How People Re-Engage in the Economy Matters

There’s much debate and disagreement on what lies ahead for national and global economies as country after country reopens from health-imposed lockdowns. With so many uncertainties, calm conversations about potential outcomes tend to get hijacked by pre-existing narratives, personal biases and political considerations. Only well-documented actual experiences or, before they’re established, solid analytical constructs will reduce public confusion and differences among experts.

In a wide-ranging conversation on “The David Rubenstein Show” last week, Eric Schmidt, the former executive chairman of Alphabet Inc.’s Google, put forward two simple yet extremely powerful concepts to think about the distribution of potential outcomes in what’s fast becoming the dominant paradigm of “living with Covid-19.” I think of them as centering on overcoming information failures and reducing segmentation. Combined with economic considerations, they shed light on what lies ahead as nations and, within the U.S., different states reopen at varying speeds and with diverse guidelines.

Schmidt encourages thinking in terms of health information signaling as one of the most important factors influencing human interactions at the moment. In a perfect world, each of us would be able to credibly flag our infection status: whether we have the virus, don’t have it, or carry strong anti-bodies. If we can’t, mistrust and dis-engagement will persist, amplified by lack of reliable third-party processes for verification and validation.