How COVID-19 has changed Public Policy

Democratizing Work

As the United States and countries around the world consider re-opening after COVID-19, we are faced with a crucial question: Is our current societal model working and, if not, what kind of societal model do we want for tomorrow? Staying the course would be a recipe for disaster. The current levels of social and economic inequality both globally and locally have become untenable, and the current pandemic only reinforces these inequalities. Moreover, we are pushing the limits of what our natural world can endure. The status quo must change if we hope to survive the combined health, social, economic, political, and environmental crises at hand.

What these crises are first and foremost teaching us is that humans never were and are not resources. They invest their lives, their time, and their sweat to serve the organizations that they work for and their customers. Workers are not one type of stakeholder among many: they hold the keys to their employers’ success. Without workers, there would be no manufacturing plant, no deliveries, no production. All workers are essential. They are thus the core constituency of the firm. And, yet they remain excluded from participating in the government of their workplaces—a right that is still monopolized by capital investors. This exclusion is unfair and unsustainable and it prevents organizations from reaping the benefits of workplace democracy.

What we have seen in our research is that workplace democracy may well be critical to the success of corporations in the future. We have been studying organizations that pursue social and environmental objectives alongside financial ones for more than a decade. It is time we turn to these organizations and learn from their work as the economy as a whole transitions towards setting clear goals for employee well-being, and environmental and social metrics, alongside financial performance. Our research reveals a critical link to workplace democracy: organizations that are more democratic—that give a voice to their workers—are better at staying the course and pursuing these multiple objectives.

Finally, democratizing workplaces is one of the most promising avenues for creating more just (including more racially just) workplaces where all workers—workers of color, women, workers with disabilities—have real control over resources, and an actual say, as equals in the governance of their organizations. By giving employees representation in decision-making bodies and the right to participate and control their organization’s strategic decisions, we can collectively build institutions that are truly equitable and fair.

The Rainy Day Is Here

The single best way to strengthen the national economy right now is to help reboot local economies, which are reeling from the economic fallout of the pandemic. The United States has 90,000 jurisdictions—including cities, towns, school districts, and transit systems—that together provide the public with schools, water, sanitation, trash collection, fire safety, emergency medical response, and infrastructure.

Local governments are now on the front line in fighting the pandemic: responsible for organizing local testing, contact tracing, treatment and isolation programs, buying protective equipment, and setting up a system to eventually deliver a vaccine. But their revenues have collapsed—and will be hit even harder in the new fiscal year that started July 1.

State revenues are a mixture of sales and income taxes, federal aid and user fees. Following the 2008 financial crisis, most states prudently set aside “rainy day funds” in order to improve their balance sheets. This time the revenue shortfall will be far deeper and will quickly deplete these funds. Many revenue-producing activities—such as tourism, international airports, conventions, and sporting events—are unlikely to return to pre-pandemic levels for years. States that entered the pandemic in a poor fiscal position are especially vulnerable. And, unlike the federal government, states must balance their budgets.

Meanwhile, local communities face an existential crisis. Revenues from sales taxes and user charges (tolls, parking fines, hotel and restaurant taxes, and the like) have dried up. And across America, small businesses—many of which are minority and women owned—are failing. Local governments will face a second fiscal crisis if property values fall, leading to a decline in property taxes.

State and local governments have already laid off 1.5 million employees, most of them teachers. A further 1.5 million are in danger of losing their jobs next month. Congress has provided some $200 billion in aid to states, but this is no match for the estimated $1.3 trillion revenue shortfall expected over the next three years. The Federal Reserve’s $500 billion Municipal Lending Facility is welcome, but it is only available to states and very large jurisdictions and must be repaid within three years. This will not help thousands of medium-sized communities that wish to issue longer-term debt to finance critical infrastructure projects that generate jobs.

States and municipalities are already taking steps to mitigate the damage. These include restructuring their balance sheets, entering into regional recovery efforts, carefully examining operating costs, adopting job-shares, monetizing fixed assets, pruning overheads and working closely with community banks. But at the end of the day, these efforts alone will not be enough to prevent cuts in vital local services that often fall on the most vulnerable. If night bus routes are curtailed, the night-shift nurse will be left standing outside the hospital waiting longer to get home.

Studies conducted in the 2008 crisis showed that each dollar invested this way produced a return to GDP of $1.3 to $1.55. In the current environment, we need to strengthen local communities by providing a flexible program of cash-flow assistance and long-term liquidity to states and localities.

The Perfect Storm

COVID-19 is causing the biggest economic downturn that developing countries have ever seen. Governments and the international community have prepared for a tropical storm, but it increasingly looks like a Category 5 hurricane. They need to act and they need to act fast to assure that the government is adequately financed to withstand the collapse in tax revenues and the need for increased health and social expenditures. Absence of such action will lead to a combination of currency, debt, and banking crises. Recovery from such avoidable events is slow and painful.

The Tide Is Rolling Back

COVID-19 is a game-changer for much of the developing and emerging countries of the world, and not in a good way.

COVID-19 hotspots are flaring up in many low-income countries. And, while it is challenging to combat the disease in developed countries, developing ones face even graver challenges. Combatting spread is difficult. Social distancing remains near impossible in the dense mega-cities. The lack of clean water in many poorer towns and villages prevents effective hand-washing techniques. For those who do become ill, health systems are less developed, with fewer hospital beds and medical personnel per citizen, less technology, and less equipment and personal protective equipment.

But, it is not just the disease that will have a human toll. The corresponding slowing of the global economy from the pandemic is leading to unemployment and food insecurity. For the first time in over 20 years, we expect that global poverty will rise. This, in turn, may roll back gains in nutrition, education, and preventative health.

A Dangerous Turn

We are facing the most consequential set of challenges since the Great Depression and World War II. The United States, in particular, is at a dangerous turning point facing four fundamental crises:

• The Coronavirus Crisis: With more than 120,000 Americans dead, inadequate testing and irresolute federal leadership, we are not well organized for a possible second wave;

• The Economic Crisis: More Americans are unemployed now than any time since 1933 with no clear administration plan to encourage a recovery;

• The Racial Crisis: There is nothing more dangerous to our future than continued domestic dysfunction, especially denial of justice to African Americans and other minority groups;

• The Leadership Crisis: President Trump has failed to address these and other crises. His active attempt to divide Americans on race is the most disgraceful act by an American president in our lifetime. On this issue alone, he should be defeated on November 3.

There is hope. Americans have taken to the streets in the largest peaceful demonstrations in recent decades. Our businesses and universities lead the world in the digital age. The courts, career public servants in Washington, and the military leadership are defending democracy. Our students are ready to lead and to write the next chapter in the American story.

Global Trends and Foreign Policy

Will the COVID-19 pandemic change or accelerate pre-existing global trends? Many commentators predict the end of the era of globalization that prospered under U.S. leadership since 1945. Some see a turning point at which China surpasses the United States as a global power. Certainly, there will be major changes in many economic and social dimensions of world politics, but humility is in order. One must be wary of assuming that big causes have predictable big effects. For example, the 1918–1919 flu pandemic killed more people than World War I, yet the major global changes were a consequence of the war, not the disease.

Globalization—defined as interdependence across continents—is the result of changes in the technologies of transportation and communication which are unlikely to stop. Some aspects of economic globalization such as trade will be curtailed, but while economic globalization is influenced by the laws of governments, other aspects of globalization such as pandemics and climate change are determined by the laws of biology and physics. Walls, weapons, and tariffs do not stop their transnational effects.

Thus far American foreign policy has responded by denial and blaming others rather than taking the lead on international cooperation. On a speculative counterfactual, imagine an American administration taking its cue from the post-1945 U.S. presidents I describe in Do Morals Matter? Presidents and Foreign Policy from FDR to Trump. For example, the United States could launch a massive COVID-19 aid program—a medical version of the Marshall Plan. Instead of competing in propaganda, leaders could articulate the importance of power with rather than over others and set up bilateral and multilateral frameworks to enhance cooperation. Recurrent waves of COVID-19 will affect poorer countries less able to cope and a developing-world reservoir will hurt everyone if it spills northward in a seasonal resurgence. In 1918, the second wave of the pandemic killed more people than the first. Both for self-interested and humanitarian reasons, the United States could lead the G-20 in generous contributions to a major new COVID-19 fund that is open to all poor countries. If a U.S. president were to choose such cooperative and soft-power-enhancing policies, it might create a geopolitical turning point to a better world. More likely, however, the new coronavirus will simply accelerate existing trends toward nationalist populism, authoritarianism, and tense relations between the United States and China.

A New Look at Business and Government

Coronavirus and other health pandemics will happen again, and sooner than we think because of climate change. COVID-19 provides an opportunity to seriously examine the roles of business and government in society, to figure out what each is best at doing, to figure out what each is not well-suited to deliver, and what they must do more of together. These determinations must be made in a clear-eyed manner with data, incentives, and a tremendous sense of social-justice for the poor and vulnerable.

Rebuild What? And How?

Our work on sustainable development invites a long-term perspective on today’s overlapping crises, of which the coronavirus, racism, and climate heating are only the most visible faces. From that intergenerational perspective, shocks and surprises are the norm, not the exception. Sometimes they stem from wars, sometimes from environmental degradation, sometimes from technological innovations, sometimes from revolutionary ideas … and sometimes from pandemics. Such disruptions invariably impoverish or kill some people, while opening opportunities for others. They can also lay bare underlying social inequalities that incumbent regimes have ignored or papered over. This is certainly the case today, where it has become starkly clear how the burden of our overlapping crises is falling disproportionately on people who are Black or poor or otherwise socially marginalized.

The long-term perspective of the quest for sustainable development also highlights the reality that—however terrible the immediate impacts of history’s cataclysmic disruptions—their ultimate consequences for human well-being are not foreordained, but rather depend on how we choose to rebuild in their wake.

But rebuild what? And how?

Research suggests that the prospects for rebuilding a more just and prosperous world—and a world better prepared to weather the next shocks that will inevitably come along—depend on long-term programs of action to strengthen and maintain the following six interdependent social capacities:

• The capacity to conserve and enhance the natural and anthropogenic resources that constitute the productive base of society.

• The capacity to assure greater equity in access to that resource base and the flow of goods and services produced from it.

• The capacity to adapt to unexpected shocks through identification and provisioning of essential reserves and through practice in mobilizing them.

• The capacity to transform unsustainable development pathways into more sustainable ones through disempowerment of incumbents vested in unjust aspects of the status quo.

• The capacity to link knowledge with action in ways that enhance the effectiveness of political agitation aimed at equitable improvements in well-being.

• The capacity to govern—to work together to achieve what we can’t achieve alone—and thus to develop and implement all the other capacities in an integrated and mutually supportive fashion.

An integrated strategy of capacity building is no substitute for immediate action to meet the basic needs and redress the violent injustices facing us in today’s crises. But such a strategy is a historically informed alternative to the temptations facing each of us to focus exclusively on the single ill or capacity about which we feel most strongly. The capacities we list here are complementary, not competitive. Society has already built a significant understanding of how to foster each of them, and has sometimes learned to integrate them in sustained programs that support deep and long-lasting social change. Such programs should be put into action today by diverse actors at multiple scales in concerted efforts to rebuild a more just and sustainable world from the wreckage of our current crises.

Information Is Survival Gear

This pitiless spring of 2020 has exploited the forces that already weakened us: our political divisions, our doubts, and our intersecting injustices. Partisan division turned public health measures into performance art; distrust of institutions deepened as they struggled to respond; and the weight of suffering, physical and economic, on communities of color has inspired people all around the world to risk their own health and safety to come into the streets in solidarity.

Early in this crisis, the World Health Organization warned of an “Infodemic”— people overwhelmed by information, some of it true, much of it not, that made it harder for anyone to know what to believe. In the months since we’ve seen just how viral conspiracy theories can be, spread by those looking to divide us even further or profit from our fears. So both the media and the platforms that control so much of our information ecosystem face a reckoning that was long overdue. We are seeing that play out in real time, from the serial policy adjustments at Facebook and Twitter to the soul searching at our largest newsrooms to the desperate efforts to save what remains of local news.

Good information is more than a democratic value; it is survival gear. When people show up in emergency rooms after drinking bleach in hopes of preventing infection, or blame 5G, GMOs, or Bill Gates for the spread of the virus, we have failed to protect our information streams from lethal toxins. So out of this crisis, for all our divisions and distrust, should come a deep and broad debate over rules and norms about speech: who controls what we read and see and hear; how do we honor both freedom and fairness; what can we do to promote reliable information even as we prevent misinformation from spreading? We aren’t likely to agree on the way forward; so the next test is how well we create the conditions for debate, listening with open minds, putting the public interest first and realizing that the tension between values can be a source of strength, not an excuse for surrender.