Recovery from a deep crisis is often uneven, and there is historical evidence that leaders may want to spread out their policies over many years.
The economic downturn faced by the US due to the COVID-19 pandemic does not have any parallel since World War II, while some others believe that it is the worst since the downturn of the early twentieth century. The humanitarian and economic impacts of COVID-19 are so vast that it has left policymakers bewildered as they grapple the unprecedented crisis and uses numerous interventions to help businesses and individuals. According to Beth Ann DeBouvre, to overcome the crisis, it is vital to learn lessons from the past. From crises of lesser magnitude, we can understand how people overcame the crises which can be inspirational for policymakers and facilitate in their planning.
What to learn from past crises, according to Beth Debouvre
When we look at successful government responses to past crises, whether environmental disasters, epidemics, or financial downturns, three distinct themes become visible. Prioritization of human capital and human welfare is the first aspect that catches the eye, followed by responses based on devising long-term government policy by considering preexisting economic trends that tend to accelerate. Lastly, there is an early start to planning for effective long-term economic recovery alongside efforts in crisis relief.
Give priority to people
Economic recovery depends on two factors – protecting public health and bolstering human capital by retaining the employment of individuals or upskilling them to help them find new jobs. For example, during the Great Recession, the state workforce agencies increased enrollment in government training programs during 2009 and 2010 by 56%. Later, amid persistently high unemployment, the federal government passed the Layoff Prevention Act in 2012. The act broadened the employment opportunities for employers who could offer work-sharing programs that made it possible to provide work to employees but with reduced pay and reduced hours. The act also provided funding. This approach stemmed from research that showed that unemployment results in increased mortality, and staying employed is good for physical and mental health.
Understand existing trends
People who are economically vulnerable before the crisis face the toughest recovery because they are most affected negatively. During the Great Recession, income loss for the bottom 10% of earners was two and a half times worse than the 10% belonging to the wealthiest bracket. New risk factors came to light during Hurricane Katrina that caused a disproportionate impact on some residents like lack of English proficiency, social exclusion, and residence in poor quality housing with high density.
Recovery from a deep crisis is often uneven, and there is historical evidence that leaders may want to spread out their policies over many years. Between 1933 and 1937, during the Great Depression, unemployment grew consistently but then in 1938 dipped by five percentage points. It took long five years to revive international tourism to New York City after the terrorist attacks of 9/11.
In recent times, during the financial crisis of 2008, when unemployment rates doubled, it took almost seven years to reach the pre-recession levels in 2015. Most importantly, past responses had anticipated a permanently changed world just as it is going to happen after COVID-19 when the world has to embrace a new normal.