By Alejandro A. Tagliavini *

 

According to Capital Economics, “the efforts to contain the coronavirus have caused a sharp slowdown in growth in China” and, globally, the losses during the first quarter of 2020 would reach US $ 280,000 million. The global GDP would not grow in quarterly terms for the first time since 2009.

Now, it is not the virus itself that has caused this fall, after all, after several weeks, the dead do not reach three thousand. On the contrary, around 8 million people die per year in the world – they were 15 million twenty years ago – due to causes related to lack of food.

The economy falls because of the measures taken by governments as an exaggerated, inefficient and even counterproductive reaction. Why do States cause so much damage with the excuse of a disease? Because they are only interested in politics, that is, in gaining power and taking demagogic measures to get the applause of the majority of public opinion, which, incidentally, they deceive with lies and hiding a good part of the truth.

Politicians and bureaucrats scare the population to justify actions that only benefit the increase in their power and money, as they expand the powers and budgets they receive. On the contrary, the market – the people, working and creating in peace – has been demonized when it has no other incentive that the cooperation between each other for the benefit of all: more money earns he who is more required because provides a better service.

And, by the way, private NGOs, such as the Red Cross or Doctors Without Borders – when they are not forbidden – arrive faster and more effectively in disaster areas. Free private activity, markets – health services and insurance companies – and NGOs, can control these epidemics effectively.

Capital Economics is confident that “production will recover and the global economy will resume normal growth in mid-2021”. In fact, the stock markets, although at first they were withdrawn by the limitations imposed by the governments, then ignored the scared digited from the States and already hit record highs.

Obviously, a (multi) state entity such as the IMF could only encourage governments to “take action” and therefore says that the epidemic could impact global growth “depending on the ability of the Chinese government to contain its spread”.

And so the Chinese government decided to isolate the 56 million inhabitants of the province of Hubei, the epicenter of the outbreak, and subjected “strict closed management” to cities, that is, the inhabitants should not leave their homes until further notice.

In Hong Kong, isolated to “protect it from the epidemic” – and incidentally control the “prodemocracy” demonstrations – consumers empty supermarkets to store food and other products because the fear for scarcity. The thing has reached the point that, according to the police, three individuals armed with knives stole rolls of toilet paper, a product difficult to find.

But the tight control exercised by the government goes beyond the prohibition to move through the affected areas: countless videos that circumvented censorship show violent arrests of people for not wearing chinstraps. The images unleashed harsh criticism of human rights violations so much that the government was forced to dismiss some officials.

 

* Senior Advisor at The Cedar Portfolio  and member of the Advisory Board of Center on Global Prosperity, de Oakland, California

@alextagliavini

www.alejandrotagliavini.com