Twenty images that offer a lens on 2020

‘McKinsey designers highlight the photos and illustrations that helped us tell the visual story of a remarkable year...

‘The way we see the world may well have changed in the course of 2020—as the global pandemic has upended our personal and professional lives. As the year draws to a close, we turned to McKinsey’s designers to get perspective on the images that helped bring our insights to life.

‘While we sometimes commission bespoke art for our articles and reports, for the most part we curate our visuals from outside image libraries. Even in prepandemic times, this presented special challenges when it came to selection (does the visual messaging fit the topic and tone of the piece?) and adaptation (is the image treatment consistent with our style and brand?). But in a year where much of the world spent many months maintaining some level of physical distancing, large swaths of the images in the libraries we access—those that showed people in the close proximity we were all used to before the pandemic—became unusable.

‘See our designers’ favorites from this year and why they resonated, then read the stories behind them to understand some of the year’s most important issues.’

Read here (McKinsey & Co, Dec 17, 2020)

The magnifying glass: How Covid revealed the truth about our world

‘A fitting symbol of this global pandemic would be a magnifying glass. For while the virus ended and upended so many lives, and spawned a whole new vocabulary – social distancing, furlough, herd immunity, R number, circuit breaker, bubble, unmute – it did not remake the global landscape so much as reveal what was already there, or what was taking shape, just below the surface.

‘It amplified it, sometimes distorting it, sometimes illuminating it in alarming detail. Covid‑19, the disease that was first reported to the World Health Organization one year ago this month, served as a lens through which we were able to see our politics, our planet and ourselves with a new and shocking clarity. It made 2020 a year of revelation, even if what was uncovered was not nearly as new as we might imagine.’

Read here (The Guardian, Dec 11, 2020)

The billionaires who profited from the pandemic should help pay for our recovery

‘The collective wealth gain of roughly a trillion dollars that the billionaires have enjoyed is more “than it would cost to send a stimulus check of $3,000 to every one of the roughly 330 million people in America,” the report states. “A family of four would receive over $12,000.” The report points out that a trillion dollars is also “double the two-year estimated budget gap of all state and local governments”—the deficit facing states that will certainly prompt them to make more cuts in public jobs and services if it isn’t addressed. The authors of the report don’t argue that taxing the recent gains of the mega-rich would cover the entire fiscal cost of the pandemic. They stress, instead, the undoubted fact that, at the very apex of U.S. society, there is now a staggering—and historic—amount of wealth that could be taxed.’

Read here (The New Yorker, Dec 10, 2020)

An effective response to Europe’s fiscal paralysis: George Soros

‘With Hungary and Poland vetoing the EU budget and Covid recovery fund, the case for issuing perpetual bonds has never been stronger

‘Perpetual bonds offer the great advantage that the principal never has to be repaid; only the annual interest is due. The discounted present value of future interest payments diminishes over time – it will approach, but never reach, zero. A certain amount of financial resources – say, the €1.8tn currently planned – would go several times further if it were used to issue perpetual bonds rather than ordinary bonds. This would largely solve Europe’s financial problems.

‘If one country issued perpetual bonds, it would have the additional advantage that other European countries would find it an example worth following. The Frugal Five should find perpetual bonds particularly attractive. After all, they like to save money.’

Read here (The Guardian, Dec 1, 2020)

United States: Beyond the wasteland -- New strategies for pivoting from the pandemic crisis to a recovery built on economic justice

‘Decades of falling wage shares mean that millions of households are ready to spend more if only they could earn more income. A well-calibrated recovery strategy that combines public spending on goods and services with regulation of predatory corporate behavior and effective redistribution can unleash a virtuous growth circle that improves living standards for the vast majority and strengthens government finances even as it generates resources to boost public services and tackle the environmental catastrophe.

‘Such a strategy would consist of the following elements:

• A prolonged fiscal expansion with immediate support to employment creation and social services, including a strong component in the care economy;
• Public-infrastructure investment to accelerate the energy transition by combining policies to encourage investments in renewables and discourage fossil fuel extraction;
• Policies to improve industrial capacity based on raising productivity and greater energy efficiency;
• Progressive tax reforms shifting the burden from indirect taxes such as sales and value-added taxes (which are regressive and discourage spending) to direct taxation, especially on high-income earners (whose consumption is relatively unaffected by taxation) and on corporate earnings and rents (with exemptions depending on employment creation).

Read here (The American Prospect, Nov 27, 2020)

Has capitalism turned the COVID-19 emergency into a disaster?

‘Exploit it’ - Protect the People or the Profit? ‘We were in a crisis before COVID-19 - a crisis of capitalism. Join Ali Rae in this first episode of “Al Hail The Lockdown” - a 5 part series exploring the complexities of our global response to the COVID-19 pandemic. In this episode, Ali speaks with filmmaker and activist Astra Taylor, economist Aditya Chakrabortty and economic sociologist Linsey McGoey about disaster capitalism, philanthro-capitalism and how the structures of capitalism have left us ill-equipped to deal with the fallout of COVID-19.’

View here (Aljazeera, Nov 24, 2020) 

A tale of two economies: Stephen Roach

‘As financial markets celebrate the coming vaccine-led boom, the confluence of epidemiological and political aftershocks has pushed us back into a quagmire of heightened economic vulnerability. In Dickensian terms, to reach a “spring of hope,” we first must endure a “winter of despair.”...

‘With COVID-19 still raging – and rates of infection, hospitalization, and death now spiraling out of control (again) – the near-term risks to economic activity have tipped decidedly to the downside in the United States and Europe. The combination of pandemic fatigue and the politicization of public health practices has come into play at precisely the moment when the long anticipated second wave of COVID-19 is at hand.

‘Unfortunately, this fits the script of the dreaded double-dip recession that I warned of recently. The bottom-line bears repeating: Apparent economic recoveries in the US have given way to relapses in eight of the 11 business cycles since World War II. The relapses reflect two conditions: lingering vulnerability from the recession, itself, and the likelihood of aftershocks. Unfortunately, both conditions have now been satisfied.’

Read here (Project Syndicate, Nov 24, 2020)

The Delinquent Dozen of pandemic profiteers -- A report on billionaire wealth versus community health

‘There are few stories more sordid than the surging wealth gains of the world’s billionaire class during a pandemic when so many have lost their lives, health, and livelihoods. A handful of billionaires and corporations have seen their wealth surge to record levels, in part as a result of their monopoly status and opportunism during the pandemic...

‘Meanwhile, private equity firms have bought up essential businesses in the health care, grocery, and pet care industries, only to aggressively cut costs, skimp on worker safety, and load companies up with debt to boost their own profits. Hundreds of thousands of essential workers employed by these companies have remained vulnerable and exposed. These frontline workers risk their lives every day to do the work that increases already obscene corporate wealth.

‘This report focuses on a list of 12 emblematic bad actors. We call them the Delinquent Dozen — corporations that should do significantly more to protect their workers as their owners and executives continue to reap billions.’

Read here (Inequality.org, Nov 18, 2020)

What history can teach us about the post-Covid economy (Morningstar, Nov 17, 2020)

‘To investigate the means through which these shifts could happen—and the likelihood that they will—we identified three main ways the coronavirus could shape the economy long after the pandemic has subsided:

• Habits could evolve, causing lasting change in consumer behavior. As an example of the impact of habits, consider the rise of recycling in the United States over the past several decades. This shift was due in part to the advent of Earth Day in 1970 and the nationwide campaign encouraging Americans to "reduce, reuse, recycle." The Environmental Protection Agency reported that 34.7% of municipal solid waste was recycled in 2015, as compared with 6.6% in 1970.
• Fear can make consumers reluctant to engage in certain activities—in this case, fear of the next pandemic (including a COVID-19 resurgence). An instance where fear led to consumer shifts is when research in the 1960s demonstrated the health risks of smoking cigarettes. This led to a permanent reduction in cigarette sales—approximately 42% of U.S. adults smoked in 1964, compared with approximately 19% in 2011.
• Sunk costs, or costs that have already been incurred and cannot be recouped, could change the long-term plans of consumers and firms. A classic example of sunk costs is the Concorde. British and French manufacturers poured such exorbitant sums into developing the aircraft in the 1950s and 1960s that the jet never became profitable over the decades it was commercially available. (This was such a notorious incident that the sunk-cost fallacy is sometimes also referred to as the Concorde fallacy.)

Read here (Morningstar, Nov 17, 2020)

Vaccine rollout could cause US dollar to fall 20% in 2021: Citi

‘The widespread distribution of vaccines to combat the coronavirus pandemic and ongoing monetary easing could cause the U.S. dollar to weaken as much as 20% next year, Citibank said on Monday. “When viable, widely distributed vaccines hit the market, we believe that this will catalyze the next leg lower in the structural USD downtrend we expect,” the U.S. bank said in a research note.’

Read here (Reuters, Nov 17, 2020)

Daisy Chain: Can a Cornish town adapt to survive another lockdown?

‘When the remote town of St Just, Cornwall, was locked down in March, the small community worried that its economy wouldn't survive. But one town councillor, Daisy Gibbs, rallied an army of volunteers to form 'the Daisy chain', an informal support network to ensure every household in the district had support. Inspired by her imagination and resilience, filmmaker Sky Neal followed the Daisy Chain for seven months, as local businesses adapted and the community pulled together to realise a more sustainable future. However, as a second wave of restrictions threatens, the town has to dig deep to find the resilience they need to ensure their future. Can they re-invent their local economy to survive and thrive beyond Covid?’

View here (The Guardian, Nov 2, 2020)

We need fresh ideas to handle the Covid recession — Jeyakumar Devaraj

‘What is the most appropriate budget for Malaysia to navigate the economic recession that the Covid pandemic has precipitated? This is the crucial issue we should be discussing so that appropriate solutions can be found. Each country needs to develop a national consensus on how the finite financial capacity of the nation should be deployed to limit the health and economic fallout of the ongoing pandemic. Unfortunately, we in Malaysia have been distracted by political intrigues for far too long.

‘The PSM would like to share our analysis of the current recession and put forward a set of ideas on how we should tackle the economic fallout of the Covid Pandemic. We need a clear understanding of the situation we are in so that we can plan coherently for the coming year...’ 

The analysis and suggestions come under seven headings:

1. We cannot “talk up” the economy
2. Pumping in more credit into the system is not going to work
3. The government has to take the lead role in managing the economy and protecting the rakyat
4. This is not going to be a V-shaped recession
5. More targeted relief for the poorest families
6. A “Green New Deal” for Malaysia
7. The government should use “debt monetisation” as one of the methods to raise funds for the programs mentioned above.

Read here (The Malay Mail, Oct 28, 2020) 

Finance Covid-19 relief and recovery, not debt buybacks

‘In the face of the world’s worst economic contraction since the Great Depression, a sense of urgency has now spread to most national capitals and the Washington-based Bretton Woods institutions. Unless urgently addressed, the massive economic contractions due to the COVID-19 pandemic and policy responses to contain contagion threaten to become depressions.

‘Nevertheless, many long preoccupied with developing countries’ debt burdens and excessive debt insist on using scarce fiscal resources, including donor assistance, to reduce government debt, instead of strengthening fiscal measures for adequate and appropriate relief and recovery measures.

‘Most debt restructuring measures do not address countries’ currently more urgent need to finance adequate and appropriate relief and recovery packages. In the new circumstances, the debt preoccupation, perhaps appropriate previously, has become a problematic distraction, diminishing the ‘fiscal space’ for addressing contagion and its consequences...

‘Despite her earlier reputation as a ‘debt hawk’, new World Bank Chief Economist Carmen Reinhart recognizes the gravity of the situation and recently advised countries to borrow more: “First fight the war, then figure out how to pay for it.” Hence, in these COVID-19 times, donor money would be better utilized to finance relief and recovery, rather than debt buybacks.

‘Multilateral development finance institutions should resume their traditional role of mobilizing funds at minimal cost to finance development, or currently, relief and recovery, by efficiently intermediating on behalf of developing countries. They can borrow at the best available market rates to lend to developing countries which, otherwise, would have to borrow on their own at more onerous rates.’

Read here (IPS News, Oct 17, 2020) 

Coronavirus: How the world of work may change forever

‘More than seven months have passed since the World Health Organization declared Covid-19 a pandemic. Hundreds of millions of people have lived through lockdowns. Many have made the abrupt shift to working from home; millions have lost jobs. The future looks uncertain. We don't know when, or if, our societies might return to normal – or what kind of scars the pandemic will leave.

‘Amid the upheaval, BBC Worklife spoke to dozens of experts, leaders and professionals across the globe to ask: what are the greatest unknowns we face? How will we work, live and thrive in the post-pandemic future? How is Covid-19 reshaping our world – potentially, forever?

‘We’ll roll out these important views from some of the top minds in business, public health and many other fields in several articles over the next few weeks. We'll hear from people including Melinda Gates on gender equality, Zoom founder Eric Yuan on the future of video calls, Lonely Planet founder Tony Wheeler on what’s next in travel and Unesco chief Audrey Azoulay on the ethics of artificial intelligence.’

Read here (BBC, as at Oct 26, 2020)

China got better. We got sicker. Thanks, Trump

‘Public health expert Dr. David Katz argued in a New York Times op-ed and in an interview with me back in March that we needed a national plan that balanced saving the most lives and the most livelihoods at the same time. If we just focused on saving every life, we would create millions of deaths of despair from lost jobs, savings and businesses. If we just focused on saving every job, we would cruelly condemn to death fellow Americans who deserved no such fate.

‘Katz argued for a strategy of “total harm minimization” that would have protected the elderly and most vulnerable, while gradually feeding back into the work force the young and healthy most likely to experience the coronavirus either asymptomatically or mildly — and let them keep the economy humming and build up some natural herd immunity as we awaited a vaccine.

‘Unfortunately, we could never have a sane, sober discussion about such a strategy. From the right, said Katz, we got “contemptuous disdain” for doing even the simplest things, like wearing a mask and social distancing. The left was much more responsible, he added, but not immune from treating any discussion of economic trade-offs in a pandemic as immoral and “treating any policy allowing for any death as an act of sociopathy.”

Read here (New York Times via Salt Lake Tribune, Oct 15, 2020)

The Covid-19 pandemic and the $16 trillion virus

‘The estimated cumulative financial costs of the COVID-19 pandemic related to the lost output and health reduction are shown in the Table [in the story]. The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US. For a family of 4, the estimated loss would be nearly $200 000. Approximately half of this amount is the lost income from the COVID-19–induced recession; the remainder is the economic effects of shorter and less healthy life.’

Read here (JAMA Network, Oct 12, 2020)

The pandemic’s complex cocktail

‘Over the past few years, investors have tended to be richly rewarded for setting aside traditional determinants of market value and focusing on just one thing: plentiful and predictable liquidity injections into the marketplace. But the next few months will likely be a bigger test for this wager. Wall Street has decoupled from Main Street in a way that few expected. It would be a mistake to keep extrapolating into the future without stopping to ask about the mounting collateral damage and unintended consequences.’

Read here (Project Syndicate, Oct 6, 2020)

Pope says capitalism failed humanity during coronavirus pandemic

“The fragility of world systems in the face of the pandemic has demonstrated that not everything can be resolved by market freedom... It is imperative to have a proactive economic policy directed at ‘promoting an economy that favors productive diversity and business creativity’ and makes it possible for jobs to be created, not cut.” The pope also restated the past calls for the redistribution of wealth, saying those with much should “administer it for the good of all.” But he clarified that he was “not proposing an authoritarian and abstract universalism.”

Read here (DW, Oct 4, 2020)

Capitalism after the pandemic: Getting the recovery right

‘Governments also need to consider how to use the returns on their investments to promote a more equitable distribution of income. This is not about socialism; it is about understanding the source of capitalistic profits. The current crisis has led to renewed discussions about a universal basic income, whereby all citizens receive an equal regular payment from the government, regardless of whether they work. The idea behind this policy is a good one, but the narrative would be problematic. Since a universal basic income is seen as a handout, it perpetuates the false notion that the private sector is the sole creator, not a co-creator, of wealth in the economy and that the public sector is merely a toll collector, siphoning off profits and distributing them as charity.

‘A better alternative is a citizen’s dividend. Under this policy, the government takes a percentage of the wealth created with government investments, puts that money in a fund, and then shares the proceeds with the people. The idea is to directly reward citizens with a share of the wealth they have created...

‘A citizen’s dividend allows the proceeds of co-created wealth to be shared with the larger community—whether that wealth comes from natural resources that are part of the common good or from a process, such as public investments in medicines or digital technologies, that has involved a collective effort. Such a policy should not serve as a substitute for getting the tax system to work right. Nor should the state use the lack of such funds as an excuse to not finance key public goods. But a public fund can change the narrative by explicitly recognizing the public contribution to wealth creation—key in the political power play between forces.’

Read here (Foreign Affairs, Oct 2, 2020) 

China is winning the virus-economy recovery race

‘The countries that best controlled the coronavirus pandemic haven’t necessarily been rewarded with economic benefits. But one economic giant has, and its success is likely to resonate for years. That’s China.

‘Among members of the Group of 20, the global club of leading economies, only China rebounded from a Covid-19 contraction as early as the second quarter of 2020, and its growth shows no signs of abating. In the U.S. and Europe, by contrast, where the virus arrived later, recoveries were slower and now face stiff headwinds.’

Read here (Bloomberg, Oct 2, 2020)