How the pandemic is hitting the reset button on the world economy and international cooperation
The Western media, still suspicious of China, have bent over backwards to laud anti-Covid-19 efforts in South Korea, Taiwan and Singapore. But the world’s experts must work together to dig us out of this mess, then prepare for the next pandemic
Last September, business leaders and academics across Europe and the US began calling for a reset: the need for businesses to act more sustainably, to treat their stakeholders more equitably, and global warming seriously. They were focusing on ESG – “environmental, social and governance” – factors.
Just when business leaders need to cooperate and apply vision to redefine their roles in society, they have been plunged into an unprecedented struggle to save jobs and fend off bankruptcy.
The Financial Times captured this set of dilemmas neatly on Saturday, talking about the fragility of the social contracts needed both within and between countries to address the present extraordinary human and economic crisis: “… to demand collective sacrifice you must offer a social contract that benefits everyone”.
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And this is only to mention those in rich Western countries that have strong and sophisticated economies, trusted governments, generous welfare systems and well-equipped hospitals.
In short, getting support to those that most need or deserve it would be a massive challenge in its own right. But throw into the mix a deepening recession and deep-seated disagreements on the kind of global economy we want to see emerge from the crisis, and the social contracts required for harmony are being stretched to breaking point.
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And it is clearly in its interest – its own recovery from the coronavirus means nothing when the rest of the world’s economies are in deep trauma, borders closed to the billions of dollars of goods China needs to sell to the world’s consumers. But its heavy-handed diplomacy is putting this opportunity for soft power in jeopardy.
Beijing can make a good case: six provinces surrounding Hubei, which bore the brunt of the coronavirus, all of them the size of medium-sized European economies, have escaped with few Covid-19 cases, and a tiny handful of mortalities.
This is really not the time to arm-wrestle over the comparative merits of different social and economic models. The result is that innocent citizens are needlessly suffering and dying.
Instead, the priority must be to let experts – whether medical or economic – work closely together to dig us out of this mess as quickly and with as few casualties as possible. New institutions will need to be built – global institutions – that take lessons learned from Covid-19 and use them to make sure we are better prepared when the next pandemic comes.
The post-Covid reset is likely to involve more big government than many libertarians would like. It is going to need higher levels of latency in our just-in-time supply chains. It is going to need better-funded health care systems, and health security plans that mirror today’s food security arrangements.
And new social contracts need to be built that involve less extreme inequality. This will doubtless be the task of decades, but in the meantime let them focus on lives and livelihoods.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view
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