Rush to a conclusion: Latin America’s lockdowns

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Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. The Trump administration has again tightened rules on issuing visas, but this time it's gone after the kind given to highly skilled workers. It's not clear just how much that will hobble industries such as tech, but it seems certain to delight President Trump's base. Southern France is Europe's biggest tourist draw, or it usually is. This year, things are rather different. Pretty much the only visitors are French. The Riviera feels a little like it must have done in the 1950s. Great for tourists, terrible for business. First up, though. With more than 2 million infections and 100,000 deaths, Latin America has become a new center of the pandemic.

We've seen a persistent and progressive increase in cases in Central and South America, and it is of deep concern.

A lot of attention has been on Brazil, second only to America in numbers of infections and deaths. But the coronavirus is also ripping through Brazil's neighbors. In a region with high urbanization and inequality, where social distancing is less easy to enforce.

We have big cities like Rio, Sao Paulo, Lima, in where they are surrounded by belt of poverty and inequity.

Lockdowns in Latin America have been varied, but many share one trait. So Far, they haven't worked. That's why it's so worrying that countries in the region are already starting to open up.

The pandemic in Latin America took a while to accelerate.

Richard Enzer is our Mexico City bureau chief.

We are now at a point where the daily number of cases being reported in Latin America is worse than the outbreak in Europe was at the peak in April. And the same with the American outbreak and its peak. Latin America, what it's going through right now is worse than anything that any region until now has seen during this pandemic. You can see this just about wherever you look. Brazil has recorded more than 50,000 deaths. China Chile has one of the highest infection rates per person of any country in the world. And Mexico's epidemic shows no signs of easing.

And so why is it that the region is struggling so much?

There are lots of speculations that Latin America is very unlucky because of the population density or the rates of urbanization. But I think the main reason is because the lockdowns have not worked in the same way that they did work in Europe and in America, which is a very concerning sign, because if you can't curb your COVID epidemic with a lockdown, then how can you curb it?

And what kind of lockdowns were put in place?

I mean, do you see a trend across the region in terms of government responses?

The policy response by governments in Latin America and the success of their lockdowns has varied greatly. You have El Salvador, where the president's lockdown is so strong that people accuse him of acting like a dictator. And then you have Brazil, where Bolsonaro looks utterly uninterested in. In trying to do anything about the pandemic. And in Nicaragua, Daniel Ortega has opposed no lockdown at all. But we do see lots of countries, be it Peru, Argentina, Chile, Bolivia, where there has been a concerted attempt to impose a strict lockdown, and that simply hasn't worked. What you normally want to see after you impose a lockdown is for cases still to go up in the first week or 10 days as behaviors from before your lockdown still start getting registered in the system. And then you want to see a dramatic U turn. What you see in Latin America is a curve that does not decline, but rather goes up, which means that you are getting further away from a situation when you can retreat from lockdown rather than closer to it.

So why haven't they worked in the same way? What has failed in locking down?

Quite simply, people have not been observing them with the same stringency that they have been in Europe, and authorities have not been enforcing them with the same stringency. Now, that is partly because there are so many people in Latin America who are informal workers, street vendors who do not eat if they do not work, and therefore need to leave their houses every day. And also, the patchiness of the Latin American welfare states means that the level of support that furloughed workers in London and New York have received simply isn't available in this part of the world. You can see a really big divide, Jason, between the way that the rich behave and the way that the poor behave. The rich are quite receptive to doing what the government tells them to do. In a pandemic, they will not go to the office and so on. But in poorer regions and poorer neighborhoods in big cities, you see a very different response. You know, I spoke to a Peruvian economist, Ugo Nyopo, who said that there is a detachment from the state, not just in a legal or economic sense, but also in a cognitive and emotional sense. People feel abandoned by the state. And that makes it very hard for a pandemic safety message to penetrate in this part of the world.

And what about Mexico in particular, where you're based?

Mexico is one of the seven countries that has passed 20,000 deaths. And if you believe an analysis of the death certificates in Mexico City, not the numbers that the government says are deaths from COVID but the amount of deaths this year that have been more than you would normally see, we are talking about possibly three or four times that 20,000 death toll. And Mexico is facing a problem that the entire region and the entire world is, which is after three months of lockdown, there is an enormous amount of fatigue. People, governments, businesses, are all desperate for some kind of exit strategy to get back to work, to see their friends again. But whereas European governments opened only when they could declare some major kind of improvement, lots of Mexican states and regions are opening up well before they are ready.

And what did the lockdown look like in Mexico now?

In Mexico, the government shut down the formal economy forcefully, but left the informal economy to operate as it pleased. It refused to apply what it described as authoritarian measures that other governments were taking. Now, the man in charge of all of this is not so much President Andres Manuel Lopez Obrador, but the deputy Secretary of Health, Ugo Lopez Gatel. And earlier in the pandemic, I spoke with him. He explained this somewhat nuanced approach to shutting down the economy, saying that you simply cannot treat the multinational company the same as the guy selling tacos on the street. Corner the lady walking the streets with her corn, because one of them is going to suffer a lot worse than the other. So they designed an intervention that was destined to hit that formal sector and hoping that they could keep a hold on the pandemic. Now, if we look at the numbers, I think it's fair to say they have failed to keep a hold in any sufficient way on the pandemic.

And yet you say Mexico is starting to reopen. I mean, is that the story across Latin America sort of success or failure opening carries on?

Some countries are persisting, some are trying to transition to a regionalized, gradual reopening. And it allows you to make sure that if you do open too early, you don't unleash a new massive wave of COVID 19. Although in countries like Panama and Chile, that's exactly what happened when they tried to reopen their economies in May. They're both now trapped in epidemics that are worse than the ones that they thought they had conquered.

So why is it then that governments are rushing to open when they're not ready? Is this purely an economic consideration?

Now, what's driving this is a prediction that this region is going to be absolutely devastated economically from the fallout of this pandemic. The World bank is expecting a contraction of the entire region's economy by 7.2% just in this year. That's more than any other region in the world. Countries like Mexico and Argentina are heading for double digit drops in their economy. What's going through the minds of a lot of decision makers all across the region is, on the one hand, the pulverisation that you're getting from this disease, and on the other hand, the pulverisation from economic inactivity, increasing levels of poverty and social unrest. There is no comfortable, easy decision when you are faced with such a choice.

Richard, thank you very much for joining us.

Thank you, Jason.

To follow all of the Economist's coverage of the COVID 19 pandemic and how it's swiftly reshaping the world, visit economist.com coronavirus. President Donald Trump has found a remarkable number of ways to choke off the inflows of foreigners to America.

Tonight I am speaking to you because there is a growing humanitarian and security crisis at our southern border. Nearly 180,000 illegal immigrants with criminal records. Build that wall. Build that wall.

Before the coronavirus crossed the border, his administration cut arrivals of undocumented migrants most effectively through his immigration deal with Mexico.

It's sad that when you think of it, Mexico is doing more for the United States. As of now than Congress.

But this week, Mr. Trump upped the stakes again, suspending visas for highly skilled workers until the end of the year. The White House says it hopes the move will help Americans to find jobs. But critics say the pandemic job slump is being used to justify a fierce immigration clampdown.

So the executive order that was announced on June 22 will stop immigrants from coming to America until the end of the year. And this will affect those who are applying for new visas. This includes highly skilled and professional people who'd been hoping to come here.

Adam Roberts is the Economist's Midwest correspondent and is based in Chicago.

So the order affects four visas. One of them is the H1B. That affects especially people working in tech companies. And most of those, about 70% of those are workers from India. The next one is H2BS. That affects lower skilled people, maybe those who are working in landscaping, maybe outdoors, work more often. Then there's J visas, that's cultural visas, but it's also au pairs, maybe some academics and temporary summer workers, maybe who are going to come and work as waiters or ski instructors or something like that. And the last one is L visas. That's for professionals, people who are being moved within companies. Managers may be shifted from London to New York, for example. They may well come on an L visa.

And how many people will that affect across those different kinds of visas?

Well, this is where it gets hard to pin down the exact numbers. Some have talked about this affecting 500,000 people this year. What's tricky to actually know, though, is how many people were anyway going to get those visas because the pandemic coronavirus means that US Consulates have been closed and so many people have been trapped, in a sense, not able to get back into the US Anyway or able to start jobs they were hoping to start. So it's hard to be clear yet how many people are really going to be affected by Trump's order.

But in any case, it seems like a big escalation of the Trump administration's immigration policy, which has mostly targeted low skill migrants before now.

Yes, this is a big escalation. This is something that many people had feared. If you talk to universities or to companies, they're very worried about the idea of choking off high skilled immigration. Trump previously, the government previously has been targeting lower skilled workers. If you remember Donald Trump talking about building the wall on the southern border stopp undocumented migrants coming in. If you look back over the last three or four years, he's actually been very effective in delivering on what he promised he's choked off the refugee program, which used to be a world beating program, which would settle far more refugees in the US Alone than all the rest of the developed democracies in the world put together. There used to be far greater numbers of undocumented migrants coming up from South America. But since a deal with Mexico's government last year, that's been choked off. And if you look at those who are applying for green cards and so on, that's become much harder to do in the last couple of years. But what makes this order different is it specifically targets the high skilled. And if you talk to those who want to employ the high skilled, they say there are not enough Americans in the country to do those jobs.

So then why do it?

It seems like a fairly self defeating move.

Then, yes, if you're just thinking about what's good for America, then it's a self defeating move. This is a mistake to choke off high immigration. We can see that that would be a f thing to do. But if you're only thinking about your re election and your Donald Trump saying, how do I win the election in November? You want to do a couple of things. First, you want to refocus the attention of the voters on the issue that you really did well with back in 2016, immigration. He believes that he won in 2016 because he really pushed that issue and he thinks he can do it again in 2020. And if he can stop people talking about coronavirus, economic slump, George Floyd and the rest of his problems, the that's a big gain for Donald Trump. The second reason he's done it is he thinks the Democrats are split on immigration. He sees the left wing of the Democratic Party talking about closing down ice, abolishing the border. It's quite radical on the left of the Democrats. And if he can encourage division between the Democrats on this issue, then he's a happy man. And the third reason he does it is because he doesn't want to be outflanked himself by even more hawkish figures of his own party who are even more strongly against immigration. And so you see that back in May there were four senators who wrote to Trump demanding that he close down high skilled immigration because of the coronavirus problems. And he doesn't want them to be staking our ground ahead of him.

But you say in particular that the case of H1B visas will really hit the tech sector hard. What do you think the effects there will be?

Well, we've heard this week from many figures in the tech industry, such as Google's boss, Sundar Pichai, who say that without immigration, there's much, much less chance that America can be a world leader in developing new tech companies and scaling up its existing tech companies. In effect, American tech companies rely enormously on importing talented workers, especially from India, to staff them up. And Donald Trump seems to think that they're just cheap workers. In reality, they're very highly skilled workers. And the United States so far has just not been able to supply enough of them to staff up its own companies. And so that's why we're hearing the tech company bosses talking about this as a very unwelcome move, a great threat to their industry. And they will surely be lobbying in the coming months, along with universities and other big employers of foreign workers, to tell the government that they must implement this order very, very carefully. Now, if you look at the order, it does include various waivers. So, for example, if you want to work in the food industry or the medical industry or work generally for national economic recovery, there can be waivers issued to allow immigrants to come in. And I think those tech companies will be lobbying hard to make use of some of those waivers.

So in essence, it's a fairly short sighted move just for the current political calculus. But what if Mr. Trump doesn't get reelected in November?

Well, one of the unknown questions about this is how much all of this is driven by Donald Trump and his personal political ambitions and how much this is a response to the same sort of forces that are affecting immigration changes in other countries around the world. We've seen nationalism, anti immigration, public opinion, it getting harder to travel between countries all over the world, in Europe, in Asia and elsewhere. And I think it would be naive to expect that just because Donald Trump left office, all these pressures would go away. I think that even if Joe Biden becomes president, although of course he'll be much more open to having immigration resumed, he may not undo everything that Donald Trump has done in the past four years. He may also feel political pressures to keep borders more closed than they have been before. There is a chance that we've seen the end of an era of very easy immigration and that politicians of all stripes will decide to make it harder to cross borders again.

Adam, thanks very much for your time.

Thank you, Jason.

This morning, the Eiffel Tower reopens after being closed for three months. Across Europe, cultural sites, museums, galleries, grand houses are opening back up to visitors. But mostly those visitors are just locals. For the head of the Pompeii Architectural park touring the ancient town practically alone is an almost metaphysical experience. In northern France, Monet's garden normally has 5,000 visitors a day. Now less than a fifth of that wander among the water lilies.

I think it's amazing that we can actually be here. I don't think there's a lot of people, so it's not, like, annoying that you're bumping to each other.

It's not just cultural stops. Across Europe, popular towns are having to imagine what the tourist season will look like without tourists. Nowhere is this a more dramatic shift than in the south of France.

Well, usually about 87 million international visitors turn up in France every year. In fact, it's the world's top tourist destination, ahead even of Spain.

Sophie Petter is the Economist's Paris bureau chief.

But obviously, because of confinement and the borders being shut, in the south of France in particular, there are restaurants and hotels have been shut for the past three months. They're only just beginning to open again. In Marseille Port, there are some enormous giant cruise liners that have just been berthed for months there without moving. So the region, particularly in the south of France, is taking a big hit that they reckon could be worth about 1.3 billion euros.

And you've gone to see what that situation looks like on the ground?

Yes. So I went to look at La Ciota, which is a port that really deals with maintenance. And usually at this time of year, most of the yachts, the super yachts that it maintains and refits in the winter, have already gone into the water and they're off to Cannes or Saint Tropez or beyond. And this year, it's filled with superyachts that the foreign owners just can't get to. So it's a very surprising sight. Just along the coast from La Ciotur is a really pretty little harbour of Cassis, an old fishing harbour. I was quite surprised when I got there to find how busy it was. This was at a weekend and the people were queuing in the streets for ice cream. All the terrace cafes overlooking the port were really busy. People were even queuing to get onto the beach because they have to be socially distanced. So they had to pick up an orange flag from the policemen to go and occupy there. They're allocated space on the beach. But when you actually go up close and ask people about this, it's really just French tourists.

And so those French tourists aren't enough by themselves to keep these local economies afloat.

Well, this is what I discovered when I spoke to the manager of one of the restaurants on the port. Is that although it looks busy, French tourists don't spend as much as the foreigners. To just give you an example, an average French tourist on The Riviera spends €16 a day. And if you take a Russian or American or a Middle Eastern tourist, they spend up to €150 a day. So the difference for these small family run restaurants, hotels on the Riviera is absolutely huge.

And so how do you foresee this playing out as things start to open up?

Well, I think July is still going to be difficult. If you look at the government forecast, it's expecting even French citizens to be only booking about 20% of the normal levels for campsites, hotels and holiday homes in the region and possibly back up to 40% by August. But even that's not going to be enough. They're really looking to get back to normal in the autumn, by which stage the season is really over. Local regional tourism committees are doing their best. They're launching advertising campaigns to try and reassure people about COVID 19 measures to stop it spreading. Spending some time in the region, one gets the feeling that people are relatively relaxed now. The waiters are wearing masks, but people aren't. There is a sense of sort of a return to normality, but it's quite hard to imagine that, I suspect when you're far away and you know that France has been hit by the pandemic.

But I guess given how strict the lockdown was in France, makes it that much nicer for the locals, that public places are a bit emptier for the French.

This is quite nice. You know, in a way, they're rediscovering what their country used to be like before the arrival of mass international tourism. And places like Saint Tropez were just little fishing village. And I think that there's a sort of secret pleasure to be had on the part of French tourists to find their country not overrun by by foreign visitors.

Sophie, thanks very much for joining us.

Thank you very much.

That's all for this episode of the Intelligence. If you like us, give us a rating on Apple podcasts and you can subscribe to the economist@examiner.com intelligenceoffer. See you back here tomorrow.