Principles of Economics

Introduction of the Event- Corona Pandemic 2019

According to IMF (2020), due to the corona virus pandemic the global economy is expected to shrink by 3 %, the worst ever and steep slowdown and downturn since the great depression of 1930. Several countries of the world decided to impose severe to eased lockdowns depending upon the governments and recommendations of UN and WHO, it shut down businesses and ceased all the economic activities in addition to severe problems being faced by citizens who were striving to find essential items of daily basis. Even today the cases are increasing at a rate higher than that during the lockdown. Now some countries have put off the restrictions and started the economy as it was getting down at a fearful level, some economies are striving for another mini lockdown as economy is already under recession. It has led to a widespread unemployment, In USA, in April alone 20 million jobs were lost and the world labor market is worst than ever (Hess, 2020). Advanced economies like Japan, Germany, USA, and Australia have been hit harder with the second quarter of 2020; the economy shrank by 7 % (Sullivan et al, 2020). The first affects of corona in Australia was seen by domestic businesses and just in time business exports towards China. In addition to this, Australian dollar got down and commodity prices rose with the fact that consumption power has been lowered.

The Interview

The interview was taken of a person named Smith and he was a manager in a multinational firm in Canberra, Australia. I thought of him as a perfect interview material as he is a middle class person with a job that has been lost due to corona virus pandemic. His purchasing power gone very down with home rent and basic essential expenses due. He is trying hard to acquire new skills for a new job but is not very clear about which avenues of jobs are presently open and no government help has been providing on a package basis to commoners to fight the economic downturn of the virus.

Summary of The Interview and The Interviewee

Smith was a manager in a leading multinational firm in Canberra, Australia and that he had to lose his job due to the company’s decision to lower the workforce by 40 %. He is married and has a family of 4 with wife and two children, both children are schooled and Smith is really under stress regarding his house rent, essential commodities, and expenses of the children. As his family had a habit of more consumption and lesser savings and investments, it had hit hard this family. Though the Australian government’s mandate of a 6 months moratorium on house rent and all kinds of loans (PWC, 2020), he has been relieved of the stress for some time, but now the time is coming to pay those payments. He felt that an economic stimulus announced by the government is not enough and that the government has failed in several aspects to contain the economy and people through the pandemic. First of all, he asked for a helicopter money which can increase the consumption and ultimately jobs, secondly he asked for all social security payments in addition to the declared 750 $ unemployment payment (PWC, 2020). Thirdly, he condemned the Government’s stance against china in these critical times, as he thought this is not the right time to condemn China.

He has started to hate communism and socialism as he thinks that China willfully spread the virus to unethically increase its affect on the world and increasing its economy while the world is busy in containing the virus, of which he gives proof that only 85,000 cases were recorded in the origin country (China) where millions are recorded in other countries (Michie, 2020). He also took part in the anti communist protests. He thinks that he is pushed economically and career wise at least 3 years back looking at the economic recovery and his possible employment status which he wants to acquire and learning new skills. I have come to understand this philosophy of Smith that an economic stimulus is simply not enough for a common man, and that there is a greater need for a balance between consumption and savings among the people of Australia to avoid any economical shock such as this. The third thing is the macroeconomic term of helicopter money. He thinks that helicopter money (money given just as a giveaway to common man) is not given which can be analyzed as the unemployment security payment was simply not enough for a common man.

Reflections of Economic Situtaion of Covid-19 Pandemic Interview

On macroeconomic policy issue, I have noticed that he is not satisfied with the fiscal and monetary policies as a stimulus package (0.9 % of GDP) is simply very low compared to India which is 10 % of its GDP (Misra & Gopalan, 2020). Also government should increase the moratorium on house rent and all the loans as given moratorium is simply not enough looking at the present conditions of households and that the employment rate has not been recovered. The other idea that I got by his interview is that the government should organize a skill development portal in which it offer courses of various practical skills and give information about the current and future job opportunities, till the time a person is acquiring a skill, government should give him an unemployment payment depending upon the monthly loss he is bearing, till he gets graduated from that portal. This could be a good approach to balance down the social security payment and the employment rate recovery as common people do not have adequate knowledge on emerging markets. The most interesting topic that I have noticed is Smith’s political orientation towards capitalism. He has good knowledge of capitalism and communism and the countries supporting it. He had given his thoughts on the prejudice that capitalism is always better for people than communism. That said, I have had a good and fruitful interview with Smith which gave me a glimpse of the current economic problems of a common man in this slowdown.

References for Economic Situtaion of Covid-19 Pandemic Interview

Hess, A. (2020). The u.s. economy has been hit hard by the corona virus pandemic—here’s what it’s like for job seekers. Retrieved from https://www.cnbc.com/2020/03/20/how-coronavirus-is-impacting-job-seekers.html

IMF (2020). The imf and covid-19 (coronavirus). Retrieved from https://www.imf.org/en/Topics/imf-and-covid19

Michie, J. (2020). The covid-19 crisis – and the future of the economy and economics. Journal International Review of Applied Economics. 34 (3): 301-303.

Misra, A. & Gopalan, H. (2020). Covid-19 pandemic and challenges for socio-economic issues, healthcare and national health programs in india. Diabetes Metab Syndr 14(5): 757–759.

PWC (2020). The possible economic consequences of a novel coronavirus (covid-19) pandemic. Retrieved from https://www.pwc.com.au/publications/australia-matters/economic-consequences-coronavirus-COVID-19-pandemic.pdf

Sullivan, D., Rehmatullah, M. & Pawar, M. (2020). The impact and implications of covid-19: an australian perspective. The International Journal of Community and Social Development 2(20): 134-151.

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