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Review: Covid-19 and the coming crises

A paramedic in protective clothing watches on August 5, 2021 in Almaty, Kazakhstan. REUTERS / Pavel Mikheyev

LONDON, September 3 (Reuters Breakingviews) – What are the lessons of the coronavirus pandemic? It may seem too early to ask that question. After all, Covid-19 is far from over. Around 100,000 Americans are hospitalized with the virus. Countries like Australia are still effectively cut off from the rest of the world. And large parts of the world have only just started vaccinating their populations.

Even so, historian Adam Tooze makes a strong case for looking back and drawing some conclusions. In “Shutdown: How Covid Shook the World’s Economy”, the Columbia University professor summarizes the timeline of 2020, one of the most seismic years in world history. His focus is on the time that began with the public recognition of the coronavirus outbreak by Chinese President Xi Jinping on January 20, 2020 and ended exactly one year later with the inauguration of US President Joe Biden. The extent and variety of what has unfolded in the days in between remains staggering. Tooze organizes these events clearly and concisely across the book’s 300 pages, while maintaining the broad perspective that readers of Crashed, his masterful story of the 2008 financial crisis and its aftermath, will be familiar with.

The story raises several paradoxes. Covid-19 was a massive public policy failure that also led governments to prop up their economies with unprecedented speed and determination. It was a public health disaster that led to breakthroughs in life-saving vaccines. In the United States, the pandemic has already exacerbated deep political divisions that culminated in the controversial presidential election, but also created the world’s largest fiscal stimulus.

Dealing with the crisis forced governments to abandon old orthodoxy, many of which were already under attack. Politicians, who previously tried to contain public spending, used huge sums of money to support home stuck citizens and businesses that had to close. The central banks sucked up government bonds and blocked a number of financial markets. Free trade and private sector commitments were rushed to secure face masks and vaccines and support troubled industries.

These extraordinary actions were largely aimed at preserving the status quo. “None of the politicians who voted for huge spending started the year transforming society,” Tooze writes. And in some cases the sums were far too small. Compare the meager contributions of developed countries to vaccines for poorer countries to the much larger economic gains that would have come from ending the pandemic around the world.

Even so, it’s hard to imagine the political pendulum returning to overly disciplined government spending or a permissive approach to private corporations. This opens up fascinating opportunities, such as a large-scale, government-led investment offensive to reduce the world’s dependence on fossil fuels. Despite years of warnings and several near misses, the world has not adequately prepared for a global pandemic. Maybe now she can avoid the same mistake with climate change?

However, Covid-19 has also revealed many shortcomings. The virus “provided an amazing demonstration of the collective inability of the global elite to understand what it would actually mean to rule the deeply globalized and interconnected world they created,” Tooze writes. The deterioration in relations between China and the US over the past year and a half has made joint decisions even more unlikely in the future.

Tooze identifies some strengths. The rapid development, testing and delivery of vaccines is a testament to what scientists and governments can do when faced with an urgent crisis. The central banks have also successfully cushioned the effects of a massive global supply shock. These technocratic interventions have the unfortunate side effect of increasing inequality within and between countries. The challenge for politics is to counteract these effects. The history of the past decade is not encouraging in this regard.

Yet the world will face greater and prolonged global emergencies. The unprecedented floods in Europe, China and the US this summer are certainly just a foretaste of a time when weather fluctuations are getting wilder and more difficult to predict. Climate change is less likely to cut a tenth of global GDP anytime soon, as the pandemic did in the second quarter of last year. But future crises are on the way. The history of Covid-19 so far suggests that we still have many lessons to learn.

Follow @peter_tl on Twitter

CONTEXT NEWS

– “Shutdown: How Covid Shook the World’s Economy” by Adam Tooze will be published by Allen Lane on September 7th.

Arrangement by George Hay and Oliver Taslic

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