FIRST PERSON - Alex Magno (The Philippine Star) - March 31, 2020 - 12:00am

Hunkered down as we all are, it might seem a futile exercise to think about our economic recovery. But we need to.

We have been in “enhanced community quarantine” for over two weeks now. The restrictions are due to be lifted by mid-April. Even if they are, it is unlikely that full normality will be restored in one blow. Karlo Nograles has spoken about a “new normal.” 

This is going to be a long battle. Even if we “flatten the curve,” outbreaks of infection are likely to continue. There could be a resurgence of the epidemic, or a “second wave” later in the year. 

This virus will put everything under extreme test: our institutions, our systems, ourselves, our humanity. We will, of course, try to assure ourselves we have what it takes to prevail. At the same time, we should prepare for potential breakdowns in various parts of our community.

It is nearly certain the global economy will slip into deep recession as a result of this pandemic. The immediate challenge for us is how to escape this large trend and manage even minimal growth through the remainder of the year.

The last time the global economy plunged into recession was during the 2008 financial meltdown. We were able to avert recession during that time due to adept action by the Arroyo administration. This time, the recessionary plunge will be deeper and more profound. It is not only the financial system that will be choked. Production and distribution systems are in grave peril.

The past three weeks underscored both the strengths and weaknesses of the decentralization of power we undertook the past three decades.

On the upside, decentralization enabled local government units enough flexibility to respond to the peculiarities of their situation. The calamity funds entrusted them were quickly deployed without peril of freezing in our impossible bureaucracy.

On the other hand, local governments did tend to overstep their bounds and threaten general policy. Local executives, of course, have a much shorter horizon. Acting on the basis of localized concerns, however, could harm the larger community.

For instance, when public transport was shut down early on to minimize movement, the mayor of Pasig wanted tricycles to continue their trade. That would have undermined the general effort to contain the contagion. The IATF was correct to clamp down on that.

In the days following, villages, towns and whole provinces began setting up their own “lockdowns.” They closed provincial and municipal borders with barricades of every sort in a mad frenzy that would have produced food shortages nationwide. Again, the IATF had to step in and order that only PNP checkpoints would be legal.

Still, some ports, local governments hampered the movement of cargo by denying entry to crews, as if the deliveries could unload themselves. One city bemoaned the admission of someone from another city into “their” hospital.

La Trinidad in Benguet imposed an extreme lockdown. That trapped tons of vegetables now left to spoil.

Then there are the stories of thousands of trapped foreign tourists who could not be evacuated because local governments hampered their movement. The Foreign Secretary had to raise hell to rescue the stranded tourists, some of them expelled from hotels and forced to depend on the hospitality of communities.

Everywhere, there is a felt need for increased centralization to most efficiently coordinate the national responses to the pandemic. Analysts are now anticipating the crisis will bring forth a rebirth of big government – simply because it is the only means to bring on enough resources to reverse the plague.

Our logistics system is weak to begin with. Now we face the prospect of that system being further hampered by unilateral actions taken by local governments. National government needs to step in and use the army, if necessary, to move vital supplies. 

Our agriculture is weak to begin with. Now we see the sad sight of farmers destroying their produce because they could not be brought to market.

We need an urgent program to encourage community farming to minimize shortages. Already, some of the sources of our rice imports are cornering their supplies for their own people. The global food supply chain could be very constricted in the next few months.

 Today, food self-sufficiency makes sense. With much of the world on lockdown, we do face serious prospects of food shortages. If we need to dole out subsidies anyway, we should focus them on encouraging our people to plant. We need to do that now.

Some governments elsewhere are now laying out spending plans many times more than originally budgeted. Among some, they are preparing to incur debt to the extent of 150 percent of GDP to fight back economic collapse. 

It took us tremendous effort, over many years, to bring down our debt-to-GDP ratio from over 70 percent of GDP to barely over 40 percent.  Given the circumstances, we should now be prepared to see that vital ratio climb back up again dramatically.

It will take us many years to recover from the economic setbacks suffered because of the pandemic. But we must think in terms of reinvention rather than just recovery.

The inevitable trend is for nation-states to become more self-reliant over the next years. Supply chains will be reconfigured. Comparative advantages will take a back seat to national security. Interdependence will now become a bad word.

These will be the large trends. In plotting our own recovery, we need to adjust to these trends. 

The most immediate concern is that we can no longer depend on imports for our food supply.

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