Project Syndicate The Year Ahead 2021: The Pandemic of Fear

After years of growing suspicion toward the latest wave of digital technologies and the companies and governments that control them, Beyond the Techlash brings together economists, technologists, policymakers, and business leaders to consider how the lost promise of twenty-first-century innovation can be reclaimed.

United States
Project Syndicate
kr 132,48

i denne utgaven

2 min
board member’s note

THE GLOBALIZED ECONOMY, A LIFELINE to billions of people in recent decades, has suddenly become a source of vulnerability, owing to the disruption of far-flung supply chains and governments’ efforts to protect national markets. The pandemic thus has accelerated a process of deglobalization that was already underway (as reflected in plummeting world trade), and exposed deep disparities in the quality of governance across different countries and locales. Brazil, India, the United Kingdom, and the United States – all countries with populist leaders – have performed far worse than countries like Germany, the Nordics, Japan, South Korea, and even developing countries such as Rwanda and Vietnam. By disparaging scientists and politicizing expertise, leaders like US President Donald Trump, Brazilian President Jair Bolsonaro, and Indian Prime Minister Narendra Modi have left their countries…

6 min
the pandemic of fear

IN THIS NEW WORLD, MANY governments (benevolent or otherwise) closely follow where we go and whom we meet, out of a determination to protect us from our own recklessness and the that of our fellow citizens. Contact with other people has become a threat to one’s existence. In many countries, unsanctioned walks in the park can elicit fines or even jail time, and unsolicited physical contact has become tantamount to a kind of societal betrayal. As Camus observed, a plague erases the “uniqueness of each man’s life” as it heightens each person’s awareness of his vulnerability and powerlessness to plan for the future. It is as if Death has moved in next door. After an epidemic, everyone living can claim the title of “survivor.” But for how long will the memory of…

4 min
a global recovery’s leading variables

RETURNING TO NORMAL WILL TAKE time, raising the question of how much damage will be incurred in the interim. The answer will depend on the economic policies that major countries pursue in the coming months. There is already significant potential for hysteresis (long-lasting) effects. Household and firm balance sheets that have been eviscerated will be restored only gradually; firms that have gone bankrupt during the pandemic will not suddenly become “un-bankrupt” when the virus is brought under control. In managing these effects, an ounce of prevention would be worth a pound of cure. Yet at this point, the near-term outlook remains tremendously difficult to read. One reason is China. After the 2008 crisis, China played a central role in the global recovery, achieving annual growth of around 12% by 2010. But this…

5 min
the quiet financial crisis

BUT SOME FINANCIAL CRISES DO NOT involve the drama of Lehman moments. Asset quality can deteriorate significantly as economic downturns persist, especially when firms and households are highly leveraged. Moreover, years of bank lending to unproductive private firms or state-owned enterprises (the latter is not uncommon in some developing countries) take a cumulative toll on balance sheets. Although these crises may not always include panics and runs, they still impose multiple costs. Bank restructuring and recapitalization to restore solvency can be expensive for governments and taxpayers, and new lending can remain depressed, slowing economic activity. The credit crunch also has distributional effects, because it hits small and medium-size businesses and lower-income households more acutely. To be sure, the COVID-19 pandemic continues to deliver many moments of unwanted drama, including soaring infection rates,…

7 min
europe’s watershed year

IT IS A TRUISM THAT 2020 MARKED a watershed. In fact, the world has been undergoing several tectonic shifts for years now, including but not limited to growing public distrust, polarization and identity politics, tepid economic growth, rising debts, and deepening inequality. We have witnessed the weaponization of interdependence. Trade, technology, investment, tourism, and other former venues of deepening cooperation have become instruments of power and domains of intense competition. This was the big picture that we in the EU leadership saw when we took office in December 2019, just before conditions became even more challenging. For Europeans, it looked as though everything we held dear was being contested, be it multilateral cooperation; solidarity between countries, generations, and individuals; or even basic respect for facts and science. In addition to several…

5 min
the big bounce-back?

THERE ARE FOUR GOOD REASONS to be optimistic about 2021. First and foremost, scientists and pharmaceutical companies have been working furiously to develop COVID-19 vaccines, often supported by sizeable direct and indirect government funding. There are signs that a handful of vaccines may soon be approved, thus opening the way to the herd immunity needed for economic and social interactions to return to normal. Second, a substantial part of the private sector – supported by wide-open capital markets providing ample low-cost financing – has been busy thinking and planning for the post-pandemic world. Firms are looking to emerge from the crisis with a better balance between resilience and efficiency, as well as with the increased operational agility and open-mindedness that they were able to acquire only when forced into a highly…