Vulnerability & The Resiliency Of World Economy In The Wake Of Destructions Such As Covid-19

By Lakshman Jayawardena –SEPTEMBER 26, 2020

Lakshman Jayawardena

The economic theorists have advocated, the supply and demand as the basic premise of market equilibrium having no room for exploitation, subject to “all other things equal”. However, COVID-19 pandemic made us learn the difficulty in keeping everything equal and the catastrophe it created across world and many facets of life.

It was apparent that COVID-19 has dramatically changed our way of life, running businesses, trade deals between countries, and conduct of governments which hitherto practiced and accustomed to. These models have been pushed beyond imagination and create and opportunity to think differently. Although this is viewed as a catastrophe and negative impacts, I strongly believe and urge everyone to reap new opportunities through overcoming challenges and barriers to discover the hidden treasures and harness positives for betterment of humankind.

As per my beliefs, COVID-19 is no doubt is an act of God, I also recall from the Old and New Testaments, the two biblical stories, global flood of Noah’s time and the burning two cities Sodom and Gomorrah to ashes. Although, these biblical stories do not reveal the aftermath, I strongly believe such cleansing have resulted incorrupt and sin free societies. 

Over the past centuries and decades, we have witnessed many worldwide mass scale destructions, World Wars, orchestrated by men (e.g. WW2) and devastations occurred naturally. The evidence shows that every aftermath had resulted unprecedented progress, improving quality of life, not limited to technological advancements but with environmental changes. It should also not be forgotten that these destructions had also resulted emergence of superpowers (Soviet Union, United states). The advancement in technology had not only been used for improvements but also to inflict destructions to the humankind thus showing the supremacy of one against another. This is a major concern and need to be addressed urgently through the international organisations affiliated to UN. Are UN afflated organisations unbiased?

In the recent past, we have also seen the superpowers, overpowering nations for their economic supremacy and “quasi-acquire” resource rich areas of the globe. Although this shows ethical in in terms of traditional economic modelling, which hold good when all other things are equal, “ceteris paribus”, has caused irreparable damages to many nations and prolong dependencies. 

Without further elaborations, I will now attempt to correlate these effects in the midst of pandemic COVID-19 and impacts to global economy and the shift of power centres. The most economic fundamentals breakdown and become invalid in the wake of such large scale disasters. Keeping an “all other things equal” is impossible at all times. Therefore, there is a necessity to consider them in the context of local interest and cautiously evaluate what has been advocated by the international agencies. Blindly following such advocacy is a foolish thing and there is evidence how the powerful are controlling and manipulating the most vulnerable. 

Interesting consequence need to be addressed preventing exploitation 

When a country become indebted, and unable to service loans, Lender has the bargaining power to negotiate and restructure the terms to maximise their share of the assets at a very lesser pricing than investment. This is in the form of debt to equity swap, joint ventures or acquire assets and business. 

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