Article Review for Economics Class

Article Title: “From Plague to Penury”

Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982

A Critique of “From Plague to Penury”: A Rebuttal for Proposed

Economic Measures

I. Brief Summary of the Article

The Economist’s article “From Plague to Penuryi” centers its discussion on
how the pandemic’s effect on the economy is detrimental to society’s bracket
subsisting below the poverty threshold. The article highlights that while it’s a
given that the effects of the pandemic is adverse to the economy in general –
the article even went so far as to contend that it had already frozen entire
economies – this effect is maximized at the level of the sector at poverty levels
and more particularly, below it. The term “penury ii” as used in the article’s title
is defined as severe poverty, which is exactly the end result it is hinting at if
present circumstances would be allowed to continue without any intervention
at both the local and global platform.

The article presents the alarmingly rapid descent to penury through looking at
case specific examples. It narrated several stories personal to actual
individuals who are members of the subject societal sectors. Its narratives
highlighted how these people were compelled to move out of the capital cities
where they primarily derive their sources of income to rural areas, presumably
the areas where they actually came from in the first place in most of the cases.
This prompts a polarizing effect because it forces the most affected sectors of
society to choose either to stay in the capital and risk infection – which risk, if
actualized, poses the problem of greater expenses for medication – or move to
rural areas where risk of infection is relatively lower but trade off a more stable
source of income in the process.

The discussion gravitates towards a “zoom-in-zoom-out” strategy to look at the

facets of the pandemic problem vis-à-vis the adverse effect to global
economies. This was expressly observed in the article’s discussion of what it
terms as a “food crisis”. From the personal narratives, it shifted to a global view
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
of the pandemic’s effect on hunger, or more particularly, what the article
perceives to be a global food crisis. It generalized from the personal narratives
that global economies – most, if not all – are suffering from or at constantly at
risk of starvation. From its various narratives of how certain individuals – who,
again are members of the subject sectors – and proceeding from the premise
that since a lot of economies and sectors share this dilemma, this could be
generalized. It primarily bases this premise on the fact of the decreased
number of times a particular unit is able to eat in a day, the lack of certain
commodities in the family basket which were present prior to the onset of the
pandemic.

The article also submitted the proposition that this dilemma is further
aggravated by the fact that there is no standard definition, both at the local and
global level as to what conditions need to exist to determine the percentage of
society comprising those belonging to the poverty threshold and those below it.
This leads to an inability to estimate with narrower precision the percentage of
society bearing the greater brunt of the paralyzing effects of the pandemic to
the economy. This poses a problem because these estimates are integral to
the process of identifying solutions to address the economic issues at the
poverty line and below it; a far larger estimate could draw away efforts to
address other integral aspects of the problem that need to be addressed, such
as the problems in education and the health sector which were also points that
the article briefly touched upon. On the other hand, however, a far lower
estimate could downplay the problem and not garner it the necessary efforts to
prevent a further escalation of the issue.

The article’s last points focused on the inadequacy of certain measures to

attempt to address the issue at hand. However, in this part, it angled the
discussion in such a manner as to solely focus on third-world countries as the
subject. It discussed the infeasibility to resort to reliance on foreign spending
given the decline in mass exports as well as in foreign tourism industries, due
in turn to the measures implemented to restrict movement and minimize if not
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
altogether prevent the rapid spread of the pandemic. It highlighted that while
these industries can, to a certain degree, expect a recovery when the
pandemic subsides, the central problem would still persist. After all, those
belonging to the poverty line and below it could not afford to wait for industries
in these sectors to reopen and be feasible again. Clearly, there is a need to
look for solutions elsewhere.

It presented an alternative solution, that instead of relying on foreign spending,

governments of these countries could step up and intervene to prevent the
rapid blurring of the poverty line. It briefly discussed measures implemented in
certain governments to attempt to address this issue. For example, it cited that
in Kenya, its government has “started a program to give temporary jobs to
more than 26,000 young Kenyans” (The Economist International, September
2020). It also cited, in particular, the government efforts here in the Philippines
to facilitate the speeding up of the cash handouts through the setting up of a
new national ID system with the end goal in mind to get cash to the poor faster.
While the article conceded that the cash handout policy is a cheap and
effective form of support, it qualified such concession saying that such
schemes are feasible only if governments “can afford to hand out serious
lumps of cash”. (The Economist International, September 2020)

Proceeding from the previous points discussed, particularly with regard to

government spending, the article cautioned governments to exercise caution in
its spending. It surmises that given the present circumstances, it will have to do
so in a clever manner, given the limited resource and growing areas needing
financing. It predicted that such governments will struggle to continue funding
such efforts, especially since funding from “richer governments and
international institutions” will not be as reliable as before, given the limitations
imposed by the present circumstances. The article, in its ending statement,
went on a full roundabout to stress its primary point that, given all the
discussions in the preceding paragraphs, the pandemic has fully exposed the
“vulnerability” of the poor but not destitute – most especially, the destitute – in
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
the face of a big economic shock, and given the current limitations, the brunt of
the responsibility should be borne by policymakers to help people climb back
up the poverty and devise ways to create a buffer for future similar shocks.

II. Critique
Manner of Critique
Before delving into the critique proper, the student will first discuss the manner
by which the critique is to be made in this paper. First, the student will briefly
discuss the problem with regard to the approach of the article in discussing the
economic issue it presented. Finally, the student will discuss the substantive
arguments in the article and the problem with such arguments from the global
level and at the Philippine level.

Critique Proper
The student submits that the approach of the discussion in the article is
problematic because it proceeds from hasty generalizations. The alternating
zoom-in and zoom-out approaches works in favor of the article’s bias. This is
not to say that its claims lack credibility. It is conceded that the claims that the
article purports hold a validity to it. Theoretically, one may be able to conclude
that given the adverse effects of the pandemic, the most to suffer would be the
members of society comprising the poverty thresholds. But, to induce (as
opposed to deduce) the problem from select cases and to present a general
solution as derived from the generalized problem to the case specific subjects
is to assume that all the circumstances and particularities in these subjects are
the same. The problem is that they are not, certain nuances exist in these
localities so as to render ineffective a one-solution-fits-all approach to the issue,
especially the economic ones, brought by the pandemic.

On the matter of the substantive arguments propounded by the article, what is

primarily noteworthy is the proposition to make the national governments bear
the majority of the responsibility to address the issues of health, economics,
education and all other sectors affected by the pandemic. It hints at a
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
conservative and cautious approach to spending. While this position is
understandable, given a limited pool of financial resources, this claim is
rebutted in this critique. The student clarifies however, that the issue is not with
“cautious” spending but rather with conservative approach. Economies are at a
standstill precisely because of the aversion of governments and businesses to
inject currency into markets and industries. In her foreword to the August 2020
issue of the Philippine Law Journaliii, Rep. Stella Luz A. Quimbo argued that
uncertainty is the biggest enemy in the midst of the global pandemic – it
causes people to hoard goods, businesses to retrench employees, markets to
cease functioning as mechanisms for price determination and resource
allocation – thus, the required response is Keynesian in nature. The
government must spend to boost the economy. With increased government
spending, the hope is to reduce uncertainty and boost confidence among
businesses, workers, consumers, so that the economy may be safely
re-started.

The article also fails to consider how the multi-faceted dimensions of the
issues presented in the pandemic is “customized” in a certain State. For,
example, here in the Philippines, another noteworthy economic concern is the
“free-rider problem”. This occurs when people benefit from an activity without
having to shoulder the cost for the same. Here, specifically, this problem is
best illustrated in the cash transfer schemes. The objectives are laudable but
the implementation of the program as well as the clarity of the statutory
provisions governing its implementation are sorely lacking. There is a lack in
identifying the people who should be the recipients of the financial aid and
prevalence of the people who are receiving the benefits but are not actually
qualified for the same.

As a final point, the article stresses that the duty to prevent the rapid blurring of
the poverty thresholds falls upon the national governments. It is submitted that
this position unnecessarily condenses the responsibility at the central level of
governments and discounts the integral participation of local governments to
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
present a viable solution to the economic problems brought by the pandemic.
In the Philippines, specifically, important government functions are relegated to
the local government units (“LGUs”) based on the provisions of the Local
Government Code, including those pertaining to health care. However, the
government’s Covid-19 response has been largely centralized through the
Inter-Agency Task Force (IATF) which is predominantly a national government
instrumentality. Here, the free-rider problem is presented as the ensuing
hesitance of local governments to take action and decide on pandemic-related
problems when the failure attributable to its acts could result in blame. To this
problem, it is submitted that an economic solution of coordination is the most
viable action. A multi-level government coordination is stressed as the integral
key to curb the exacerbation of systemic issues.

Summary
The article shed light on the problem of the pandemic at the level of those in
the poverty line and their rapid descent below the threshold. This is viewed as
a progressive and radical take on the issue of the pandemic as the general
focus of the economic issues at present is central to the closure of businesses,
the freezing of global economies; in this way, it may be argued that the
approaches are very centered on capitalist structures and entities. However, a
recurring problem in the article is its general approach to providing a solution to
the issue presented which is not feasible in view of the nuances and
particularities of how national governments are affected by the pandemic
problem. A scalpel approach should be preferred to the mallet approach which
the article’s generalized solutions propose. Furthermore, the economic issue
of the rapid blurring of the poverty threshold, at least here in the Philippines is
closely related to issues of governance – both at the national and local levels.
Nuances like these should also be considered in presenting solutions.

List of Sources
i
Cardenas, Kampala and Mumbai. From Plague to Penury, 26 Sept. 2020,
www.economist.com/international/2020/09/26/the-pandemic-is-plunging-
millions-back-into-extreme-poverty.
Article Review for Economics Class
Article Title: “From Plague to Penury”
Source: The Economist, 26 September 2020
Student: SHENG, Dianne C.
Student No.: 20201982
ii
“Penury.” Merriam-Webster.com Dictionary, Merriam-Webster,
https://www.merriam-webster.com/dictionary/penury. Accessed 1 October 2020
iii
Quimbo, Stella Luz A. “Foreword: The Post-Covid World Where Law and
Economics Meet.” Philippine Law Journal, vol. 93, Special Online Feature, 2020,
journals.upd.edu.ph/index.php/law/issue/archive