This short essay by economists Richard Baldwin and Rebecca Freeman, on the pandemic and globalization, is packed with important information and, more importantly, also with deep economic wisdom. Here’s their conclusion:
If the world is to ramp up the production of essential medical equipment to meet the swift rise in pandemic-driven demand, there is no alternative to international trade given the integrated nature of global manufacturing. The same is true for the medicines, vaccines, and medical tests that will become important in defeating the virus. Trying to shut down this sort of supply-chain trade will simply make it harder to fight the virus for all nations.
Whatever merits there may be to addressing risk in international supply chains, pursuing this goal in the midst of a pandemic could lead to serious, unintended consequences. Pursuing policies aimed at forcing companies to alter their supply chain practices can easily lead other nations to respond. A spiral of retaliation could disrupt world productive capacity in virtually all manufacturing sectors given the high level of interdependence we documented. This could make economic recovery more challenging, to say the least. In short, keeping trade channels open will help us fight the disease and help the world economy recover.
David Henderson fondly remembers the late, great Dick Timberlake. And here’s Tyler Cowen on the sudden, tragic death of Alberto Alesina. (The past week has been bad for good economists.)