Covid has unleashed a vast global economic experiment, #CargoOfBricks…

In today’s Cargo of Bricks, we take our first look at how the southern economy is coping with the shocks to the labour market in particular. With my guest Dan O’Brien, chief economist at the IIEA in Dublin we cover…

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  • It is absolutely impossible to read too far into the success or failure of what amounts to ‘the biggest social policy or political experiment in decades’. Government is able to hold to it’s massive intervention in the labour market for now, but in 6 to 9 months it could get ‘hairy’
  • We are far from understanding the effectiveness of different countries approaches to fighting the Covid crisis, but there are no golden bullets. Some think the Fortress New Zealand approach works but their economic contraction in the second quarter was similar to Italy’s and Belgium’s.
  • If there is a sliver of good news from an Irish point of view it is that world trade did not contract by as much as expected. The Republic’s substantial pharmaceutical industry ensured that they were the only European country to increase exports in the first half of 2020.

The real issue comes with the fact that the young and those on lowest pay are the ones most likely to be hit the worst. The significant jump in income inequality will do nothing to address the growing anger in society. The risk of ill-health makes it feel like we’re going back to earlier times.

Have we overreacted? Only time will tell. With each country trying its own separate approaches we have a massive global experiment in ‘disciplined pluralism’ there will be much to learn. But as Dan says, ‘it’s far too early to tell’ or to draw any concrete inferences.

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