Economic factors - Alfred Sant
“The latest controversy between the two camps concerns the measures to be undertaken in order to curtail the economic and financial effects of the coronavirus pandemic. As of now, the most significant measures came from national governments and the European
Central Bank.”
Necessarily, given the times we’re living in, great attention is being given to the uncertainties that are accumulating. In “normal” times, many of the changes that occur are well understood, so that one has an idea regarding where they could lead to.
But when a crisis develops like that of the coronavirus, which is not spreading according to some scenario that one could foresee, it is not possible to find a clear logic for how the situation could change. What might happen at a later stage also gets scrambled in new uncertainties.
In the economic sector, this gives rise to acute dilemmas. Despite the uncertainties, people look forward to quick and effective solutions. Yet, how can one be sure that measures being proposed could lead to an improvement or to a stronger position from which to overcome the arising difficulties?
To be sure, in the eurozone, there is an added complication. The protective structures being established to contain crises are half done. And there is disagreement regarding how they can be completed... a disagreement that has held up important decisions.
Free market rules
It’s been a longstanding refrain. The market knows best. The overriding doctrine that says there’s nothing like free trade to solve... basically... most problems, has been drummed into our heads. The state should restrict itself to activities that ensure the free market functions according to its own sweet rules. Whoever believes otherwise belongs to the dinosaurs.
Yes, but then, what happens at times of crisis?
For myself, I quickly understood that the coronavirus pandemic would make necessary vigorous state action to help enterprises survive. However, I did not expect that so swiftly, so many private sector chiefs would declare that unless government immediately stepped in massively, they would collapse.
This did not happen just in Malta.
It seems there are limits, are there not? – to how best the market knows?!
Dog days
Big gloom as you face who knows how many days during which you must remain cloistered in the same place.
Now, if there wasn’t the command, you still would have done it in a “natural” way – spent the same days in the same place, that is – and you wouldn’t have noticed. But once it’s become obligatory, it’s a different ballgame.
Worse: there’s the point that you have to do it because of your age. Now, we all live in the illusion that we’re younger than the age we show on our ID. It’s usual to pretend you do not feel the burden of the years that you’ve lived and that you’re carrying out your everyday chores ... so you want to believe... with the ease that you alway did – which is hardly true. With the years, you will have bent this way and that to fudge the reality of creeping old age.
But it is there, present... even if the illusion remains. Then some upheaval occurs, like the one caused by coronavirus, with the new commandments it has led to... and reality again intervenes to tighten the screw.
Forecasts
Less than two months ago, the economic forecast was that though the situation could have been better, still Europe and the rest of the world could expect economic growth that would be sufficiently positive to sustain businesses as well as jobs. Problems were arising mostly from the controversies between the US and countries like China which had generated confusion and uncertainty, as well as from worries about how environmental targets to control global warming could be reached.
Today, forecasters are in disarray. The coronavirus pandemic has crashed in a big, unexpected way and with phenomenal speed, into world economies. There has never been since the end of the Second World War such a disastrous shift in how countries operate: so we are told.
Historians will decide later whether this is true or not. Certainly though, it is no longer possible to have reliable forecasts about the coming future for we find ourselves in a situation for which no precedent exists. So we are given estimates for how most or how least national economies can be impacted with ranges so wide between the best and the worst option, that frankly they are meaningless.
Really, nobody can yet predict how it will all end.
Lack of harmony
The eurozone has remained locked in its own tensions – between countries which support strong measures undertaken on a European basis, to provide mutual economic support; and those other countries which are not prepared to back such a commitment before the economies of all members involved follow policies that are on the same page.
The latest controversy between the two camps concerns the measures to be undertaken in order to curtail the economic and financial effects of the coronavirus pandemic. As of now, the most significant measures came from national governments and the European Central Bank. Nordic countries, including Germany fear that southern Europeans will ride on the coronavirus “excuse” to reap new European funds coming from the north, while continuing with lax financial management instead of implementing necessary “reforms”.
Sequential inputs
If the government really intends to introduce gradually and sequentially measures meant to contain the adverse economic effects of the coronavirus pandemic, then it is proceeding on the right lines. Since these effects are still not completely well known and understood, and since we cannot forecast how long they will endure, it is prudent to reserve action according to how circumstances shape up. And one should stand ready to change or reinforce any move about to be made according to changes in circumstances.
Naturally, people who do not carry the same decision making responsibilities that the government does, find it easy to shoot off the most elegant solutions, even if they lack realism or hardly reflect well actual needs. What’s important is getting applause.
On the other hand, the government too needs to be precise in the aims it sets out while following the sequence of measures being progressively introduced. It must be just as precise when it then explains what it is doing.