Coronavirus bailouts can secure a better future – if policymakers can get their act together

Name: Experts reluctant to predict end of Covid-19 pandemic as global case numbers keep setting records
Uploaded: 2020-07-05T19:00:13.000Z
Duration: 5 min 38 s
Description: Experts reluctant to predict end of Covid-19 pandemic as global case numbers keep setting records

There needs to be a consensus on what reforms should be and where new sources of economic growth are, and a better bridge between state capitalism and market capitalism. Countries must swim together or sink

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A man walks past a mural in midtown New York on June 26. The next few years could herald a great economic reset, towards more sustainable and equitable directions. Photo: AFP

Anthony Rowley

Published: 3:00am, 6 Jul 2020Updated: 3:43am, 6 Jul 2020

What kind of brave new world will emerge in the post-Covid-19 era? It could be a better world in the economic sense if policymakers march into it willingly and embrace new economic realities. But the danger is that they could lurch into it reluctantly while denying the need for change.

The next few years could herald a time of greater cooperation between public and private sectors of the global economy, and between state capitalism and market capitalism. And it could see economic development shift into more sustainable and equitable directions.

With the pandemic still raging and the risk of a second wave of infections very real – and with most people and businesses concerned mainly with staying healthy and avoiding financial distress – there has been little time or inclination to consider Covid-19’s longer-term economic implications.

Yet these could prove manifold and profound. Governments have stepped into the pandemic crisis with huge amounts of financial aid to prevent corporate bankruptcies on a massive scale while also attempting to rescue personal consumption from a devastating collapse.

Central banks are, meanwhile, underwriting huge increases in government debt to finance this official support, blowing out their own balance sheets in the process. And there will, no doubt, be a great deal more such financing required before Covid-19 is finally conquered or subdued.

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Experts reluctant to predict end of Covid-19 pandemic as global case numbers keep setting records

But what will governments and central banks demand in return for all this largesse? Will governments become more active shareholders or partners in the corporate sector, requiring a bigger say in business affairs and shifting economic development aims and priorities in the process?