COVID-19 may have changed economics, at least the neoclassical variety that supplicates to the market, like nothing else has.
Even the International Monetary Fund (IMF), which sees the economy as a web of market-based exchanges, is prescribing government intervention in its latest flagship publication, World Economic Outlook 2020.
Neoclassical economists, aka free-market economists, those in IMF included, may have to acknowledge that the economy is more than the market.
Governments everywhere are extending a lifeline to households and businesses that are going broke. The government has always been an important economic actor, if not the most important, in ordinary or extraordinary times.
Even Malaysia, a middle-income developing country, has dished out RM305 billion in government stimulus packages to people and firms.
True, these are extraordinary times. In the words of IMF's economic counsellor, Gita Gopinath, the crisis triggered by the coronavirus is "the worst recession since the Great Depression". It has to be. In late March, when the coronavirus spread to almost every corner of the globe, planet Earth put up the sign, "We are closed for business".
This was no "Out for lunch" notice. Ten months on, after Wuhan, China, where it all started, Covid-19 has left much of the world staggering.
Gopinath says, in an IMF blog, the world may end up paying US$28 trillion in lost output. We shouldn't be surprised if the final bill is more. Coming in waves, Covid-19 is threatening to be around for a long time.
Three years is one local estimate. Without viable vaccines, we may have to live with a low output for long.
Government lifelines to people and firms do help. One good example is wage subsidy. Such support comes in handy for companies facing a depressed demand, especially those in contact-intensive industries, to continue keeping their workers on the payroll.
Low capacity, high debt and high unemployment are a lethal mix for any country. Several other support mechanisms are in place around the world to keep people at work and prevent companies from going bankrupt.
The list of lifelines are varied and country-specific. But taken as a global total, governments around the world have expended fiscal support amounting close to US$12 trillion, says Gopinath.
All this will cost governments dear. IMF expects public debt, measured in relation to gross domestic product (GDP), to reach the highest in recorded history. It will cost them even more if the money somehow finds its way to the undeserving.
Technology can help minimise this from happening. And it can rush the money to where it is needed most. At the end of the day, lifelines are about putting the money in the hands of those who will keep the economic engine running.
Public spending, the government lubricant that oils the economy, is no less important. Like in the Great Depression, it is needed in this great recession.
This isn't just Keynesian economics. There is even an IMF logic to it. In a Tuesday blogpost, the fund put forward the case for scaling up government spending thus: "Increasing public investment by 1 per cent of GDP could strengthen confidence in the recovery and boost GDP by 2.7 per cent, private investment by 10 per cent, and employment by 1.2 per cent."
There you have it: government, private sector and people. Or, if you like, the triumvirate of the economy. Economics, as Cambridge economist Ha-Joon Chang says, is the study of the economy.
Covid-19 is telling us, we can't do economics without the government.