Lockdown Economics

There is talk of a possible worldwide economic depression. What does this mean? Here's our take, as armchair 'economists':

  • In a village, there are a farmer and fruit grower. The farmer grows veggies, the fruit grower, fruits. The farmer and fruit grower barter trade, resulting in each of them having a a delightful mix of fruits and veggies on their dinner tables. (Substitute fisherman, pastoralist etc as required based on your cuisine preference.)
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  • One day the weather turned bad, Neither the farmer nor fruit grower could grow or harvest. They have to live on emergency stocks of preserved veggies (eg sauerkraut) and dried fruits (eg prunes).
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  • When the weather turned fine again, it is not business as usual. Some of the helpers have left, the land has to be tilled again, seeded and tendered to before it could bear produce. It will be months of austerity before fresh veggies and fruits reappear on dinner tables again.
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  • The above is an illustration of why, when the giant wheel of the economy stalls, it can be difficult to restart. Not unlike a car which has not been started or driven for weeks. The battery could be drained or worse, the engine seized up. This stalling, the difficulty restarting and the resultant austerity is the 'depression'.
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  • A depression can have its own contagion, like mass social disorders. However, going back to work too soon is like the farmer and fruit grower going out to farm again in treacherous weather conditions. Hence, the tough call for governments whether to continue the lockdown or return to work.
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  • The metaphor also illustrates how recovery can be easier if the farmer and fruit grower kept their farm and orchard, their helpers, their farming knowledge and systems, and the good ties between the farmer and the fruit grower.