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Reshuffling Societal and Budgetary Priorities? SoC1165 June 2020

Author: Martin Schwirn (Send us feedback.)

SoC1154 — Life after the Time of Coronavirus and SoC1161 — Scanning: the Pandemic and Its Implications highlight that the current coronavirus-disease-19 (covid-19) pandemic should not have been the surprise that many media outlets and politicians seem to have found it. Indeed, this pandemic was just waiting to happen. But health-care systems around the globe have been, to varying degrees, unprepared to deal with this situation. Arguably, many other societal and economic needs took priority over pandemic preparation. New York University (New York, New York) Leonard N. Stern School of Business professor Scott Galloway believes that after the pandemic subsides, the world will look very different from how it looked before the pandemic. Many experts would agree, but Galloway focuses on the pandemic's resulting in the potential reallocation of budgetary resources. Because of the covid-19 pandemic, policy makers will reconsider societal priorities and the allocation of financial resources.

Societies will consider setting new priorities.

Galloway argues that the stakes are high: Throughout human history, pathogens have killed more people than have wars and violence. His main argument is that people will realize that even personal wealth cannot shield them from the effects of a pandemic (or climate change, for that matter). Given the high stakes, societies will consider setting new priorities and will likely decide to change budgets according to these new priorities. This line of thinking will strike a chord with many people who have been experiencing various effects of the covid-19 pandemic for the past few months. In fact, although saving lives and protecting people's health is the dominating concern, concerns about the proper use of financial resources also exist. For example, a lack of health-care equipment and medical personnel is likely prolonging the effects of the pandemic. The US government's budget proposal for 2021 allocates some $700 billion for the US Department of Defense (Arlington County, Virginia) and less than $100 billion for the US Department of Health & Human Services (Washington, DC). This comparison does not include all the allocations that affect the defense and health-care sectors, but these numbers offer a glimpse of the nation's current priorities. The ratios of national funding for the defense and health-care sectors will differ among countries, but most countries will prioritize military expenses as the United States has. The covid-19 pandemic could shift nations' opinions about what sectors deserve additional funding.

Andrew Winston—coauthor of Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build a Competitive Advantage—argues that the covid-19 pandemic will lead to a more global outlook: "Pure nationalism is frankly dangerous in the face of borderless issues like climate change, resource overuse, and, yes, pandemics. On some level, we're only as strong as our weakest immune systems" ("Is the COVID-19 Outbreak a Black Swan or the New Normal?" MIT Sloan Management Review, 16 March 2020; online). Such weakest-link considerations could trigger resource-allocation changes that aim to make global public health, supply chains, and environmental efforts more robust and resilient. The possibility exists that markets and societies will reconsider priorities and perhaps even perceive their priorities as global issues that require intense international collaboration.

The pandemic provides a very good example of why considering the weakest links across and within countries is so important. If a country lacks a functioning health-care system with the resources necessary to serve the vast majority of the country's population, any outbreak of a contagious disease can become a pandemic. And if a country cannot reduce the spread of a disease within its borders, the disease and its effects will eventually have an impact on other countries. In fact, one could argue that countries should view the spread of a disease in another country as a domestic issue, sending financial and material resources to that country to stop the spread of the disease at its source. Such thinking will require not only a new way of allocating budgets but also a new understanding of the division of domestic and foreign-support budgets. Changes in prioritization must go beyond merely shifting money to considering more flexible uses of that money.

Such a reorientation in the health-care sector could very well become a starting point for taking a new look at priority setting more generally. Weak links similar to those in the area of health exist in the area of environmental efforts within and across countries. For example, if a region depends on coal mining, the financial and employment needs of this region can hold hostage the entire country the region is in (unless substantial budgetary allocations enable the reorientation of this region). If this country then uses coal to a substantial degree as a result—as many countries in the Americas, Asia, and Europe still do—the outsize use of fossil energy and the resulting carbon dioxide emissions will hamper the environmental efforts of all other countries. This scenario shows that regions can become weak links for global efforts. Again, reprioritization, reallocation, and increased flexibility of budgetary considerations could become important policy aspects moving forward.

The covid-19 pandemic's impact on environmental budgets and efforts has been a point of discussion in recent months. On the one hand, many regions—particularly regions in China and India—have seen dramatic pollution relief as industries have come to a virtual standstill. On the other hand, the current economic situation will likely require a focus on economic growth rather than on environmental considerations for the rest of 2020 and possibly even beyond. But the drastic actions that governments, companies, and individuals have taken within a few weeks to reign in the spread of the virus have also set a precedent for what is possible. May Boeve, executive director of climate-advocacy group 350.org (New York, New York), highlights that "we've seen that governments can act, and people can change their behavior, in a very short amount of time.... And that's exactly what the climate movement has been asking governments and people to do for years" ("What would happen if the world reacted to climate change like it's reacting to the coronavirus?" Fast Company, 10 March 2020; online). But what is theoretically possible is not necessarily what will see prioritization. A need exists to balance economic and environmental goals, but achieving this balance can be challenging. For example, the European Union aims to become a carbon-neutral region by 2050, but using stimulus packages in efforts to overcome the negative impacts of the covid-19 pandemic has created economic challenges to achieving this environmental goal. During a 26 March 2020 session of the European Parliament, Jos Delbeke—a former senior European Commission official who has played a substantial role in much of Europe's environmental legislation—stated that no stimulus package should contain provisions that work against the European Union's environmental goal. In this case, budgetary prioritization means balancing multiple needs to ensure that economic and environmental goals align.

Many regional, national, and global weak links exist. Policy makers who are dealing with the covid-19 pandemic might rethink some priorities and how to address such weak links in a variety of areas, including rare-metal mining, plastic production, water use, and food consumption and waste.