Martin Wolf is the associate editor and chief economics commentator at the "Financial Times", a staid old (est. 1888) British financial and economic journal. He's also been awarded the CBE by the Queen, so never let it be said that I don't drop names.
Anyway, in an embedded video in this FT article*, Wolf has some things to say about the post-COVID world. He presents them pretty confidently, so I thought I'd pass them on.
Wolf has the good grace to begin by saying that "the most important answer is that we really don't know what's going to happen. It is a completely novel experience." Well, yes.
Except - we do know that we will emerge with a lot more debt than we're used to, certainly in the public sector, but also in the private sector. There will be an unprecedented number of defaults, mostly in the private sector and mostly in emerging economies. "These are sources of great fragility," he warns.
They certainly are. The damage caused to emerging economies (read: poorer countries) may be the big story as we drift further into this Sargasso Sea of pandemic. Whole cultures destroyed? A breakdown of the civil structure in multiple countries in the same region (Latin America, perhaps?). This is the route that we could take to dystopia, if that were to be the outcome.
Wolf moves on to the good news - in which he is less confident. The debt will be manageable; interest rates will remain low, as will inflation. But taxes will rise (even I could figure this out) and, he adds, taxes on the well-off will rise, too. Interesting that "taxes" are not necessarily about the "well-off" unless that is specified. A little peek into the tax-free world of the ultra-rich. In fact, he goes on to say that "we are not going to be able to repeat... the austerity measures that followed the last crisis." The "austerity measures" of the last crisis were, we need to understand, imposed on the many to prevent the inconvenience of the few. Not this time. We're done with austerity. The few may even need to start paying a small percentage of their fair share. This, in Wolf's world, is something to take note of. He has the gall to add,
"This will be a new social contract, if you like. (Oh, I like it. A lot). It might be as profound as what happened after the Second World War, which is a period of relatively high equality."
Imagine that.
Then he moves on to effects which are possible but not certain. He notes that "the virus and the response to it is dividing the world, even though it is a common experience." Trade relationships are fracturing, especially between the US and China, but among EU countries as well (not to mention Brexit, which will be a meteor smashing into whatever chaos the virus has wrought). "There is serious discussion of ending the World Trade Organization or ending trade globalization." Nationalism and protectionism are on the rise. These forces will result in "massive shifts in business and the way business works."
Well. That can't be good. Especially the part about the rise of nationalism and the fracturing of global alliances and trading networks. Sounds familiar...
Wolf goes on to predict the permanence of WFH, with resulting changes in commuting and, therefore, in real estate and urban planning and how cities work. He doesn't go into details. We can deduce what the details of the new landscape will be, and I suspect that much will be written about this as time goes on. He also notes that there will be losers in this new urban environment - the smaller and smaller proportion of us who cannot work from home, and the businesses we work for. If urban planning in general, and commuting infrastructure specifically, moves down the priority list because fewer workers are commuting, those who must commute lose out. But we already knew this.
"I think it is reasonable to suppose," Wolf says in summary, "that the world we will emerge into... will be really quite different from the world we were in before the pandemic hit us."
As always: Stay tuned.
* - By the way - the article, with the video, was published in mid-September, before caseloads shot up in so many developed nations. So - pay attention, and extrapolate.
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