Pandemic will expose failings in services
By the time you read this SA’s coronavirus infections are likely to have exceeded 1,200, with several deaths. The scale of the spread of the virus and the interventions required to contain it are unprecedented. It might not be the first virus of its kind, but it occurs in a global context that differs from the Spanish flu pandemic of 1918.
World War 1 might have internationalised that pandemic, but globalised systems of trade, exchange, communication and travel as a feature of everyday life have made the contagion effects of the coronavirus on the health and livelihoods of so many much more severe.
How we have built our economies — and their human, social and ecological cost — are recurrent features that make us more vulnerable to crises of this type. It might be a viral attack now — it might be an ecological shock at another time. What this suggests is that this period will expose key shortcomings in access to water, health care and housing in SA.
It might also expose the fault lines in the health profile of a country with the world’s largest treatment programme for immune-compromised parts of the population. While a commendable achievement, it is also an expression of how vulnerable SA is to this pandemic.
From a macroeconomic perspective it challenges the dominance of entrenched ideas of how economies work. It seems like a Muhammad Ali rope-a-dope-type strategy.
We’ve had to be placed on the ropes to use some of the tools we have had at our disposal, without understanding that many among us have always been on the ropes.
The Reserve Bank’s liquidity interventions through refinancing and open market operations, while not representing a departure from its monetary framework, signalled a noteworthy shift.
Much like the quarterly projection model on which the Bank bases its rates decisions, this is part of its business cyclesensitive basis of intervention, rather than a recognition of the need for a sustained structural stimulus to public life and the state capability and resources required for such a reconstruction effort. This is not an effort reliant on monetary stimulus alone, but a mix of interventions and actions (communicated as such), rather than singular actions sitting in different places. Presented with this opportunity, extensive time lags and provisioning gaps clearly exist in the nuts and bolts of the proposed measures. Sometimes websites and call centres that have been set up do not function as they ought to.
The confrontations on the first morning of the lockdown between workers, the taxi industry and tavern owners on the one hand, and law enforcement officials on the other, indicate how inadequate the attention, communication and support are that have been extended to those outside the policy scope — those in the informal sector and outside the social safety net (18-59 years old, able-bodied and economically inactive).
In a global context in which biological, ecological and other social crises rather than spontaneous shocks become entrenched and endemic parts of life, what does the role of politics and policy, as the “art of the possible”, become? What economic tools will respond to this “new normal”?
It was possible for a Trump administration that has sought to undo Obamacare to provide a temporary universal income and public investment in health care in a “shock policy reaction” in the form of a $2-trillion stimulus. The facts had changed, to echo JM Keynes’s suggestion once, and the Republican playbook changed with them. What is possible has changed. We are faced with a similar moment in SA and Africa.
Notwithstanding its undesirability, the current opportunity provides clues about what is possible. This is a litmus test of how the subsequent period of recovery and reconstruction will unfold.
We would do well to bring all along on that path.
Cawe (@aycawe), a development economist, is MD of Xesibe Holdings and hosts MetroFMTalk on Metro FM