COVID Economics 101

Published May 25, 2021, 6:00 AM

by Ted Estacio

Lockdown. Quarantine. Social Amelioration Fund, Retrenched. Government borrowings. Mass Testing. Contact Tracing. Vaccinations. Herd Immunity. Work from Home. And so on. Words or phrases that probably enlarge our vocabulary when this pandemic began.

This article does not in anyway act as the spokesperson of either the government or the private sector wants and needs ,. It is not the objective of this paper to criticize anyone but simply  is an attempt to explain what is happening around us.

As a way to prevent the spread of the virus, community lockdowns are imposed and people has to stay quarantined in their homes. People has to stop working, production has to be at a standstill, and non-essential services are prevented to be given. We saw therefore quite a number of businesses, especially those where people converge closed so as to avoid contamination of those carrying the virus.

Government services, on the other hand, have to continue their services to the general public. It has to continue sustaining their services to the public. It has to open Public Hospitals, maintain the armed forces on stand by, financial institutions and other public entities like the Barangays and the local government has to be open to continue with their basic services and sustain on going government projects. As they do this funds outflows continue.

As private commercial establishment closes, revenue inflows stop. Consequently, payment of taxes, the main source of operating funds of both local and national government, becomes at risk.

Therefore, deficiencies have to be filled up by borrowings. In addition, huge undertakings like the purchase of vaccinations have to be covered also with fresh funds.

But borrowings are not the ultimate solutions. Internally generated funds should start flowing again, hence the decision to open again private establishments including malls, provided they enforce strict basic health protocols. Allowing people to get back to work, including the daily earners, opening up entertainment places like restaurants and resorts are all meant to reheat the economy.

But while many countries in Europe are almost back to normal, some countries in the Asia Pacific region are happy to re-open their economy because of the discipline of its citizens and the resolve by their government to strictly enforce the rules they see fit to prevent new cases of Covid from recurring.

How can the people help?

One, we as a people can observe the much desired discipline just to observe the practice of the basic health protocol. People enjoy converging in groups, see our local wet markets. We like to play in groups – community basketball, we are happy doing nothing but chat with our neighbors and not using face masks and face shield.

Second, the effect of the community pantry must not be overlooked. Even if the labor front is back to their daily grind to earn the minimum income, family budgets are compromised. However, being able to get basic food provisions through the community pantry is already considered a big help to the lower income  to survive their day.

Third. Our people should be serious in harnessing our own strengths by engaging in self-help, self-managed activities. For example, those with motorcycles, scooters or bikes need not affiliate themselves with huge providers like Grab or Lalamove to earn even minimum wages. Start in your own community. Affiliate yourselves with businesses within your own neighborhood – restaurants, small trading firms, etc. Pool the skilled workers. Establish micro-enterprises. And if you need extra capital, I am sure there is one cooperative or micro finance operating in the neighborhood. Visit them and be member.

Fourth. Copy experiences of Taiwan, Japan, New Zealand and even the US in providing soft loans to small businesses to enable them to continue their respective businesses.

Fifth, re-start small businesses within the community to be able to generate income. Slowly we hope all these actions start something new to our people.

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