The world will have to revisit the existing global order starting with the efficacy of the United Nations System and its fragility with the composition and perfunctory and total say of just five permanent members of the Security Council with the power of veto given to each single member in global affairs.
by Dr. Ruwantissa Abeyratne
writing from Montreal
Don’t waste a good crisis
The Economist, April 4th, 2020
In support of the aforesaid headline, The Economist speaks only of who the winners are in the current global health and economic crisis: big tech. It went on to say that “the large digital platforms, including Alphabet and Facebook, will come out of the crisis even stronger”.
This may well be true from a business perspective but does not cover the half of it. The overall winners would be all of us who recognize the cause rather than the symptoms.
In 1930 John Maynard Keynes, in his essay “Economic Possibilities for our Grandchildren” wrote prophetically: “I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe... [T]he pace at which we can reach our destination of economic bliss will be governed by four things-our power to control population, our determination to avoid wars and civil dissensions, our willingness to entrust to science the direction of those matters which are properly the concern of science, and the rate of accumulation as fixed by the margin between our production and our consumption; of which the last will easily look after itself, given the first three”.
Although this Keynesian philosophy may not be the exact formula for a successful post Covid-19 strategy, yet it resonates sense that may be worth noting. Taking a cue from Keynesian thinking, which still resonates after 90 years, the pace at which an economic revival and normalcy should take place after the global health crisis is over could do well with the four factors as reasonable precautionary measures should be taken to avoid another global pandemic and economic disaster. Firstly, as Keynes said, the control of a population explosion which will gravely aggravate the negative aspects of connectivity upon which the world depends heavily, should be seriously considered.
This year the population of the world is 7,794 billion. According to the United Nations, the world will have 8.6 billion people in 2030, 9.8 billion in 2050 and 11.2 billion in 2100. In Africa, which portends the largest growth, what was 1.2 billion in 2015, will reach 2.5 billion by 2050 and continue growing to 4.5 billion by 2100. Notwithstanding United Nations’ 3rd Sustainable Development Goal of universal health -which will prove horrendously difficult with these figures - Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University and advisor to the Secretary General of the United Nations on the UN’s Sustainable Development Goals, believes the world should invest in raising the education levels of adolescents in Africa in particular to raise awareness among girls and boys of high school age.
As for the second Keynesian principle - our determination to avoid wars and civil dissensions – which the world is riven by – be it the type of conflict in Afghanistan, Yemen or Syria or internal conflict without foreign intervention - civil dissension provides the main causative factor for failure of the world to come together in combatting the pandemic. The absence of global cooperation and leadership and the promotion of nationalistic policies is what Sachs calls “pure politics top to bottom which has nothing to do with anything meritorious other than the idea of temporary advantage in some geopolitical contests and contexts.” Global cooperation during the current crisis has been conspicuously absent. In the words of Yuval Noah Harari “what we are seeing around the world now is not an inevitable natural disaster. It is a human failure. Irresponsible governments neglected their health care systems, failed to react on time, and are at present still failing to cooperate effectively on a global level. We have the power to stop this, but so far we lack the necessary wisdom”. It is evident that nations have acted in their own individual interests in a global crisis.
The third Keynesian thought - our willingness to entrust to science the direction of those matters which are properly the concern of science – is critical at this juncture and economic revival and the return to normalcy will be entirely dependant on scientific research, findings, and recommendations. Again, as Keynes said in the aforesaid essay: “ but, chiefly, do not let us overestimate the importance of the economic problem, or sacrifice to its supposed necessities other matters of greater and more permanent significance. It should be a matter for specialists-like dentistry. If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!”
As for the fourth Keynesian factor - the rate of accumulation as fixed by the margin between our production and our consumption; of which the last will easily look after itself, given the first three”, Nobel laureate Paul Krugman says in The New York Times: “ the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations”. He goes on to say that economists will have to be more resilient in anticipation of unseen circumstance and not turn “a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation”.
In other words, the world will have to revisit the existing global order starting with the efficacy of the United Nations System and its fragility with the composition and perfunctory and total say of just five permanent members of the Security Council with the power of veto given to each single member in global affairs. The solution may lie in the immediate formation of a temporary global governance system to immediately address the Covid-19 crisis, taking into consideration the relevance of the fourfold 90 year old Keynesian approach. In the words of Gordon Brown, Prime Minister of the United Kingdom from 2007 to 2010, as appeared in The Guardian recently: “ This is not something that can be dealt with in one country, there has to be a coordinated global response.”
It is hoped that good sense will prevail of self serving interests of State and industry.
Post a Comment