Neoliberalism Failed; State Activism Needed to Save People from Crisis.

By N. GUNASEKARAN

In spite of the peak in COVID-19 outbreak, several countries in Asia are reopening and they are resuming economic activities against the threat of another increase in infection rates. However, in most of the countries in the region, economic growth would be very much downward in the coming months. The situation is getting much worse due to weaker global conditions. The protracted containment measures in many Asian countries to prevent the virus spread have also been causing negative effects on their economies.

Asia’s output may contract by 1.6%. South Korea would contract by around 2%, India by 4.5%, Japan by 5.8%, and other economies by even more. A recent IMF study, conducted in 57 economies revealed that contraction in industrial production due to lockdowns was about 12% a month.

Even if lockdowns are relaxed completely, many Asian economies depending on tourism, remittances and in-person contact services would not recover due to strict imposition of the social distancing and containment measures. The remittances from Southeast Asian workers abroad may drastically reduce by 13% or $10 billion. The impacts of pandemic and lockdowns have resulted in the collapse of this vital financial support for hundreds of millions of families, who depended upon the remittances by migrant workers. The migrants themselves are suffering seriously with joblessness and income losses and their living conditions are becoming very much deteriorating. The remittances of the migrants may further plunge by one-fifth this year. Due to deep recession in advanced economies, the overall exports of Asia would contract in 2020.Another serious challenge facing Asian countries is their high debt levels. The pandemic situation has deepened Asian inequality and shrunk the employment prospects.

Many researchers and international bodies are releasing alarming predictions about the situation in Asia. In a recent policy brief, the United Nations predicted how the economic crisis would devastate the livelihoods of Southeast Asia's 218 million informal workers: “Without alternative income, formal social protection systems or savings to buffer these shocks, workers and their families will be pushed into poverty, reversing decades of poverty reduction."

Governments in Asia have to safeguard the food and livelihoods of the most vulnerable working populations who are experiencing the destructive impact of the global pandemic. The pandemic has been worsening poverty, food insecurity and gender inequality. Asian countries have more than 350 million undernourished people, and the pandemic is threatening to aggravate the problems of poverty and hunger. In several Asian countries, the farmers in rural areas are leading their lives under worsening conditions. Even before the pandemic, their average income was falling thanks to the neoliberal policy of opening the rural economy to big corporations. Now the poor farmers are experiencing drastic reduction in their purchasing power, food loss, falling prices for their produce, and disturbances caused due to the disruption of food chains. To save their families and livelihoods they are continuing the agricultural work without worrying about their personal safety. The governments have to take supportive measures and should give priority to protect the rural communities.

The health sectors in many Asian countries need higher health spending in the context of persisting conditions of health emergencies. The UN human development index awarded lowest rating for the six of the 11 countries in the south Asian region including the biggest nations, Indonesia and the Philippines.

In the youth employment front in Asia, the pandemic hit the young workers hard. Unemployment spiked in an unprecedented manner, particularly for the first three months of the health crisis. Nearly 400 million full-time jobs in the year’s second quarter (April to June 2020) were lost due to the pandemic and in South Asia 17% working hours were lost, according to the International Labor Organization (ILO).In South Korea, which is a comparatively prosperous economy in the region, a little more than one million jobs were lost. The governments in the region have to increase subsidies for unemployment benefits.

In this critical situation, the governments across Asia have to make heavy stimulus to save their economies and deliver large stimulus packages to save the vulnerable populations. The extensive measures to support the poor and needy sections are indispensable for the economic recovery and the governments have to pursue effective and strong policy measures.

The UN brief recommended various measures to boost the economies including curbing tax evasion. But the mindless tax relief to big corporations that have amassed huge wealth during the neoliberal era are crippling the economies of these countries. In this pandemic situation, such policies must be reversed.

Some neoliberal advocates expressed hopes for a private-sector–led recovery. But the economic indicators have been showing that it would never happen and a recovery of the private sector in 2021 would be slow.

In Britain, Prime Minister Boris Johnson recently promised to increase public investment to stimulate the economy, as F.D. Roosevelt did under the New Deal in the 1930s. Johnson also intended to increase the taxes on the rich if necessary. One may be skeptical of Johnson’s determination to pursue such people–oriented policies.

However, these assertions by Johnson showed that the neoliberal policies that served interests of global finance capital are no more compatible for the nations to take measures to save the majority of their people. Moreover, in times of pandemic and health crisis, such policies would destroy the lives of working people. The governments have to give up the policies, such as providing the corporates with incentives including loan-waivers and tax concessions and curbing labor rights. Although it is anathema for capitalists, the direct intervention by the state is needed for increasing the level of activity in the economy in the direction of safeguarding the interests of the poor, downtrodden, marginalized people. The peoples’ movements and the Left across Asia are on the forefront in the struggles, demanding the governments to reverse their policies and attend to the needs of the most vulnerable sections.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, September 1, 2020

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