The effects of SARS-CoV-2 are dramatic: The World Health Organization (WHO) is currently counting 2.7 million people worldwide who have died with or from Covid-19 (as of March 22, 2021). The pandemic must also be viewed in a global economic and political context. Unemployment, corporate bankruptcies, and government deficits are rising in more than 100 countries. Even in the European Union, parts of the population lose confidence in their political institutions. Political scientist and economist Paul J Wolfens dedicates himself to these complex developments in his book, which he wrote during the first wave of pandemics in the mid-2020s. A globally available vaccine against Covid-19 was not on the market at the time, and the current US president was called Donald Trump.
The global economic crisis?
Welfens argue that the Covid 19 pandemic could trigger a global economic crisis. In his work, he explores the questions under which international weights change, who can be identified as the winner and losers of the epidemic and which reforms are necessary to confront the problems to come. To this end, it provides a comprehensive analysis of the impacts of Covid-19 on global and economic policy. The book is divided into four parts: The first part deals with the Covid-19 pandemic and how to combat it. This is followed by data on global economic instability. The third part deals with the potential risks of the collapse of the euro, and the final section deals with the issue of global leadership.
The United States sees the Welfens as the biggest loser in the crisis due to the high number of infections and deaths, the health system in need of reform, and the populist president downplaying Covid-19. Where international cooperation is necessary to combat the epidemic and its consequences, the country fails as a leading power. Instead, it opened an additional center of conflict (as well as its trade war with China) by leaving the WHO – because it was so influenced by China.
The European Union also appears to be sick and in danger of slipping into the next crisis. In general, they have little financial leeway, which is why coordinated fiscal and political policy is imperative. But there is no strategy to avoid another Euro crisis. The causes and consequences of Brexit, which have now been completed, have not been fully addressed. Italy sees Wolfens as a potential epicenter of the second Euro crisis.
However, Germany, which in 2020 weathered the epidemic well compared to other countries, is one of the winners in the Covid-19 crisis. Thanks to fiscal consolidation in the past few years, it can currently pursue a “completely comfortable” fiscal policy. However, the pandemic has shed light on Germany’s digital vulnerability. In general, Welfens are the telecom and computer industry as well as the pharmaceutical industry among the winners in the crisis.
In general, the author believes that the political balance will shift from the United States to the European Union, but above all to China. According to him, a severe recession can be avoided through an expansionary fiscal policy in terms of innovation and promotion of start-up, liquidity measures for banks and strengthening of multilateralism. However, when granting aid, one also has to take into account small and economically weak states, as they are at risk of national bankruptcy. Wolfens cites Lebanon and Jordan as examples of strategic importance for political or economic reasons that should be stabilized with financial assistance from the European Union, the World Bank, or the International Monetary Fund.