As world changes the downside risks have the upper hand
The world has changed irrevocably and life will never be the same again. The scale of the devastation in the short to medium term is unthinkable. The long term change is unknowable.
Just as 9-11 changed air travel, regulation around financial flows and money laundering, and individual privacy, the Covid-19 pandemic will change how we live, eat, invest, trade, socialise and, again, travel.
There is hope that the pandemic will have a positive spin-off as a wake-up call to the world to slow down, better appreciate our planet and natural resources and one another, that citizens and civil society should take the opportunity to campaign for a grounding of better values.
But, as always when it comes to human activity, the downside risks are bigger.
The pandemic is also likely to change how nations secure their borders and intensify the world’s already fearful attitude to the movement of people who are not their own.
It will deepen the divide between rich and poor, both in terms of countries and economies, and within national populations. The poorest will have the least resources to cushion themselves against the huge economic shock, which is already hitting Europe and the US in the form of businesses failures and layoffs.
With the entire world population caught up in this life-changing storm, governments are called to rise to the occasion on a scale and with an intention not seen since World War 2.
Being at an earlier stage in our epidemic than Europe and the US, we have the advantage of their experience. An overarching lesson stands out: lockdown is the only way to slow it down. Half measures are not enough to arrest exponential growth and the risk of the health system being overwhelmed. From an economic point of view a shorter, intense lockdown to arrest at least the first wave of infections is preferable to a long and grinding one over a year or even two.
Business has been pushing for a lockdown since last Monday. At the time of writing President Cyril Ramaphosa had not yet made his statement to the nation, but at the rate the epidemic is growing, SA is fast heading for a worse-than-Italy scenario. Anything short of lockdown in Gauteng and the Western Cape will be a terrible underreaction.
The politics of a lockdown are not as simple as they look, which is partly why it has taken time to come together. Not unexpectedly, organised labour has not been in favour as it is their constituency and the communities they live in that will find it hardest.
While the middle classes can zoot out to shops in their cars and stockpile a couple of weeks’ food, that is not possible for most people. Moreover, if public transport shuts down — which it must — most township dwellers are not in easy reach of grocery stores.
While price gouging can be monitored by watching the prices at the big retailers — Business Unity SA has a task team monitoring this — who will stop profiteering, or just ordinary competition for scarce goods at local spazas?
Maintaining law and order where the likelihood of access to food being restricted is more of a real possibility, and where criminal opportunists are good at invoking crises that enable looting, is the most difficult part of the lockdown decision. A timing problem, where the announcement is made and safety and security is not in place, could be disastrous.
With a lockdown in place must come measures to keep the economy going, stop the closure of businesses — especially small ones — as well as support for the temporary and long-term unemployed and an extension of welfare relief.
The government’s announcement that use will be made of the Unemployment Insurance Fund (UIF), with its R60bn in investments (before the Covid-19 crash) is potentially meaningful. If the proposal to pay those who are temporarily laid off is effectively implemented, this could reach a significant number of people. But to do it serious logistical support is going to be required.
What must not happen is for the Treasury to revert to its catch-all response: the government does not have money. Finance minister Tito Mboweni must take a red pen to the budget he tabled in February and shift spending into health, welfare and small business support.
While rich countries have huge trillion-dollar stimulus packages to help and are looking for a rebound as early as the third quarter, and definitely by the fourth, here in Africa we will not be as lucky.
THE POOREST WILL HAVE THE LEAST RESOURCES TO CUSHION THEMSELVES AGAINST THE HUGE ECONOMIC SHOCK