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No Free Lunch

Dangerous divergence

/ 04:04 AM October 13, 2020

We’ve heard it said that COVID-19 has been an equalizer, in the sense that the virus makes no distinction between the rich and poor, and has afflicted people regardless of social and economic class. But the similarity ends there. The divide between the haves and the have-nots becomes obvious when we hear accounts of how recovered patients had to spend millions of pesos for their treatment. In a country whose public health system leaves much to be desired, a poor COVID-19 patient clearly faces far greater odds than one who is more financially endowed.

But what has emerged to be a far bigger gap widener affects even those who have not and may never even get the virus. The economic standstill caused by severe lockdowns killed jobs and livelihoods by the millions, and put countless futures under a heavy cloud of doubt. The United Nations Development Programme projects that average incomes around the world will fall 4 percent, and the World Bank expects 40 to 60 million people to be pushed into extreme poverty. The International Labour Organization estimates half of working people worldwide to lose their jobs, and that the virus could cost the global economy up to US$10 trillion. The World Food Programme, winner of the 2020 Nobel Peace Prize, expects 265 million people to face crisis levels of hunger if prompt direct actions are not taken.

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I wrote last week of a K-shaped recovery now seen as the likely post-COVID scenario, with segments of the economy and society having bounced back from or even having thrived through the pandemic, while others continue declining with worsening fortunes. This divergence is not a new phenomenon. In 2008, as the world was reeling under a financial crisis blamed on bad decisions by a wealthy few, sales of luxury Rolls Royce cars reached a record high, especially in the United States, the epicenter and source of that very crisis that set back the world economy. It was at that same time that a wealthy business leader showed me data they had gathered showing sales of table wines in the Philippines surging, while those of instant noodles and consumer goods associated with the masses were flat. Now come Bangko Sentral ng Pilipinas data showing sales of mid-income, upscale, and luxury condominium units, or those valued at P3.2 million up, accounting for 80 percent of total sales in the first half of 2020, against last year’s comparable figure of 71 percent — and that overall pre-selling of condo units actually grew even in deep recession.

Indonesia is now reeling from riots in protest of a new omnibus “Job Creation Law” enacted on Oct. 5, which revises dozens of laws in key areas such as labor, taxation, and environmental protection. Al Jazeera reports that the law, while ostensibly aimed to simplify Indonesia’s complex legal system and ease foreign investment, is seen by critics to be exploitative to workers and potentially destructive to the environment.

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In the United States, CNBC had reported: “After three years in office, the Trump administration has moved to reverse more than 100 major climate and environmental rules that it has deemed burdensome to the fossil fuel industry, even as climate change accelerates and global greenhouse gas emissions rise.”

In the Philippines, someone made a last-minute insertion to the Bayanihan 2 law, which prevents the Philippine Competition Commission from examining mergers and acquisitions with transaction value up to P50 billion in the next two years — a move that paves the way for new monopolies and cartels in an economy already plagued by lack of competition in vital industries. Moves such as these threaten the world with a “new normal” that could be worse than where we started. Rather than be able to use the pandemic crisis as a launching pad for fundamental reforms toward a more equitable, inclusive, and sustainable economy and society, there are powerful forces seemingly bent on pulling the world in the opposite direction.

It is often said that with every crisis comes opportunity. Unfortunately, it too often looks as if the poor and the powerless masses bear the brunt of the crisis, while the few who are wealthy and powerful get all the opportunity.

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TAGS: Cielito F. Habito, coronavirus pandemic, coronavirus philippines, COVID-19, No Free Lunch, pandemic economy
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