Source: East Asia Forum
Author: Editorial Board, ANU
The residents of Omaha, Nebraska, received unusual letters in the autumn of 1967. The letters weren’t for them, they were for someone who lived in Boston, but they came with simple instructions: if you know that person in Boston, forward the letter to them. If you don’t know them (almost always the case) send the letter to someone who might.
On average, the letters passed through only six pairs of hands before they reached their target, inspiring the phrase ‘six degrees of separation’. It was a landmark study, conducted by Stanley Milgram, and it showed just how interconnected the world had become.
That interconnectedness has increased exponentially since then, and that’s been a good thing. Increased trade, finance, investment and people-to-people links have seen massive reductions in poverty and increases in living standards that could only have been dreamed of back in the 1960s.
But integration has an ugly side. Financial integration means a lower cost of living, but it also means more dangerous financial crises. Trade integration means huge advances in productivity, but it also means greater exposure to the economies and policies of other countries. And while people-to-people links mean richer communities and a more peaceful world, it also means that a health problem in one country can quickly become a global health problem.
The coronavirus reminds us of the downside of integration: that it makes risks more systemic. The challenge for Asian governments, including Australia’s, is to manage these risks while protecting the integration that has saved and greatly improved the lives of so many. These are not competing objectives. Protecting the fruits of our integration and addressing the coronavirus are both about maximising welfare and minimising suffering.
The solution to the coronavirus is to have more integration and cooperation, not less. Addressing pandemics is what economists call a …continue reading