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Lockdown and the path to economic recovery

Two things needed: for lockdown and restrictions to end, and for savings to be built up – which calls for clear, rational, work-friendly policies.
Few people in the world have been locked down longer and harder by their government than the people of South Africa. Image: Michel Bega, The Citizen

The national lockdown, that came into effect on March 27, was meant to last 21 days.

Five months later, and the latest extension of the National State of Disaster to September 15 notwithstanding, it has no actual end date, since yet more extensions may be gazetted.

Covid-19 has for months shown itself to be considerably less severe than initially feared. Yet the lockdown rules got crazier. E-commerce was banned, despite being the perfect medium for those who feared human contact. Selling warm cooked food in supermarkets was prohibited, but selling cold cooked food was fine. You weren’t allowed to buy open-toe shoes.

Read: At last, sanity in state’s lockdown plan

Alcohol was banned, unbanned, then banned and unbanned again. And in spite of contradictory ‘evidence’ and with complete disregard for individual rights or any empathy for smokers, tobacco was completely off the table until last week.

Few left untouched

All sectors have been affected in one way or another. The South African tourism, hospitality and entertainment industry has collapsed under the weight of one of the most stringent lockdowns in the world. Even with the latest relaxations, this sector remain subject to costly restrictions.

Read: Lockdown devastated livelihoods: the numbers are out

And it is one of the most stringent and enduring lockdowns in the world.

Whether one considers lockdown regulations as measured by the Oxford University Stringency Index, or the sanction of movement as captured in the Google Mobility data, few people in the world have been locked down longer and harder by their government than the people of South Africa.

Source: Oxford University research, Macrobond, ETM Macro Advisors

 

Source: Google, Macrobond, ETM Macro Advisors

This policy has left in its wake a trail of economic destruction. Can the country recover from this?

It is possible.

But for a recovery, policies have to target the very heart of the problem – and that is the lockdown and its numerous restrictions that directly created this economic depression.

Ending the lockdown is, therefore, the first and most critical step to economic recovery.

But even once lockdown ends, society will find itself with fewer savings, having used them up to stay alive.

Without savings, there is no capital to invest, and, without capital, businesses can’t fund the restarting of production or rehire staff.

The recovery plan for South Africa is thus twofold:

  1. End lockdown
  2. Restore savings as quickly as possible

Ending lockdown

Ending the lockdown needs to happen in two ways. Firstly, the government needs to discontinue all lockdown regulations immediately, lift the state of disaster, and allow people and organisations to manage their unique risks by converting all Covid-19 regulations into non-compulsory recommendations.

Secondly, people need to lift the lockdown themselves by claiming back their freedom and acting in accordance with their conscience and their fundamental rights. This action is already building, with millions of small acts of civil disobedience all around the country.

Building savings

To build savings, households and businesses need clear, rational, work-friendly policies.

Ending the lockdown would be a great start. Once markets open up, households and businesses need other measures that will help them to retain income and save it at low risk for a return above the rate of inflation. The aim is for a savings-rich rather than debt-saturated economy. This is where the focus must now fall.

Russell Lamberti is an economist and founder of ETM Macro Advisors. He serves on the advisory panel for Business for Ending Lockdown

COMMENTS   8

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History will show that we achieved nothing. We did not have the spikes that were incorrectly modeled and predicted. We did not create enough hospital beds apparently. We are the 5th largest infected country according to worldometer. We have similar graphs to everyone else. We however do differ in one important aspect. We DESTROYED what was left of our struggling economy.

By creating this round table of ‘experts’ we elevated individuals sense of self importance. We created an environment where the president was forced to accept collective advise but accept 100% accountability. Inconsequential idiots were given a stage to be something they could never be and used Co-vid to demonstrate their ineptitude through some of the most ridiculous legislation we have ever seen (some still exists). We create a feeding frenzy of corruption never seen before with billions wasted, stolen in tender fraud, food parcel theft, TERS theft and the list goes on.

There is however one looming problem that not even this cesspool of corruption will be able to deal with. We have started programs to feed people for free, pay people that are unemployed, we have provided free health care services in their dwelling places and so on. Who is going to be the one to tell these people, when co-vid is over that these programs are stopping as we can no longer afford them. In March our president had the hearts, minds and support of the nation. His own party made sure that was erased by June.

South Africa has actually flattened the curve, but as do agree it was a waste of time. The demographics of the country show that his supporters have a lower median age, and therefore a lower risk of death from covid, than the people who benefited the most from the measures, who are complaining the loudest. Of course, if he allowed the virus to rip through the population, the opposite charge would have been leveled at him, and he would have been accused of being indifferent because the disease would disproportionately have affected minority groups.

When the free lunches stop the recipients will get restless. Very very restless in fact. Open up international travel as a matter of urgency and get a huge number of people in that sector of the economy back to work, thus reducing the number of restless and unemployed people.
Alcohol seems to be an issue and for different reasons than Covid, so limit the amount of alcohol anyone can buy at a time. Do this by having a register and proof of ID each time you buy. If you are caught buying in excess of the limitation stipulated then have hefty penalties which will happen WITHOUT commission of enquiries and through special courts set cup for this purpose.

Every time I read this kind of nonsense I see red. I have been in many countries with few restrictions on the buying and selling of alcohol, and when and where you drink it. Not a drunk person in sight. You really think that the problem drinkers are those lining up to buy a bottle of wine with dinner, ID in hand? Stop with all these “restrictions” nonsense and address the real social reasons why people drink too much AND be honest about who is doing the drinking. Ever thought that with idiot’s law coming up, criminalizing a drop of alcohol, your doctor who drinks one glass of wine with supper may have to let you die, becauce he cannot drive to the hospital? Or the electrician who had one light beer after work cannot attend to your after hours crisis, as he may not drive? Living in a country with utter morons at the helm, becomes more unbearable by the day.

Open international travel, and the only people who come into SA will be those from worse affected countries. Rich tourists are not going to risk queueing for a ventilator in a third world country, and quarantine in their home countries to see some wildlife.

This government simply doesn’t care!! They get their fat salaries and thats it.screw the country.

For the general public to get their lives back they will have to act against these minority pressure groups.
Violence against women and children only reports the women killed and molested men apparently are totally irreverent.
Global warming activists only mention their own mostly pathetic findings to intimidate the world.
Alcohol and cigarettes restrictions…..really.
Sugar taxes to reduce obesity…..creates an extra income for government but serves no health problem.
Civid-19 paranoia…. well it’s unfolding itself as the “whatever” of 2020 with only Brazil being the sensible country.
And the list goes on……….

Why has the economic recovery panel only now been established – it should have been established in March already, so as to be ready when the lockdown gradually lifts – more months wasted with more damage to the economy.

End of comments.

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