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  • Subject Name : Economics

Economic Decisions 

Table of contents:

The Article

Ethical considerations:

Economic considerations

Critique on the discrepancies

References:

The Article on Covid-19

The article that is chosen for this assignment is about the Covid-19 and how the polices and programs initiated by the different governments across the world presents stark choices among ethical decisions about human life and death and also about the state of the economies across the world. The article is focused upon the tradeoffs that are happening across the countries as the pandemic is becoming intense. Even the most developed economy with the developed health care facilities is suffering a tradeoff for a ventilator and there has to be a decision taken with regard to sharing of ventilators – should it be for corona suffering patients or for patients suffering from other illness. Similarly, the decisions about the medical resources whether to be provided to covid-19 patients or for other patients. The benefits provided by the government should reach the unemployed and the poor that too in a social distancing way(The_Economist, 2020).

Ethical Considerations:

The governments of various countries are facing various problems in resources handling. There are various ethical issues that comes into mind when the need to prioritize on the scarce resource emerges in the light of the pandemic. The principle of equality suggests that the interests of each person should be considered equally unless there are apt reason to justify the prioritization of resources even between pandemic affected persons and people who are suffering from other illnesses. When it come to allocation of economic resources – rationing of food and money for people in developing countries who are stuck in their homes in the lockdown, the irrelevant characteristics like race, ethnicity, ability, creed or gender should not be the basis for differences in the allocation of these economic resources(WHO, 2020). Infact the countries like India seem to have large slum areas where the prevention of spread seems to be a difficult task as even social distancing in urban slums seems to pick up problems for the spread.

The practical implication of this principle of equality would be to guide the allocation of resources among population groups who can be expected to have the same benefit from the vaccines (that could be given to high risk populations), or ventilators among those with same clinical indicators). Another ethical principle based on utility can be used to allocate the resources to those who have the capacity to do most good or to minimize the most harm created would be to use to allocate the available resources in order to save the maximum lives possible. This principle might be most appropriate in guiding the allocation of scarce resources among those who confer substantially different benefits to various persons- for example allocating ventilators to those who might get the maximum benefit. Similarly, the ethical principle in prioritizing the worst off would be used to justify the resource allocation to those having highest medical need or to those who are at highest risk. This principle can be used to distribute the resources for the highly vulnerable groups with the intention of protecting those people.

PPE provision for the health care workers, vaccines for the vulnerable groups and provision of essential supply of drugs to those who need them urgently than others(J&J, 2020). Similarly the prioritizing those tasked with the task of helping others could be used to justify the allocation of resources to those who have certain skills to save other people like the hospital doctors, physicians, nurses, or others like policemen who are engaged in the tasks of helping others during the Corona lockdown. This would be helpful in guiding the resource allocation to the healthcare workers and to the first responders for the pandemic. According to the article, the Modi government in India decided to have speed as tits priority and fatally mismanaged the lockdown.

The migrant workers were not thought about and they streamed out of their workplaces in cities and spread the disease among themselves and carried back to their villages (hometowns) as well. This lockdown in a developing country like India makes the capacity of the state much more limited than it would be for the rich countries. Since there are millions of people in India who live on daily wages and have no savings to fall back upon, the government certainly does not have the resources to support them on a monthly basis.

Economic Considerations:

The economics and tradeoff in the resource allocation is being discussed in the article. Which says that the cost of life calculations cannot be measured in real cash but it is an accounting measure which has to compare various things such as the lives of the people, jobs and unemployments and also it has to contend to social and moral values in the complex society. When the crisis gets bigger as it has become now, the measurements become much more important. As the pandemic gets bigger, the leaders and policy makers cannot escape the tradeoffs they need to make as every action they take would have huge social and economic costs and they need to be outweighed against each other before implementation(Baldwin, 2020).

Similar to being systematic in the tradeoffs, it is equally important to help those people who are on the losing side of these tradeoffs. For example the employed who are sacked in the lockdowns do deserve extra help in the resources – both monetary and non-monetary. Children who are used to get their noon-meals at schools need to given food. Society must also help the youngsters who are both socially and economically impacted. The third economic principle that the article talks about is the balancing of costs and benefits and this will be a changing concepts as the pandemic evolves. This Is because, when the lockdowns are lifted in these economies, the pandemic would spread again among the population who would be still susceptible.

Critique on the Discrepancies

What the article does not cover is the recessionary or even depression trends that is going to impact the world economies soon after the Covid-19 pandemic is over or slows down drastically. It does say that economies should start living with it, but it does not describe possible solutions to bring out the economies from the recessionary trends that have started emerging in many countries. With lockdown that is being continued for months, production activities are affected severely as the households are no longer giving their factor input labor for the production activities. This has led to countries coming to a great halt in the circular flow of income. The article talks in length about the tradeoffs in resource allocation but has left out the tradeoffs in the circular flow of income. There are many impacts of Covid-19 in the circular flow of income.

For example, the households are not spending enough on the goods and services due to lockdown which has led to store closures, delivery restrictions and travel bans(Baldwin, 2020). Similarly, many small businesses across various countries are declaring bankruptcies which would impact the aggregate supply of the economy. There are even household bankruptcies and financial distress which has resulted in lowering of consumer spending component of the aggregate demand. The flows of income due to the exports and imports are also drastically affected as people are restricted to import and export from other countries. Only the government spending component of the aggregate demand is active and high due to the pandemic and the resultant lockdown in the economies(Roach, 2020).

The article misses out on the points where the circular flow of money is being locked. The economies continue running only when there is circular flow of money and income in the economy. The disruption of the flow anywhere would result in slowdown. There is disruption in the income for households as they are getting paid for their work and might experience distress due to heavy medical bills. This reduces the consumer spending and aggregate demand for goods and services. The domestic demand shock hits the imports of the nation and also impacts the imports for other countries. There are business bankruptcies which would impact the flow of money from the businesses towards households. The Covid-19 crisis impacts many industrial sectors particularly the tourism industry as people are afraid to go out to other places for atleast another six months to one year.

Government is spending on various measures but it also has to spend on households and businesses to keep them away from going bankrupt as this is the only way to keep the economy going even if the factor inputs are not working. But given the fact that developing and underdeveloped countries are facing limited resources, government spending on various accounts would be a huge problem. Apart from this, the article does not discuss the ethical values that must be promoted while allocating these scarce resources. These four ethical principles should include transparency (about justifications in the resource allocation), inclusiveness of individuals and communities, etc. Consistency (not showing favoritism) and accountability of those making these decision with regard to resource allocation and tradeoffs decisions.

References for Economic Decisions

Baldwin, R. (2020). Keeping the lights on: Economic medicine for a medical shock | VOX, CEPR Policy Portal. VOX. https://voxeu.org/article/how-should-we-think-about-containing-covid-19-economic-crisis

J&J. (2020). Ethical Framework for Decision-Making During the COVID-19 Pandemic | Johnson & Johnson. https://www.jnj.com/our-company/ethical-framework-for-decision-making-during-the-covid-19-pandemic

Roach, S. S. (2020). What will help alleviate the COVID-19 economic crisis the most? | World Economic Forum. https://www.weforum.org/agenda/2020/03/covid19-economic-crisis/

The_Economist. (2020). A grim calculus - Covid-19 presents stark choices between life, death and the economy | Leaders | The Economist. The Economist. https://www.economist.com/leaders/2020/04/02/covid-19-presents-stark-choices-between-life-death-and-the-economy

WHO. (2020). Ethics and COVID-19: resource allocation and priority-setting.

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