US President Donald Trump sounded like a complete chump when he announced two weeks ago that he hoped to get the US economy “opened up and just raring to go by Easter.”
Well, Easter is just a few days away, but with Covid-19-related infections heading towards the 400,000-mark and deaths towards 12,000, Trump clearly seems like a heartless person, uncaring about the sufferings of his people.
However, while Trump may be wrong about his impractical deadline to revive economic activity in the US by Easter, there cannot be two opinions that a continuing decline in jobs and growth will have a huge impact on health and survival of the weak. The lockdown, prescribed as a prophylactic to reduce the loss of lives, will end up destroying both livelihoods and lives.
In India, Prime Minister Narendra Modi is facing intense pressure from many state chief ministers and his health bureaucracy to extend the lockdown beyond the midnight of 14-15 April. By the time decision time comes, Covid-19 infections will be topping 10,000 in India, and may continue to double in the week after that. The temptation to extend the lockdown will be high. He should resist it.
With the unemployment rate now surging in the wake of the lockdown — the Centre for Monitoring Indian Economy estimates unemployment at 23.4 per cent, and 30.9 per cent in urban areas — arguments in favour of extending the lockdown beyond 15 April can be rebutted.
To be sure, there is no case for an abrupt end to the lockdown, and it must be wound down in phases keeping both Covid-19 hotspots and economic needs in balance. 15 April is when the government must consider ways to wind down the lockdown. Modi must reject that idea that the lockdown needs to be extended, except in the worst affected Covid-19 areas.
First, while the advice of the health establishment cannot be dismissed lightly, the political demands from states for extensions are partly self-serving. Politicians love a pandemic for many reasons, and the main one is that they get to play benevolent uncles to the masses by doling out this freebie or that.
Additionally, a lockdown shifts unprecedented power to the bureaucracy and law enforcement agencies, which makes politicians feel safer on their political perches.
So, while some arguments in favour of extending the lockdown may sound logical, when the idea is being pushed by politicians from all parties, we have to discount their views. Not just Bharatiya Janata Party (BJP)-ruled states, but even non-BJP ones like Telangana and Chhattisgarh are calling for extension. This itself should raise some red flags.
Second, when businesses go kaput, barring the very well-endowed ones, they take many other businesses down with them, and the jobs they are currently providing may be lost forever.
It is easy to say that the government and banks must provide the necessary funding to keep them afloat. But at a time when many small and medium businesses are anyway reeling under the pre-Covid slowdown, the task of keeping them afloat is getting to be tougher than ever.
When businesses go under for a long period of time, it is kinder to let them sink than keep them on ventilators forever. To rescue viable businesses, the country-wide lockdown period has to be ended on 15 April. Only then will the financial support provided to firms will prove useful.
Third, any extended lockdown means employers will start substituting humans with machines and automation. The longer the lockdown, the faster the replacement of labour with technology solutions. This has been demonstrated repeatedly in the flexible labour markets of the US, where every recession has ended with fewer jobs on board even after the recession ends.
In India, where the organised sector is small relative to the informal sector, job and wage flexibility is more in the latter. This means small and medium businesses — our main job creators — will shed jobs faster to stay afloat. Businessmen are already wary about an extension of the lockdown, and they should be heard first.
The domestic household jobs sector — which employs millions at flexible pay structures — may also shrink. Jobs currently done by maids in homes and car-owners who employ drivers will discover that they can get along with dish-washers, floor-cleaning robots and self-driving.
In any event, if work-from-home gathers steam, who needs chauffeurs? The longer the lockdown, the lower the chances of domestic workers obtaining re-employment at the old wages.
Unfortunately, the subliminal message delivered to all employers, whether in the formal, informal or domestic sectors, is that workers can be a source of infection. They are the reason why offices have to be closed, and maids sent away from gated colonies.
Will this subliminal message not result in everyone reducing employment if and when they can? Covid is converting a useful worker into a source of personal and organisational risk.
Fourth, labour attitudes to work also change when unemployment becomes structural. It is a well-accepted reality that when a worker is without a job for a long period of time, he stops looking for work. This is why in the immediate aftermath of demonetisation, when people stopped looking for jobs, the unemployment rate actually fell, according to the CMIE unemployment report of January-April 2017.
A prolonged Covid lockdown will make our structural unemployment worse than ever. Pressure on the state to keep giving incomes without delivering jobs will increase. Social unrest will become endemic after the pandemic.
Fifth, even the health arguments weaken on closer examination. Efforts to ‘flatten the curve’ of infections sound logical in the early stages of the pandemic, but here’s the reality check: there is always a chance of a second wave of infections.
Singapore is having a second lockdown as local infections rise. In Japan, a state of emergency is being declared to avoid another debilitating lockdown. Since vaccines and cures are at least a year-and-a-half away, the best way to keep infections down for such a long period of time may not be lockdowns.
Modi must think hard before listening to political advice on extending the lockdown in the name of saving people from death. There are some cures worse than the disease, and that disease is called destroying livelihoods to protect lives. Without livelihoods, life itself matters less.
Just as the right antidote to sickness is a healthy body, the right antidote to Covid-19 in the medium term is a healthy economy.
Jagannathan is Editorial Director, Swarajya. Views are personal.
The article was first published on Swarajya website.
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