The outbreak of Covid-19 that began in Wuhan in China in December last year has now turned into a pandemic. Now more than 180 countries have confirmed cases of the virus. Most of us have not experienced anything similar to the current situation. The virus has struck with unprecedented scale and ferocity. Educational institution, shops, restaurants, recreational facilities and many others are closed for next month or more. Our lives have almost come to a halt. All these are done for a very good reason - to slow down the spread of the virus.
The Covid-19 crisis has played out in ways that have not been anticipated from the prevailing nature of governance in different countries. By the time infections began to soar at an exponential rate, most affected countries, including the US found themselves severely short of test kits, masks, ventilators and other necessary medical supplies including personal protection equipment (PPE). In fact, governments and health care system almost in all affected countries caught short handed.
Since the 1980s, the neo-liberal policy of austerity to balance the budget (as if public finance is the same as household finance), if possible to run surpluses has caused the health care system being starved of funding while tax cuts and subsidies continued to further enrich the corporations and the rich. In fact, austerity in most developed countries resulting in cuts in the public health care system along with the increasing privatisation of the health care system is causing more deaths than the pandemic.
Despite all these public handouts in billions of dollars to the corporations (some call it corporate socialism), big pharmaceutical corporations never showed any interest in infectious diseases. In fact, they rarely invest in prevention. But they love to invest in cures. The sicker people get, the more money they can make. Prevention of diseases does not add to shareholders value. They only respond to market signals, and there is very little profit in devoting resources to staving off some anticipated catastrophe. No wonder big pharmaceutical corporations have very little interest in investing in preparedness for a public health crisis.
At the same time budgetary cuts to balance the book mostly caused decreased funding for the provision of public health including research on preventative medicines and pandemics. According to journalist, writer and film maker John Pilger, four years ago the British government was warned that the National Health Service (NHS) was not prepared for a pandemic. Now it is quite clear that nothing much seem to have happened to bolster the preparedness in the UK. President Donald Trump also made cuts to funding for the Centre for Disease Control. Now President Trump in his efforts to mitigate the lack of medical supplies to deal with the pandemic outbreak has resorted to force diverting medical supplies such as masks and other necessary medical supplies destined for other countries like Germany to the US. One German minister described such forced diversion of medical supplies as 'modern piracy''.
The pandemic now quite visibly demonstrated the collapse of people's trust in the state and its capacity to address serious issues such as the pandemic or other calamities or even any major societal issues. Sustaining public trust is crucial to dealing with crises and the lack of trust has been clearly reflected in panic buying and hoarding of basic necessities like pasta, rice, flour, toilet paper and others in many countries. There were pictures of empty super market shelves, even people literally fighting to grab hold of toilet paper. People see their panacea to deal with the situation arising out of the pandemic is essentially through the market not the state. But the omnipotent market has miserably failed to live up to its potency to face a pandemic crisis.
Under the spell of neo-liberal doctrinaire view of the world, governments and public institutions in most countries in advanced developed world (i.e. the West) have been labelled as an enemy of progress, therefore shrinking government institutions has been the message given to people, of course except the military and the police. People have been constantly urged to become self-reliant in the market not only for the daily necessities but also for health care, housing, children's education, making provisions for retirement and so on.
As the people do not expect the state to provide assistance in times of their need, they obviously turn to the market to deal with supply shortages by hoarding in times of crisis thus further exacerbating supply shortages, depriving the society of things it needs to fight the pandemic.
As the market failed to face up-to the challenge of the pandemic crisis that has led at least for the moment to a certain extent reversal of the neo-liberal ideological grip on the state as the state is now reasserting its central role by undertaking mitigating measures to overcome the crisis with massive financial and other interventions. These massive interventions go against the very neo-liberal grain but now there is no other option than the state to reassert itself.
But not all states are in the same league, only capable states run by governments enjoying political legitimacy with their effective public institutions will be able to address the health and other crises more effectively and get their economies moving faster when the crisis passes, despite whatever missteps they might have taken along the way.
Political leaders are dealing with crisis largely on a national basis but the virus does not recognise borders. This reflects the prevailing nature of governance in countries around the world, but no country alone including developed countries can, by purely national efforts, be able to overcome the virus. This lack of global co-ordination to combat the virus is indicative of the serious weakness in global governance or more precisely multilateralism - now clearly visible in the area of health care. No wonder the World Health Organisation (WHO) is not playing the central role it should be in the Covid-19 crisis. To allow the situation to worsen, President Trump has already cut funding to the WHO accusing it of 'mismanaging the pandemic' and 'conspiring with China'.
In fact, the global multilateral institutions have entered a phase of declining importance since President Trump assumed his office with the slogan 'America first'. Multilateral institutions are of vital importance, especially for developing countries like Bangladesh because a rule based system gives a voice to all members which is a prerequisite to achieve success in facing any global challenge. We have already seen how the diminution of multilateral institutions has contributed to increasingly decreased capacity from dealing with climate change and pandemics to the collapse of the global trading system.
There is a convenient myth that infectious diseases like Covid-19 also do not acknowledge class or race. But the statistical evidence tells a very different story. In the US, the Covid-19 pandemic exhibits all the characteristics of a racialised pandemic with Afro-Americans and Latinx bearing the brunt both in terms of infections and deaths-- if one takes account of their percentage share in the total population. Their share on both counts is disproportionately very high.
Also, the rhetoric that 'we are all in it together' in undertaking mitigating efforts is quite hollow. The contemporary wage earners in most parts of the world are distinguished by class, gender and race. The workforce that is expected to take care of increasing number of sick like medical support staff, cleaners, kitchen and laundry staff, general support staff and many others in hospitals are at a very high risk of contamination. Also, workers in grocery stores and in their supply chains to keep food and other necessities of life moving do not have the luxury of working from home. These wage earners come from a low economic bracket who are also the pandemic's disproportionate victims.
The new climate of uncertainty resulting from worldwide Covid-19 outbreaks and the shutdowns to contain them has also created global economic uncertainty. Economic distress will come through various channels in the coming months. According to the WTO, global trade flows could be reduced by a third of what it was the previous year. The pandemic is also shaping up to be an enormous stress test for globalisation.
The International Labour Office (ILO) said that currently 81 per cent of the global workforce of 3.3 billion was affected by the full or partial work place closures. The United Nations' World Food Programme (WFP) director David Beasley told the UN Security Council that in addition to the threat to health posed by the virus, the world faces 'multiple famines of biblical proportions within a few short months' which could result in 300,000 deaths per day - a 'hunger pandemic'.
The crisis will severely disrupt output growth along with disruptions in global input supply chains. As for many developing countries like Bangladesh, remittances, a key source of income is expected to diminish drastically as well as exports as economic growth slows among its trading partners.
Initial policy response to the Covid-19 pandemic by most countries around the world is quite similar like interest rate cuts and fiscal stimulus. But public health policy response widely differs. That will determine the length of the health crisis, and in turn will determine the length of the economic crisis.
The health crisis, hopefully, will be resolved in the near future, but the political and economic ramifications will be far reaching and could last for generations. No country alone can by its own efforts be able to overcome the virus. Only a global collaborative effort with far reaching vision can get us out this crisis.
Muhammad Mahmood is an independent
economic and political analyst.