Foreign Policy Blogs

Insuring a Systemic Collapse

The present and future effects of a Covid shutdown on international society will have significant consequences on our employment, economy, taxes, and even those mechanisms that protect and insure us. New laws and regulations that would be considered a violation of consumer rights and protections, labour codes, and to some degree human compassion, are taking place in many countries at once.

Protections, even ones that favoured consumers to a greater degree, are being limited or outright suspended. Anyone who has recently tried to find a recourse for having their money returned has often been denied. One notable example are those seeking compensation for their air travel or hotel reservations as they are often being told that they are no longer owed a refund. This is occurring because many regional and national governments are aware that for many large companies, covering their usual contractual obligations with their customers might place those companies in the red, and might even end the existence of those companies altogether. For this reason, many governments are suspending or altering laws that protect consumers. While they are advising their customers to change dates, the worse case scenario may be that the company gets wound up into bankruptcy and those customers lose their investment altogether.

The basis for many large economies is that the governments, the banks, and the insurance companies need to be solvent in order for commerce and society as a whole to become successful. While a coordination to reduce or remove taxes from small and medium sized business entities would likely have the effect of saving employees their wages and accompanying insurance, the governments and banks seek to push the onus of the damage caused by Covid on those with less influential interests in society. For this reason, the Covid lock-down permeates the economic system, as someone in the chain has to pay for the debt. As governments offer trillions in financial support, impressions are widely positive. In many cases governments will go beyond the call to pull out all the stops, using taxpayer money in order to help in the short term, while piling on unsustainable, eye watering debt and deficits for the future. The reality however is that if there is no money, and the government will not be able to help when the next emergency comes about. For this reason there should be strict controls and oversight on spending during the Covid crisis.

The next crisis of confidence may be in the confidence industry itself. As we see above, many companies are not honouring their original agreements with consumers, leaving the consumer to face the losses. What occurs when a state or region runs out of employment insurance assistance? More taxes will surely result, but what occurs when a private insurance company faces bankruptcy? More often than not the insurance company will not pay out as they should, may put up administrative or legal barriers or just void the policies altogether and ask the governments to alter the laws so that the company preserves itself instead of servicing their clients. Even some labour laws are being altered so that severance payments can be cruelly delayed during a possible economic depression. With a lack of insurance, any losses or damages related to Covid (and those apart from Covid) could result in the termination of otherwise healthy companies and industries.

So it will be the case that any additional damage or losses to companies may not permit them to return, as insurance may be limited or non existent. The job losses will exacerbate as private people also lose their coverage, but also do not pay into the insurance industry. Governments may have a limited capacity to tax and spend as employed people are evidently not a good source of revenue. While it will be a rocky road ahead, there has to be balance, and that balance must be met with extreme transparency. Any government or company fleecing tax money from their customers must be held to account to a great degree. Any damage to society will be now felt by most of us, because corrupt practices in 2020 will significantly hurt us all.

 

Author

Richard Basas
Richard Basas

Richard Basas, a Canadian Masters Level Law student educated in Spain, England, and Canada (U of London MA 2003 LL.M., 2007), has worked researching for CSIS and as a Reporter for the Latin America Advisor. He went on to study his MA in Latin American Political Economy in London with the University of London and LSE. Subsequently, Rich followed his career into Law focusing mostly on International Commerce and EU-Americas issues. He has worked for many commercial and legal organisations as well as within the Refugee Protection Community in Toronto, Canada, representing detained non-status indivduals residing in Canada. Rich will go on to study his PhD in International Law.

Areas of Focus:
Law; Economics and Commerce; Americas; Europe; Refugees; Immigration

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