As the World Grind to a Halt, a Look Ahead at What is in Store for the Global Economy

Is the Present Crisis Due to the Coronavirus Outbreak Worse than the Great Depression?

It would not be an exaggeration to state that the entire world is either under lockdown or something close to that.

Right from India that has locked down the entire country to the United States that has passed strict rules for social distancing, and including China and other Asian countries as well as European ones, the situation that arose from the Coronavirus outbreak is such that the world has ground to a halt.

With major economies in the developed world and in the emerging world under lockdown, the economic costs of the present crisis would be massive.

Indeed, some experts are suggesting that the cost of the present lockdowns worldwide is enough to cause a crisis that is worse than the Great Depression of the 1930s.

Further, there are others who believe that negative growth or minimal growth would be the new normal for a year or so.

Indeed, when businesses are shuttered, there is no economic activity and consequently, no growth which means that the Global Economy is staring at the abyss of a major upheaval brought about by Covid.

Is it all Gloom and Doom or is there a Silver Lining in the Gathering Clouds?

So, does this mean that it is all Gloom and Doom for the world with no end in sight in the near future?

Moreover, does this mean that the workers who have been laid off or the gig workers who cannot find gigs do not have a chance of being employed for the immediate term?

Unfortunately, the answers to these questions are yes which means that the Millions of those who have been fired from their jobs and the Millions of those who are in the next line of fire have an uncertain future.

However, this does not necessarily mean that we are entering a Dark Age or it is the End of the World.

On the contrary, if governments worldwide with active coordination and cooperation take steps to mitigate the effects of the unfolding disaster, there can be hope and faith in the future.

Before we discuss what governments can do and what they are already doing, it would be pertinent to look at the situation worldwide in terms of the perspectives of the businesses and their owners.

In other words, while one can lament the job losses, the latter do not have much of a choice as otherwise, they would go bankrupt.

Why the Idea of the Universal Basic Income Makes Perfect Sense in These Trying Times

Therefore, any policy response to the present crisis ought to be Two Pronged in terms of helping the workers as well as the businesses.

For instance, as some Left Leaning Economists have suggested, this is the time to implement the UBI or the Universal Basic Income, which is essentially a blanket transfer of cash to the eligible and the needy.

Moreover, there can be indirect assistance as well in the form of subsidies and free food. Indeed, when the concept of UBI was first mooted a year or two ago, there were many who mocked the idea and it is only now that this is being taken seriously.

On the other hand, the businesses too need assistance and hence, policymakers can very well arrange for Working Capital and money to pay the Wages of workers through direct cash transfers to the entrepreneurs and the business owners as well provide them with Soft Loans and other forms of assistance.

Moreover, taxes on goods can be waived off as is the idea of delaying the payments on outstanding loans taken by them. In this manner, shuttered businesses can continue to pay their worker and at the same time, the workers too can supplement their income by governmental handouts.

Is the Present Response Socialism for the Rich and Capitalism for the Poor?

Already, the United States has passed a $2.2 Trillion Stimulus plan that addresses some of the concerns that have been discussed in the previous section.

The United Kingdom and Australia are following suit as are China and India. However, there are many economists who believe that the assistance in the Stimulus Packages is more supportive of business than labour.

This is where there needs to be a Rebalancing in these trying times wherein the beneficiaries should be everyone and not a few.

Indeed, the Presidential Hopeful, Bernie Sanders has called this as Socialism for the Rich and Capitalism for the Poor which was the case during the Great Recession in 2009.

To avoid further misery to the working class, we suggest that at least this time around, the policy response ought to be more toward Social Justice Goals.

Moreover, it is also the case that the only way to prevent massive social unrest is by fair and just distribution of economic largesse by the government.

In addition, with no end in sight as of now as to when the present emergency like situation would ease, it also a good idea to think of longer term impacts.

The World Can Overcome Through Human Ingenuity

Last, while the situation is indeed dire, the ingenuity of the human race is such that we can pull through.

All it takes is a Large Hearted and Unselfish approach as well as an approach that is not blinkered by One-upmanship and short term and narrow political considerations.

The present times call for visionary and transformational leadership from the leaders of the world.

To conclude, fiscal and monetary incentives can alleviate the present economic crisis and at the same time, a well thought out and more importantly, a well executed and coordinated global response is the need of the hour.

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