How the predominant ideology of our time survived the pandemic, by EricLevitz
Photo: Spencer Platt/Getty Images The second millennium was nearly over, and so were global capitalism’s worst “financial troubles.” Or so one influential economist suggested in 1999.
To many, these first decades of Dornbusch’s golden age — also known as the “neoliberal era” — had looked gilded at best. The rise of independent central banks had corresponded with a fall in labor’s share of income. As policymakers prioritized price stability over full employment, they had condemned the most unskilled or socially stigmatized workers to perpetual joblessness.
On one level, Shutdown narrates the 21st century’s rebuke of neoliberal triumphalists like Dornbusch . Even before the COVID crisis, however, the technocratic justifications for the neoliberal program had largely broken down. The 2008 crash had revealed that financial deregulation and economic stability were more compatible in theory than in practice. The ensuing decade was characterized by slow growth, low interest rates, and scant inflation. In that context, prioritizing price stability over employment began to look perverse, even to independent central banks.
In these conditions, only “big government” could save global capitalism. No institutions but major central banks could stabilize bond prices. And nothing but massive deficit spending could plug the holes that COVID had punched in household income, business revenue, and consumer demand. Tooze presents a number of explanations for this phenomenon. But the primary factor is also the simplest: “epic government deficits could be financed without driving up interest rates” because “one branch of government, the central bank, was buying the debt issued by another branch of government, the Treasury.”
And these market failures were plainly resolvable! Money was no object. The pandemic had forced the Federal Reserve to reveal as much. “Bond vigilantes” could not actually hold the U.S. government hostage. The balance of power ran in the other direction. If the Fed wished to abet decarbonization by effectively monetizing deficit spending on a green transition, there was little investors could do about it. And this was only a bit less true for the European Central Bank.
The final bill is also expected to include less than $10 billion in funding for pandemic prevention and preparedness. Even in the midst of a world-historic crisis that has already cost the global economy tens of trillions of dollars worth of output, the world’s wealthiest governments are declining to invest seriously in public health.
Which isn’t to say that Biden’s program lacks democratic legitimacy. Most elements of the Build Back Better bill are overwhelmingly popular, and the median voter’s views on public policy are often protean and confused. Still, the following remains true: Last year, the American state revealed its capacity to directly raise workers’ incomes through massive interventions in the economy.
Or maybe not. Regardless, in the world we live in, though, Tooze sees little hope for transformational, progressive change in the near-term. “In an earlier era,” he writes, his diagnosis of the global situation “might have been coupled with the forecast of revolution.” But this appears patently unrealistic; even “radical reform is a stretch.
Ireland Latest News, Ireland Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
ICU nurse helps fill nursery of newborn whose mom died of COVID-19 shortly after giving birthEmily Robison was just 22 years old when she died last month due to complications from COVID-19, leaving behind a newborn daughter whom she never met.
Read more »
The Covid vaccine doesn’t cause infertility, but the disease mightThe Covid vaccine does not cause infertility, but it's possible that getting a severe Covid infection could hurt both male infertility and female infertility.
Read more »
Pregnant women were kept out of clinical trials. That left them vulnerable to COVID-19A long-standing tradition of keeping pregnant women out of clinical trials is having serious consequences with regard to COVID-19.
Read more »
17 employees have died from Covid in a Florida school district since August'Every death is a devastating blow to our community,' according to a statement from the Polk County Public Schools.
Read more »
Covid: Lateral flow tests more accurate than first thought, study findsPositive results from the widely-used rapid Covid tests should be trusted, say UCL researchers.
Read more »
Analysis | The WHO has a bold new plan to find covid-19’s origins. China could get in the way.Without Beijing’s acquiescence, the hunt for the origins of covid-19 is likely to remain unresolved.
Read more »