Home Quarantine vs the Economy - which one?
Dr. A.K. Enamul Haque*

The economy is crippled due to Corona.  The government has already taken various incentive steps. As I wrote in the last article, we should think about this issue and move forward. If the decision is not made wisely, the result will not be good but bad. I reminded you in the last issue of 1974, but I didn't say much, because many will take it politically. On New Year's Day (April 14, 2020), the IMF spoke of the famine. Many countries do have have experiences about famine. Some countries in Africa and Bangladesh have gone through this experience. But this time the situation may be more tragic. 
Famine usually does not come in many countries at a time.  It comes where food production is hampered by natural causes. Now? This time almost all countries are affected by the disaster. Let me tell you a few facts I know.

One. A woman died in an apartment building due to Corona. Her husband, daughter, son-in-law and even grandchildren are now corona positive. None of the half a hundred or more families living in the apartment builiding were not found to help. The Imam of the local mosque did not come either. She was buried with from from the government.  However since then, many families living in the apartment have said that the rest of the famility members to leave the building! Forget about help, they seem to no right to stay in their own home.
 
Two. The wife of a professor at Dhaka University has been suffering from a debilitating illness for many years. His wife has passed away in the midst of this crisis.  Her death was not due to Corona. He or his daughters did not find anyone to bury the body. The girls bathe their mother after watching YouTube videos. No one believed she had not died in Corona. Later, her burial was completed in their encestor's village. 

Three. In Chittagong, a housewife was expecting baby. Her elder sister and brother-in-law came to help them. The landlord is unhappy. Why did outsiders come to the building now? His clear words. Say goodbye to them, and leave home.

Four. A relief truck was on its way. A group of people stopped the truck near Jamalpur and looted. Because they also do not have food at home. They did not get relief, why others? Meanwhile, relief rice is being stolen. Some are caught but we know, not everyone will be caught. The fact is that we have many thieves around us.

When this is the situation, the government should deal with the situation wisely. Loud voice or strong hand will not work. Such incidents will happen even more. The number of incidents and cruelty will also increase and yet the game of throwing money is going on. It is easy to distribute money without any theoretical knowledge of economics. I am writing today to clarify some aspects on these issues.

First, the wheels of the economy are shut. The key to the production system is transportation.  The transportation of materials is needed to produce and to reach the market.  I have chicken on my farm but I can't bring chicken feed, it Will not be produced. I have chickens but I can't sell them in a market, production is in vain. I have fish on my farm but I cannot send fish to Dhaka because the transportation and distribution system is closed. What do I do with the fish? The condition of the milk, the vegetables farmers - all the same. Thousands of warehouses, wholesalers, transport systems in the villages and bazaars create a market system. There are two markets here. An input market and the other is the product market. I am waiting to harvest paddy in my land I need workers.  But the workers of one district cannot go to another district or even if they go, they cannot stay anywhere! The labor market is stagnant. I will not be able to harvest my crops from the field. Do you think there are enough workers in every village to harvest paddy? Of course not. Farming does not sit over time. We seem to have forgotten what will happen if we don't harvest rice on time, don't buy milk on time, don't buy chicken feed on time, don't sell papaya on time.

Second, the incidence of COVID-19 disease will not go away so easily. So almost every government in the world is trying to figure out how quickly the wheel of economy can be opened. Until that happens, everyone is going to ask for 'incentive' or 'stimulus' packages. Many people are thinking wrongly that stimulus is meant for activating the production system. The economy will not be activated by this incentive. The production system will not restart because of this incentive. So why is this incentive? Incentives are given not to mobilize production, but to provide minimum income to the working people. Otherwise he will die in hunger. Why are we giving incentives industrialists? I do not understand. However, if they are indebted and cannot repay loans, he may be given an incentive to reduce his liability.  What will he do now with a new loan (as a part of incentive package)? Government closed his factory. Why should he bear the debt burden? So he will get some incentive. But it seems that he has to take a loan from the bank for receive this incentive. Why? The amount of bad credit will simply increase. The money for the incentive will be buy home in Kuala Lumpur, Dubai, London, New York or Toronto. On the other hand, the fragile banking system will collapse.

Third, after how long we will get back to a healthy life. China got back after four months. WHO says things will not be natural until we have a vaccination.  In that sense, Corona will come and go until 2022. Can we wait until then? Of course not. Everyone is now desperate to find a vaccine. Such a profitable business opportunity may not ever come.  More than 6 billion people in the world should be vaccinated! The company that can discover the vaccine first will win. Germany, the United States, France are all saying in different ways that the vaccine is coming. China has already claimed to have invented a vaccine. Germany did the same.  We understand that everyone's attention is on the billion dollar business. India is not far behind either. In this situation, even if a vaccine is discovered, not everyone in Bangladesh will get it. So we have to think about what can be done for us. We have to think of alternatives. Spain has already launched some experimental activities. Sweden did not agree to stop the wheel of their economy.  

Think about our situation. In good season our boro paddy production is 19 million tons. If the paddy is not harvested from the third week of April to the first or second week of May, it will be submerged in flood water. All the paddy in the country has to be harvested by May. At the same time, the work of aus crop has to be completed. Rainy season vegetables must be sown as well. The agricultural sector, therefore, needs workers. But with the transportation system closed (for good reason) it cannot happen. The income earned during this provides food for the workers in the rainy season. Then comes the season of the Aman crop. Aman paddy sowing time is in July and August. Jute is sown at that time. Agriculture needs even more workers at this time. Other years we did not notice it but many of the day-workers in Dhaka used to go home for such work. Due to this, number of day-workers, including rickshaw drivers go down in the rainy season in cities. Then September-October is the month of Monga - difficult time.  About seventy million people are working in the country. If the government has to give half of them an allowance, then even if they pay 5,000 taka per month, it will cost Tk 18,000 crore per month, if they pay Tk 2,000, it will cost 6,000 taka  crore per month. And if you make 1 thousand taka a month, it will cost 5 billion taka. Will it be possible for the government to give it for four months?

Can you tell, will we have to be remain in home quarantine till August? In China, everything was closed from December to April. The way they were able to force people to obey the law is not happening or will not happen in our case. We live in a different society. We are not a Chinese nation. We are already upset. It is not possible for the poor to stay at home. Theirs is not even called a house. We also do not call it a house, we say 'slum'. They are in shortage after 20 days already. Can they wait for 100 days? Impossible! Society has already lost its consciousness. We only think of ourselves, whereas in the United States where the society is built around individualism, there were 85,000 volunteers who came from other states to New York.  Our rescuers are busy stealing relief supplies right now. As if they think more bad days are ahead so I need rice or may be rice will fetch more money in futuer so it will be a good business!

Implementation of government incentives in agriculture is impossible. Will it be possible to harvest paddy with thousands of tractors in the next one week? Who will buy? Government? You dont have to go too far, it took the government a month to find out if the ventilators that were purchased at government expenses in a few hospitals were operational or not. Numbers on the website are easy to put but the reality is very difficult indeed. This year's forecast for world food production is not that good.

In the meantime, the government is pouring billions of taka into the market. If the wheel of production are out of order, this money will only increase inflation. The price of goods will increase and the number of hands for receiving incentives will increase. Of this, only Tk 5,000 crore is for the agricultural sector, the lion share of which will go to fertilizer factories as government subsidy. Only the indebted farmers will get the benefit of borrowing. Industrialists and NGOs in Bangladesh own thousands of acres of land.  Is there a chance for a farmer to get a loan? In order to save agriculture, it is necessary to keep the market system normal. For now except workers, others can wait (to receive incentives) till they start production. They will need in the future. Right now only the unemployed people should get monthly payment.  

Our danger is on both sides. Corona incidences will be higher if the market is normalized  now. Again, if we stay at home, millions of families will die without food and we, the rich people, will survive. As we survived in 1974.  I wrote at the end of March that Corona would change us. We need to think about how we can turn the wheel of the economy back again and also survive the Corona. Both are required. Many countries have made it mandatory to use masks in public. Many have reduced population density at work or in public places. Not allowing two persons to stand or sit side by side. I have no idea how the distance of one meter has become six feet in our country!  To reduce the population density in an area, the number of seats on the bus, for example, should be reduced by half or more. The size of the shops has to be enlarged. Half of the current students in the class should be allowed. The number of schools needs to be increased or flipped classrooms need to be introduced. Everyone should have a ‘Corona Free’ QR code (which China has done) with him/her. We have to reduce the number of workers in our factories. The sooner we introduce such policies, the better it is for us. Poor people will not stay at home for long. In that case, they will die of hunger. However, if they leave their houses, the rich will die of corona. Thousands of crores of rupees without the restarting the production system will only make matters worse. We have to understand that we are not suffering from the Keynesian recession. We are suffering from a natural disaster. Here the contraction in demand did not create this situation it has been caused because we shut down the production system and hence there is income loss.  Simply increasing the income will not solve it. The wheel of production should also be activated soon.  We have less time. The Ministry of Health will do its job but other ministries should not sit quiet. We already know who are more sensitive to Corona. By keeping distance within their homes, the wheels of the economy shall gradually be restarted to have a better world.

 

* Dr. A. K.Enamul Haque: Professor, Department of Economics, East West University; Director, Asian Center for Development