Joseph, the Pharaoh and COVID-19: The Importance of Saving Money for The Future
Saving for tougher times has proven to be the best way to face the current COVID-19 crisis. So why does it generate such a hard resistence?
By Jorge Andrés Galicia Rodríguez
In the book of Genesis, Chapter 41, the story of Joseph and his interpretation of the dreams of the Pharaoh is narrated. In the first of these dreams, the Pharaoh saw seven cows of extraordinary appearance, healthy and well nourished, then seven other cows appeared very ugly, skinny and obviously malnourished, this last group devoured the first cows seen by the ruler. In the second dream something similar happened: the Pharaoh saw seven ears that looked “full and beautiful”, and these ears were subsequently consumed by others of “skinny and dejected” appearance. Joseph, using the wisdom given to him by God, interpreted the dreams as follows: both the seven healthy cows and the seven overflowing ears represented seven years of great abundance on earth, while the seven skinny cows and the seven scrawny ears represented years of scarcity and extreme famine.
The Pharaoh, having seen the wisdom of Joseph, decided to put him in charge of all Egypt, making him the second most powerful man in that land to prepare the kingdom for the prophesied scarcity. Joseph then decided to save all the surplus food that was produced during the seven years of abundance, which is why Egypt not only did not suffer from the extreme hunger that actually occurred after the completion of the first seven years, but also had the ability to sell food to the rest of the neighboring nations.
The entire world is currently waging a war against a microscopic enemy called SARS-CoV-2, better known simply as “coronavirus.” This war has almost completely paralyzed all of the most important economies on the planet and has forced the different governments of the world to assume tremendous costs to mitigate the impact that the massive spread of the virus is having on the entire global population.
It is in situations like this one when we can better understand the profound wisdom that Chapter 41 of Genesis exhibits, because those countries with healthy and reasonable levels of spending (meaning those that saved money or have low levels of debt) are precisely the ones that now have the ability to spend more and therefore offer a more robust response to face the crisis.
This is the case of Peru, for example, whose government has allocated a total of 90 billions of soles (US $ 26.40 billions), a value that represents 12% of its GDP, to protect Peruvians from the spread of the virus and its economic effects. It is worth remembering that Peru has been one of the least indebted countries in the entire Latin American continent for years and one of the most responsible with its public finances.
On the contrary, we see countries like Argentina and Ecuador having a very limited reaction capacity, the first one was barely able to allocate some 5.7 billion dollars and received a loan from the World Bank for 35 million dollars, while Ecuador is debating whether to continue paying the pre-existing external debt or to allocate more resources to fight the pandemic. They are on the verge of economic default. I am not even going to get deep into the case of Venezuela, a country that a little over a decade ago was experiencing one of the greatest oil booms in its history, and despite this fact it is now one of the most indebted countries in the region and does not even have a legitimate government capable of receiving financial bailouts to cope with the global crisis caused by the pandemic.
In the old continent, we also see interesting contrasts between fiscally responsible countries and those that have devoted year after year to squander their resources. Germany, a country known worldwide for its tendency to save and for its fear of indebtedness, plans to allocate a total of 350 billion euros to alleviate the economic shocks left by the pandemic, for which they must assume a debt of some 150 billion euros, breaking for the first time in a long time with the German tradition of maintaining a deficit-free budget. Germany can bear these costs because of the great fiscal discipline they have exhibited for decades.
In southern Europe, we see the opposite effect; countries such as Spain and Italy are having serious difficulties to obtain resources to combat the spread of the virus, this is because lenders do not trust that these governments will have the ability to pay back their debts, so interest rates become considerably high. The hope of these countries now lies in a possible financial rescue granted by the European Union, which will accentuate the divisions among its members.
It is also worth highlighting the case of the United States of America, a country that already had a debt of over 23 trillion dollars and that, despite this, its government approved an additional budget of about 2 trillion dollars (the largest stimulus that has ever been approved in that country) to combat the effects of the crisis. The political machinery of Washington DC seems to be working night and day to saturate the borrowing capacity of the colossus of the north, and when that happens the consequences will undoubtedly be catastrophic.
The economist Romina Boccia, who is the Director of the Grover M. Hermann Center for the Federal Budget of The Heritage Foundation stated as follows: “Fiscal watchdogs, including this author, have warned lawmakers not to drive up deficits in cavalier-fashion during economically strong times because acting irresponsibly would set the government up for being less able to respond to an unexpected crisis and could accelerate the threat of a public debt crisis”.
Certainly humanity did not count on the luck that Egypt had in having someone like Joseph who warned us about the pandemic seven years in advance, but the truth is that it was not necessary, since God taught us through his writing in the book of Genesis the importance of managing abundance well in order to prepare ourselves for dire times.
Jorge Andrés Galicia Rodríguez is a lawyer and a speaker for Fund for American Studies.