The world beyond the lockdown

The coronavirus pandemic will cause a drastic increase in global poverty. There are other immediate consequences of this pandemic in the world. However, there is now an increasing number of geopolitical and strategic analysts who are looking into the long-term impact.

The 1918 Spanish flu did not seem to have long term effects on the global economic and political drivers. Right after, the 1920s saw a global economic boom partly fuelled  by the economic recovery after the end of the First World War and the Spanish flu which also resulted in millions of deaths. But after a decade of prosperity came the worst economic depression in world history. Then came the Second World War.

Among the geopolitical strategists that have tried to analyze long-term impacts is Rodger Baker who wrote that the COVID-19 crisis does not exist in a vacuum. Patterns and trends in the world are impacted by the viral outbreak, but remain deeper drivers of the international system.

In the near term the big question is how nations should balance between physical health and economic health. In some countries there are voices advocating that people should be willing to give up their lives to save the economy. The basic idea behind this advocacy is that the lockdowns are causing hunger due to cessation of economic activities. This will, therefore, lead to people who will die from hunger. This is a highly debatable conclusion. Each year, millions of people suffer and die from hunger around the world without any lockdowns. The argument is that countries like the Philippines will run out of food in the next few months if the lockdown continues.

The underlying problem is really the efficient distribution of food. It seems so unbelievable that farmers are seeing their harvest rot because there are no buyers or proper logistics. At the same time people in the urban areas are on the verge of riots because they have no access to sufficient food.

If the problem is inefficient distribution, then why not focus on that problem. If the government cannot handle this, then allow private sector logistics firms to manage the problem.

In the United States, Trump is insisting on “reopening” the economy. The biggest objection is that businesses, especially small businesses, are not capable of testing their employees to determine who can report for work or who should be sent home. It takes only one employee who is infected for the whole company to become an infectious “cluster”. There is also the proposal of social distancing in the workplace. Perhaps this is possible in big business; but, this is not possible in most workplaces for small and medium sized businesses.

I am sure that this will be a hotly debated topic in the next few days as we approach the April 30 deadline. Let me just add that the worst thing that can happen is that we lift the lockdown and make it selective only to see the number of cases and deaths increasing. Then we will have another debate on whether the lockdown should be reimposed.

In the meantime there are certain long term effects of this pandemic that will have serious consequences on businesses. According to Rodger Baker:

“The COVID-19 pandemic is just the latest shock to globalized supply chains drawing attention to the risks to business and commerce continuity, and at times to national security. Even before the COVID-19 pandemic, global supply chains were facing challenges from the China-US trade war and from rising economic nationalism across the globe. While the world has not broken free from the gravitational pull of China’s manufacturing and consumer heft, trade tensions plus rising labor costs in China had caused some manufacturing to begin moving to Vetnam and elsewhere in Southeast Asia.

It has been reported that Japan and the United States are either going to offer financial incentive or financial pressures to Japanese and American companies to transfer their plants from China to other countries. This move was exacerbated by reports that at the height of the China lockdown, China prohibited American companies from exporting medical supplies from their Chinese plants to their home country, the United States.

In the Philippines, there is a need to again review the issue of food and determine whether the Philippines must accept the necessity of ensuring that we have the internal means to satisfy our basic food requirements especially rice.

Globalization has suffered a major blow and may take a long time before it can be resurrected as a driving force in the world economy and politics. The global institutions like the United Nations, the WTO, WHO have proved ineffective during this pandemic.  Baker writes: “The United States has long seen many of these institutions as either restricting or ineffective, while China has begun seeking to alter their direction to better fit its world vision.

The World Health Organization last January parroted the Chinese line that there was no pandemic. Nations right now are beginning to bypass many of these systems in order to pursue their own specific interests.

This pandemic crisis has resulted in the weakening of the power of the two global superpowers. China has suffered tremendous loss in its credibility and trust in the global geopolitical stage. Its attempt to change the narrative has only caused more distrust. The United States, under Trump has also shown that it really does not care about aiding other countries. However, its incompetent handling of the pandemic crisis has also weakened its image as a global leader.

While we debate about lifting or extending the lockdown, we must also start preparing for the world after the pandemic crisis. It will be a different world.

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