In navigating a second natural experiment, the U.S. would be well served by quickly incorporating the lessons of the first experiment in the areas of policy relief measures, social distancing, face coverings, testing and contact tracing. The incentives to do so are compelling.
Despite the encouraging progress on both therapeutics and vaccines, it is for now the only feasible way to avoid:
• Widespread bankruptcies and a second wave of joblessness when the government and the Federal Reserve have already deployed significant resources for relief.
• A further hit to trust in the effectiveness of institutions and policy responses.
• A worsening of the inequality trifecta of income, health and opportunity.
• Restricting children’s access to healthy in-person education and raising the frightening specter of a “lost generation” whose standard of living ends up being significantly worse than that of their parents.
• Fueling social unrest at a time of much greater awareness of longstanding injustices that continue to erode the social cohesion needed to ensure the collective responsibility for overcoming Covid’s generational challenge.
The whole point of natural experiments is to derive findings, be open to their implications and modify policies and behaviors accordingly. Unless we collectively get better at this, and quickly, the two experiments will be treated by historians as an example of giant collective failures whose consequences could be borne by multiple generations.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide."