Economy

The Economic Wrath Post Covid-19: John Maynard Keynes to the Rescue!

Amidst the catastrophic circumstances of Covid-19 that India is witnessing, there have been other disasters striking India – Vishakapatnam Gas Leak, Cyclone Amphan in West Bengal, Uttarakhand’s raging Forest Fire, Earthquake in Manipur and Locust Infestations in Rajasthan and others states. All these disasters add to the current misery created by Covid-19. Historically, the intensity of the disasters that have struck India in recent months has by far been most challenging for our society and the government in retrospect. “Tigers took away our men, Covid-19 took away my child and the Cyclone took away my livelihood” – reckoned a woman residing in Sunderban, West Bengal. Those words are bound to reverberate to the most insensitive human being and summaries the wrath of nature that has disrupted the global world.

“History repeats itself, first as a tragedy and then as farce” – Karl Marx had once written. It is with that ideology, one must ponder on whether our society is facing the greatest tragedy or swimming against the tide of facade. As the global world deliberates on the contraction of economy and the corporates initiate a debate on productive capacity, we have forgotten those who culminates to form the bottom of India’s soul, the underprivileged. The discourse on reviving economy is certainly an important attribute to consider, however, in the short run humanity must not forget to empower the lower brass of the society. All those years of work of empowering the manual labourers, assisting the farmers, and the discourse on gender parity in accessing financial instruments in rural areas would soon be engulfed with increasing agricultural production, efficient management of the supply chain and the contribution of those daily wage workers in industries while they remain suspended from the protection of labour laws.

The academic sphere of economics is much more than the Gross Domestic Product (GDP) growth and Inflation. It is an amalgamation of sustainable development, enriching the people living in poverty, investments in human capital namely, education and health care and also, a pragmatic approach to an equitable society. International Labour Organisation (ILO) estimates 305 million will slip into the domain of joblessness in the aftermath of Covid-19. On the other hand, the International Monetary Funds (IMF) further estimates a contraction of 3% of GDP growth worldwide. With all the economic indicators working against the very people who retorts to an efficient economy in times of disaster, the time has come to deliberate on a co-operative discussion which connects the dot between an optimal economy as well as the development of society. In an Internet savvy language, it can be said that extraordinary times like these would need an extraordinary measure.

Metaphorically, this is where John Maynard Keynes comes to the rescue once again. Keynesian Economics is a comprehensive and pragmatic work, being appreciated by academicians all over the world for decades. If a philosopher and an economist helped shape the perspective for years to come, it was the academic work of Keynes following the Great Depression in 1929-1930. Well, nearly all schools of economic thought for a period of ninety years have incorporated the ideology of Keynes, either conforming or countering the philosophy, in their academic work.

Let the government spend. Dig a hole. Employ people to fill up the hole. As a result of multiplier effect, in common language domino effect, the economy would revive. The pragmatism of his thought involved other intricacies and complexities but in retrospect, the idea revolves around digging a hole.

Not before one dwells on the deeper insight, the parallel between Covid-19 and digging a hole, will remain under the curtain of mystery. The first determinant to consider is the unemployment rate which would exacerbate following the aftermath of Covid-19 whether it be corporate sector or the educational institutions. Next, the migrant labourers who have returned back to their natives and would face considerable barriers before they are employed. The second determinant to consider is the opportunity to create employment in the short run. Basic understanding of economic theory would showcase that with job creation, the income of the masses are kept intact which results in higher consumption. Only if you have money, you have the power to spend it on goods and commodities. As a result of which there is increased economic activity, in terms of investments, retail income, which ultimately assists the government in collecting their revenue in the form of taxes. “Digging a hole” does exactly that. For digging a hole, people need to employed, which would lead to the sale of shovels needed to cover up the hole. Due to the sales of shovels, the metal industry benefits and the positive effect remains countless commonly known as the multiplier effect.

The first step is to realise the problem persists with unemployment which leads to reduced economic activity. To broaden the scope of economic activity, well, digging a hole is not the solution to ameliorate the effects of post Covid-19 world. An alternative must be put into perspective.

If ever the society has to make most out of the catastrophe, this is the time. The human civilisation cannot get trapped in the pessimism recent disasters have caused rather, utilising the troubles of the society is the way forward. Here is when John Maynard Keynes comes to the rescue. The disruption that Covid-19 has caused along with disasters such as the cyclone in West Bengal, Uttarakhand’s forest fire, or the Locust Infestations – to combat the long term effects of these disasters, employment can be created at this juncture through a very robust economic instrument. West Bengal has witnessed uprooting of 4.5 lakhs tree due to the cyclone which struck the state last week. The state government must utilize the opportunity to employ the underprivileged just to clear the roads and drains clogged with leaves and branches. Certainly, this being an unskilled work would help the state in recovering by generating employment. Without proper functioning of the drainage system, the monsoon season affects the drainage mechanism. Viewing the condition at first instance, one must take this to be unimportant. However, with deeper insights the situation becomes clear as water. Locust Infestations would need pesticides to be deployed in the state of Rajasthan, a greater workforce is the need of hour. The government must immediately incorporate strategies to hire labourers who are out of the payroll for an unskilled work such as spraying pesticides. Once progress has been made in creating employment, the multiplier effect is countless which in the short run would help the cash starved economy in creating an environment to comfortably breathe.

Throughout the discourse of history humanity has witnessed economic recessions, pandemics, violence and wars but pragmatic and progressive approach of society have always prevailed. Human beings are warriors. If we have to grow as society, the only thing we shall not do is to stop and breathe. There is no time for that in this fast-changing global world. To stop is to fail.

Remember, John Maynard Keynes will come to the rescue over and over again.

 

-Mayukh Sen (One of the prize winners of Covid-19 Article Writing Competition in the 18-24 years age group)

Picture Credits: thoughtco.com / Juhari Muhade / Getty Images

References

1.International Labour Organisation (ILO), 2020. Covid-19 Monitor Report on Global Labour.
2.International Monetary Fund (IMF), 2020. World Economic Outlook Report.



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