Pandemics are Game Changers
Pandemics, big wars, revolutions, and catastrophic natural disasters have been the game changers and the responsible factors in creating new world order throughout history. They brought about major changes through which the pre- and post-event worlds became very different. The coronavirus pandemic is fast becoming one of those world-changing events.
The pandemic is going to bring significant long-lasting changes in our lifestyle, social and national priorities, organization of the economy, and ways of production and distribution. In a recent article John Cassidy mentioned how the black plague created shortage of labor and resulted in the demolition of the feudal system in Europe. Similarly, the War of Independence in the U.S. dented the slave system and resulted in abolishment of slavery. The World War I brought women to work and the World War II gave rise to Keynesian fiscal policies and the welfare state.
In the history of the Muslim world, some other events had created great changes. The crusades destroyed the old kingdoms, and then the successful wars by Muslim forces to repulse the crusaders created new smaller states governed by soldier and slave dynasties that were welfare oriented and adopted a very different order for determining the heirs to the state. Similarly, the Mongol invasion not only changed the intellectual discourse and development, but also eliminated many trouble spots like the terrorist groups of kharijis. The rounds of plague epidemic that hit different areas under Muslim rule brought about major economic, military, political and social changes in those areas. So much so that several books about these epidemics and even the fiqh of epidemics were penned. Famous among them is Ibn Hajar’s (d.852H, 1449AD) Bazal al-Maun fi Fadal al-Taun (بذل الماعون في فضل الطاعون).
Response Depends on Our Worldview
The Islamic understanding of catastrophes like epidemics, natural disasters and unusual calamities is that they do not occur without cause or reason. They occur due to misdeeds of human species, specifically due to their transgressions and tyranny on earth. They occur by the will of Allah to let people taste some bad consequences of their deeds so that they understand and repent. They befall as punishments imposed on some people and as a mercy on believers, i.e. test of patience and steadfastness of true Muslims who are then rewarded with mercy upon them.
‘Ā’isha, Mother of the Believers, said: “I asked the Messenger of Allāh (ﷺ) about plagues and he said, ‘They are a punishment which Allāh sends upon whomsoever He wills, but Allāh has made it a mercy to the believers. Anyone who remains in a town which is plagued with an epidemic, remaining patient and anticipating Allāh’s reward, while firmly believing that nothing will befall him other than what Allāh has preordained for him, then he will receive a reward of a martyr’.” [Ṣaḥīḥ al-Bukhāri: 3474].
The optimal response to such crises will differ based on our viewpoint, understanding and faith. Prophet Noah (Peace be upon him) was to rely simultaneously on building a boat and seeking protection of Allah. His son, on the other hand, thought the flood could be defeated by climbing up high mountains and holding out until the flood situation was normalized. The Quran (11:43) describes the scene. The son did not realize the true cause of deluge and arrogantly chose a wrong solution.
In the end, such crises give power to one group and destroy the power base of incumbent groups.
Response to Covid-19
Our response in the pandemic would be that of efforts for survival with the intention of course correction through repentance and positioning for the future leadership.
The episode of the crisis should make us realize the power of Allah, that with His will, just a small non-living material (Ribonucleic acid RNA) encapsulated in a fragile protein-cover, the corona virus, has paralyzed the human life over the entire globe in a very short time. All the world powers, despite their touted military might, and all the economic and finance power centers of the world have become incapable of providing protection to the people who are now hiding or trying to run away from the disease.
The short-run strategy for now is social distancing and isolation. It is the first step to protect oneself and to slow down the spread of infection so that the medical care and health systems remain manageable. However, this step also needs to be done with repentance to Allah on our misdeeds and selfish behavior and that social distancing should not only be to save oneself but also to save others. Conveying this message to others and remaining steadfast and patient through the difficulties of distancing is important. This self-discipline in community, to do good for others and cooperation for achieving social-good, is more important in non-authoritarian societies because state enforcement of isolation may not be sternly imposed by government fiat there and people will have to abide by the instructions voluntarily.
While distancing and isolation is possible in the short run, it cannot remain applied easily in the long run because there are many economic and social costs associated with this. The ultimate rational solution is in generating immunity in sufficient proportion of the population to stop the virus. This would be done when a vaccine is discovered and administered to a significant portion of the population or when people get infected by the virus in a gradual manner and recover from it, thereby building a natural immunity. This may already be taking place without the realization of the people as it is known that many infected people remain asymptomatic, and therefore never discovered, especially in countries where the corona virus testing is not being carried out on a large scale.
In a new study the reproduction rate (R0) of the virus turned out to be 5.7 which is much larger than 2.7 estimated in the earlier studies. This indicates that the virus is highly contagious. Every infected person is passing the infection, on the average, to 5.7 other people. With such a high reproduction rate, about 88 percent of population is required to be vaccinated to stop the contagion. This is a proportion which is a considerably difficult task to accomplish within a short time period even if the vaccine is invented and made available right away. However, the good news is that it is quite likely that by now 30 percent of the population may have already been infected and cured without any severe symptoms in the countries where the virus has peaked.
Support for Survival
All of this means that social distancing, mandatory lockdown and isolation will continue for some time. This has several economic and social implications, and these are clearly visible now in societies. Most economic activities cannot continue as before, mobility gets restricted and work gets halted, earnings of daily wage laborers vanish, and demand for all goods and services decline except for the essential goods. This along with a sharp drop in supply of all goods and services due to production shutdown. The downward shifts both in supply and demand has adverse consequences for businesses as well as work force. The supply that is coming in the market, at present, is mostly from the available stocks in the warehouses and inventories in the shops; very few are from new production activities.
In countries where the lockdown is stringent, the problems in the intermediate run are two: one is of maintaining the logistics of delivery of essential goods and services from the stocks to the shops or to the door steps of the consumers. The second is of providing income to the people to enable purchases for their essential needs.
Access to Money and Income
People need income for their current needs. They also need income to pay for their past obligations which may exist in various forms such as debt of credit purchases, payments due for rent, utility, education, and outright loans. All these create a burden on the individuals and the households which is exacerbated by disappearance of income and earnings. One possible method to reduce this burden is to write-off some of these debts of the poor by the richer members of the society and the government. Another possible solution is in the form of extension of due dates of the payments. In this time of lockdown, even the rich may face issues of payments due to limited access to the payment systems, declining prices of assets due to contraction in demand and the drying-up of liquidity of the assets they hold. Concession by the creditors by giving people more time to payback their debts is important for all. Both these measures, reduction of debt obligation and extension of time to pay, are encouraged in Islam and they are on the agenda of many governments across the globe. The difference is in the way these are implemented, which counts for the huge difference in the impact of these policies on the deserving poor.
|Country Examples of Government Assistance to Individuals and Families
|Method of Payment
|In the U.S. through the economic stimulus relief every taxpaying citizen with income below a limit (e.g. for individual filer with an income less than 75,000USD) is granted 1,200 USD one-time assistance sent to his/her bank account. An adjusted payment is granted for income limit between 75,000 to 99,000USD.
|Transfer to bank account
|Banks deducting any payments that are owed to them or to a debt collection agency by the account holder before crediting the stimulus money in the respective accounts.
|In Canada, every citizen is to be paid 2,000 CAD per month for four months as emergency response benefit.
|Transfer to bank account
|In Pakistan, all deserving citizens with low income are to be paid 12,000 PKR
|Physical collection of check or cash
|Indonesia has several programs. One specific to cash transfer to families is: Partnering with the Social Affairs Ministry, the Jakarta administration is to provide Rp 1 million to each household for a targeted 2.6 million residents, comprising the poor and vulnerable groups, between April and May, in Jakarta.
|Transfer to bank account
|The ministry has data only on poor residents who have been registered in the government’s social safety net programs. They do not have data on the vulnerable residents. Incomplete data on the targeted residents, thus posing a challenge to the plan.
|Saudi Arabia initiated several programs for businesses, SMEs, families and the expatriate population. The ones that specifically addressed the families and individuals are: $1.06 billion (SR4 billion) to support low income families in 2020.
|Details of operation are not known.
|Another program in Saudi Arabia: Public sector workers will continue to receive salaries, and government has further announced to bear 60% of employees’ salaries paid by the private sector to Saudi nationals for a period of three months and ceiling of $2.39 billion.
|Transfer to bank account
We also learned that the existence of data about the citizens and their economic status, existence of electronic payment channels, wider inclusion of people in the electronic financial networks also mattered for the swift response and delivery of coordinated help. These are the areas that need to be further developed in IsDB Member Countries even in the post pandemic era.
Maintaining Logistics and Delivery of Goods and Services
The other issue in supporting the survival has been making available the essential goods and services. The pandemic and the resulting lockdown have a positive aspect, in that they have reduced the demand for all non-essentials and increased the demand for essential goods and services such as food and other important items. However, there has been a logistics problem both for the consumers and the suppliers to bring these essential items out of the storage to the retail shops and to the doorsteps of the consumers. The need for improved access to payments services is frequently talked about, but the pandemic has also exposed the weaknesses in the logistics for physical delivery of goods and services that require a host of different service providers to complete the task.
Various web-based aggregators became handy and some new ones also came into existence. The aggregators are web platforms that do not own the assets but bring together a large number of service providers and match them with individual customers. All these aggregator services work well if there are a large number of suppliers and a large number of delivery persons. Uber and Careem work because there are a large number of drivers (suppliers) to cater to the demands. If one is not available there is another one to fill his place. Aggregators organize, the unorganized, densely populated sectors like hotels, taxis, etc. and provide their service under their own brand or just as a service provider.
The Aggregator Services, for example, include:
During the pandemic some of the commercial aggregators and delivery services that faced unemployment due to the shuttering of many commercial businesses were transformed and used for delivery of donated rations, food and medical supplies by the philanthropic and social work organizations. Thus, the workforce found an alternate, albeit reduced, form of earning. This has been a unique combination of voluntary, philanthropic, and commercial sectors uniting together for a cause.
There is a need to further develop social aggregator services. These will have several advantages from the perspectives of donors and deliverers of those donations to the needy. These will also have several advantages for the government and policy makers working in possibly some newly conceived Ministry of Help.
Advantage for donors and deliverers:
Advantage for Ministry of Help:
The data created and the learning made through this type of service will also enable the donors and the government to identify and reach out to those who, for various reasons, such as illiteracy, cannot fully participate or do not have access to smart phones or have a weak network service.
It is clear that the novel corona virus is going to bring about major changes in the society, its social priorities, the organization of economy and finance. The IsDB has also launched an innovation competition to address the challenge. The new era will be different in economic organization as well as in its ways to handle production and distribution. The coronavirus pandemic may give rise to the importance of the healthcare system and the reorganization of work and production. All these are expectations. However, the key question facing us so far has been what ought to be our response for survival. In addition to all the strategies and actions discussed above, our repentance to Allah and efforts to cause correction are important both for immediate survival and future prospects. The future readiness will come next. In our next blogs we will discuss issues regarding future positioning of economy, finance and Islamic finance.
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