The global economy will recover quickly with the coronavirus under control, but the old problems that have fueled populist politics have compounded and may be more difficult to solve.
In a report published by the American “Foreign Policy” magazine, writer Michael Hirsch believes that after the end of the nightmare year 2020 and the distribution of “Covid-19” vaccines in large quantities, many economists believe that the global economic recovery in 2021 may It is the fastest in decades.
But the epidemic and associated lockdowns will leave a bleak legacy that may take decades to clear as well, including a widening income inequality gap that could lead to a revival of populist politics in the United States and other major countries.
After a year in which nearly every major economy has experienced a contraction, with one notable exception of China, most economists expect 2021 to bring growth, and according to the International Monetary Fund, global growth is expected to reach 5.2% this year.
Other economists expect that the strongest performers this year will be those that imposed a strict lockdown in 2020, led by the United Kingdom and Spain. For its part, China has already returned to economic growth last year with robust GDP growth likely to return moderately this year.
Expectations indicate a major recovery in the United States after a devastating summer, and in this regard, Andre Schleifer, a prominent economist at Harvard University, says, “I assume that if vaccination does not fail or slow, we will achieve a major economic recovery, I hope (the American president) concentrates The national team, Joe (Biden), is on this matter, because overcoming the Covid virus is a great victory that he can achieve in the next six months. “
The writer is likely that Biden will not be able to do more due to the possibility of Republicans blocking him, along with the development of his economic thinking since his days as Vice President Barack Obama, but even if Biden had relative freedom, the next administration has already indicated that it will not simply return to centrist politics. The supporter of free trade supported by former Democratic presidents.
On the other hand, the Oxford Economics Foundation indicated in a recent report that “major deals such as the North American Free Trade Agreement signed under Bill Clinton or the Trans-Pacific Partnership under Barack Obama have become unpopular across the political spectrum. Which may make President-elect Biden less supportive of free trade than he was when he was vice president. “
And if Trump’s rise was partly driven by income inequality that worsened after the last recession between 2008 and 2009, the continued inability to solve these problems will pose political problems, especially in the wake of the unprecedented economic disruptions during the pandemic.
In a recent report, economists at the Massachusetts Institute of Technology, David Autor and Elizabeth Reynolds, concluded that the “Covid-19” crisis will exacerbate the economic suffering in the short and medium term for workers who are less economically secure, especially those who work in the sector. Services that are growing rapidly but not providing high wages. “
Shortly before the new year, Trump signed a new $ 900 billion Covid-19 relief package after months of stalemate, as well as extending unemployment insurance, postponing deportations and debt repayment, which will alleviate some immediate pain and postpone some of the worst effects of income inequality, but That will not solve the basic problems, especially since the recession caused by the epidemic, unlike most previous recessions, did not affect the rich.
The situation is very similar in Europe. It is certain that the European Central Bank and the European Union were quick to put in place a massive rescue package early on and pass a massive new EU budget that eased the immediate economic threat and helped bridge the gap between northern and southern Europe. But the second wave of The pandemic, which has involved a new round of closures, closed businesses and rising unemployment, is raising similar problems as in the United States.
The writer cautioned that this does not even include the almost certain turmoil created by Brexit, and with the end of December, the United Kingdom and the European Union concluded a trade deal that governs their future relationship, and the agreement stipulates not to impose customs duties or quotas on goods. British Prime Minister Boris Johnson declared this agreement a major victory.
But the long-awaited Brexit agreement does not appear to cover services such as finance, which account for a large proportion of the ailing British economy and most of its trade with the European Union, and British citizens will not enjoy their previous rights to live and work in the European Union, and the European Union is still struggling. Long-running trade and economic battles with Washington will not be resolved with a magic wand from Biden.
The terrifying legacy of the pandemic
There is another dire economic legacy of the pandemic that could pose a huge challenge to Biden in the future, and months of virtual work during the pandemic have begun to alter work patterns, which will ultimately have a disproportionate impact on the already struggling working classes.
Edelberg, who became the director of the Hamilton project run by the Brookings Institution, believes that “there will be some important job shifts, and we’re not going to get rid of all the new ways of doing business after the pandemic, there will be a lot of remote work and less travel for work. A lot, and there is likely to be a lot of automation in different sectors. “
There will also be more ATMs in stores and other retail companies, which will accelerate the need for millions of workers to move to new sectors, which in turn will create the need for large, federally funded retraining programs.
The Biden transition team has made clear that job retraining programs, as well as a massive infrastructure bill that can rebuild a ramshackle country and act as a fiscal stimulus, are big priorities, but the new president will find it difficult to pass progressive tax legislation, such as the new tax proposed by him. On the wealthy, new tax breaks for health insurance, childcare, elderly care, and home ownership.