2021: The Year Of The Great Reset14 min read . Updated: 01 Jan 2021, 12:18 AM IST
Mint’s annual year-end issue, in collaboration with Project Syndicate, looks at what’s in store in 2021. Current and former political leaders, senior policymakers, and renowned scholars provide original, exclusive and incisive analyses of the tasks that lie ahead to ensure that we are not caught sleeping again
The covid-19 pandemic in 2020 delivered the greatest shock to the global economy since World War II. Entire societies have been locked down, and people everywhere have had to adjust to new ways of working, studying, socializing, and entertaining themselves. Still, more than a million people have died worldwide, and unemployment, inequality and poverty have soared. The globalized economy, a lifeline to billions of people in recent decades, has suddenly become a source of vulnerability, owing to the disruption of far-flung supply chains and governments’ efforts to protect national markets.
Given the pandemic’s persistence, prospects for recovery in 2021 will depend largely on how quickly a safe and effective vaccine is distributed. Importantly, the effort to meet that imperative could reinvigorate existing institutions of international cooperation and catalyse new ones. Whatever form it takes, robust multilateralism will be necessary both to mitigate the sharp increase in poverty and inequality caused by the pandemic, and to address longer-term challenges, particularly the existential threat posed by climate change.
Indeed, the pandemic can be viewed as a global wake-up call—one that has underscored the need to place sustainability and social justice at the centre of public policy. Mint’s annual year-end issue, in collaboration with Project Syndicate, looks at what’s in store in 2021. Current and former political leaders, senior policymakers, and renowned scholars provide original, exclusive and incisive analyses of the tasks that lie ahead to ensure that we are not caught sleeping again.
A global recovery’s leading variables
As we head into a new year, this much is patently clear: covid-19 is not just going to disappear, as outgoing US President Donald Trump repeatedly suggested it would. Although there has been a substantial economic recovery from the depths of the initial lockdowns last spring, the losses to GDP and employment around the world are enough to make this the second- or third-worst downturn of the last hundred years. And this is true even as it appears increasingly clear that an effective vaccine is in the offing. (To Read Full Story Click Here)
Lessons from Rwanda’s fight against Covid
When covid-19 started going global in the early months of 2020, developed countries struggled to keep the virus at bay, and many began to worry about the ability of African countries to withstand the pandemic. Experts from around the world issued dire predictions, warning that the region’s weak health systems would be decimated. Yet as we look back on the first nine months of the pandemic, it is clear that African countries have not only survived, but also offered lessons about how to manage similar crises in the future.
Here in Rwanda, our health system had to be completely rebuilt after the 1994 genocide against the Tutsi, when one million people were murdered. Just 26 years later, the country is widely seen as a world leader in responding to the pandemic. In mid-October, when the covid-19 death toll in the US had passed 220,000, Rwanda’s stood at just 33, out of a population of 12.3 million. (To Read Full Story Click Here)
The Red Dragon’s strategic overreach
The year 2020 will be remembered not only for the covid-19 shock and the end of Donald Trump’s presidency in the US, but also as a moment of reckoning for China. With its international reputation battered by the pandemic, and with pushback against its territorial overreach intensifying, China’s ability to pursue its geopolitical ambitions is diminishing rapidly. Nowhere is this more apparent than in its relations with India.
The shift began in May. As the brutal Himalayan winter receded, a shocked India reportedly found that Chinese forces had occupied hundreds of square kilometres of borderlands in its northernmost Ladakh region. (To Read Full Story Click Here)
How might the virus change the world?
Today, covid-19 is devastating the world. It’s in the process of infecting many (perhaps even most) of us, killing some, shutting down our normal social relations, halting most international travel, and clobbering our economies and trade. What will the world be like a few years from now, after this acute crisis has waned?
There’s a widespread assumption that vaccines will soon be developed to protect us against covid-19. Alas, that prospect remains very uncertain. Diseases vary in their potential to be prevented by vaccines. (To Read Full Story Click Here)
The ultimate cure for demagogic populism
Donald Trump is the first true demagogue to have been the President of the United States. But politicians who claim to be tribunes of the powerless against corrupt establishments have historically been common in America at the state and local levels. As a form of politics, demagogic populism tends to flourish when large groups of citizens feel that conventional politicians are ignoring their interests and values.
Following the end of the post-Civil War era known as Reconstruction, so-called Bourbon Democrats, the elite descendants of antebellum slave-owners and their allies, dominated Southern state governments from Virginia to Texas. The Bourbon oligarchy disenfranchized all black southerners and many poor white ones by means of the poll tax, literacy tests, and other devices designed to suppress the vote. (To Read Full Story Click Here)
Overcoming Trumpism by reaching out
Butler, Pennsylvania, is a small steel mill town north of Pittsburgh, with a population of 13,000 people. Donald Trump is popular there. One of its citizens, Nadine Schoor, 63, expressed her feelings about the president to the New York Times. “I look at President Trump," she said, “and we’re the family—the country’s the family… And he’s the parent. He’s got a lot of tough love, and he doesn’t care what anyone thinks to get something done that he knows is right."
Pollsters, Democrats, and liberals in general once again underestimated the enthusiasm and numerical strength of Trump supporters such as Schoor. While Joe Biden squeaked through to victory, there are millions of people who feel—and voted—the same way: Trump is “one of us", a father and a saviour. (To Read Full Story Click Here)
Is post-pandemic labour revival possible?
Although one or more vaccines may soon be available, covid-19 will continue to harm the global economy in the year ahead. And that means a difficult year for the world’s workers.
The good news is that the pandemic has highlighted the vital role played by essential workers in sectors such as health care and logistics, especially those in precarious, low-paid jobs. In 2020, many in the developed world realized that their health and wealth depends in part on public schools staying open so that parents can work. People also saw how economies can suffer from a lack of paid sick leave, weak unions, the absence of workplace safety standards for infectious diseases, and the erosion of basic income protections when paid work is unavailable. (To Read Full Story Click Here)
2021 should be year of the ‘Great Reset’
The year ahead could be a historic one—and in a positive way. Seventy-five years after the original “Year Zero" that followed World War II, we once again have a chance to rebuild. The process after 1945 was literal: building anew from the wreckage of war. This time, the focus is on the material world but also on so much more. We must aim for a higher degree of societal sophistication and create a sound basis for the well-being of all people and the planet.
After WWII, we developed a new economic philosophy grounded in collaboration and integration, with material well-being as its primary objective. This project gave rise to international organizations such as the World Bank, the International Monetary Fund and the Organization for Economic Cooperation and Development, as well as the arrangements that would evolve into the World Trade Organization and the European Union. (To Read Full Story Click Here)
2020 was a watershed year for European Union
In 2020, people around the world experienced life in slow motion, even as political developments accelerated. For the European Union (EU), navigating the covid-19 crisis has been challenging; yet, despite much naysaying, Europeans not only stuck together, but grew together, forging a more cohesive bloc.
In 2021, global cooperation ought to make a strong comeback, and the EU should continue to pursue “strategic autonomy" so that it can safeguard its citizens and interests in the years and decades ahead. (To Read Full Story Click Here)
Learning to live with the pandemic
As covid-19 infections rise in much of the world, many are clinging to the hope that a vaccine will soon restore life as we knew it. That is wishful thinking. Even if an effective vaccine is found, covid-19 will be with us for the foreseeable future – at least for the next five years. We are going to have to learn to live with it.
An international panel of scientists and social scientists, convened by the Wellcome Trust, recently constructed four pandemic scenarios. Key variables included what we may learn about the biology of SARS-CoV-2 (the virus that causes COVID-19)—such as the pace of mutation and the extent to which an infection elicits antibodies – and how fast we develop and deploy effective vaccines, antivirals, and other treatments. (To Read Full Story Click Here)
The path to recovery in coming decade is fragile
By the end of 2020, financial markets —mostly in the US—had reached new highs, owing to hopes that an imminent covid-19 vaccine would create the conditions for a rapid V-shaped recovery. And with major central banks across the advanced economies maintaining ultra-low policy rates and unconventional monetary and credit policies, stocks and bonds have been given a further boost.
But these trends have widened the gap between Wall Street and Main Street, reflecting a K-shaped recovery in the real economy. Those with stable white-collar incomes who can work from home and draw from existing financial reserves are doing well; those who are unemployed or partly employed in precarious low-wage jobs are faring poorly. The pandemic is thus sowing the seeds for more social unrest in 2021. (To Read Full Story Click Here)
Argentina’s woes of high debt, disease
The covid-19 pandemic will undoubtedly be remembered as one of the most difficult episodes in the history of modern capitalism. But it is difficult for different countries in different ways, which is reflected in the policies their governments have adopted. And nowhere are the difficulties greater than in highly indebted countries.
In Argentina, the pandemic hit at a time when the country had no access to credit. In that context, we initiated and finalized a sovereign-debt restructuring that has – for the first time – tested the collective-action clauses (CACs) that became the new market standard in 2014. (To Read Full Story Click Here)
There will be no quick coronavirus fix
Covid-19 stormed across the planet in 2020, striking first in Asia and then surging throughout Europe and the Americas in what seemed like an endless tidal wave of grief. With each passing milestone—the first 100 deaths in January, followed by the first 1,000 in February, 10,000 in March, 100,000 in April, and one million as of September—the question always has been when it will it end.
Despite its virulence, many simply assume that the pandemic will end sometime in 2021. But such hopes are misplaced. Controlling an epidemic involves four fundamental components: leadership, governance, social solidarity, and a medical toolkit. Most countries today have failed on the first three, all but ensuring that covid-19 will remain with us over the next year. (To Read Full Story Click Here)
Recovering global leadership is crucial
This year, the world experienced a global crisis unlike anything seen in generations. The covid-19 pandemic is indiscriminate and unprecedented in scale, and has exposed pervasive weaknesses in health systems, emergency preparedness, and multilateral coordination. Though the coronavirus is primarily a health issue, it remains a multidimensional crisis.
Owing to the sheer complexity of the pandemic’s fallout, policymakers at all levels have been confronted with unprecedented challenges. Governments have had to strike a balance between protecting lives and livelihoods, and maintaining fiscal space and avoiding higher debt burdens. During these extraordinary times, the trade-offs between speed, accuracy, and effectiveness in policymaking have become widely apparent. (To Read Full Story Click Here)
Latin America’s pandemic of mounting troubles
Many regions performed badly when confronted with covid-19, but Latin America fared worse than most, in terms of both lives and livelihoods lost. As of November 2020, nine of the 20 countries with the highest number of covid-19 deaths per capita were in Latin America. The International Monetary Fund (IMF) expected the region’s output to drop by 8.1% in 2020, with only the eurozone suffering a bigger regional decline. As a result, almost 15 million more Latin Americans will live in extreme poverty.
The first explanation for the region’s underperformance that comes to mind is poor leadership. Brazilian President Jair Bolsonaro initially claimed that the pandemic was a media trick. Mexican President Andrés Manuel López Obrador denied for weeks that the coronavirus was a threat and continued to hug and shake hands with supporters, only to reverse course suddenly and impose a strict lockdown. (To Read Full Story Click Here)
West-Islamic clash needs a mindset shift
The year 2020 demonstrated, once again, that the relationship between the Western and the Arab and Muslim worlds remains muddled, complicated by lingering memories of colonization, wars, and atrocities that date back to the Crusades and, in modern times, to Algeria’s war for independence from France and the recent wars in Afghanistan and Iraq. It is a relationship marred by suspicion, distrust, and resentment on the part of many (if not most) Muslims, as well as many in the West. The thin knowledge that both sides of the relationship have of other cultures doesn’t lend itself to mutual understanding—a grim fact that radicals (again, on both sides) cynically exploit.
A plethora of recent initiatives have sought to promote intercultural dialogue and foster deeper understanding between civilizations and cultures, particularly Islam and the West. (To Read Full Story Click Here)
Has Covid-19 killed Asia’s growth miracle?
For decades, most Southeast Asian economies climbed the income ladder by pursuing a growth strategy based on ramping up investment in export-oriented manufacturing and services, relentlessly upskilling their domestic workforces, and leveraging technological advances.
Today, the Asean+3 countries—the ten member states of the Association of Southeast Asian Nations plus China, Japan, and South Korea— can be proud of their accomplishments. (To Read Full Story Click Here)
Getting back on the Paris climate track
When representatives from nearly 200 countries finalized the Paris climate agreement on 12 December 2015, there were celebrations around the world. But it has now been five years, and the world is in a state of deepening uncertainty. The covid-19 crisis admits of no quick fixes. The pandemic has ushered in deepening economic and social crises, as well as a wave of increased indebtedness. The geopolitical landscape is as fractured as it has been in decades, and with global supply chains being reorganized, the prospects for achieving deeper global integration through trade are fading.
Yet, despite all the recent turmoil, one certainty remains: the climate crisis and the need to stick with the Paris accord, which is the only roadmap that we have for decarbonizing the global economy. (To Read Full Story Click Here)
The quiet financial crisis that is brewing
The term “financial crisis" has long been associated with dramas such as bank runs and asset-price crashes. Charles Kindleberger’s classic books The World in Depression, 1929-1939 and Manias, Panics and Crashes, and my own work with Kenneth Rogoff, This Time Is Different, document scores of these episodes. In recent years, the term “Lehman moment" has stood out as a marker of the 2007-09 global financial crisis and even inspired a Broadway show.
But some financial crises do not involve the drama of Lehman moments. Asset quality can deteriorate significantly as economic downturns persist, especially when firms and households are highly leveraged. Moreover, years of bank lending to unproductive private firms or state-owned enterprises (the latter is not uncommon in some developing countries) take a cumulative toll on balance sheets. (To Read Full Story Click Here)
Poor reading of American capitalism
Those who advocate taxing the rich to give to the poor often must endure wearied explanations of why such redistribution is a pointless policy. While the rich are indeed rich, there are supposedly too few of them to tax on a scale that would help the poor.
Rarely does one hear about the opposite process—the upward redistribution, whereby a few cents taken from everyone make a few individuals very rich indeed. Yet that is precisely what monopolists and rent seekers do, by overcharging consumers, underpaying taxes, and funding politicians who will protect the process of extraction from the many to benefit the few. Worse, the 2020 US election all but ensures that this “trickle-up" dynamic will continue. (To Read Full Story Click Here)