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del

Foto:

Eduardo del Buey
Foto: Reuters
La Jornada Maya

Jueves 14 de mayo, 2020

In her 1989 hit song, [i]Talkin’ bout a revolution[/i], Tracy Chapman begins the song with “don’t you know they’re talkin’ ‘bout a revolution, it sounds like a whisper…”

It sounds like a whisper…

The whisper that I am hearing is the frustration of many not being able to earn a living, running through what savings they have, falling further into debt and facing a bleak future. The frustration of the small business owner unable not only to make a living but also enable their employees to do so as well. If those whispers spread, we may well face a period of social unrest and turmoil unlike any that we have seen in recent times.

The COVID-19 pandemic is entering its most critical phase as governments grapple with the economic costs of their reactions to the pandemic and the costs in human lives if they change their strategy of closing down whole economies, putting at risk not only human lives but global and local social stability.

Governments of all levels face a difficult dilemma: on the one hand, keeping the economy closed and risking social unrest as a result of the unemployed not receiving enough benefits to sustain their lifestyles. On the other, opening the economy and risking further sickness and deaths which also lead to economic disruption and social unrest .

Governments must also face another dilemma: continue injecting massive amounts of money to private companies to keep them afloat, distribute these funds to consumers who will ultimately rebuild the economy through demand for products and services, or try to do both. The major question here is: can governments afford to continue doing both with much less revenue since taxes can only be raised from income and, currently, far fewer people and companies are earning money?

I recall the economic crisis of 2008, when many governments bailed out private sector firms with tens of billions of dollars. The result was that the economy avoided a depression and growth resumed, but company executives used cheap debt and lower taxes to buy back shares, inflate the value of their companies, pay themselves huge bonuses, and give investors dividends, all at taxpayers’ expense.

Many today argue that the private sector had an opportunity to restructure and to create contingency funds to meet future market calamities. The fact that most didn’t underscores their inability to plan properly. I say “most” because the auto industry in the United States did use the bailout to restructure their business models and repaid the government loans ahead of time.

But none of the executives responsible for the crash were ever held accountable, and none were prosecuted for economic malfeasance or outright fraud. Instead, their avarice was rewarded, and the taxpayer bore the brunt.

The millions of small businesses that went under and the millions who lost their homes were never compensated, creating a wave of resentment that led many voters to follow populists who decried government funding of these large companies as crony capitalism.

The result was a resurgence of populist parties and leaders in Europe and Latin America, as well as the rise of the Tea Party movement in the United States that contributed to the current gridlock in the U.S. Congress and the eventual rise of Donald Trump.

The fact that executives earning millions of dollars per year in salaries and bonus could literally screw up and be saved by government funding led to the beginning of the many whispers that we have heard over the past few years questioning systems of government that appear to cater to cronies with connections at the expense of the common citizen.

The result: globalization is now perceived by many as a major evil, and the private sector as modern day buccaneers intent at enriching themselves at the public trough.

Yet, the growing nationalist movements don’t appear to be cleaning up the mess either. Rather, increasing nationalism and the decisions by many governments to reduce oversight capacity and strong controls is exacerbating the plight of many.

Many leaders, from the Hungary to Brazil, are looking at ways to weaken democratic institutions and consolidate their personal political power, leaving voters with little say in how they will be governed and leaving leaders with few if any constitutional controls.

So, coming back to today’s challenge and faced with a potential lose-lose situation, which is the lesser of two evils for governments to follow?

I don’t envy the leaders who must take these potentially life or death decisions, yet they sought power and must live with the consequences of their decisions to lead their countries.

But they will have to take smart, courageous and pragmatic decisions if they are to open up the economies of their countries in a safe manner. They will also have to effectively sell the merits of their decisions to all stakeholders.

Can they afford to not reopen their economies, and should they do it soon, or simply wait until a vaccine is available?

Governments depend on taxes for funding social welfare, health, education, and all of their other programs. No income earned by companies or employees leads to no taxes and no funding as well as further unemployment and risk of social unrest. A bankrupt economy depleted of resources cannot fund itself by printing huge amounts of currency to cover current expenses. This would result in massive inflation and the economic collapse of many societies.

The market depends on consumers to purchase the goods and services that make our economy run. Without demand, supply is irrelevant. Without jobs and income, consumers will stop purchasing and, as their savings dwindle and they begin to lose valuable assets, the market will cease to function effectively driving many to despair.

However, should the economy reopen before a vaccine is available, and should the healthcare system be overwhelmed, how many more lives could be lost if contagion reigns? Since many of these lives will be those of people from the lower economic classes who will have little or nothing left to lose, will we begin to hear Chapman’s whispers?

Should governments decide to postpone a decision to reopen economic activity, tens of millions of people around the world will be left with no income, hungry, homeless, and with no hope for the present or the future.

Many small businesses will fail, leaving many with no hope for employment in the short-term, and many entrepreneurs facing significant economic losses that will likely preclude them from jump-starting their companies. There’s no easy answer.

I have often said that the perfect is the enemy of the good.

The perfect would be a world without COVID-19 and with full employment. That’s not the reality that we’re facing.

The good is an economy that opens slowly, in a targeted manner, and with careful deliberation in order to avoid overwhelming the local healthcare systems, with each step the result of meticulous planning and based on the best medical advice.

While the government is responsible for the overall health and safety of society, individual responsibility must also play an important role.

Each of us must respect social distancing and embrace the use of masks and gloves.

Individual responsibility means just that: overall control by the nanny state will have to be replaced by a collective consensus that we all must play by the rules until the contagion is contained and a viable vaccine developed.

There will continue to be deaths as the pandemic runs its course. That is the sad truth we face.

Another truth is that governments cannot afford to fund the economy indefinitely.

We all need an economy that contributes to our well-being. An economy that is responsible in its management of human resources and committed to working within medically and scientifically developed parameters.

We also need a health system that addresses the major threats to public safety.

Absent this, tens of millions will be deprived of their sustenance, condemning them to try to deal directly with the economic impact of the pandemic in their daily lives as well as the pandemic itself.

Hopelessness leads to despair, and despair to social unrest.

The whispers are there for all to hear.

Are our leaders up to the task of implementing the proper, well timed decisions with the utmost care possible, and, is each of us ready to assume responsibility for our personal safety?

[b][email protected][/b]

Edición: Ana Ordaz


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