The world after Covid-19 - 2
From an online event by How To Academy
In 2014, Ian Goldin, Professor of Globalisation and Development, Oxford Martin Programme on Technological and Economic Change, predicted that a global pandemic would cause the next financial crisis. He is a world-leading expert on the systemic risks created by globalisation – risks that, in the midst of the coronavirus outbreak, are no longer hypothetical, but profoundly affecting every human being alive today.
In April 2020, he gave an online talk analysing the unfolding situation and predicting the likely consequences for our lives and the world. How does globalization create systemic risks, and what can we do about it? What global responses are necessary both to the current pandemic – and to prevent another such catastrophe emerging in the near future? Will the world deglobalize, and what is the lasting impact on our societies and the world order?
Part 1 is here and what follows are some of the further points he made:
Pandemics are unusual in that they're the only threat that face us all, that really require that every place on earth participates in the solution. A pandemic can come from anywhere and that's why in dealing with pandemics we need a real global corporation. For most of the other global threats that we face, like climate change, a very smaller set of actors account for a very big share of the problem. About 20 countries account for 90% of global carbon emissions, and so they need to work together to ensure that we are able to deal with climate change.
Pandemics require us to really recognise our common humanity that we can only be as healthy as people are elsewhere. This pandemic is affecting economies, health systems in dramatic ways and I believe it's going to lead to a very big reset on many, many levels.
We've already seen that much of the old orthodoxy in economics has been thrown out the window. Things that were unimaginable only six weeks ago are now mainstream in Europe and in the UK. The idea that governments would bail out any company and give them a lifeline. That the levels of debt and deficits that governments are taking on, which are now absolutely regarded as acceptable were regarded as heresy. Was it such a good idea that we outsourced a lot of things to other places so we can't get them when we need them?
When a big event like this happens and people get threatened, their first reaction is to look to government and they recognise the importance of government. I believe we will see a stronger role for governments and a stronger safety net where health and education will become a bigger part of the focus of societies and more important politically. And when you match that with the much higher levels of debt that are being taken on, we're likely to see higher taxes going forward.
And part of this reset is going to have to be a focus on more equality in our societies.
What this pandemic has revealed starkly is inequality. 20% of the people in the U.S. do not have medical insurance. Poor people have much less to fall back on. They don't have the savings. Over 75% of people in the U.S. cannot survive for more than a week without income.
This pandemic is unfair not only within our countries but also between countries.
Richer countries have more facilities, they have more ventilators, they have more doctors, they have more capacity to print money, to bailout, to create a safety net that is strong, to guarantee everyone an income, to guarantee firm's survival. This is not an option for 80% of the world's population. Not only do their governments not have the money, but of course, if they are going to borrow money, they're going to have to often borrow in foreign currency. And all their income sources have been reduced because their exports and tourism have been reduced.
Physical distancing is an impossibility when you're sharing a small home with six other family members, or when you have to work to get food on your table. So the development emergency that's going to be caused by this is enormous
. There's also a medical emergency - 12 African countries have no ventilators at all, many have very few ICU beds. But more significant than that is going to be the development emergency, the food emergency, the urgency that we all need to understand of the humanitarian impact of this on people's incomes and lives. This is the biggest shock to development, certainly in the postwar period, and for many countries since their independence.
And so it's going to be a test. It's a test not only of domestic leaders everywhere, of the solidarity of businesses and individuals with people in their societies, but it's a global test. It's a global test of solidarity. It's a global test of how much we care about the rest of the world
, and so far countries have not passed this test. I do not believe that this pandemic will lead to deglobalization
, which is what many people are saying. Deglobalization implies that the flows across national borders are likely to be reversed dramatically.
One thing that's increased dramatically already, which I believe will be sustained is digital globalisation. That is happening enormously fast. There's also been already a globalisation of ideas and knowledge. We all, I'm sure, are watching what's happening in other countries far away and attentive to what they are doing in ways that we were not before. We are all aware of our interconnectedness.
The ideas flow between countries has increased and the scientists are doing an amazing job, 1,000 of times a week
, sharing the genome of COVID-19 to work together around the world on vaccines and other things. But what's missing is political people doing the same.
Supply chains were already deglobalizing before this happened - localised robotics, automation, 3D printing or making people increasingly do things with machines, not with cheap labour. Services like call centres, like back offices for administrative functions in banks in other areas increasingly done by computer servers with artificial intelligence. Increasingly customers want and services quickly and they want them delivered today or tomorrow, and they want them increasingly customised to their own needs and that will be done by machine. So I think we'll have big investments near big markets and we will see that this continues.
Financial flows need to continue and accelerate. And that's because we need massive financial support, a new global Marshall Plan to support countries around the world in need.
And even countries in Europe, like Italy, will need massive injections of finance. Travel and tourism I hope will rebound with business travel but I think will be much less in the future because we discovered how, with efficient and effective internet connectivity, individual meetings can be.
The key question is the political globalisation. Are we going to continue to see a disconnect between the flows across national borders, which are connecting us all, our economies and our ideas versus the politics, which for way before the pandemic was becoming more nationalist? And it's that disconnect, that disconnect between the real flows of people, of goods, of services, of ideas, of technologies, and the politics of nationalism, which is the cause of our insecurity.
In my book, Age of Discovery
, which compares our times to that of the Renaissance, I look at that incredible period 500 years ago when there was an information revolution due to the Gutenberg Press. When there was the first globalisation of Columbus and many others, and when societies changed and genius was unlocked then as it is today in revolutionary ways.
It took Europe from the dark ages into the modern world. But it also led to wars in Europe, ships that went to the new world spreading diseases that killed most native Americans and the growing inequality leading most people to feel that that process was threatening them. We need to learn that unless we care about those left behind, they will stop this process of progress. We need to learn that what happens on the other side of the world matters.
We've got our priorities wrong. We're still fighting the last war, we need to look forward and we're at a crossroads. This could be the most incredible century for humanity. The prospects for all of us and for coming generations have incredible potential of longer, healthier lives. A clean planet with zero carbon, a huge reduction in pollution, the overcoming of inequalities and of poverty. All of that is within our grasp, we know what it would take and it's what we can and must do.
But this could also be a really terrible century and we're seeing in this pandemic how that would look. We're getting a real feel for what uncontrolled globalisation does. We're getting a feel for how it can exacerbate inequalities within countries and between them.
But we also must know that this is not inevitable. So my hope is we will recognise, through this terrible ordeal we go through, how important it is to cooperate, to form institutions with power which stop these risks. If we can learn to cooperate and work together to stop the next pandemic, we would have learned to cooperate and work together to stop climate change, to stop the other great threats that we face.
We would have learned to create a much brighter future. We would have used this opportunity to reprioritize. We would have used this opportunity to reflect on what makes humanity precious, what makes our lives precious, and that is the contacts we have with others
Ian Goldin's books can be found here
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