The public will determine the direction of our recovery after the Covid-19 crisis, writes Colm McCarthy
A few countries, none in Europe, are close to suppressing the Covid-19 virus. South Korea, a country of 52 million people, has had just 273 deaths, compared to more than 40,000 in the United Kingdom, whose 67 million population is only a quarter larger.
Most countries have sought to ''flatten the curve'', minimising strains on the health system, without an explicit target of suppression. A few seem to have resigned themselves, by accident or design, to letting the disease develop almost uncontrolled.
Ireland's experience looks better than the UK but not as good as several European countries, including Austria, Germany, Denmark, and Portugal.
Calls for an earlier exit from Covid lockdown are being promoted by Ibec and several sectoral lobby groups as a strategy to limit the economic damage. But the economic damage could be worse if the exit is mismanaged and the public come to fear a resurgence of infection.
How many Irish people would travel to Cheltenham next week if the festival meeting in March had been deferred?
In the fixture list published last November, the Cork hurling team were due to take on Clare this afternoon at Pairc Ui Chaoimh and a packed stadium would have been expected. How many people would turn up today if the game were to go ahead?
The authorities in Seoul, the Korean capital, slipped up through reopening bars and night clubs too early, sparked a fresh outbreak, shut them again and taught everyone a lesson - there are economic costs in an over-hasty exit.
There has been an extensive discussion on the economics websites about the plausibility of a V-shaped rebound, and particularly about the notion that early recovery is somehow in the gift of policymakers.
Most economists predict no early bounce-back and warn of substantial long-term effects. While there is widespread support for the instant response of governments, including extra unemployment pay and aids to businesses closed by government edict, there is no belief that economies will spring back to life as they do when the Christmas shutdown expires on schedule.
This is the central delusion of the V-shaped analysis, that the supply shock can simply be switched off by governments since they flicked it on to begin with. There has been a demand shock too, and some of it will be permanent. The public will reduce demand for anything seen as risky.
There is extensive evidence that governments were slower than the public in becoming alarmed about the virus.
One example - the ''super-spreader'' football match at Anfield on March 11, attended by 52,000 people including 3,000 fans from Madrid. Matches had already been cancelled in Spain and Atletico travelled under protest. When they offered ticket refunds on their website, many people took them up.
Attendance at Cheltenham the same week was down a little on the previous year. Some pubs in Dublin closed a couple of days before the Government acted. Travel bookings declined before flights got cancelled.
This is a key point about the prospects of post-lockdown recovery: there can be no presumption that pre-Covid patterns of consumer behaviour will re-emerge, which implies that not every firm can be saved.
Some of the long-term casualties are already coming into view. The airline industry will be smaller, so there is no urgency about building a third terminal at Dublin airport.
City centre hotels and restaurants which rely on business customers will suffer. If social distancing raises office costs relative to remote working, office landlords will not see a full recovery in demand.
The economist Richard Baldwin expects that the deglobalisation narrative will not apply to services - the remote workers can be anywhere. All the Dublin-based tech firms have staff working from home, but some of the homes are in Spain and Italy. Both Facebook and Twitter have announced their intention to adopt remote working permanently.
Baldwin reckons the economy is more like a metal clip than a rubber band - if you pull on a rubber band, it resumes its former shape when you stop pulling, executing, if you wish, a V-shaped recovery. But that does not work for a metal clip, which stays out of shape once the temporary shock has gone away.
Why is the economy more like a metal clip? Because there have been important changes, caused by the pandemic, to variables which are known to have permanent effects. There have been massive layoffs in labour markets around the world. Even for firms unaffected by adverse demand shifts, rehiring workers is far more costly than retaining the ones you already have, especially if they have gone back to Poland or other EU countries.
Both firms and governments are accumulating large debt mountains, which will constrain their options, especially for capital formation.
The argument that interest rates are low, so debt does not matter, must contend with the awkward fact that interest rates were low before Covid and have not fallen further.
Firms and individuals have made several years of investment in remote working in just a few months. Uncertainty about how they might manage has been dispelled - it works fine for a lot more businesses than was thought possible, and there is no going back. The invisible investment in organisational capital will have profound effects - firms have discovered a viable way to operate that might be less costly. There will be an acceleration, Baldwin argues, in robotics for office work and the use of artificial intelligence.
Consumers have learned, very quickly, that online shopping works fine, delivery is cheap and reliable, and bricks-and-mortar retailing will take another hit.
Those searching for silver linings think they might have found one in remote working, which has been welcomed for its potential to reduce peak-hour commuting. But the perfect commuting mode for as long as social distancing is required by governments or chosen by a nervous public, is the single-occupant private car.
Until a vaccine is found there could be serious problems for public transport, with uneconomic restrictions on capacity utilisation.
A better silver lining could be the willingness of governments to be more radical about policy solutions, in this instance, a long overdue resort to congestion charging for road use, penalising the peak-hour commuter, and providing another incentive to remote working.
Every component needed to move in this direction, including the technology in cars and GPS tracking, is already in place.
There is also an important anniversary in 2024 - it will be 60 years since the first practical congestion charging scheme was proposed in a report to the UK government.