Martin Wolf: after the coronavirus pandemic | FT

The FT’s Martin Wolf explains what the world could look like when the epidemic is over

How might the world be different after the pandemic the most important answer is we really don’t know this is a completely novel experience in terms of what’s causing this economic and social crisis and pandemic and the nature of the response by governments to close down economies the combination is unprecedented we’ve had crises that start with a real economy like

Oil shocks we’ve had financial crises but these things happening all together and driven by a disease is new and because of that we don’t know what’s going to happen in the next two years or so and that will shape the world after the pandemic the thing we most definitely know is that we will emerge from this crisis with much more debt in the public sector very

Large fiscal deficits a lot more debt in the private sector as well and almost certainly we will already have experienced a great many defaults particularly in the private sector and particularly in emerging economies now these are sources of real fragility but if we concentrate just on the debts that the public sectors will have i think there will be manageable

Real interest rates are likely to remain very low we won’t see an immediate explosion or possibly any explosion of inflation a consequence seems to be quite clear taxes will rise taxes on the relatively well-off will rise i think almost inevitably we are not going to be able to repeat in the western world at least not in europe and i think not in america either

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The sort of austerity policies that follow to the last crisis this will then be a new social contract if you like it might be as profound as what happened after the second world war which is a period of relatively high equality now think about the things that are possible but not certain the most likely change in the world is in the international context the virus

And the response to it is dividing the world even though it’s a common experience relations within the european union and still more between the us and china are terrible and getting worse they’re serious discussion of ending the world trade organization or indian trade globalization more broadly there’s strong resurgence of nationalism and protectionism across

The world in many different ways you can see it very very clearly it’s a pretty good guess not absolutely certain so this comes into the likely category that the globalization story which was already not really working after the financial crisis trade growth had stopped will now go into reverse i think that will be very bad for the world economy but it will impose

Massive shifts in the nature of business in the way business works a third factor here is technology and here i think the story is more complex but it seems almost certain that the pattern of work we’ve now experienced this transformation into distance working the move away from the office the use of modern technology for running businesses most people didn’t know

They can do this is permanent it’s a permanent shift it’s quite likely that commuting patterns will also change as a result the real estate business will be transformed commuting and the structure of cities will be changed this is a i think accelerated a technological change that was already underway for the benefit of some very important businesses particularly

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The technology business and to the huge disadvantage of other businesses wars and pandemics change the world and i think it will change the world technologically as well as in terms of global integration and future fiscal policy so while we’re not sure about all of this some of it is much more likely than others i think it’s reasonable suppose the world we will

Emerge in two to three years from now who knows will be really quite different from the world we were in before the pandemic hit us

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Martin Wolf: after the coronavirus pandemic | FT By Financial Times

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