“Medicine” is a difficult discipline. “Economics” is a difficult discipline.
Deepak Chopra wrote, “Modern medicine knows less than 10 percent of what your body knows instinctively.” John Kenneth Galbraith said: “In economics, the majority is always wrong.”
It is not for me to question the efficacy of a tighter lockdown. I saw one comment that said that modified enhanced community quaratine would reduce cases by 50,000. That would be good as there is strain on the hospital system, and that is not good.
However, there’s a discipline that is more difficult than medicine or economics—and that is “common sense.” It is true that if a person dies from Covid complications it is an irreplaceable life that is lost forever. But Joseph Stalin said: “If only one man dies of hunger, that is a tragedy. If millions die, that’s only statistics.”
The United Nations Children’s Fund estimates that “every day, 95 children in the Philippines die from malnutrition. Twenty-seven out of 1,000 Filipino children do not get past their fifth birthday.” Tragedy or statistics? Need I mention that 27 out of 1,000 is 2.7 percent and that according to the European Centre for Disease Prevention and Control the Covid-19 Case Fatality Rate for the Philippines currently is 2 percent?
The idea that a “dead person” is lost forever is common sense. But comments like “The economy can always recover” is lacking in common sense.
Here are three realities. “Home improvement retailer Wilcon Depot Inc. saw a 95-percent drop in second-quarter net profit.” If your toilet seat broke during lockdown, when Wilcon reopens you will go buy a replacement. But you will not buy two toilet seats to help Wilcon make up its revenue decline. The same is true for the retail business in malls and for restaurants.
8890 Holdings, the affordable housing developer, suspended amortization collections during the lockdown. Eventually they will collect from their buyers but the “cost of money” during the lockdown is gone forever. Their unrealized sales of P8 billion will only be delayed—as for all property companies—like what happened in 1997. But the profit delay may also delay future plans and a large number of their workers did not make any money during the lockdowns.
Food and beverage kiosk operator Fruitas Inc. has reopened about 50 percent of its stores. They will never “recover” the revenue that was not generated during the lockdown. However, Fruitas like some other companies are spending to expand their product lines to increase revenues and profits in the future. Another example of this is Agri-
Nurture Inc., which has expanded its business model to include direct consumer delivery of its fruits and vegetables. It is also looking to adopt an enhanced e-commerce/e-payment platform.
The economy will not “recover” as if you can watch a movie on Netflix because you missed it in a theater. Let me explain so that even the person with a modicum of common sense might understand.
How many haircuts did you miss having in the past four months? How many trips to the dentist for a teeth cleaning did you not take? How many “staycations” were spent in your own house?
The income, wages, and taxes from those economic transactions cannot be “recovered” because they never existed. But maybe I am wrong. Maybe the economy can recover what did not happen during the lockdowns. All you have to do is get two haircuts next week
instead of one.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.