The status quo is under threat and now people are more likely to blame the entire system of the market economy whose revered players could not self-sustain a quarter before jumping on the new Noah’s ark - government stimulus or ‘stimu-lend’
For the best part of the past decade the general people, the enfranchised voters of Bangladesh, harboured political emotions that can be summed up in the four-syllable word 'indifference'. The working class, the middle class and anybody who had command over enough resources to earn a decent living did not simply care about the country's politics. Attitudes of major political parties and their aides only confirmed and reinforced the 'us and them' stratagems that have been the staple of subcontinental politics.
Aside from boredom with the political monologue this indifference can also be attributed to the economic progress that the nation experienced in the last few years.
Fast-paced economic growth generated new opportunities, bolstered the entrepreneurial spirit, generated employment, and enough income for people to go about their daily lives - the ground reality is that when there's food on the plate, a roof overhead and high hopes for the future most people do not care about politics; though intellectuals, economists and politicians would beg to differ because it robs them of much of their assumed duty. People did not want to measure the share of the economic pie they were enjoying. They were living life as it was and in good faith continued to believe in the myth of trickle-down economics. It paid off well for the party holding office and the country as a whole: political turmoil, strikes and the likes did cost the country a lot in the past and no one wanted a repetition.
Now in the aftermath of the pandemic, a lot of these otherwise indifferent, hardworking silent people will slip from their comfortable middle-class employment into the ranks of the precariat. In the midst of the pandemic, a good share of these people lost employment, lost income, depleted their savings to the last dime and are feeling entirely hopeless as uncertainty grips over their tomorrows. Today's hopelessness might metamorphose into anger tomorrow and people will tend to focus their anger on an economic system they think has pummelled them unfairly and a system of governance that they think continued to ignore them safely. To balm their pain the state must ensure good governance at the earliest.
Policymakers are toying with ideas of a universal basic income, direct income transfers to low/middle-income households, low-cost credit to SMEs, cottage industries, farmers and so on so forth. The 'give people money' slogan is resounding in the 'intellectual' arena with a tinge of populist fervour. However, no one seems to have any idea about how the government will shower such blessings with large swathes of the economy in cryogenic sleep and liquidity problems staring in the eye: print some money maybe?
The process of quantitative easing is underway but do the policymakers have the instruments necessary to mitigate the possibility of unanticipated inflationary pressures should it arise once the economy wakes up? Can the middle class then stay happy with their already low earnings evaporating after discounting for inflation? How is the government ensuring that the created credit will reach the right people?
Some of the 'stimu-lend' (a term employed by the economist John Cochrane) are already in their implementation stage. The government is hoping that this will be the saving grace. It believes businesses will rise with access to the new money and livelihoods will be restored with no net catastrophic effect on the social and economic hierarchy. Except maybe a few random incidents the low-income group will continue to be in their designated rung of the income ladder and the middle-income group will continue to eke out their existence.
What the government and the class of society with influence over the way the state thinks, devises and deploys its policies fail to realise is the irreparable damage that this pandemic and the piecemeal stimulants, each piece coming much later than expected, in rather meagre forms, marred with an array of reservations, did to the entrepreneurial zeal.
The animal spirits that led to the mushrooming growth of SMEs, cottage industries are almost dead and the few that hopes to live either on government support or by sheer miracle have already cut down in size or are planning safe exit strategies. The larger firms are more interested to borrow only to pay off accrued wages rather than to sustain output and employment. The private sector, the sector that acts as a source of employment and livelihoods more than 50% of the middle-income people is on dire straits. The possibility that the middle-income group slipping to the low-income group and the low-income qualifying as indigent is now only a matter of time. Will the people accept this shift in status quo?
In usual circumstances envy or jealousy is more horizontal than vertical - the side actor envies his substitute and not the lead actor. This horizontal nature of jealousy or envy keeps the society stable despite an unchecked rise in inequality - a reason why leftist ideals seldom gain ground. However, these are exceptional times. The status quo is under threat and now people are more likely to blame the entire system of the market economy whose revered players could not self-sustain a quarter before jumping on the new Noah's ark - government stimulus or 'stimu-lend'. With the status quo disturbed and the hierarchy compromised, anger at one's predicament might direct envy or jealousy vertically upwards. Those in the lower rungs of the society might sound cries to disposes of the ones vertically above and the nation can be thrown off balance. Political emotions sometimes change with a butterfly flapping its wings somewhere and it's the role of good governance to ensure that the flapping wings do not stir up chaos. Can our government ensure it?
The author Zulfiker Hyder is the founder of Rational Nudge