Article published by José Miguel González Hernández in the April issue of La Gaveta Económica.
At this time it is better to look ahead because the diagnosis has already been made and wallowing in it does not make much sense. There is little point in trying to give the scoop on good or bad news. There is little point in predicting the past. What if I knew it, what if you didn't realize it, what if I had done it better... it doesn't matter. It has happened and is happening. Let's get to the day after. In the time that will pass until companies operate again with optimal performance percentages. That is the interval we have to worry about and occupy ourselves with now.
And why? Because if we do not commit to avoiding the economic disaster in which we are immersed due to the health crisis, more health problems may be generated than those caused by COVID-19 itself. Yes. Seriously. It's not a hoax. It is true that they will be more sibylline effects with greater polarization of impact due to the different conditions of each of the regions, but it will end up filtering through all the cracks of society. Currently, the risk of recession is served and eaten. And on that stage you have to move.
If this persists over time, it can be seen that, in relation to other economic crises that have occurred throughout history, when relating the health and well-being of the population and its economy, there will be a proliferation of diseases, both psychological and physical, beyond social problems, such as the increase in unemployment with the consequent proliferation of the underground economy. At the same time, social protection from a health perspective will be strengthened at first, but will be neglected in the medium and long term due to the insufficient public funds to sustain it. Because who is going to pay taxes? If taxable events disappear, their impossible bases disappear. And if the tax bases disappear, there is no point in having tax rates (neither high nor low), because revenue will collapse. And if that happens, how will the provision of public goods and services be financed? Furthermore, the impact will not occur linearly or in a single direction. Today the private economy is affected. Then, the public. The differences will be polarized, both from the perspective of those that improve and those that worsen. And to see this, you don't need a crystal ball. You just need to have some common sense. From this diagnosis, we must move away from incompetence and approach management.
For this reason, the day after we must put on the table all the action schemes regarding economic policy and private market decisions: taxation and taxation, debt, surplus management, expansion of production, satisfaction of collective needs, income distribution, sectoral and regional protection, management of private consumption, security of supply, massive use of collective bargaining plus a long etcetera of measures that must be considered, rethought and agreed upon, asking the universe for help, if it could. is missing, because the fall, despite being temporarily short, is going to be deep, very deep.
It's not about pessimism. It's about realism. Good words and intentions will not be enough to prevent our society from cracking because we have not witnessed a decline in supply or demand. We have witnessed the temporary disappearance of certain markets for goods and services. Reactivating them, in some cases it will be simple: press the button and that's it. In others not so much, because they do not depend directly on their sphere of action. Therefore, let's stop placing ourselves in the starting square of this game and let's put ourselves in the arrival square, because a new round begins. And be careful, this is not a game.
José Miguel González Hernández
Consulting Director
Corporation 5
