By Nic Wolpe
The world has become a surreal Hollywood movie. As Shakespeare said: “all the world’s a stage, and all the men and women merely players.” Today COVID-19 is also a powerful player wreaking havoc on our lives and erstwhile cosy view of globalisation.
Though it is unclear what the long-term economic and structural consequences of COVID-19 may be, what is irrefutable is that the virus has changed our lives forever..
We are now compelled to change how we do business, interact and behave. The idea of social distancing, which just a few short months ago was unheard of, has become the middle words in human relations.
The spread of the virus has seen drastic measures; it caught us off guard, despite numerous warnings.
Over the last few months much has been said about how the world will change. Concerns and fears have been expressed that lockdowns have begun to threaten the very core of universal human rights and civil liberties on the way to an economic meltdown of gigantic proportions.
As the debate rages between the trade-off of lives versus economic wellbeing, the reality is that the lockdown has brought severe economic and social hardship with the poor the hardest hit.
Yet, the pandemic has hit everyone. The middle class, the employed, self-employed and businesses alike. Unemployment is spiking, and as the harsh impact of the economic fallout cascades across the world, we are questioning and re-evaluating the feasibility and benefits of globalism and of neo-liberal, free market policies.
As attention turns to the easing of lockdown restrictions and the gradual reopening of economies and economic activity devastated by the lockdowns, the question on everyone’s mind is how we as a global community – for it can only be done in solidarity – are going to rejuvenate and reboot economic activity.
The last time the world experienced such an economic crisis as devasting as the one we are currently experiencing was the Great Depression of 1929–33. Millions were left unemployed, homeless, and dependent on food banks and kitchens. We are witnessing the same today, as the lockdowns are pushing the world into a global depression.
Thus, to prevent the advent of a global depression, and to ensure that economies are able to withstand the impact of economic lockdowns, it is imperative that a global economic stimulus package is implemented to ensure countries’ economies are able to bounce back.
Therefore, it should be incumbent on the world ‘s richest nations to provide an economic stimulus package that draws on President Roosevelt’s New Deal and the Marshall Plan.
Both provided the necessary stimulus; the New Deal to restart the US economy and pull it out of the Great Depression, and the Marshall Plan to enable Western Europe to rebuild their shattered economies from the ashes of war.
Roosevelt’s New Deal was a series of initiatives to stabilise the US economy and to provide security, jobs, and relief to those who were suffering. The New Deal fundamentally and permanently changed the U.S. federal government by expanding its size and scope – in particular, its role in the economy. The Marshall Plan, also known as the European Recovery Programme, provided financial grants at no interest.
As South Africa went into lockdown, concern and speculation was (and still is) rife that our stagnating economy, high and rising unemployment, and weak public finances, the consequence of a shrinking tax base, will be heading for an economic Armageddon. This concern was further compounded by Moody’s downgrading South Africa to junk status at the end of March, which made borrowing for government and state-owned enterprises that much more costly. However, lost in the fear and economic dilemma is that Britain at the end of March was also downgraded – from AA to AA-, but nevertheless downgraded.
Thus, at this global moment of economic reckoning, the focus should be on the need to pump liquidity into global economies through either increasing domestic borrowing – increasing the deficit to GDP – or grant stimulus packages through the Bretton Wood Institutions. For, as the US economist Paul Krugman has put it, paraphrasing Franklin Roosevelt, ‘the only fiscal thing to fear is deficit fear itself.’