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General Thinking

Economy – after COVID

Every economy in the world today has two types of income centres – Internal Consumption and External Consumption. 

Internal consumption is all of the things bought and used by the people of your own country. External Consumption is all of the things that you sell to other countries because you are either really good at it or produce a surplus of it. In addition to this, we obviously buy goods from other countries that have a surplus of things that we cannot produce.

Usually, if there is a crisis within an economy there is the external consumption that a country can depend on and fix the other. During the 2008 crisis, the problem was external to India. Were we hurt, Sure! But there was internal demand that we could fall back upon.

The current circumstance is unique in that the global economy has come to a stand-still. A month is 8% of a year. Shutting down any economy for a month implies a decrease of 8% in consumption. Obviously essential goods and services are still available; still, there is going to be a decline. This decline is consistent in both kinds of consumption; internal and external.

Further, small businesses that have short cash cycles and little in terms of capital in the bank – especially the trading businesses may never be able to recover from this. This will further reduce business consumption going forward. 

Money has to be spent on the those struggling but I don’t think any government in the world has the will to do that. They will protect the rich. This is a perfect example of it. Funded companies don’t need the relief as much as the ones that are not. But the ones that are not do not even have a place on the table. This is not survival of the fittest but survival of the richest.

I expect a long and painful recovery from here. It will take perhaps a year and a half for things to return to normal. Growth will not be visible for the next 12 months. Expect most sectors to be hurt in the aftermath. Some more than others.

Sectors that will see a certain slow-down would be: automobile, electronics, real estate, financial services, services, BPO, airlines (some may shut down), travel and tourism. 

Categories
General Thinking

Costs we incur without knowing

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This is an image I took today morning at ITPL, Whitefield. This security guard was protected by sand bags and all.

I have had the privilege of going to the ‘Madras Sappers’ campus in Bangalore which is a military establishment and there is no sentinel in place there once you pass the gate.

Truth be told, if terrorists were to storm the campus, he would shit his pants and run away.

I went into a mall in Bangalore once with a ‘Gas Cylinder’ in my boot; I was in the midst of shifting houses. They let me in! Honestly, there is no real security

Brings me to the cost of security. How much of time, energy and money are we wasting as a nation, in creating the illusion of security? There has to be a better way…