In this episode of COVIDcast, Lowy Institute lead economist Roland Rajah sat down with Adam Tooze to discuss how the Covid-19 economic crisis is evolving and reshaping the world economy. Tooze is Professor of History at Columbia University and the Director of its European Institute. He is also the author of the 2018 book Crashed which is widely acclaimed as one of the best books about the 2008 global financial crisis and its aftermath.
Rajah and Tooze discussed how the story of Covid-19 has rapidly evolved as the crisis has unfolded. Tooze noted how China had gone from facing what many serious people thought could be its Chernobyl moment to getting control of the virus. Similarly, Europe was initially badly hit but has more recently the outlook has improved. Meanwhile, the United States has been on a rollercoaster, with initial fumbles on its health response followed by a massive fiscal and monetary response that has since begun to unravel in partisanship even as social unrest has exploded onto its cities’ streets.
The pair also discussed the importance of a proposed €750 billion European Union Covid recovery fund. Rajah noted that the level of fiscal support is perhaps not as large as the headline figure might suggest but that it was still substantial and could be scaled up in future. Tooze agreed, arguing that it was certainly big enough to qualify as a really serious political step, particularly on the part of Germany. However he also noted that serious blockages remained and the new proposal was far from a done deal.
The conversation then returned to China, focused on the contrast between China currently being a pillar of relative strength in the global economy but with relations with the West souring on nearly every front. Tooze noted that China had clearly chosen this time to “push” and that the West is going to face difficult choices. But cooperation with China also remained essential, especially on climate change. He noted that Europe has the most constructive policy of moving towards a green transition and see China as a potential partner. Tooze concluded by arguing there was enough there for cooperation, even though there is little sympathy between the two at a political level.
COVIDcast is a weekly pop-up podcast hosted by Lowy Institute experts to discuss the implications of Covid-19 for Australia, the Asia-Pacific region, and the world. Previous episodes are available on the Lowy Institute website. You can also subscribe to COVIDcast on Apple Podcasts, listen on SoundCloud, Spotify, Google podcasts, or wherever you get your podcasts.