The Crisis after the Crisis
How to Shape a Sustainable Post-Corona Policy?
EU and OECD countries differ in their scope for political action to successfully counter the corona crisis and its fallout. However, any issues that were overlooked before the pandemic will be difficult to catch up on once it is all behind us.
One thing is certain: the corona crisis marks a turning point and its consequences will beset EU and OECD nations for years, if not decades. Among industrialized countries the recession is worse than at the height of the financial and monetary crisis in 2009. Last year, the coronavirus and its unchecked spread around the world triggered the worst economic crisis since the end of World War II.
How countries cope with and recover from the pandemic largely hinges on how forward-looking their governments are and how well they are positioned to implement necessary reforms. However, countries are drifting further and further apart on their ability to combine forward-looking policies with equally forward-looking governance.
In many places the governments’ ability to steer policy has diminished, a fact which is far from encouraging. Of the 41 industrialized countries that we have been studying comparatively for many years, a majority of a total of 26 countries have either come to a standstill or have deteriorated further. This is evident, for example, in the question of whether independent experts are regularly involved at an early stage in developing new political measures. In 17 countries, this was not systematically the case in recent past. This is a serious burden in the context of the corona crisis, where an extremely dynamic development of knowledge requires quick and targeted reactions.
Task for the future: sustainable transformation of the economy
The enormous increase in national debt caused by the pandemic is threatening major future-orientated joint projects, including dealing with global warming and managing scarce natural resources. These tasks cannot be postponed and will require economies to rapidly transform towards more sustainable and resource-efficient modes of production and consumption.
Data from our Sustainable Governance Indicators (SGI) show that only the Nordic countries and Switzerland were ambitious in protecting natural resources in the pre-pandemic period. But even these countries are not doing enough to meet their climate and environmental goals. In contrast, Israel, Germany and the U.S. have sacrificed their environmental protection efforts for wealth gains during recent years. Poland, the Czech Republic, South Korea, and Turkey also saw a significant decline in their natural resource conservation efforts in the period leading up to the coronavirus outbreak. Achieving the much-needed shift toward a sustainable economy in the coming years will be much more difficult for these countries, given their strained budgets.
Home-grown problems intensify
Industrialized countries are also exposed to a range of economic and social policy problems that would have been in urgent need of reform, even before the spread of the virus. Failures to digitalize the economy, administration and society have meant that some countries have found it harder to shift work and education online than their more digitialized counterparts.
We note that the reform backlog for policies on labor market, education, health and innovation was responsible for fuelling wealth inequalities in richer nations in the pre-pandemic era, and has made income distribution increasingly unequal within many countries. It is alarming that even in the years before the spread of the virus, the risk of poverty among children and the elderly in many democracies had risen due to the patchy cover of social security systems.
Democratic systems under pressure
The fight against the pandemic poses the EU and OECD countries with an almost insurmountable task: they must effectively curtail citizens’ rights in order to protect their health while not inflicting damage on liberal democracy as a whole. Yet ahead of the emergence of corona, the quality of democracy had already declined in no fewer than 24 states, and in some cases sharply. It is little surprise that these nations include Turkey, Hungary and Poland, but the list also encompasses Japan, Iceland and, particularly strikingly, the United States.
If the social and economic problems worsen in the aftermath of the pandemic it could fuel another trend that we and our experts have been observing for some time: the increasing polarization of political systems, a potential danger for democracies. In many countries, populists have succeeded in greatly widening the political and social divides. In 19 countries, it was recently no longer possible to organize sufficient levels of cross-party compromise. This poses a heavy burden for coronavirus crisis management, which relies on a great deal of social support and trust.
It will be crucial that all political and civil society actors committed to the fundamental values of liberal democracy now work together. They need to forge viable policy solutions to help bridge the economic and socio-cultural divide. In addition to containing the health crisis, the most important tasks for the future include, above all, a successful and sustainable economic transformation and cushioning the social consequences of the crisis. Collective understanding and effective mechanisms are vital to more effectively halt any anti-democratic tendencies.
Looking ahead at prosperous democracies in the post-corona era, an old adage will prove true: Don’t put off until tomorrow what you can do today. The greater a state’s pre-corona ability to develop and implement forward-looking political solutions, the better its prospects for coping with the pandemic’s impact and for leaving a liveable and fair world for future generations. However, not even the long-standing champions, the Nordic countries, can rest on their laurels. After all, it is clear that we will not create a sustainable future if we work in competition, but only if we work together.