WARNING: Something Wicked This Way Comes


BLOOMBERG OPINION: The problems of how to accommodate rising aspirations for equality through inequality-generating economies were particularly acute for nation-states such as Germany, Italy and Japan, that were trying to catch up with economically advanced Western countries. Once the series of economic shocks that began in the late 19th century climaxed in the Great Depression, the elevation of the far-right to power, and intensified conflicts between states, was all but guaranteed. In our own conjuncture, all ingredients of the previous calamity are present, if ominously on an unparalleled scale.

For decades now, de-industrialization, the outsourcing of jobs, and then automation, have deprived many working people of their security and dignity, making the aggrieved in even advanced Western countries vulnerable to demagoguery. At the same time, stalled economic modernization or a botched process of urbanization in “catch-up” powers like India and Russia, has created, in almost textbook fashion, the political base for far-right figures and movements.

The financial crisis of 2008, which has caused deeper and longer damage than the Great Depression, may have discredited the globalizing elite that promised prosperity to all, creating broad scope for opportunistic demagogues like Donald Trump. Yet few lessons were learnt from the collapse of global markets as the tide moved faster to Niagara. This is why the crisis of our time is as much intellectual as it is political, economic and environmental.

One sign of analytic deficiency is that the prescriptions for multiple malaises have remained the same in much mainstream politics and journalism: more economic “reforms,” largely in the direction of global free markets, reheated Cold War slogans about the superiority of “liberal democracy” over “authoritarianism,” and aspirations for a return to “decency” and “global leadership.”

These hopes for a return to the pre-2008 political and ideological status quo are often leavened with a heightened, if ineffectual, concern about climate change. Their inadequacy will become clearer in the months to come when afflicted nations as much as individuals are tempted to self-isolate, sacrificing many holy cows to the existential urgency of survival. The coronavirus, devastating in itself, may prove to be only the first of many shocks that lie ahead. MORE

RELATED: Beijing’ bungling of its initial response to the outbreak showed that the Chinese Communist Party remains ill-suited to global leadership. But as the crisis has progressed, it has begun to seem that the U.S. may suffer even greater damage to its international position and prestige.

America’s reputation for basic competence and steadiness has always been critical to its global leadership. Who wants to join the posse if the sheriff can’t shoot straight? That reputation was already suffering under President Donald Trump, and it has taken a further hit because of the coronavirus. The list of the administration’s failures is long: The failure to take advantage of the breathing space that early travel restrictions helped purchase; the failure to acknowledge the severity of the crisis; the failure to respond with alacrity when weaknesses such as severe shortfalls in testing capacity became clear; the failure to communicate accurate and timely information to the public; the failure to convey a sense of calm and determined leadership; the failure to effectively coordinate with international partners. And that list is all the more depressing given that other countries equally surprised by the outbreak have reacted so much more adeptly.

The 2008 crisis was so damaging because it revealed that economic policymakers who confidently claimed to have tamed the business cycle did not realize that their policies had also permitted vast, systemic vulnerabilities that nearly plunged the world into depression. What international observers are seeing today is that the country that claims to lead the world has so far turned in a distinctly underwhelming performance in dealing with the greatest global crisis of this century. MORE