What will be striking in 2023 is the extent to which the tone of the discussion has shifted to an acknowledgment that the world has changed decisively over the past few years. as Financial Times Report: “At the three-day symposium, current and former policymakers from around the world voiced their concern that the good economic relationships that underpin the administration’s policy decisions are at risk.
“They urgently called for a revision of the playbook to better understand and respond to a rapidly changing situation that could trigger more frequent supply shocks, higher prices and increased volatility across financial markets.”
Now, this all might sound quite familiar to the casual reader ecologistBut it’s worth noting that great and good financial governance is trying to catch up.
Of particular note is that, as Financial Times explain, Speech by Christine Lagarde (pictured), he told central bank officials: “In some likely scenarios, we could see a fundamental change in the nature of global economic interactions … We may be entering an era of transformations in economic relationships and disruption of established laws .”
geopolitics
Lagarde highlighted “profound changes in the labor market and the nature of work”, including large numbers of people leaving the labor force in the wake of COVID-19 and digitization; the “energy transition”, where the world moves away from fossil fuels, but also future energy supply shocks; and “Deepening geopolitical divisions and a global economy fragmented into competing blocs”.
Putting it all together, Lagarde argued, “we’re likely to experience more shocks from the supply side itself” and as “firms change their pricing strategies” and workers “change their pricing strategies in a more powerful way,” these Shocks are more likely to be transmitted through the system. the ability to make up for lost real wages”. The result would be higher and more persistent inflation going forward.
This is worth it read her entire speechIt places ecological catastrophe in the context of chaotic geopolitical shifts and technological transitions—often referred to as “multiple crises“.
I’ve argued the case before The shocks of the past few years or so point to the beginning of a new, more unstable and certainly more costly economic period – Among them, the positive sidelabor may find itself in a stronger bargaining position than beforebut on a negative note, capital will seek to pass on to wider society the rising costs of climate change, ecological collapse, geopolitical tensions, technological failures, etc.
fiscal activism
Economic historian Adam Tooze has called the coronavirus pandemic “aThe First Crisis of the Anthropocene” – I think it’s worth taking this seriously because the outbreak of the pandemic marks a step change in how our global system works.
In this historical period of generally low growth, the economic decisions we face come down to one straightforward question: Figure out which side you are on: Labor, that is, workers, their families, their allies, should their communities Bearing the cost of the Anthropocene; or should it be capital and the rich?
You’d be surprised to learn that Lagarde didn’t ask this question, but instead focused on how monetary policy can be used (in some way) to stabilize the economy.
But another speech by economic historian Barry Eichengreen, perhaps best known for his classic history of the Great Depression, also drew attention, golden shackleslays out the rather bleak outlook for government debt around the world in what has been called “the era” elsewhere.fiscal activism’: Repeated shocks and higher costs of providing the necessities of modern life, from health care to education to infrastructure, mean governments will spend more.
fail
Arguments by Eichengreen and Serkan ArslanalpAt the end of the day, we recognize that we are entering a new period of shock and uncertainty, saddled with huge debts from the old one, closing off room for governments around the world to make a relatively easy transition.
Everything will cost more; the options for governments to borrow, or for that matter, the central bank interventions we’ve seen through quantitative easing since 2008, will likely be reduced; so the outcome will be more about who has to pay for it Much debate – which mostly means passing taxes.For example, think about what happens Ultra Low Emission Zone in the UK, and multiply that many times over.
Many politicians are deeply naive about this: either they think the magic of green growth will provide a costless transition, or worse, there is still a group of people who think the cost of transition and the ecological crisis are just their aspirations to leave.
Instead, what will happen is likely to be a version of what we’ve seen in the UK, Failure to solve problems today can cause bigger problems in the future – The ability to deal with these problems is getting weaker and weaker.
the author
Dr James Midway is an economist and former political consultant.This article is his transcript large dose podcast.
