Coronavirus and global shifts: A new “New Deal”
The coronavirus pandemic and the countries’ responses to its spread have taken the world to the point where it is quite clear there can be no return to the world as it had been. While being in the middle of the crisis may lead us to exaggerate certain issues, the sheer scale of government intervention means that some of the changes we witness occurring, will be irreversible. Let us take a look and emphasize some trends which may be with us for a long time.
It is very naïve to believe that the Western governments, after implementing multi-billion (or, in the U.S. case, even trillion) dollar rescue packages, will be happy to return to loose neoliberal-era regulations. Since most of the sectors and firms have no chance to survive other than through the state aid, they will have to return this favour by shifting towards a more planning-heavy, top-down economy. Preserving fiscal and monetary sustainability will take a large-scale transfer of resources from business and households towards the state which would use redistribute them to the hardest-hit sectors and personalities as well as investing more heavily into priority research (not only medical by the way). The French economist Thomas Piketty in his oeuvre Capital in the Twenty-First Century demonstrated the scale of such redistributions triggered by the wars and revolutions of the 20th century and how they enabled a welfare state and a consumer economy. At the same time, as many experts have been warning during the recent decade, to be able to effectively respond to the Chinese challenge the Western states will have to revert to more centralized and data-driven socio-economic model. Most probably, in the post-pandemic world it will be inevitable.