The world is living through a truly remarkable, era-defining moment. This short essay is an effort to provoke you a bit, to add some turbulence to your mental tranquillity, and to suggest we need to ‘break the glass’ when it comes to international economic cooperation. My basic theme, or reprise is: “If not now, then when?”
An era-defining crisis
Covid-19 and the seasonal flu are very unalike both medically and economically. The flu causes a severe but short disease. As long as you don’t die, it rapidly fades leaving few traces on the future. Covid-19, by contrast, can have very long-lasting medical effects. The same is true of its economic effects. There’s no going back to ‘normal’.
The Covid-19 vaccines will normalise things a little, but this ‘normalcy’ will be skin-deep. Five years out from now, looking back at the turbulence of 2020, you’ll be able to refer to the ‘before times’ and everyone will know you mean ‘pre-Covid’. This may sound like an exaggeration, but it is not.
There are lessons from the thinking during the last big shock – the 2008 financial crisis. At the time, many pondered how long it would take for normality to return. But it never did. Trends in productivity and trade shifted with the 2008-09 shock and haven’t shifted back fully. Indeed in 2019, you could say ‘before the crisis’ and everyone would know that you meant before the Global Financial Crisis.
In the heat of the current battle, many are seeing the Covid-19 crisis from a similarly simplistic lens – thinking it will pass quickly.1 It won’t. The Covid crisis is much larger, much deeper, and much broader than the 2008-09 crisis. The shockwaves are much more powerful. They are leaving lasting economic and social ‘craters’ all around the world.
The scar tissue building up
The pandemic has tipped the world into the deepest and broadest recession in living memory. It has killed millions directly and many more indirectly, and it has sickened tens of millions. Both numbers are likely to have an extra zero on them before the disease is vanquished. Companies and countries have piled up debt stocks that will alter their economic and financial prospects for decades.
But these broad statistics – awful as they are – hide the most damaging scar tissue that is building up. Global poverty is rising for the first time in decades. The World Bank estimates that between 80 and 120 million will be pushed back into extreme poverty. The virus has led to millions of people going hungry, with an estimated 12,000 people dying every day from pandemic-related hunger (Oxfam estimates), on top of those who are succumbing to the disease. And this is not just a problem of poor nations. We’re witnessing kilometres-long food lines in Texas.
Children across the planet are losing out on critical early childhood education. The UN found that “the COVID-19 pandemic has created the largest disruption of education systems in history, affecting nearly 1.6 billion learners in more than 190 countries and all continents. Closures of schools and other learning spaces have impacted 94% of the world’s student population, up to 99% in low and lower-middle income countries.”
Reading scores and educational outcomes have suffered. Given the long-lasting impact of early childhood training, the OECD predicts that: “the impact could optimistically be 1.5% lower GDP throughout the remainder of the century and proportionately even lower if education systems are slow to return to prior levels of performance.”
As parents are critical in passing literacy down the generations, today’s learning losses threaten future generations. It could erase “decades of progress, not least in support of girls and young women’s educational access and retention.”
This is why we must think of Covid19 as an era-defining event. The question is: will the pandemic pull humanity pull together or will it tear us apart?
For the first time since WWII, the entire world is sharing the same experience at the same time – a terrible pandemic that is robbing people of their lives and livelihoods. Not only was the shock sudden, traumatic, and synchronised – it is being televised. Everyone has a front-row seat to the devastation of this deadly virus.
Being an optimist, I choose to think that this trauma could be a catharsis – a spark that brings out our shared humanity. In a sense, we are all on the same wavelength, facing the same challenges. It could be a moment when humans look around themselves and realise that we humans are all in this together. It could create a spirit of solidarity and cohesion, a sense of shared humanity, and shared destiny.
I’m being naïve, of course, but terrible moments have often been moments when bold choices are made. Will we pull together, or will we let the epidemic tear us apart? That’s the choice. Things must move incredibly fast if we are to tackle the two urgent, era-defining challenges:
1) Fighting the Covid-19 pandemic
It will be necessary to produce, distribute, and administer several billion doses of vaccine around the world. National solutions will not suffice given the highly contagious nature of the virus. The disease will not be fully crushed anywhere until it is crushed everywhere.
2) Fighting the global recession
Given the deep economic linkages, full national economic recovery will require global economic recovery. What is needed is global, coordinated, and multilateral cooperation.
This virus has created an historically unprecedented resonance in the human experience. For the first time, we are all in this together, facing the same set of challenges. It is my hope that they will foster a spirit of solidarity and cohesion, a sense of shared humanity and common imperative – that not only do we all have to look after one another, but also the planet we share. If not now, then when?
1 I am guilty of this, as evidenced by the instant eBook I edited with Beatrice Weder de Mauro on 9 March 2020, Economics in the Time of Covid-19. But now I believe that many of the changes will be very long lasting.
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