Covid-19 will pass but we must learn the lessons inherent in it, failing which we are headed for doom
As the number of people affected by coronavirus is increasing the world over, its impact on the world economy appears to be devastating. We know that for any economy to move it is imperative that its wheel of everyday life keeps turning so that people are involved in productive activities.
This means the production of food items is not stopped and their supply and sale-purchase is not hindered. Then comes the manufacturing sector whereby industries and mills produce other items of necessity, and finally the services sector that includes banking and finance, educational institutes, health organisations, electricity and water supply systems, sanitation, cargo, public transport, and many others.
Since the beginning of this year when coronavirus started proliferating, there has been incessant talk about its impacts on economy. In January, there were apprehensions about China alone that the second largest economy of the world would slow down and go into a recession.
In February, when Iran and South Korea became primary targets of the virus, we thought that the economy of Asia would be affected. But in March when the virus spiraled with an amazing speed in Europe and the US, finally its tremendous impact on the entire world became clear. America, China, France, Germany, Great Britain, Italy, and others are among the largest power houses of the world economy; and a closure of business in these countries also spelled doom for the rest of the world. We need to keep in mind that the share or stock markets directly affect the economies around the world.
There was a time when not the entire world had stock markets, especially before the 1990s the erstwhile socialist economies did not get a direct impact from fluctuations in the stock markets. This was manly thanks to their government-owned businesses and industries. Even agriculture and services sectors were in the government hands so the economic ups and downs did affect socialist states but the people in those countries were not directly in line of fire from the stock exchange, though indirectly there were some repercussions. Stock markets prosper essentially in the free market of capitalist economies.
If they earn profit the benefits are transferred to shareholders, if they go into loss nearly everybody bears the brunt. With Covid-19 wreaking havoc and the stock markets of the world plunge, the consumers will have less money to spend and that will affect their purchasing power in the long run. That means stock markets don’t create problems by themselves, they simply reflect other problems in economy. With disease spreading and number of death spiraling, businesses stop and shares go down. No business results in no profits on which depends the trade in shares.
Covi-19, or any other deadly virus for that matter, first affects the supply chain, resulting in faltering production and supply. People tend to buy only the most necessary items. Then the closure of borders further affects the supply chain. Restaurants, shops, hotels, and markets are closed and that has the worst impact on jobs. As people lose their livelihoods, a welfare state protects its people from such shocks, whereas most of the developing countries that have been wasting their resources on armsand ammunitions, bombs, fighter planes, and tanks, have nearly nothing in their kitty to provide relief to their people.
When a Covid-19 type pandemic breaks out, such garrison or security states excuse themselves by simply announcing that they can’t do much. The same states never excuse themselves while producing bombs and missiles; in that case they never use a lack of resources as an excuse; their usual mantra is that ‘there will be no compromise on defence expenses.’ Even in the 21st century many states have been firing missiles in quick succession.
For instance, just look at countries like India, Iran, Myanmar (Burma), North Korea, and Pakistan, where the rulers are always ready in their military preparations, and keep announcing with pride their actual or purported preparedness.
But from the same people you will never hear that they will not compromise on health and education. Such countries take pride in developing or imitating the latest destructive technology in the world, and boast that they have the best fighting power in the world. But they can never claim that they have the best education or health system in the world. Now the worst affected people by Covid-19 are the lowest-income groups and daily-wage earners. Small vendors, eateries, cafes, roadside cabins, cart pushers, and hawkers are out of business because all people are confined to their homes and cooking in their kitchens.
On the other side, labourers and rickshaw drivers are also without livelihood, even big transport companies are firing their employees. As most companies hire their employees on daily wages they are able to fire them in the time of a crisis. Most capitalist economies in the developed world give no protections to their people. Similarly, electricians, plumbers, carpenters, ironsmiths, cooks, suddenly find themselves withoutwork. Even big businesses and industries are closed because of the virus. Estimates vary about the total impact of the virus on the world economy, but even by a conservative calculation half of the world economy is already under crisis.
And the remaining half is also struggling. Only in health sector, activities are at their full swing but these are not contributing to productive potential of economies but simply trying to save lives. In the next three to four months the world economy will either be at the verge of total collapse or will be teetering to come out of the crisis. Hopefully by the end of July the death rate will drastically go down and then it will take at least six to ten months to fully restore the world economy.
In many ways, this entire year of 2020 will be much worse in decades and perhaps 2020 will see the full rebound of the world economy to its previous potential. The final tally of the affected and the dead will determine the cost of the epidemic. Till the last week of March the world economy was reckoned to have shrunk by at least 10 per cent. Now the largest world economies need to do a lot of rethinking at the governmental level. We need to decide whether we can save our people by wasting our resources on war machinery or by giving them health and education.
The countries where there are only a few ventilators for hundreds of patients, they have thousands of bombs, tanks, missiles, and airplanes, whereas the number of guns is even much more. Now the world has to decide if we can continue sticking with the so-called ideologies and dubious theories and keep attacking our neighbours. And the resources that should be spent on people’s development and welfare will keep going to war preparations against some real or imaginary enemies. Muslim countries appear to be the worst in this regard. From Iran, Iraq, and Saudi Arabia to Syria, Turkey and Yemen, all are involved in one fight or another, or have been thrown into wars.
We can’t simply blame foreign powers or the virus for our miseries. Our rulers don’t even think about the diseases people suffer from, neither do they do anything substantial to prevent them. We don’t have medicines, neither do we have enough hospitals but we are more interested in war games. Covid-19 will pass, but we must learn the lessons inherent in it, failing which we are heading to doom.
The writer can be reached at @NaazirMahmood