Solving the structural problems exposed by Covid-19

 

From Roger Teoh

Book review: Covid-19 and the Structural Crises of Our Time, by Lim Mah-Hui and Michael Heng Siam-Heng.

If this book were to be summarised in one quote, it would be Winston Churchill’s aphorism “Never let a good crisis go to waste”

The Covid-19 pandemic has exposed the structural weaknesses in the current global economic order and political systems, and the authors precisely identified it as a once-in-a-generation opportunity to address these limitations.

It begins with a discussion on the evolution of economics and the political state, with the system gravitating towards neoliberalism since the 1970s. The thoughts of prominent economist Karl Polanyi were used to highlight the perils of unchecked markets and an unsustainable economic system that leads to the destruction of the environment and social fabric.

This is then followed by a brief overview of the history of pandemics and an excellent analysis of the policy response of different nation-states to the Covid-19 pandemic.

The lack of social safety nets and the difficult trade-offs faced by policymakers were succinctly highlighted. For example, in developing countries, they quoted from the prime minister of Pakistan, Imran Khan, that “people had to balance the risk of dying of starvation during the total lockdown as much as dying from Covid-19”.

Developed countries, on the other hand, embarked on unprecedented fiscal and monetary policies to prop up a fragile economy that had already been overloaded with debt.

The authors cautioned that these responses could lead to unintended consequences over the longer term, such as rising inequality, inflation, and populism. The book concludes by proposing a series of reforms to address the identified structural problems that were exposed by the Covid-19 pandemic.

Looking at the ongoing developments of the pandemic, it is hard to believe that the manuscript was finalised in December 2020. Several issues that were raised by the authors are already playing out today, where:

1. inflation in developed nations is currently running at 40-year highs,
2. ongoing semiconductor shortages are exposing the structural flaws of the “just-in-time” system,
3. environmental externalities continue to be a side issue for businesses and policymakers,
4. populism continues to exacerbate public distrust towards governments and professionals that is apparent, for example, in the circulation of conspiracy theories and alternative facts on Covid-19 vaccines, and
5. unequal access to Covid-19 vaccines and treatments.

While this incredible foresight should certainly be applauded, the book could be further improved by presenting several discussions in a more balanced manner. In the opinion of this reviewer, the book is also predominantly focused on the liberal capitalist West.

More emphasis could be added to highlight the structural problems faced by authoritarian states, for example, the lack of data transparency, censorship, as well as the higher relative wealth and income inequality in China when compared with the US and Europe.

In addition, the benefits of quantitative easing (QE) in preventing the health crisis from snowballing into a global depression were not sufficiently highlighted. Although worsening inequality is acknowledged to be an unintended consequence of the QE programme, such a policy could arguably be the lesser of two evils.

Instead, the debate could be reframed towards agreeing upon a shorter timeline in winding down these highly accommodative monetary policies to maximise their benefits and limit any unintended consequences.

Notwithstanding these critiques, the reviewer strongly believes that this book would serve as a one-stop shop for the reader to gain an understanding of a range of subject matters. The authors should be commended for their undertaking in synthesising knowledge from multiple disciplines in a holistic way.

The book is available at Gerakbudaya and other major bookstores. - FMT

Roger Teoh is a research associate at Imperial College London and holds a doctorate degree in aviation and climate change.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.