At a Glance:
The inequitable response to the 2008 crisis laid the seeds for a decade of populism, instability, and violence around the world. With today’s ground fertile for populist narratives, unprecedented resource competition, and autocratic power-grabs, the scale of the COVID-19 crisis makes it clear that we can’t afford to make the same mistakes again. While the crisis poses a threat to many aspects of our lives, there are three long-term risks that are uniquely exacerbated by the crisis. If left unaddressed, these risks will have dire consequences, and could potentially collapse of our global system.
The first risk is that COVID-19 will accelerate an exponential deflationary curve as more companies embrace technology, while governments simultaneously buckle down on quantitative easing. The second risk is an exacerbation of inequalities caused by debt-fueled growth, mirroring the aftermath of the 2008 crisis, dangerously widening the disconnect between growth, wages, and productivity. And the third risk is that COVID-19 will reinforce structural obstacles to economic transformation in low-income countries, reversing progress towards regional integration, competitive advantages, and sustainable monetary, debt and fiscal policies.
In the aftermath of a tumultuous decade, it appears seldom pondered what steps could have been taken to avoid many of today’s crises. The choice today is to continue along yesterday’s trajectory, accelerating towards certain and complete collapse, or rewrite the rules completely for a better tomorrow. There is no plan C.