If the Financial Crisis of 2008 stirred doubt in the global economic system, COVID-19 exposed its fragility. Yet, it has also shown the drawbacks of populism and the need for a multilateral approach in tackling global issues.
Political leaders are scrambling to counteract the spread of the novel coronavirus COVID-19. Promising reports of a flattening curve in New York show glimmers of hope for a city which had quickly become the epicenter for coronavirus cases within the United States.
Countries have closed their borders. Over-leveraged corporations are seeking bailouts and the world seems to have grinded to a halt.
From the perspective of the globally-minded elite, the coronavirus could not have spread at a more inopportune time. For the past decade, the free market globalist agenda has been under assault by populist forces. Yet the populists won’t be celebrating either. Without multilateral cooperation, governments have shown inadequacy in their ability to combat global threats.
The last financial crisis in 2008 sent shockwaves around the world, devastating the middle class — which to this day hasn’t fully recovered— and giving way to populist movements across the world. The loss of economic opportunities across the hinterlands of nations across the world, and shameless accumulation of wealth and power within the hands of a very few catapulted populist movements across the world.
The labor market has not kept pace with the transformation of economies. The rise of big tech and fall of American manufacturing accelerated a seismic shift in economic power. Yet, the very nature of democratic institutions remains as it was years ago. Concentrating within large cities reduces representative clout for liberals. The 2016 Presidential Elections in the United States are a clear indicator of that. Despite winning the popular vote by a margin of 3 million, Hillary Clinton lost to President Donald Trump who scored resounding victories across sparsely populated states filled with people who had seen their quality of life decline and fail to recover following the global financial crisis.
Over the last decade, strongmen rose to prominence across the world, diverting attention from failing policies and false promises through scapegoating, oppression, and intense nationalism.
The far right surged in popularity bringing to light the easily forgotten frustrations of “common man” who felt they were losing their rightful share of the economic and political pie to minorities, immigrants, conniving elites, and foreigners.
Far-right activists have long decried globalism as the destruction of native culture, values, and economies. The once unquestioned free-market orthodoxy has been cast under suspicion as corrosive to national interests.
COVID-19 showed just how fragile our economic system is. A virus with humble origins in Wuhan, China managed to bring global economic activity to a halt by taking advantage of our interconnected world. How ominous that the very pillar of global free market capitalism should catalyze its downfall.
The US unemployment rate is by some estimates expected to surpass 15% soon. Businesses are seeking massive bailouts and the Trump Administration is sending relief checks to American citizens as part of an unprecedented stimulus package hoping to alleviate some of the burden on working class families. This will not be enough to recover from the damage already done, nor will it prevent another future disaster. Presidential hopeful Bernie Sanders just dropped out of the race. Under current circumstances, Democrat frontrunner Joe Biden may have a harder time rallying the disenfranchised to his cause. He is no populist, and that may harm him politically.
Yet, another phenomenon is also apparent: the failure of nations to independently deal with a global threat. While certain countries such as South Korea and Taiwan have fared better than others, national level responses alone have not shown great success. International cooperation and the activity of organizations such as WHO are critical to mitigating the impact of this novel coronavirus.
While isolationism and protectionist policies may aid prevention, they are not effective as treatment. Given the reality of the world, the complete isolation required to prevent foreign entrants in the form of nasty bugs and viruses is not possible. To handle a common crisis, nations must rely upon each other. Multilateralism may be gaining traction once again. This doesn’t mean the globalist argument of low prices and efficiency will once again win over workers who’ve lost their jobs. Domestically, national interests will dictate economic policy and agreements. Internationally, governments may decide it’s in their best interests to cooperate on pressing matters.
The 10s saw a sharp rise in populist tendencies the world over. If the short experience we’ve had so far with the 20s is any indication of the future, we may see more isolationism at the national level and greater multilateral cooperation through the form of specialized global organizations.
Regardless of what transpires, big changes are coming.
