Commentary on Political Economy

Thursday, 7 January 2021


Coronavirus pandemic: Joe Biden's lesson from the UK is crystal clear

The emergence in the UK of a new and more infectious variant of the COVID-19 virus sharpens an important "contrast and compare" health analysis between that country and the US.

It sheds important new light on the immediate challenge the administration of President-elect Joe Biden will need to overcome if it is to have any realistic prospect of quelling the public health crisis by the middle of the year and of restoring inclusive and sustainable economic dynamism to the US economy.

An aerial drone view of recent burial chambers at Sutton New Hall Cemetery in Birmingham, England.

It will also inform the continuing debate about what the deplorable mob attack on Congress on Wednesday means for the future of the US.

The UK imposed its third national lockdown this week. It is stricter and expected to last longer than the one in November.

The decision, driven by the mutation of the virus, comes amid an extremely concerning surge in daily infections (topping 60,000); hospitalisations (higher than at any time during this health crisis); and deaths (topping 1000 a day).

And while this new variant, unlike the one in South Africa, is not believed to undermine existing therapeutics and vaccines, it does significantly increase the pressure on an already stretched National Health Service.

With a few cases already detected in some US states, many health experts agree that it is just a matter of time until this variant aggravates the country's daunting situation.

Viewed through the prism of the critical health-related race that the US and other countries are engaged in – between the spread of the virus and effective vaccination – it worsens an imbalance already hindered by initial problems in the deployment of vaccines.

Once he assumes office, Biden is expected to move quickly to try to deal with this health emergency.

Without early progress, economic activity will remain well below acceptable levels, the inequality trifecta (income, wealth and opportunity) will worsen, debt levels will increase, fiscal policy will be stretched and the Federal Reserve will have no realistic chance of gradually exiting its highly unbalanced policy stance.

Because of the US federal structure, the Biden administration will not have the range of centralised policy options that the Boris Johnson government has in the UK to contain the spread of the virus and the related risk of overwhelming the healthcare system.

But it can – and must – provide greater federal leadership to what has been an inadequate response so far. Such leadership would provide the important cover that many states, though not all, desire and need to pursue more active policies.

This early policy test for the incoming administration will also help answer a question that has been placed front and centre by the mob attack on Congress on Wednesday.

Has this historic moment provided the catalyst for the US to overcome deepening divisions and come together to deal with the generational challenge of COVID; or is it indicative of even deeper divisions that will test the institutional integrity and robustness that are so central to America's long-term economic, political and social well-being?

The lessons from the UK are crystal clear. The new virus variant heightens the urgency of quick and decisive action by the Biden administration.

Failure to deliver would significantly worsen the outlook for the critical COVID-19 race while seriously undermining both short- and longer-term prospects for the high, inclusive and sustainable growth that the country needs and would be able to deliver under a more coherent policy framework.

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