Question

The U.N. World Food Program (WFP) is warning that upward of at least 14 million people could go hungry in Latin America as the coronavirus pandemic rages on, shuttering people in their homes, drying up work and crippling the economy. New projections released late Wednesday estimate a startling increase: Whereas 3.4 million experienced severe food insecurity in 2019, that number could more than quadruple this year in one of the world’s most vulnerable regions. U.N. food agency executive director David Beasley warned in April that an addition 130 million people could be “pushed to the brink of starvation” worldwide by the end of 2020. The impact of such a sharp rise in hunger could have far-reaching implications ranging from higher levels of chronic childhood malnutrition to security issues. The WFP is calling on nations to expand their social safety net to those who traditionally don’t qualify for aid. Many governments and international organizations have been stepping up, providing cash transfers and food deliveries, but are facing logistical and economic hurdles.

In the view of food insecurity around the world particularly in Latin American economies, World Food Program suggests countries to expand their social safety net. Discuss whether social safety net boosts the aggregate expenditure and leads economy to recover.

Answer 1

Social safety nets are important at this stage when the incomes of more and more people across the nations are either reduced or have stopped altogether due to the COVID-19 syndrome that has engulfed the world. This is with special reference to the informal sector workers, the factory workers and the like who have not received their wages due to the shutting down of these facilties in the wake of the lockdown in the nations. At this juncture, it becomes important for the governments to expand their social safety nets to include all such people who are on the verge of starvation and being homeless due to the lack of income. Unilateral transfers might be helpful, but only if it ltimately reaches these people and is enough for the family. Meagre transferes would only sustain them for a few days, while not helping the situation much.

It is true that these transfer payments will increase the aggregate demand in the economy which is necessary for the economies to start functioning again, but at the present time, increasing the aggregate demand is not the focus. That is becasue re-starting factories and other mass working sites where employees and labourers work in masses will only increase the number of COVID-19 casualties and further deteriorate the conditions of the economies. Hence, practice of physical distancing is important. Thus, the focus is on how these people who are being affected by the stopping of the economies can be brought out of their misery by carefully targetted transfers, without the funds being lost in bereaucracy and corruption, and how the essential services can be supplied to them free of cost at least until the situation changes for the better.