HOW IS THE PANDEMIC COSTS DISTRIBUTED?

Efraín Gonzales de Olarte

The unprecedented coronavirus pandemic is presenting us with a series of economic, social and political challenges. There is an ethical dilemma between saving lives and resuming economic activity, others say: between starving or dying of coronavirus. According to statistics: between 2% and 15% of those infected die, more than half are over 60 years of age with previous ailments, on the other hand, more than 190 thousand deaths are already worldwide and the figure could easily double, despite the social isolation that is being practiced.

The problem with the resumption of economic activities, without being sure of a flare-up, is that it could turn into a truly lethal pandemic and there would be millions of deaths. The problem is relatively clear, it is necessary to do everything possible to maintain social isolation until the contagion curve flattens or until the number of infected is decreasing, this can last from three to four months. However, it will have a very important cost: a strong economic recession in all countries, due to the paralysis of its activities, with higher unemployment, lower wages, higher poverty and other psychological and social costs that are difficult to assess.

The biggest problem of this crisis is: how are its costs distributed? How this distribution is equitably, those who have the most should contribute proportionally to their incomes and the poorest should receive income from transfers, during the crisis. But: how do you go about achieving this goal? First, companies must reduce their earnings and support their workers for two or three months, people must reduce their wages and consume less, so that their employers support them. Second, a reprogramming of all debts will be necessary, so that the debtors retain additional liquidity. For this purpose, the Central Bank of Peru has made a very important fund available. Third, we will have to think of an extraordinary tax on profits and high income, to recover the fiscal box. That is, today more than ever a MACRO-ECONOMIC SOLIDARITY is required, to get ahead.

The next step is as or more important than saving economy during quarantine. What to do after such an economic downturn?

The first thing is to learn to consume less and invest more, as the Nobel Prize winner Jean Tirole points out, we have to change some habits, not only to get out of the crisis, but to remember that global warming has hyper-consumerism as a main cause. It has been observed that during economic inactivity the CO2 emission rates have decreased, showing unequivocally the relationship between consumer capitalism and global warming.

The second is to review and control the perverse effects of globalization, such as the increase in inequalities between and within countries and poverty. Third, this pandemic has shown us that a global health system is required to prepare us for future pandemics. Cooperation between states and the integration of their health systems should be on the world agenda. Fourth, seriously rethink reducing informality. This crisis is showing that countries with lower levels of informality can better respond to the needs of the poor and informal population. Finally, we are obliged to think about moral values ​​and about our organization as a society.

April 2020

¿CÓMO SE DISTRIBUYE LOS COSTOS DE LA PANDEMIA COVI19?

Efraín Gonzales de Olarte 

La inédita pandemia del coronavirus nos está planteando una serie de desafíos económicos, sociales y políticos. Existe un dilema ético entre salvar vidas y reanudar la actividad económica, otros dicen: entre morir de hambre o morir de coronavirus. Según las estadísticas que se tiene a mano entre el 2% y 5% de contagiados fallecen, más de la mitad son personas mayores de 60 años con dolencias previas, por otro lado, ya van más de cien mil muertos en todo el mundo y la cifra se podría doblar fácilmente, pese al aislamiento social que se está practicando en todo el mundo.

El problema de la reanudación de las actividades económicas, sin que se tenga la seguridad de que no habrá un rebrote, es que podría convertirse en una pandemia realmente letal y se hablaría de millones de muertos. El problema parece relativamente claro, es necesario hacer todo lo posible para mantener el aislamiento social hasta que la curva de contagios se aplane o hasta que se esté seguro que el número de contagiados está bajando consistentemente, lo que puede durar de tres a cuatro meses. Sin embargo, el hacerlo ha de tener un costo muy importante: una fuerte recesión económica en todos los países por paralización de una gran parte de actividades, lo que ya se está traduciendo en desempleo, reducción de salarios, mayor pobreza, además de otros costos sicológicos y sociales difíciles de evaluar.

El mayor problema de esta crisis es cómo se reparte sus costos, es decir, cómo se hace para que los costos sean equitativos, o sea  los que más tienen deberían contribuir proporcionalmente a sus ingresos y los más pobres que tengan la posibilidad de recibir ingresos de subsistencia a manera de subsidio cruzado, mientras dure la crisis. Pero como se hace para lograr este objetivo. En primer lugar, las empresas deberán reducir sus ganancias y apoyar a sus trabajadores durante estos dos o tres meses, las personas deberán reducir sus sueldos y consumir menos, para que sus empleadores los mantengan. En segundo lugar, será necesario una reprogramación de todas las deudas, de tal manera que los deudores retengan liquidez adicional, para respaldar esta propuesta el Banco Central ha puesto a disposición un fondo muy importante para que se utilice con este propósito. En tercer lugar, habrá que pensar en un impuesto extraordinario a las ganancias y a los ingresos altos, esto para recuperar la caja fiscal. Es decir, hoy más que nunca se requiere una SOLIDARIDAD MACRO-ECONOMICA, para salir de la crisis.

Pero el siguiente paso es tan o más importante que la economía de salvación del período de inactividad económica. ¿Qué se hace después de semejante bache económico? Lo primero es aprender a consumir menos y a invertir más, como lo señala el premio nobel Jean Tirole, es decir, tenemos que cambiar algunos hábitos, no sólo para salir de la crisis, sino para volver a recordar que el problema del calentamiento global tiene como una de sus causas principales el hiper-consumismo,  pues se ha observado que durante la inactividad económica se han reducido los índices de emisión de CO₂ mostrando de manera inequívoca la relación entre el capitalismo consumista y el calentamiento global. En segundo lugar, cabe revisar y controlar los efectos perversos de la globalización, tales como el incremento de las desigualdades entre países y dentro de ellos. En tercer lugar, esta pandemia nos ha demostrado que se requiere de un sistema de salud mundial, capaz de prepararnos en el futuro para otras pandemias o problemas generados por la globalización. La cooperación entre estados y hasta la integración de los sistemas de salud debería estar en la agenda mundial. En cuarto lugar, repensar seriamente en la reducción de las desigualdades y la pobreza, y al mismo tiempo la reducción de la informalidad. Esta crisis está demostrando que los países con menores niveles de informalidad pueden responder mejor a las necesidades de la población pobre. Finalmente, esta crisis nos está obligando a pensar en los valores morales y en la forma como estamos organizados en nuestras sociedades.

Lima, cuarentena 2.04.2020

VIRUSES AND IDEOLOGY: How much is the person’s life worth?

Efraín Gonzales de Olarte

The coronavirus has ideology-like characteristics: it is invisible, when people become contaminated it is difficult to get rid of, it is easily transmitted, and when it becomes widespread it becomes a pandemic or ideal thought. The difference is that people themselves die from the biological virus, in the other case ideologies can kill it, as it has been long demonstrated in history, German Nazism, Soviet or Chinese communism, killed millions of people in the name of totalitarian ideologies and by action of their leaders.

But now the coronavirus is also killing for two reasons: because countries are poorly prepared for an eventuality of this magnitude, or because some rulers, protected by certain neo-liberal or left-wing ideologies, have underestimated the power of this virus and are privileging their economic interests, and / or politicians.

The coronavirus pandemic and the normal and simultaneous functioning of the economy is a lethal equation, with quite predictable results: the virus will win, that is, it will kill more people than it should. This raises the central issue of the current pandemic: how much is people’s life worth? There are two positions on this.

On the one hand, there are those who, like the President of the United States, the British Prime Minister and the President of Brazil – for whom the coronavirus is a little “flu” – assume that if tens of thousands of people have to die, provided they do not stop the economy it does not matter, it is the social cost of any pandemic or crisis.

On the other hand, there are those who think that life has no monetary value or price and that everything possible must be done to save as many lives as possible.

At the bottom of this controversy are ethical and moral principles, which are embodied in fundamental human rights such as the right to life, which every person by the simple fact of being alive has. This right protects her from any attempt on her life by anyone, including governments. Therefore, when a government makes the decision that people continue to work despite the high risk that they will become infected with the coronavirus, they are violating the right to life and against the dignity of the persons.

Therefore, the coronavirus is testing the principles that defend life and is drawing a line between those that the world cannot stop because the economy cannot stop and those who think that it can stop because there are thousands or millions of people whose lives, whose life projects, whose dreams would not be realized and, in my opinion, there is no rational and practical justification to justify them. This is the time for solidarity, cooperation, and detachment so that, once the economy is stopped, those who least have access to temporary and solidary income and we should all collaborate to that end.

Consequently, it is essential to do everything possible so that the smallest number of people become infected and the fewest die, even if they are old, because the right to life is also the right to a full life.

Lima, April 2020