The Upcoming Economic Downturn And What That Means For Southeast Asia
This is the first article that comes from a series of conversations with the International Blockchain Monetary Reserve’s Managing Director Sinjin David Jung, IBMR.io’s Head of Research Cyrus, and IBMR.io’s Head of Media Eric Tao.
Sinjin has lived and worked in Asia and Southeast Asia for most of his adult life, spending most of this past decade running a fintech company in the Philippines. He believes the current global leadership has never been tested the way they’re being tested now, and that it could lead to major societal problems and unrest during the world’s recovery. He talks about how governments and infrastructures throughout the world are currently being exposed as insufficient, and that it’s the poor and the working classes who will inevitably suffer the most.
But if there is a silver lining in all of this it’s that throughout the world we’re seeing examples of people organizing themselves to take better care of their communities and solve the issues that their governments couldn’t solve. Be it delivering food to those who need it or procuring much needed masks and PPE for frontline healthcare workers, people are coming together and looking out for one another. And that gives us hope.
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Eric: Recently there was a Wall Street Journal editorial that suggests that we may soon be facing a dilemma, a terrible choice to either severely damage our livelihoods through extended lock downs or to sacrifice the lives of thousands, if not millions, in a fast spreading virus.
Sinjin: To go really historical, the population of North America before the Europeans had arrived was estimated something like, I don’t know, was it like 100 million? They came with their European diseases and the Native Indians didn’t have any immunity. And then you have settlers coming in 100, 200 years later, and they’re like, “Wow, a lot of this land is not occupied.” And the reason why is because there’s been like literally 100 years where all these Native populations were wiped out and nature literally reclaimed the earth.
And you can see that happening right now. They say in India, that for the first time they can see the Himalayas again in like the last 60 years. And now we can sense tremors in urban centers because there’s not many people running around. And then you have stories in Italy where goats are invading villages, because now there are no people running around. So it’s kind of crazy to think about the effect of humankind and the effect on nature. And the reality is, we have such a huge impact. And then once that impact is kind of gone, nature will come in and really do their thing again, really make things right.
Eric: It’s only really been a matter of weeks, when you think about it.
Sinjin: Yeah, exactly. And you see the kind of impact we have, but Earth will go on and humanity will go on. And at the end of the day, this comes down to leadership and the current leadership that’s out there globally, hasn’t been tested. They’ve never been challenged in this particular way. And you look at Korea or China or Taiwan, Hong Kong, where we had the SARS, the governments are at least aware of, or were prepared enough to have an understanding of what this could end up being. Now, not to say that everyone did it perfectly at all, I mean, there’s a lot of criticism to be shared. And the biggest thing is what held a lot of leaders back was the economy, right? What are the economic effects? What are the globalization effects? Closing down your borders was akin to a diplomatic insult, right?
And so let’s say that hypothetically every single country, once they realized the COVID issue, took it seriously and they went overboard and they all closed their borders, including China, for a matter of a month. That kind of mentality actually came into play in the US probably about like three weeks ago (late march) when they realized if they don’t do this, if they don’t go for broke, then we’re looking at like a three to four year, five year pandemic, however, it turns out.
Eric: And millions dead.
Sinjin: And millions of lives. And how nature decides, right? So it’s a question of, if you prolong the economic shutdown, then the actual real effect, is not really the economic effect… it will be that we get into this kind of massive, great depression and crime, livelihoods, quality of life for every single child who isn’t from a good socioeconomic class will be affected for the next, whatever, 40, 50 years of their life. Whether it’s malnutrition, whether it’s a trauma, whatever like that.
Eric: So now are you saying that as a worst case scenario or is that what’s upcoming?
Sinjin: No. I’m saying that as kind of like an argument on the other side, because some people are saying, it doesn’t matter about the economy at all, we’ll get through it whenever we get through it. But you know, there is a point to say, yes, the economy does matter to a degree, okay? Because at the end of the day, okay, we will eventually have a vaccine. I know there’s some people who are saying like, “Well, maybe it doesn’t come at all. I mean, look at HIV.”
Cyrus: I mean, what if it becomes just like a partial vaccine, sort of like the flu vaccine where you can take it every fall, but inevitably you’ll get the flu once, maybe twice in the winter time. What if that’s the vaccine where it’s not 100%? What happens then?
Sinjin: Well, even if it is, then at least it’s manageable, right? We can get back to work. And then there are ways that you look at Asia itself. So I mean, it’s kind of manageable all in all, but what I want to say is that, there are people who are like, okay, well, the economy is extremely necessary, let people die. And there’s other people that are saying the economy is not necessary at all, let’s save everybody and so on and so forth, right? But I’m going to say that obviously you have to lean on the side where the economy is the economy and it is, how do I say, it has to take second place to lives. But in the long-term, if you don’t solve a way to get the economy back on track, then it will impact the long-term outlook for lives as well, or the quality of life, right? So I really wanted to get a balanced kind of approach to this, not in the sense of balancing both sides out equally, but at least understanding of the short term, midterm and long term context for it.
Eric: I like that. That’s the best way I’ve heard it put so far. Right now, America is so polarized. You’re hearing one side or the other. You’re hearing, “We have to focus on lives, screw the economy,” or you’re hearing the opposite, “screw lives, focus on the economy.” You put it really in a nice way right there.
Sinjin: Well, I think the main thing is like, we are strategists at our firm and I’m a trained strategist professionally. And the biggest failing for most people who look at extremely complex problems is that they only look at it in a snapshot. So what is going to happen now? What’s going to happen five years from now. What’s going to happen 10 years from now. And that’s it. And then they extrapolate from whatever the snapshot they see right now. And there’s a very easy and basic 101 strategic tool that everyone uses is SWOT, strength, weaknesses, opportunities, threats, right? And it’s so good because if you are of zero strategic mind, it’s good to kind of take a reality check of where you’re at. What the situation now is and then what the effect is going to be a week from now is going to be different and it’s going to change. And also what is true now is also going to change one week from now.
So yeah, I mean, if you kind of look at it that way, I mean, you end up being a lot more reasonable, but it’s, it’s really crappy for soundbites, right? Like everyone wants a really extreme position. Nobody really wants to kind of have this kind of balanced position because it’s difficult to stomach because everyone wants an opinion one way or the other.
Eric: Maybe even difficult to get your word out. We’re in such a soundbite culture, where social media becomes an echo chamber and whoever has the most soundbitey soundbite is the one that gets echoed.
Sinjin: Absolutely. When I was studying political theory in undergraduate, I asked my professor, I’m like, “Well, obviously it’s kind of in the middle here or whatever.” And then my professor said, “Yeah, but the people who said that it was kind of in the middle, never wrote these books, right? And the books are there because, or the great philosophers are there because they held their very extreme positions and then we could kind of like work back from that.” But he also gave me a wink and he said, “But the good leadership took everything with a grain of salt.”
So then it comes back to the leadership. I mean, you have the resource of these academics, of these observers, of these social scientists, and even these media personalities. And then you have the actual leadership and how they really absorb it. And again, we talked about this, I mean the leadership has never been tested like this. The leadership that we have globally right now is a leadership of growth, commerce and globalization, right? So outside of these three aspects, most of them are floundering and they’re finally kind of getting into gear at the moment.
Eric: Could that be a sign of how things are going to change when we come out of this? That our societies are structured around growth, globalization, and now we’re encountering something that’s going to prohibit all that?
Sinjin: Absolutely. I think it’s not a matter of prohibiting, I personally think that this is more of a call, more than anything else that we need to include, not just growth, globalization and technology and commerce into the conversation of what leadership is, but also a call to equality, a call to more humanitarian parties, not as an afterthought, but as a reality that, when you have a pandemic, it affects everyone equally. I don’t care how rich or poor you are. Even the world leaders who have the best security, the best health ministers around them are getting smashed by this virus.
Eric: So let’s dive a little deeper into that. So one of the things that I’ve been thinking about lately a lot is what’s happening in other parts of the world. We know what’s happening in America, we know what’s happening in developed nations, but what’s going on in emerging markets like Southeast Asia or India, what’s happening there? And I know Cyrus, you wrote a couple of really excellent articles about this recently. I’d love to get your guys’ thoughts on what’s going on there.
Cyrus: Sure. Absolutely, Eric, I mean, I think that the way to think about the emerging markets is that they are faced with a series of extra challenges that the developed world does not need to face. So they still have to face the pandemic, albeit with weaker health systems and infrastructural systems and weaker economic systems in many cases. But in addition, they also have a series of other challenges. Namely, there is normally less secure social security and welfare nets. The ability to actually do social distancing effectively in the slums is next to impossible.
Eric: Right I mean, what’s going to happen there? I mean, if you have hundreds of thousands of people living together and social distancing is impossible, what’s the outcome? And I know it’s already starting to happen in…
Cyrus: Well, I think that’s why the outlook is incredibly ominous. It’s that you have a virus that doesn’t discriminate and will be operating in an environment that is absolutely conducive to its spreading. You layer on top of that, that people in these areas, they tend to have somewhat weaker immune systems. They are, on a per capita basis, not as well nourished as their counterparts in the developed world, so by extension, would be less able to withstand any potential infection. And then when they do become infected, not having the means to then go and find effective healthcare. So I think this is really the main challenge facing the world today is this ticking time bomb in the emerging markets. And Sinjin, it would be great to hear your thoughts in general, on how you see this panning out for the developing economies.
Sinjin: It’s a matter of that in their own countries, a lot of the people who are severely disadvantaged in these emerging markets, they were never taken care of in the first place. So the economic elites in these countries or the government in these countries, they’re pretty much going to let these people fend for themselves as they’ve always fended for themselves. And it’s going to play out basically as nature plays it out in these countries, unfortunately.
Eric: So survival of the fittest.
Sinjin: It’s not even survival of the fittest. It’s basically like cannon fodder for the economic elite. A sacrifice almost, it’s even worse than that. It’s like the Aztecs making the sacrifices and hoping that things change and the rain comes, it’s that brutal. So these people were already in an unstable situation without rights, without representation, without medical care in the times where the countries are even being pressed for medical care for even the established economical elites. There’s nothing for these people.
And this is such a brutal situation for them that, even if the governments were to kind of step in and do something for it, they don’t have any infrastructure or they haven’t been built out for this kind of thing previously, so they’re not going to be able to do that right now either. So it’s such a dismal situation and I think more than anything else, what we need to look at is, from this moment on, I mean, we shouldn’t come away with this without ignoring anyone. And I think the biggest people that can help are in the developed nations and they themselves have such little exposure and understanding about how dreadful and how terrible the situation is in these emerging markets, and now for the first time they’re going to have some empathy because they can see it in their own backyards with their people who are excluded or marginalized in there own societies, and maybe there can be some empathy moving forward.
But on the flip side of that, because a lot of these economies are not dependent upon the urban working poor for their real economic engine. Again, this actually may not hit them as hard for Southeast Asia or these kinds of emerging markets.
Eric: Economically.
Sinjin: Economically.
Eric: But socially, it’s going to hit these countries.
Sinjin: Socially, I don’t think it’s going to hit these countries either because they’ve already dehumanized so much of their population who are not direct or really strong contributors to the economy in the way that they want them to be. And it’s almost as though, here it is, we’re in medieval Europe and here are the peasants and let’s send them out and whatever happens to them, happens to them and then we’ll be fine. And that sounds very brutal, but life in these countries is extremely brutal for these individuals. And even after this, will the urban working poor rise up and say, “Why were you not there for us?” I don’t think they will be able to because they’ll even be more demoralized and even more brought down and even more struggling to survive and to hold on to what they can do to rebuild their family and their lives.
So for the economic drivers in these countries, because they’re so under-performing anyways, and they have a lot of resources, I think they’re going to bounce back fine, and we’re talking about Southeast Asia. For the urban working poor and the social effects on them, they are going to further be marginalized, they’re going to further not trust the government, but they are going to be so desperate that they will take whatever handout or whatever short term alleviation they can get, just because they need to survive, and their expectations will have dropped so low.
And I think this is the perfect time. That’s the wrong phrase, but I think this is an ideal moment where…
Eric: It sounds like those are the conditions for revolution, no?
Sinjin: You would think so, but for revolution, whether it was communism or whatever, whatnot, even the unions or whatever in the US, you had very educated people who were coordinated and able to do something. In Southeast Asia, because of the nature of the culture where it’s not as individualistic, it’s harder to bring people forward in that way.
Cyrus: I think the other way to think about it, Eric, in terms of revolution, is that if you look through history, very rarely do societies go from base zero to revolution. Often there is actually an attempt in the middle at social reform, and only when social reform has failed or rather has been ignored by the political elites, do the masses then revert to revolution. So it isn’t always a direct highway to revolution. And we can see this example. For example, if we look at Russia, there was an initial attempt at constitutional and political reform in 1905 and only when that was reverted back to autocratic rule by the Czar did 1917 happen, and this has played out in many different societies historically. So I think it’s really on the onus of a lot of these emerging economies or developing economies in Southeast Asia to take a leaf out of history and say, actually revolution is avoidable, it’s not a fait accompli, if there is social reform done beforehand.
Eric: Do you trust these governments to do that, to be that forward thinking?
Cyrus: Anything is possible, but with every revolution, there always has to be a leader, a political leader, and every market will have its own dynamics.
Sinjin: Let me interject here. For Southeast Asia specifically, I don’t think there will be that leadership or that revolution in this way, because the economic elites have so much power that they can basically destroy any revolution that starts based around one person or one group of people, and they can police the population. But the beauty of what we’re talking about with ARCC and decentralized networks is that yes, they can take down a Facebook post that says, “Come here and gather.” But if we can incentivize and grow, and we can back a movement with data that is decentralized, then everyone will become that leader. Everyone is essentially saying, “I am joining up with this ethos that I believe in. And I will take an initiative on my own in conjunction with, simultaneously with all these other individuals.” And that is a decentralized network, when all the nodes are acting in unison with each other and not necessarily just correlating with each other, but actually pushing the agenda forward on their own, in step with the others.
And in some ways a decentralized network, if we’re able to establish that where, individuals are able to say, “Look, by myself I can’t do much, but if everyone is doing the same thing that I’m doing at the same time, then that makes a big difference!” and they can see that. And in order for that to happen, though, we have to create not only the network itself, but the incentive to create that network. And so I think this is showing, more than anything else unfortunately, the limitations of what we can do now. And it’s even worse because in this case, the leadership has completely failed us globally. There are very few countries that actually had their eye on the ball on this. So, if all the leadership fails as in a pandemic, the next time this comes around, can we really depend upon the centralized leadership when they have other agendas other than our own welfare at heart?
I don’t think we can. I think, I think we will end up having to still work hand in hand with leadership, absolutely. But I think if we can create these decentralized social economic networks that allow us to coordinate people and then see on the ground, what’s really happening. Like for instance, testing, right, of the COVID-19. Maybe if we had testing apps like this, originally, even if it’s anecdotal, we would have a much better idea of what’s really kind of going on, but there were political things at play. The US government wasn’t prepared. There wasn’t enough stockpile. People were price gouging, the hospitals couldn’t get for their first responders and the front lines for these masks and stuff like that. So a nonpolitical, purely humanitarian based agenda. That’s not going to happen unless we have a decentralized network that works for that. And I think this is a real call to that. That in a pandemic situation, it’s not a matter that we can’t trust government. It’s not enough. It’s not enough.
Eric: It’s not that they can’t, it’s that they can’t service the people, right? I think that what’s being exposed right now in the pandemic is that governmental systems and societal structures, infrastructures, are being exposed as not enough. And I know Cyrus, you’ve written a couple of articles recently about this very fact, and I’d love to hear your perspective on it.
Cyrus: Yes. Well I mean, I think one ray of light, one silver lining to all of this actually is really the possibility of the fundamental reconstitution of society as we know it. And what I mean by that is really a reemergence of activity amongst people to get things done, to not wait for any guidance or direction from government, to work using their own networks, whether it be through social media or through the internet more broadly and come together in order to find a solution to a problem that is actually affecting their community.
And there’ve been countless examples of this across the United Kingdom, whether it be villages in Scotland or communities in London or Manchester, where people coming together in streets or in avenues and delivering food to the local care home, or providing medications to people who need it along the street. They’re not waiting for a centralized authority from above to come down and provide them with the answer. So that is really pointing to an innate ability of humans to innovate, to solve problems, and I think that’s really going to continue afterwards having that refocus towards your local community and everything that ARCC is doing is going to play into that as well. So that’s hopefully one ray of hope in a pretty bleak picture that I can think about.
Sinjin: I don’t know who that quote was, you guys can let me know, but they say, “Never let a good crisis go to waste.” And when I was attending Harvard Kennedy school for my Executive Public Policy degree, that was brought up a lot because governments don’t act, policy makers don’t change, bureaucrats don’t change unless there’s a crisis. And we’ve never had a crisis like this in our modern history. A pandemic, when we also have the technology and the surveillance and the tools for tracking all of this. And when you can actually see, because like, you talked about climate change, and we say, “Look, we got to do this or this is all going to happen.” And then we’re like, we can’t envision what would it be like if humanity actually did a 180… and for the very first time we can see it, man.
So a lot of truths are happening and I think a lot of realities that were based on people’s close mindedness and speculation, or a lack of wanting to change has conformed. You can tell me, and you can say to me, “Hey, you know what Sinjin, there’s not a study about masks yet that is truly definitive or we’re not sure whether it’s asymptomatic or whatever, whatnot.” And I can say to you, “Look, I ain’t going to debate you. Here’s the facts. Look at the countries that wear a mask, look at the countries that don’t wear a mask. That’s a fact. You don’t think that there’s asymptomatic spreaders, you don’t think it’s that contagious. Here are the numbers of infections. Here is when they’d gotten infected. These are all facts.” So what I think the real benefit of not wasting this crisis is that instead of like, people speculating as to how much impact do humans have on the environment and what can we actually do?
Now, we can point to facts. Here, what is the effect of humans on the climate? What are the possibilities of coordination? And basically what are the facts? And instead of just being in this post-modernist hyper-speculative world focused on our own selves and what we think is correct, and therefore it is correct because we can basically buy our way into making our own reality or ignore what the future is, there’s no ignoring this. And so I’m pretty actually optimistic and hyped up for the future. I mean, it’s a massive cost and what will be even worse is if we don’t take this massive cost and turn it into something great. That will be the biggest loss of this pandemic to just simply go back to the way things were and look to establishing the way things were before, rather than creating a new normal.
The new reality will be, you can’t just hide behind some bullshit facts or speculation or one-off studies and say, “That’s not really true.” Because we’re going to have a year of data. And people will say things like, “Oh, well that can’t happen, humanity can’t change that quickly or whatever like this to reduce pollution or humanity can’t create a social net that quickly or whatever like that, and we have.
Eric: And we have, yeah.
Sinjin: And we have, and we have, it is possible. I love Elizabeth Warren. I’m a super big fan of hers, even though I’m a super massive capitalist. I love her. I just love her on so many levels. And I think I love her because she’s a strategist and I’m a strategist, and she’s saying, “There needs to be structural change.” And I agree. And everyone’s like, “Nah, it’s just too much.” And maybe a lot of structural changes she wants is a little bit, like I don’t agree with her on all the structural changes she wants as well. But on the point that structural change is required, absolutely. And I think this has proven her proposition as well.
Not to get political, US political, but I want to say that leaders like her, or at least in that frame of mind, that’s what we’re going to look for, for the next generation of leadership and the new normal. A new normal that is really in touch with humanity, empathy, and not as a kind of a side issue of how do we have growth and commerce and capitalism with a little bit of humanity as an afterthought? No. Like how do we do this with being human? And that will be the biggest positive change out of all of this.
The International Blockchain Monetary Reserve is an economic development reserve established to promote inclusive financial development for the urban working poor in emerging markets. IBMR.io has just launched ARCC, the Asia Reserve Currency Coin. It’s the world’s first digital microasset. ARCC are debt free sources of capital for entrepreneurial investment, specifically allotted for the urban working poor, and are a new form of microfinance that exists outside of the established financial and credit systems.
