Sonny’s Choice – national government’s policy dilemma in dealing with the Covid-19 Pandemic

Today, amid the Covid-19 pandemic, many governments around the world are faced with a very unpleasant policy decision of whether they should continue their quarantine or open up to jumpstart their economies – allowing people to resume their jobs, businesses, outside life. Both are valid, needed and have dire consequences on people’s lives.

In the Philippines , we soon expect President Rodrigo Roa Duterte to come up with his decision on this next crossroad of dealing with the pandemic with his stated deadline of April 30, 2020 fast approaching. While the buck stops with him, we are told that the crafting of this policy lies squarely on the shoulders of the Secretary of Finance, Sonny Dominguez.

Dominguez, the head of the economic team, is leading the charge towards dealing with the pandemic – not the health department, not social services. This reason is simple: the health and social services (primarily dealing with the disease and feeding the people) are simply funds driven. You simply throw money at them to have more hospitals and medical facilities, PPEs, health workers, food packs, social amelioration funds, logistics etc.

But by its definition, economics – the allocation of scarce or limited resources among alternative needs – means the economic team has to lead policy to prioritize resources, primarily funds and, most importantly, where and how to get those funds.

Dominguez and his team are faced with so many possible scenarios. Economists in the academe, including those from the University of the Philippines, are saying government must print more money. Yes, a basic principle in economics says that increasing money supply is inflationary, but they argue that the cost to life in opening the quarantine prematurely would be devastating, especially in the near future while a vaccine is yet unavailable.

Other alternatives are gleaned from other countries’ experiences. In Sweden they say their non-lockdown policy has worked for them. South Africa, too, is considering doing so. The rationale lies in demographics: the large, young population versus the smaller, older, and more virus prone population. Basically you let loose the young with the higher survival and economic productivity rates thus keeping the economy alive which in turn provides the resources for the health sector in dealing with the sick.

In the US, it sometimes seems that President Donald Trump is leaning towards the principle of natural selection – like have the vulnerable people die off thus leaving that country with a population resistant to the disease and a productive economy. Again, the wisdom (and morality) of that view is still debatable.

Will these work for the Philippines? The jury is still out, and these cannot be judged yet as “international best practice.”

Philippines’ big business – whose impact to the economy are high with their thousands of employees and suppliers serving their investments like malls, hotels, airlines, manufacturing factories, utilities and the like – are eager to reopen their businesses. They are hemorrhaging – in their scale not operating does not only mean zero income but massive expenses in maintaining their closure and more losses in opportunities and share value.

Another consideration is the demographics of the country. The social unrest of the vast majority of people – the poor are hungry and increasingly have nobody to turn to, the middle class feeling the pinch and complaining of the inequity of government’s response.

Then there is too the fact that over 90% of the Covid-19 problem is in Luzon with the rest in Visayas and Mindanao. What challenges does this situation have for the national survival? How are health facilities spread out in these areas? Are they capable?

What about age groups and gender in the national, regional and provincial scale? 

All said Dominguez and the economic managers are deep into crafting the next step for our country which, put in simple terms, has to strike that delicate balance between the citizens’ health and lives versus the need to get the economy going again.

It is in this process that Ernesto Pernia resigned from his post as head of the National Economic Development Authority (NEDA). The true economist and facts-driven man that he is, he saw the hard numbers and batted for the restarting of the key economic programs of the country, especially in the key infrastructure projects that have been put on hold.

But Dominguez would not have that, just as it is. For how indeed would you have thousands of workers back in infrastructure projects and not risk massive illness and death? The Social (or Physical) Distancing requirements alone would be a disaster to administer.

One insider quip is that along the way, Sonny Dominguez – the man who looked at the numbers and brushed away the populist cries against the heavier tax burdens of his TRAIN Law – grew a conscience.

Don’t get us wrong. There is no bad guy here. This policy exercise has been purely academic, and Pernia’s quitting was simply for the reason that his approach to the policy crafting was hard and fast, thus there was nothing more he could contribute.

Pernia’s replacement, Karl Kendrick Chua, Dominguez’s undersecretary in Finance and the “poster boy” for the TRAIN law, is more than competent yet, as team player, shares the secretary’s concern and sensibilities as part of the formula toward dealing with the pandemic.

And so far this is what Dominguez and his team have: The easing off of the lockdown – selective ECQ lifting – so long as specific conditions are met. These conditions include the massive, far reaching and regular testing; the stockpile of PPEs good for many months; the specific efficiencies and protocols of the various sectors like agriculture, logistics, transportation…

What these numbers are we still don’t know. But whatever they are they will determine the trigger point when the lockdown can be lifted and economic activity can resume—whether in partial calibrated steps or free for all.

One thing’s for sure: we cannot imagine the horror of Sonny’s choice – body bags before him either from Covid-19 or from hunger.

Meanwhile citizens like us can and must do our share: pray to God to grant our leaders guidance and wisdom, obey the authorities and fulfill our responsibilities under our constitution, and be not afraid to speak out when needed with much study, thought, truth and respect.