Thursday 26 March 2020 ★ FINANCIAL TIMES 19

Opinion

A

ddressing a traumatised

nation, the US president

fumbled. His Oval Office

speech lacked command

and old doubts resurfaced

about his fitness for the role. Much of

Washington sensed that a man elected

in good times (while losing the popular

vote) was out of his element in a crisis.

For all that, George W Bush’s ratings

surged after the attacks of September 11

2001, such that his first words are now

half-forgotten. The Beltway reviews had

misjudged public sentiment.

After an infinitely worse speech two

weeks ago, Donald Trump might be in

the early stages of a similar if less

extreme feat. His handling of the coro-

navirus outbreak has achieved positive

ratings so far. According to Gallup, his

general approval score has returned to

its all-time high. What seemed to be

career-ending ineptitude (a representa-

tive headline: “The Trump presidency is

over”) is having the opposite effect.

Eight months from a presidential elec-

tion, the mystery of his resilience needs

explaining.

Much of it is a nervous public’s reflex-

ive deference to authority. In a crisis,

there is no solace in the thought that

one’s leaders are derelict, even if the

facts invite exactly that conclusion.

Note that Britain’s ruling Conservatives

are also scoring well with voters. So is

President Emmanuel Macron of France.

Given their divergent response to the

virus (in timing, if not content), all that

links these governments is the fact of

being governments.

Consider the lot of the opposition

right now. Joe Biden, the Democrats’

presumptive White House nominee,

was an inescapable figure at the start of

the month. He now struggles to cram a

word in between the president’s two-

hour press conferences. Mr Trump’s ini-

tial denialism, his misstatements of fact,

his tension with the immunologist

Anthony Fauci: these are dire signs, but

they require effort to notice. In a visual

culture, they do not match the optical

immediacy of a leader at a lectern, dis-

aster movie-style, day after anxious day.

Such are the advantages of incumbency

in dark times, the surprise is that Mr

Trump is not polling even better.

As his popularity is mostly a function

of his office, the president can afford to

sit tight, defer to public health wisdom

and savour the free media coverage

until November. At worst, he would be

following the course of almost every

other world leader.

Instead, he seems set on the most

extraordinary gamble with his electoral

prospects, and the health of his nation.

What began as a coded reluctance to

shut down normal life for the virus is

becoming more explicit. “Our people

want to return to work,” the president

tweeted on Tuesday. “THE CURE CAN-

NOT BE WORSE (by far) THAN THE

PROBLEM.” He told Fox News that he

wants the country “raring to go by

Easter”. This heedless impatience dis-

turbs the experts. It troubles many emi-

nent Republicans, too. But it is futile to

pretend there is no audience for it.

Liberal democracies are asking their

citizens to perform an act of social and

economic self-denial unprecedented

outside wartime. It is right. It should

have started earlier. The idea that let-

ting things run their course would entail

much less economic damage is beyond

sanguine. All the same, we can only

guess at the public’s patience for it.

Mr Trump is counting on the number

of dissenters to grow as the lockdowns

drag. A leader with rhetorical sway over

nearly half the nation can help to make

that happen. Indeed, the dread must be

that going out versus staying in becomes

a new partisan signifier, denoting mem-

bership of blue or red America. The

mystery is why a man whose position

has stabilised would take such a risk.

Perhaps this stock market obsessive

cannot conceive of his re-election in a

sagging economy.

More likely, he just hates to ask grim

things of people. If it is true that power

reveals, and doesn’t just corrupt, this

has been a revealing month.What Mr

Trump has in common with Boris John-

son, the UK prime minister, is less ideol-

ogy than a bone-deep aversion to being

disliked. Tellingly, their nationalism

tends not to appeal to duty and sacrifice

as much as a can-do bullishness. It

makes them both world-class boosters.

And reluctant bearers of bad news.

The president bets there are lots of

reluctant hearers of bad news, too. And

this is before the quarantines really

grate. It is plausible that his haste to get

this crisis over with might finally do for

him. But then, two weeks ago, it was

plausible that he had lost the election

before it ever started.

[email protected]

The president is counting

on the numbers of

dissenters to grow

as the lockdowns drag on

Trump’s mysterious resilience

solvent and able to show they are part of

society more meaningfully than by

printing a pretty brochure once a year.

French luxury group LVMH is making

hand sanitiser. UK grocer Morrisons has

set up a call centre for seniors who can-

not order food online. Amazon will

reportedly distribute Covid-19 test kits.

Duty aside, it makes business sense

to accrue goodwill now. It may be

needed in coming years, when every

buyback and executive payout will

face a tough public sniff test. Businesses

in developed, democratic nations

especially need to emerge well from

coronavirus to maintain their compet-

itive advantages.

Lucy Neville-Rolfe, a Conservative

peer and City grandee, puts it like this:

“When plague broke out in ancient Ath-

ens, it enabled Sparta, which was more

disciplined, to become dominant.” No

prizes for guessing, as China seeks to

emerge from its own coronavirus lock-

down, who might be Sparta this time.

[email protected]

have to put up with fire fighters flooding

it with water,” sighs Matt Kilcoyne of the

libertarian Adam Smith Institute.

Sadly for Mr Kilcoyne, the works of

libertarian philosophers like Rand are

among the chattels going up in smoke.

Traumatised by the evils of commu-

nism, this Russian émigré coined an

equally ruthless materialist philosophy.

It glorified entrepreneurs rather than

workers and elevated financial relation-

ships not community ties. It fed into the

nineties neoliberal view of globalising

corporations as a parallel power base to

nation states.

The 9/11 terrorist attacks in 2001 and

the financial crisis in 2008 damaged the

ideology. The emergence of tech giants

has kept it alive in the US, a more indi-

vidualist society. But coronavirus is dis-

pelling any doubts that ultimately the

state, not business, is in charge. It can

create money or pencil in future tax

increases. Businesses cannot.

What they can do right now is help.

Imminent bankruptcy precludes this

for many. But plenty of businesses are

further, not least in softening loan

terms. Travel businesses, like airlines,

need bailouts. If the state also takes

equity stakes, it will wind up with a

share portfolio again. All this after 40

years of privatisations interrupted only

by a brief detour into bank bailouts.

Such expedient interventions will

create legacies that will take years to

unwind. “The danger is that free market

economies end up resembling Soviet

tractor collectives,” warns Simon

French, chief economist of broker Pan-

mure Gordon. In time, loans must be

recouped or written off, and equity

stakes sold.

Just about everything economic liber-

tarians disapprove of is happening all

at once. “If your house is burning, you

worst option. Swaths of businesses are

in the same needy place today. Whole

sectors — notably airlines, hotels and

cruise lines — will lack a raison d’être for

months. For many companies, revenues

will fall short of overheads. But state

support, and the quid pro quos that go

with it, are preferable to going bust.

“This is analogous to a war we have to

mobilise to deal with,” says Jesse Fried,

an economist and Harvard law profes-

sor. “It is not part of the normal boom

and bust cycle.”

The UK is ahead of the US on per cap-

ita infection levels. Britain therefore

provides transatlantic pointers on how

coronavirus can extend the frontiers of

the state. Recently, the government has

promised loans and grants to business

worth £330bn, and basic pay for com-

pany employees who are left workless.

In an echo of the wartime command

economy, ministers are co-ordinating

supermarkets to distribute food and

manufacturers to make ventilators.

“If the government said it was nation-

alising all the UK’s shoe shops, people

would regard it as entirely plausible,”

jokes Howard Davies, chairman of

Royal Bank of Scotland.

For diehard free marketeers, the only

mercy is that Mr Johnson is a conflicted

dirigiste. Conservatives are qualified for

interventionism because they generally

pursue it from necessity, not choice. The

irony of Tories enacting the agendas of

the Labour opposition is weaker than

pundits pretend.

But the government will need to go

O

ne of the most moving

responses to coronavirus

has come from home-

quarantined Italians sing-

ing together from their bal-

conies. They were belting outIl Canto

della VerbenaorVolare. The subtext was

that interdependence is the only

defence humans have against their own

fragility. For postwar individualist phi-

losophers like Ayn Rand — cheerleader

for the primacy of private capital — the

jig is well and truly up.

Witness the extraordinary efforts by

governments to stabilise their econo-

mies and forestall the collapse of busi-

ness. The US signed off on a $2tn aid

package in the early hours of yesterday

morning and the global bailout — cen-

tral bank liquidity support included —

will have a sticker price of more than

$4.5tn.

That is a big number, even by the

standards of recommended takeovers.

And have no doubt that this is a takeo-

ver. Bringing in the state to help fend off

the virus resembles a tactic in which tar-

get companies recruit “white knight”

bidders to frustrate hostile bids by asset

strippers. It is an ironic term for a least

Get ready

for the $4.5tn

takeover

Just about everything

economic libertarians

disapprove of is

happening all at once

D

ear Mr Chief Executive

(with apologies to the hand-

ful of you I should address

as Madam):

Greetings! Amid the

coronavirus pandemic, I hope that this

correspondence finds you and your

family safe and well in your cozy, 10,

square-foot bunker.

You may remember me: I’m the pesky

analyst who raises my hand at confer-

ences to ask awkward questions such as:

will you allow your workforce to union-

ise, and diversify your board beyond

your seven golfing buddies? Yes, I’m the

environmental, social and governance

analyst at my investment management

firm and — guess what! — I’m really pop-

ular these days.

I thought I’d leverage my new rele-

vance into some crystal clear — hand-

sanitiser clear — ESG guidelines that my

firm would very much like you to con-

sider as you traverse these trying times.

First, let E = employees. Let them

work from home unless their job abso-

lutely requires their presence. Just

because your wife stayed at home with

your four children doesn’t mean that

your workers, mothers and fathers

alike, are incapable of the multitasking

that homeschooling requires.

If you close operations, pay your peo-

ple during their involuntary vacations,

whether they’re hourly or salaried.

(Boyd Gaming, I’d appreciate more clar-

ity on this. Check out Wynn Resorts: it is

paying workers for the duration.)

If you’re worried about a cash crunch,

consider forgoing your salary. That

should cover about 300 employees. And

you might politely ask your board of

directors to forgo theirs. The reason

they’re there in the first place is because

they are one-percenters. After all, no

remuneration could truly reflect their

priceless contributions to the day-to-

day operations of your company.

S = soap. This one is obvious... if

you’re a manufacturer, make it. (Thank

you, LVMH.) If you’re a retailer, stock

and ship it. If you’re a corrections facil-

ity, buy it — and, while you’re at it, fix

the sinks so inmates can actually wash

their hands. (Hey, CoreCivic — although

you never made my buy list, maybe this

is your time to shine!) If you don’t need

more, don’t stockpile — which segues to:

G = good corporate citizenship. I

know, Mr CEO: you’re not hoarding

soap. But you might be considering the

corporate equivalent: drawing down

your revolving credit facility. If you all

do this at once, banks won’t have

enough capital to keep the system

afloat. Maxing out your revolver proba-

bly feels like washing your hands with

soap to protect yourself from a Covid-

19-triggered cash crunch. (I’m thinking

about your decision to do this, Ara-

mark.) But keep in mind that banks will

also have to provide ventilators, in the

form of debtor-in-possession facilities

that bankrupt companies need to keep

going in Chapter 11.

Mr CEO, I urge you to think of this as

your new carbon footprint. Go easy on

Planet Funding — because every dollar

you suck out of the system weakens it.

Unlike soap and respirators, which are

made by different supply chains, lend-

ing is concentrated among the banks

who graciously agreed to extend you

credit at 3 per cent in better times,

assuming you would never need it. And

under no circumstances should you

issue a terse press release about your

revolver draw without also telling inves-

tors that your employees will be paid

during closures (good job on this,

L Brands — although I would point out

that you already had more than $1bn of

cash on your balance sheet).

I realise this is all a bit different from

the last set of demands my firm pre-

sented. We absolutely want you to shake

up your board, and be more transparent

about energy saving targets — and we

will hold you to these. But when we are

on the other side of Covid-19, I’ll

remember your emergency ESG behav-

iour when I come up with my buy list.

Consider your hand virtually shaken.

The writer is a bond portfolio manager

at Weaver Barksdale, and an adjunct

professor at Columbia Business School

Dear Boss:

in case you

wondered what

you should do

If you’re worried

about a cash crunch,

consider forgoing

your salary

Ellen

Carr

AMERICA

Janan

Ganesh

W

hen the G20 was called

more than a decade ago

to deal with the global

financial crisis, we had

to overcome US scepti-

cism, G7 hesitancy, Chinese pressure to

restrict its remit, and French pressure to

broaden it. Such was the jockeying for

places that not 20 but 23 national lead-

ers attended the London summit. Their

greatest disagreement was not over the

$1tn stimulus but tax havens.

In the end, we agreed short-term fis-

cal targets, but not medium-term

growth targets. Our plan to reframe glo-

bal institutions for an age of global capi-

tal flows and supply chains also failed.

But at least all realised that if we did not

stand together, we would fall separately.

It was the unanimous commitment to

shared objectives, built on the rock of

practical measures, that helped restore

confidence where there had been none.

It is a confidence that G20 leaders

must rebuild during today’s unique cri-

sis. The crisis forced a dire trade-off. The

more aggressively we confront the glo-

bal medical emergency by shutting

down workplaces, the worse the eco-

nomic emergency, producing an even

greater need for co-ordinated action to

slow and reverse each national econ-

omy’s slide. Yet such is the mismatch

between the need for international co-

operation and our present willingness to

undertake it, that the ambition of the

G20 seems in inverse proportion to the

enormity of our joint challenges.

As we face the coronavirus pandemic,

the idea of individual self-isolation is

now commonplace. But national self-

isolation has also taken off. In the initial

post-cold war era, the US acted multilat-

erally; now, in a more multipolar era, it

acts unilaterally. This us-versus-them

nationalism — “America first”, “China

first”, “India first”, “Russia first”, “Brazil

first” or “Turkey first” — has gone glo-

bal. Yet even the most isolationist

nation knows it is not enough to stop

Covid-19 in one country: it must be

stopped in all.

The G20 must underwrite and accel-

erate a concerted global effort to

develop, manufacture and distribute

vaccines and treatments. Every nation

needs, almost simultaneously and at

scale, testing kits, ventilators, cleaning

chemicals and protective equipment.

To achieve this, instead of dog-eat-dog

bidding wars that encourage profiteer-

ing, the G20 should back the World

Health Organization and the Global

Fund’s efforts to co-ordinate and

increase production and procurement

of medical supplies. Over time, it must

build a global stockpile and workforce.

Tariffs and other protectionist barriers

must go: nothing should prevent what is

mass produced in and for one country

from being mass produced for others.

In 2010, synchronised monetary, fis-

cal and anti-protectionist measures by

the G20 quickly restored growth. Now,

similar measures could maximise the

impact of individual national policies

well beyond the $2tn stimulus forecast

by the OECD. The world would be far

stronger and more stable if each system-

ically important central bank simulta-

neously intervened as radically as the

US Federal Reserve. The IMF should

also agree a new Special Drawing Right

allocation to help address massive

emerging market capital outflows.

That strength and stability could be

even more effectively advanced by a co-

ordinated fiscal stimulus — far more

than the two per cent of global gross

domestic product deployed in 2009.

The EU and China must now match US

and UK policies on this.

Fiscal policy is doubly important

because issues of fairness loom large.

The poorest and most vulnerable bear

the greatest burden and will suffer most

when debts have to be repaid. G20 fiscal

action can avoid a second decade of aus-

terity and lower the risk of further

waves of populist nationalism.

Lastly, the G20 should tomorrow

form a task force to co-ordinate the

work of political leaders, medical

experts and the heads of international

institutions. If Africa’s rates of infection

approach Asia’s, multilateral funds will

soon be exhausted. The G20 should look

afresh at fully funding the WHO; replen-

ishing GAVI, the vaccination fund; and

promise the World Bank extra

resources. One cost-effective option is

the new International Finance Facility

for Education (IFFED). As countries

redirect investment to macroeconomic

support and social safety nets, IFFED

could assume an additional remit: train-

ing the 18m health workers developing

countries need.

The G20 has yet to fulfil its potential

as the world’s premier economic forum.

Yet there are precedents. Out of the car-

nage of the second world war came the

UN, the IMF, World Bank and the WHO.

Out of this crisis must come reforms to

the international architecture and a

whole new level of global co-operation.

This is an urgently needed public good

for a world beginning to understand

that it is more interdependent and frag-

ile than ever before.

The writer is a former UK prime minister

End the dog-eat-dog mentality to tackle the crisis

Gordon

Brown

BUSINESS

Jonathan

Guthrie

FT series

Coronavirus: the economic cure

MARCH 26 2020 Section:Features Time: 25/3/2020 - 18: 18 User: alistair.hayes Page Name: COMMENT USA, Part,Page,Edition: EUR, 19, 1