The past year has been the year of Covid and of recession. 2021 has to be the year of a New Deal and of reconstruction.
2020 will go down in history as the year of the Covid-19 pandemic and of the extraordinary crisis it triggered. It is yet another in a series of bad years of the 21st century: 2001 saw Jihadist attacks in the USA; 2008 saw the globalization crash; 2016 saw a wave of populism caused by the Brexit vote and the election of Donald Trump.
The epidemic has underlined the fact that nations, societies and the international system are extremely fragile. With the exception of a handful of countries, governments have not managed to control the spread of the virus, and this has brought about a crisis of mistrust in our leaders. Caught unawares and overwhelmed, they have been forced to resort to lockdown measures that have caused an unprecedented recession. There are many after-effects, which will be long-lasting: people’s physical and mental health is suffering, whole sectors of the population are descending into poverty, inequality is rising sharply, tens of millions of children are missing school, governments are becoming over-indebted – 137% of GDP in developed countries – and freedom is on the decline.
But some positive signs have emerged: the speeding-up of digital usage, the discovery of a vaccine in under a year as a result of an unprecedented effort on the part of scientists, the resilience of certain democracies (e.g. South Korea, Taiwan, Germany, Switzerland and New Zealand), and Europe’s response – from an economic standpoint, a €750 billion recovery plan and, from a strategic standpoint, a series of sanctions against Erdogan’s Turkey.
2021 looks like being divided into two vastly contrasting periods. Despite the launching of vaccination programs, the first half of the year will be one of considerable hardship, still dominated by the epidemic and the soaring number of bankruptcies. The second half should be far brighter: the lifting of sanitary restrictions and the furtherance of support programs will produce a marked upswing. This change will make it clear who are the winners and losers in terms of continents, countries, companies and individuals. The dividing line will be between those who remain entrenched in fear and resentment, and those who shift to a dynamic of hope and reconstruction.
This coming year will therefore be decisive. It must be focused on recovery but even more so on reforms to solve the problems that we have allowed to accumulate. We should take inspiration from Göran Personn, the Swedish Social Democrat prime minister who, in the 1990s, modernized the Swedish model: “We should never let the opportunity offered by a major crisis pass us by.” The lifting of lockdown measures and of restrictions on business activity will have an immediate effect on production and employment, with a strong upswing in the service sector, which accounts for 70-80% of GDP in developed countries. At the same time, the economic and social contract will have to change in six main aspects:
- Company and labor organization to be based on the rebalancing of people’s private and professional lives, greater autonomy for employees, and management that is less hierarchical and more responsible.
- Added value to be shared out more equally between labor, capital and government.
- Less dependence on China for essential commodities.
- The digital industry to be reconfigured, based on respect for people and not on plundering their personal data.
- Ecological transition to be speeded up, based on changes to types of consumption that have been caused by lockdowns and the introduction of carbon pricing.
- Capitalism to gradually move away from bubbles and unearned income.
The fall in job offers, the impoverishment of the population, and the rise of inequality are a new blow to the middle classes, and this will destabilize democracies a little more. It is therefore vital to defuse the spiral of fear, anger and violence: by involving citizens more in public decisions through decentralization; by investing in education; by putting technology at the service of public policy; by strengthening the rule of law and ensuring lively public debate; by energizing people’s desire to serve the common good; and, finally, by re-creating major alliances between democracies (the USA, Europe, Japan, South Korea, Taiwan, Australia and New Zealand).
The first challenge facing Joe Biden is to reunify the American nation, which has never been so divided since the Civil War. He will have to reactivate counter-balances and reconcile people, bearing in mind that Donald Trump amassed 74 million votes and refused to admit defeat. The flexibility of the economy will enable a return to business levels in the second quarter of 2021. But this will not suffice to repair the torn threads of the nation, nor to provide the USA with a strategy that allows it to maintain its leadership. This is not the time for a third term of office for Obama but for a New Deal for the 21st century.
This is the moment of truth for France and the rest of Europe. At the end of a successful German presidency of the EU, 2021 must be devoted to a speedy deployment of the recovery program, and the EU must assert itself at an international level by proposing a transatlantic agenda and a strategy for containing the Chinese, Russian and Turkish démocratures (démocrature = a combination of democracy and dictatorship). More than ever, any new direction taken by Europe will depend on the modernization of France which, with a 12% fall in GDP, unemployment at 10% of the working population, and a debt equivalent to 120% of GDP, is on the edge of collapse. In 2021, we must stop spending whatever it takes; we must work, innovate and reconstruct at any cost!
(Column pubished in Le Point, 17th December 2020)