A letter from Kaushik Basu, President of the International Economic Association:
“I have to begin with the disappointing news that, taking account of the escalating coronavirus pandemic and after a lot of deliberation, we have decided to postpone the 19th World Congress of the IEA, which was to be held in Bali, 3-7 July 2020. It seems difficult to believe that till about a month ago, we were enthusiastically planning for the Congress, while keeping an eye on the coronavirus outbreak. Since then, after the WHO officially labelled this a global pandemic, we were closely monitoring the situation and were in touch with Indonesia’s Ministry of Finance. Finally, last week, after talking to the Finance Minister, Sri Mulyani Indrawati, I took the decision that it would be injudicious to hold the Congress in July and we have no choice but to postpone it. The best outcome that I can hope for is that, by the time July rolls in, we will regret that we cancelled the Congress.
Friends, we all hope that the pandemic will slow down soon and vaccines will appear that help us deal with it. However, even if that were to happen, what is close to certain is that the pandemic—what has happened already—will unleash a huge backlash on the economy. The first numbers that are coming in are alarming. We know that unemployment insurance claims have spiked 30% in the United States, suggesting dire conditions for laborers. Industrial production in China has fallen by 13.5% during January and February this year compared to the same months a year ago. Early estimates suggest that the Italian economy would shrink by a minimum of 3%. And the big risk is that this will spark a banking crisis. All this is new territory for economics. A pandemic-induced economic crisis in the age of digital connectivity has to confront new dangers because of novel channels of information and opinion transmission, but, on the positive side, it also has created new avenues for dealing with the crisis. We can remain digitally connected while confined to our homes; we can do a variety of work using digital connectivity. No one fully understands the economic potential of these new forms of work and connectivity. We need to do research on these quickly, so that we can minimize the economic backlash of the pandemic.
As part of the International Economic Association, we — that is all those connected with it, including the regional, country-based associations — have a special responsibility to bring creative research and thinking to bear on this global challenge of our times. So, as we practice social distancing, that we shall have to for a while, we should also try to apply our minds and research skills to the problem of how we should respond to the economic fallout of the pandemic.
Finally, look at the brighter side of this. With cinemas and sports arenas closed, museums and theaters shut and malls shuttered, the opportunity cost of doing research just went down sharply.
(Photo: Kaushik Basu, President of the IEA and Gyula Prechninger, President of the Hungarian Economic Association at the 18th World Congress of the IEA in Mexico City in 2007)