EDITORIAL: The Straits Times says- Focus on fundamentals to stay strong

The Covid-19 pandemic has seen governments around the world unleash unprecedented fiscal firepower to save jobs and help workers. Just how much more help is needed, as well as the role that governments and societies play in navigating a post-Covid-19 world, was at the heart of a Lee Kuan Yew School of Public Policy discussion this week. Given the outbreak’s deep economic and social impact, there are those who call for the state to still play a larger role. But they must recognise that a country’s size and the resources at its disposal are not all that matter. It is not prudent or sustainable for governments to spend their way out of a prolonged crisis. First, the pandemic’s nature makes it hard to know when the global economy will return to normal. Second, furlough schemes and other measures have pushed budget deficits to levels unseen since the global financial crisis. Third, the age of rapid and sustained real growth no longer exists; and finally, there is the danger of businesses and workers developing a crutch mentality. In America, for instance, unemployment benefits have had unintended consequences, such as unemployed workers earning more while out of work than when they had a job.

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Governments must instead focus resources on what matters most and do them well. As growth slows and societies age, a priority is to foster inclusion by providing key public goods and services, such as healthcare, education, infrastructure and social safety nets. Beyond this, they can serve as catalysts, leveraging the energies and ideas of people, civil society and industry to achieve goals. The Emerging Stronger Taskforce here urged the Government to be open to solutions by the private sector on how to rehabilitate struggling companies – a role reversal from the past, when the public sector set the direction and the private sector carried out the implementation.