The pandemic will change public life as we know it | Analysis – analysis
No one should try to read much about the economic predictions right now with coronavirus disease (Covid-19) in full swing. However, Covid-19 is likely to profoundly affect the way governments, businesses and citizens behave, changing public life as we know it.
Former President of the United States, Ronald Reagan, said the nine most terrifying words in the English language are: “I am from the government and I am here to help.” This approach influenced political thought for a quarter of a century. But Covid-19 has put governments at the forefront of the response. Now there is further questioning why the role of government has been unnecessarily reduced in many countries. India has also come close to an erroneous consensus that we need to maintain a small government. This is likely to change.
Former National Security Adviser and Foreign Secretary Shiv Shankar Menon wrote in Foreign policy that governments will take renewed confidence in their power to shape the destinies of their nations. In responding to the crisis, governments may have found powers that they did not know they had or were unwilling to use.
This new power will influence how other matters of state will be dealt with later. The climate crisis fraternity can now see greater receptivity to demands for stricter environmental emission standards. Demands for strengthened healthcare, better social safety nets, and the like have long been rejected, due to various fiscal reasons. The envelope limits of what the government can clearly do has expanded far beyond what people would have expected just a few weeks ago.
For a long time, there has been an uncritical acceptance of lower wages in some jobs like nursing and teaching. Caught in the middle of a pandemic, we now see these groups take on an unusual level of importance. This list of critical roles includes not only doctors and nurses, but also teachers, delivery staff, store clerks, and bank tellers. While it is guaranteed that, in most cases, wages will be determined by market forces, other forms of benefits, such as additional income support, could be promised to such groups to partially offset the personal risks assumed by them. groups when they are expected to keep essential services afloat.
Historically, governments have claimed the absence of fiscal space to finance such welfare activities. In India, there should now be a strong case for increasing health care and insurance spending. Hopefully, the 2021 budget will make these more important. As we debate how adverse individual health outcomes affect society at large, it will also be recognized that large-scale unemployment, in part caused by a possible economic slowdown, also damages the economy. Governments will need to implement Keynesian steps to create more jobs and would be advised not to meet their current fiscal target. They should now have the confidence to push back the deficit hawks. The fiscal deficit in the United States increased to 10% of GDP under Roosevelt’s “New Deal” in the mid-1930s. That was an important factor in allowing the American economy to recover. Indians must go into a 5% fiscal deficit for a few years as long as the money is used in a targeted way.
Greater government powers come at their own risks. Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore, has noted that, on a cultural level, East Asian economies have so far demonstrated a better ability to handle the pandemic. Taiwan, Hong Kong, South Korea, and Singapore all stand out as good management posters. This crisis will be a blow to Westerners who claim that their governance models have little to learn from others. Citizens in many countries, seeing that strong-handed governments work well, could perhaps push democratic nations toward greater authoritarianism.
Another medium-term impact of Covid-19 should be a greater openness to the use of technology. Telemedicine, which has not been taken advantage of, will see an increase. It has always seemed unambitious that India estimates this market to be approximately $ 32 million, roughly a day’s earnings from one of the many IT specialties. In the field of education, various pressure groups have taken the position that no version of online education will be acceptable to grant formal degrees. Now, they have struggled to find ways to make online learning and assessment possible.
Similarly, for long-term working mothers, mothers with elderly and disabled parents have asked organizations to show greater flexibility in offering work-from-home (FMH) options. However, even enlightened companies have generally offered WFH facilities for up to two or three days a month. The pandemic has shown that it is indeed possible to manage some parts of our business remotely. This is a dramatic change in lifestyle for those who need it. One would expect that women’s participation in the labor force, which has been declining in India in recent years, will experience some revival.
The 2008 financial crisis led to mistrust by experts, especially those prone to making economic forecasts. This distrust of a small part of the educated elite turned into skepticism towards other classes of experts who really had something useful to say.
One consequence of this confidence deficit was the inclination to vote for people with no significant experience in public office. Governance is for serious people who have dedicated their time to politics and administration. Not surprisingly, the best administrative responses have come from thoughtful leaders in Singapore, South Korea, or Germany. One hopes to see diminished enthusiasm to vote for television stars, actors, and athletes.
Several of these changes can usher in a period of more egalitarian growth, boosting investments that the government should always have made and allowing for a broader consumer base.
the trente glorieuses (three decades of high growth) in France and the Golden Age in the United States were fueled by deep-rooted and sensible government interventions. India has to do the same.
Govind Sankaranarayanan, former COO and CFO of Tata Capital, is currently Vice President of ESG Fund ECube Investment Advisors
The opinions expressed are personal.