Bolstering public trust in authorities to alleviate COVID-19 fears

Dr. Pham Thi Thu Tra, senior lecturer, Programme Manager for Economics, School of Business & Management, RMIT Vietnam

COVID-19 presents the world with multiple challenges, from a tremendous public health threat to a great economic threat for the entire globe. To cope with any kind of threat and to limit the damage it causes to the nation, it is key to control social anxiety and strengthen public trust in authority. The only thing we have to fear is fear itself, as Franklin Roosevelt said.

First and foremost, public trust is built on the role of government in planning and executing policies. Very importantly, public trust needs to be shared by various groups of the economy including firms, investors, and also consumers.

Credible public policy needs to be well designed, targeted, and even courageous. Especially, the adoption of unpreceded and prompt measures by governments is necessary to reinforce public trust. As the COVID-19 outbreak shot up in South Korea in the past few days, despite immense queues at supermarkets in Daegu, face masks were sold at a discount, rather than a premium.

Earlier on, in another country amid the COVID-19 outbreak, Singapore, Prime Minister Lee Hsien Loong urged Singaporeans to protect themselves by washing hands with soap regularly and stressed that only those who are unwell need to wear a face mask.

Epidemics are also a great challenge to financial investors who act on their belief about the markets, over a short-term or long-term horizon. The COVID-19 outbreak can induce a self-selection mechanism which can crowd out short-term investors who only seek short-term profit, rather than long-term value creation. Investors focused on the long term and determined to uphold the fundamentals and fortune of the national economy will continue to see success. Strong public trust will help the latter group to overcome their anxiety and persist on their investments more strategically.

For firms and business sectors that suffer a hard hit from the outbreak, short-run economic damage is inevitable. To limit possible long-term damage, firms themselves need to take action prior to resorting to government support. Rather than pursuing business expansion, it is time for firms to shore up their core business values and enhance efficiency through lean production, streamlined operations, quickly adopting less investment-heavy financial technologies such as cashless payments or digital solutions for database management.

These will make firms more efficient and thus suffer less for now, and be ready to grasp new opportunities once the outbreak is contained. However, most firms are only willing to take these measures when they are convinced government attempts will be made to fight the outbreak and help the economy rebound afterwards.

Consumer confidence is essential for economies to tackle and overcome threats induced by epidemics or disasters. Solid trust in authority will help contain anxiety, restore consumer confidence, and shape better consumer behaviours. Revisiting the example of hundreds lining up to buy face masks in South Korea, news talked of queues of several kilometres. There were worries and concerns, but no chaos.

Similarly, in Singapore, no significant hoarding has been observed once the Singaporean leaders ensured an adequate supply of masks. Nearly a decade ago in 2011, Japanese people remained resilient in the face of tragedy – the great Sendai earthquake and tsunami that caused more than 22,000 deaths and missing.

In Sendai, people queued up for food outside convenience stores even 12 hours before the stores opened – however, everyone stayed calm and polite despite the line stretching over many blocks. This is based on a strong sense of social order and great respect and trust in authority by the Japanese people.

Public trust takes time and efforts to build and indeed it matters the most in times of crisis. The COVID-19 outbreak is still unfolding with many unpredictable turns. We are all together in this fight against the novel coronavirus, and public trust is among the most crucial factors that drive our endeavours to rebound.