The Great American Engine: The Race to Recover After Coronavirus
Alan Pentz, CEO
Washington DC
April 8, 2020 - These are dark days for the US economy. The St. Louis Fed released informal estimates of up to 40-50 million unemployed by the second quarter, a 30%+ unemployment rate. These are rates higher than even the Great Depression. The recent America CARES Act will blunt some of these effects but many believe much damage has already been done and that tens of thousands of small businesses will shutter while aid slowly dribbles out.
At the same time it seems that China has contained the pandemic and is focused more on keeping those coming from abroad from reinfecting their population. It’s also true that the US has already seen double the number of total cases than China (though not as many deaths) and the disease hasn’t even peaked in many areas of the country. The Chinese Government is confident enough to remove restrictions on travel from Wuhan starting April 8th.
So what happens if China successfully beats back the virus and moves forward with its economy while the US and many other countries remain mired in months of chaos and economic paralysis? On the face of it, it doesn’t look good. China can get back to building out its 5G network at a faster rate and preparing for the next round of pandemic to make itself more resilient. Additionally, investors wary of a stumbling US might shift investment to Chinese assets betting on a better long term outcome. Could this be the moment where global leadership shifts?
I doubt it for a variety of reasons. First, China won’t bounce back all that quickly. There will continue to be issues but admittedly it looks like this is an area where they will outpace us. Second, China depends heavily on exports to fuel its economy and with the world just beginning to grapple with the economic consequences of COVID-19, there won’t be anywhere near as many buyers/importers. Although China may use this opportunity to increase domestic demand which may leave it healthier in the long run, China could also see a significant increase in social unrest as a result of an anemic Chinese and world economy. However, to date China has displayed impressive stability and the pandemic measures themselves showed the level of control the Party has over the country.
I don’t think any of these reasons will be the determining factor. It might seem like it at first but over time I expect our view to shift. What will really determine the long run outcomes of this pandemic is how we respond over time.The US has always had trouble organizing itself for collective action. With a federated government, strong sense of individualism, a powerful private sector, low population density, and a deep suspicion of experts and expertise, it can often take what seems like far too long for the elements of our society to coalesce around a common goal. It took months after Pearl Harbor to gear up the military industrial complex to supply our ultimately overwhelming military efforts in WWII and don’t forget that it was the Soviets who launched the first satellite and person into space.
Over the next months and years we will see a shift as the American engine sputters and then roars to life. To get that engine running, I see three key areas of focus:
First, we need to fund and ease regulatory review for tests and treatments that could stop or throttle COVID-19. Our biotech sector is the envy of the world and given the time, it will stop the virus dead in its tracks.
Second, we need to negotiate new norms around privacy that give us confidence that it will not be abused but also gives us the tools we need to fight pandemics like COVID-19. Pandemics are only one of the threats we face in the 21st Century: cybercrime and warfare, bioterrorism, and other threats demand more sharing and coordination of information and data. We must recognize that an absolute right to privacy is unreasonable but also recognize that there are real threats to our freedom from the concentration and misuse of data in the wrong hands. Our policy and political officials need to begin this debate right now. It’s going to be tough and messy but it must be done. Data is key to how we remain resilient in the future and we can’t tie one hand behind our back in future responses.
Finally, we need to invest big in infrastructure, R&D, and next generation technologies to fuel our growth far beyond when this virus fades from memory. It’s time to play to our strengths and make the investments necessary to lead in the future economy. Broadband access/5G, biotechnology, artificial intelligence, smart transportation, robotics, autonomy, etc. are where the future lies and we should borrow now at zero interest rates to invest in that future. The world is starved for dollars. Let’s provide them and make the investment pay off for generations to come. We won past wars and challenges with large investments in education (GI Bill) and in infrastructure (highways) and R&D (space race and Cold War).
Right now our efforts are akin to me pulling frantically on my lawnmower having forgotten to prime the engine. There’s a halting response but the engine doesn’t fully engage. With a coordinated effort that brings in all levels of government, the private sector, and our citizens, we can ensure that the American engine roars to life, mows down this virus, and carves a path to another American Century.
Author
Alan Pentz, CEO and Founder of Corner Alliance, has worked with government leaders in the R&D and innovation communities across DHS, Commerce, NIH, state and local government, and the non-profit sector among others. He has worked in the consulting industry for over ten years with Corner Alliance, SRA, Touchstone Consulting, and Witt O'Brien's. Before consulting, Alan served as a speechwriter and press secretary for former U.S. Senator Max Baucus and as a legislative assistant for former U.S. Representative Paul Kanjorski. He holds an MBA from the University of Texas at Austin.
