Question

Today after the outbreak of Covid-19 the future of the neoliberal policies is a much discussed topic. We see that both developed and developing countries announced economic packages to fight the outbreak. What do you think about the future of the neoliberal policies?

Answer 1

Case Specifics

Neo Liberal Economic Policies have emerged in the 20th Century primarily and their aim is to reduce government spending and to expand business and increase privatisation across the globe. The other ambitions of this policy include reducing trade barriers and making sure that globalization can take place without any significant road blocks. Over the years, governments have preferred to use this policy since it allows for higher inflow of capital from abroad, and takes away the expense of managing private enterprises for the government. Market based economics tends to increase the flow of money since the overall efficiency in a country increase.

The recent Corona virus pandemic, has however raised eyebrows on the same. When the theory was developed, it did not account for such drastic changes in the environment as has happened currently and has led to most countries losing their economic worth.

As such, the process of globalization and privatisation will and should still continue, so that equilibrium may be maintained in the country. However, one change which is likely to happen is the way the government is thought of functioning. The Neo Liberal Policy needs to change itself as times have changed.

Government expenditure and control and supervision of the market is required so that the government can infuse money into the economy and change taxation and interest rates as and when required.

On the contrary other activities such as privatisations and globalization can take place as they increase the monetary capacity of the economy.

Conclusion

We can conclude by saying that, the economy can gain only when, we change our approach towards policies which were established by economists which did not assess the impact of deadly pandemics like this one.

The approach needs to enable some aspects like privatisation and globalization on one hand and on the other take a better view of government intervention which is necessary to come out of recession and inflation cycles. The government can then leave the market until such market conditions return and there is normalcy in the economy.

Please feel free to ask your doubts in the comment section if any.