The Prospects of Stop-Gap Economics and the Social Dilemma

“Countries all over the world are using these special purpose, stop-gap economic policies to fight their emergencies. Why don’t they use these to solve their economic problems in ordinary times?”

Photo by Vlad Busuioc on Unsplash

Stop-gap economics can be referred to as an economic doctrine that is implemented as a short-term solution, only intended to serve a specific objective for a particular time period. An example of stop-gap economics can be wartime economics which is a temporary solution to a unique problem (the war) and is not meant to use in normal times.

Using prudently, stop-gaps can be beneficial in the long-run. For instance, the USA has become the global superpower after WWII and one of the key catalysts behind this was the wartime economic policies which not only recovered the then crippling post-depression economy of the country but also taught them how to mobilize their resources effectively in case of national emergency.

The impact of WWII on U.S. economy; Source: www.thebalance.com

This COVID — 19 pandemic-driven economic policies are yet another good example of stop-gap economics. While the world is waiting eagerly for a universal vaccination program, the countries are trying to maintain their economic stability through temporary, emergency measures — i.e. special economic packages, diverting resources to the most important sector like health and social welfare and deploying everything in their capacity to fight the pandemic. Some countries are being successful at that as their fatality rates and economic damage is minimized (i.e. Vietnam) whether others’ are being battered.

IMF’s Growth Projection; Source: International Monetary Fund

The thing is, countries all over the world have been using this special purpose, stop-gap economic policies to fight their emergencies. Why don’t they use these to solve their economic problems in normal times?

Let’s create a hypothetical scenario with the Republic of Wadia to understand the question better. After independence, this republic has started from nothing. So, their founding fathers have pointed out 5 important sectors like education, health, social welfare, infrastructure and agriculture to put their focus first. Problem is, when they try to focus more on education, they can’t put enough resources (both monetary and non-monetary) in other sectors. So, the end result is, none of the five focused sectors have been developed as desired and after 30 years of independence, the country still remains one of the most impoverished countries in the world.

Now, what if the founding fathers put more emphasis on one sector, i.e. education first and put maximum resources there? Of course, there would be chaos initially but in the end, there is the possibility that the country would be on a strong foundation after 10 years of sacrifice. The problem is, economic policies may be the brainchild of economists but the implementation is always a political decision and politicians, by their very nature, don’t focus on long-term objectives. Rather, they would like to satisfy their supporters with short-run perks which essentially ensure them to remain in power.

And this is the precise problem we have to face when trying to implement stop-gap economics in ordinary times. There is a big possibility that this would create nationwide dissatisfaction at initiation as people, in general, don’t want to sacrifice their short-run petty desires for some long-run, future achievements.

So, what’s the solution to this problem? Well, there is no universal solution to this age-old socio-economic puzzle. The only way the countries can effectively utilize stop-gap economic doctrines is to prioritize their requirements and do what’s needed to be done for fulfilling their unique quest. But here’s the trick, the people need to be motivated and united and the political leaders should be truly visionary. And motivating the people for a long-term, noble cause while forgoing their current well-being needs a very strong educational and cultural foundation.

So, if there’s one true possible solution here, it’s the heavy investment in the education sector with visionary objectives. The cognition, the sentiment and the behavioral augmentation of the mass people need to be elevated so that they would support visionary yet revolutionary policies for the sake of their future generations. And this can only be achieved through a well-designed formal and informal universal education system.

Also, the policymakers must forsake their petty desire to get short-term popularity through physical, tangible projects (i.e. infrastructural mega-projects) and instead, utilize their political charisma for the cognitive development of the fellow countrymen.

The prospective solution stated above may seem a bit utopian at first glance but after all, being human, what do we have at our disposal that’s stronger than hope?

“Dreamer-Thinker -Storyteller -Writer -Researcher -Economist” @treasury fund manager @fx trader ##Website: www.economaven.com

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