US National Institute of Allergy and Infectious Diseases (NIAID) and later the Chief Medical Advisor for the Biden Administration, when asked about the progression of the virus gave a prophetic response, “...the virus will make the timeline…” (LeBlanc, 2020). Surprisingly, this was one of the very few accurate long-term predictions about COVID-19 made by many experts including Dr Fauci, a 2007 National Medal of Science award-winning scientist and a lifelong public health professional.

In June 2021, more than one and a half years since the virus was first identified in Wuhan, China, many countries were suffering through multiple waves with new more transmissive variants of SARS-CoV-2, causing massive losses of life and livelihood. These “variants of concern” became dominant strains affecting billions, including several children in India who were left orphans by the catastrophic second wave (Ghosh et al., 2021; Kottasova, 2021; Mohan, 2021).

With scant prior data available, policymakers have to make decisions under uncertainty and rely on experts for guidance, often prioritizing the societal benefit and minimizing cost with simulations projecting the impact of the pandemic using epidemiological, economic, and statistical forecasting models (Rowthorn and Maciejowski, 2020, Bhattacharjee et al., 2022). Framing the right question to address this novel threat has engulfed policymakers and concerned citizenry of over 200 countries in all 7 continents on this planet.

When and how can policymakers reopen the economy for the maximal benefit to the society? How can an accurate societal cost–benefit analysis be formulated when the cost is borne by a different group (i.e. the vulnerable immune-compromised older population) and the benefit might be enjoyed by a different group (e.g. the socially isolated, financially excluded, mentally fragile youth)?

There were few predictable or discernable patterns among affected countries or their affected citizens. For example, they range from affluent northern Italy despite having low population density and great medical facilities (Horowitz, 2020) to the care homes in the United States accounting for nearly one-third of the COVID-19 deaths with only 4% of cases (The New York Times, 2021), as well as some of the poorest in shantytown or favelas in Brazil having suffered untold devastations (Teixeira, 2021). The virus in this dubious respect has been a “great leveler.” This only reflects how helpless policymakers are even with the “ex ante” best-laid plans, when pitted against the vagaries and the wrath of nature. However, technological advancement with the development of vaccines has helped tremendously. During the Great Influenza pandemic (Spanish Flu) more than 100 years earlier the mortality rate (675,000 deaths among 105 million or about one-third of the current US population) was roughly 0.64% or about three to five times the mortality rate in the current pandemic in the United States (Ewing, 2021).

Before the advent of effective vaccines or therapeutics, most Western and developed countries relied heavily on lockdowns alongside social distancing, hand washing, and mask wearing as mitigation measures to contain the outbreak, while applying stimulus spending to supplement lost income (Bhattacharjee et al., 2022).

However, in a developing country like India, the problem is exacerbated by the financial exclusion of the unbanked or underbanked population. On one hand, there are very few social support systems in many developing countries where direct cash transfers to the underprivileged are possible. Therefore, prolonging the lockdown beyond a certain point would render the economically weaker section of society to become truly vulnerable. On the other hand, the premature lifting of the lockdowns to open the economy can often lead to a surge of cases which overwhelm the existing health structure as was evident from the outbreak of the apocalyptic second wave in India.

In this chapter, we make a humble attempt to assess a range of strategic alternatives available to policymakers. However, we will focus only on one narrow slice of this complex jigsaw puzzle. This is the challenge faced by leaders in designing and implementing an effective response to the crisis, despite having access to all the predictions, analyses, and advice provided by scientists, medical professionals, as well as economists. Most countries including those in the Americas, Europe, Australasia, and Asia, including Singapore and India, are examining which strategic choices to make in a balanced and responsive manner to the challenge of safely reopening their economies. In emerging economies, specifically, it is critical to make sure that those more vulnerable, lacking financial and social inclusion, are handled and cared for sensitively and effectively.

Strategic Decisions and Cost–Benefit Analysis in a Pandemic

The pandemic-ravaged world is obsessed with handling a strategic imperative: A choice between life and livelihood?

We, however, contend that from a societal perspective, the question “What is more important, life or livelihood?” is a false choice. Can you imagine a life without a livelihood or livelihood without life? While the first option strikes at the heart of self-worth and financial inclusion for all members of society, the latter is, of course, an unthinkable choice of societal exclusion condemning the vulnerable to stay under the sword of Damocles. However, policymakers encounter this false dilemma when questioned by media, businesses, individuals, and civil society. It poses a no-win situation for them, by narrowly framing the life vs. livelihood objective. Maybe a data-driven approach to strategic decision-making can provide a pathway for policymakers to allocate resources sensibly and efficiently. The main aim is to protect the vulnerable with pre-existing conditions or to rejuvenate the economy to reclaim lost jobs.

The projections made available through applying the University of Pennsylvania Penn Wharton Budget Model (PWBM) Simulator indicated (as of June 22, 2020) that if the baseline policy was kept in place (with reduced social distancing), the United States might be able to save 600,000 jobs at the cost of an additional 49,460 lives (Wharton, 2020). Most US states did not reopen, and between June 22nd and August 24th, 2020, the actual counts of death, related to COVID-19, in the United States were approximately 54,228 (Our World In data, 2020), while the number of jobs created (seasonally adjusted employment levels) was approximately 4.4 million (BLS Data viewer, 2021), which when compared to a similar period in 2019 was a much higher number than the PWBM projections (CDC, 2021b). The stronger growth of the job market than that predicted by the model might be attributed to a variety of reasons despite the number of additional deaths predicted being close to the actual number.

DBS-SKBI Singapore Index of Inflation Expectations (SInDEx) Survey of 500 Singapore residents in September 2020 found that around 80% of respondents believed that policymakers should prioritize life over livelihood in the short run, particularly of the vulnerable populations, even at the cost of short-term economic pain before reopening the economy. However, the survey also reported thrice as many respondents preferred reopening at all costs compared to those who wanted to save lives at all costs (SMU, 2020).

Policymakers, who have to weigh in the under-represented but vulnerable population, may consider the maximum probability of loss of life when the economy is reopened, keeping the more costly or Type I error low. They may also try to limit to a benchmark death rate of a vulnerable group from infectious and age-related diseases. Once that is fixed at a low level (say, 0.4% which is the case fatality ratio according to US CDC, 2021a), they can focus on minimizing the probability of a less expensive error, like the loss of jobs (the less costly or Type II error), by restarting the economy with appropriate safe management measures. The main data-driven, decision-making tools at the disposal of policymakers are metrics like the basic reproduction rate (or R₀) which measures the number of people infected by each infected person or the test positivity rate in the community (Ghosh et al., 2022).

So, what is the appropriate trade-off between lives and livelihood? In Table 1.1, we help encapsulate a baseline decision-making problem for future resource allocation.

Table 1.1 Decision...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Notes on Contributors
• Foreword: Strategy and Management Perspective
• Foreword: Medical Perspective
• Prologue: The Impossible Trinity in a Pandemic: Life, Liberty, or the Pursuit of Happiness
• Acknowledgements
• Part I Strategy in a Pandemic: Financial Economics of the Strategic Choices
• Part II Therapy under Uncertainty: Medical Perspective in a Pandemic
• Part III Humanity in Pandemic: Human Elements in a Crisis
• Index