2020: Another year of living dangerously

Year 2019 ended with widespread demos, rising inequality and a crisis of representation in many countries. The world is sleepwalking toward recession and a new crisis while depleting the environment.

POPULIST RHETORIC

Some 61 countries will have presidential or parliamentary elections. Many citizens are tired of conventional orthodox policies; they want change, and they will choose new parties to achieve this.

This is an opportunity to redress the situation but many of the emerging leaders are far-right demagogues who blame social-welfare policies, migrants and the poor while aiming to remove all constraints on capital. As in the United Kingdom, many will vote for these politicians, making the world more unequal and riskier.

A lot will be decided in the United States, still the world’s hegemonic power. How US citizens vote in the presidential election will have profound consequences for the rest of the planet.

US President Donald Trump has already had a big impact on the world, eroding multilateral institutions, trade agreements and global initiatives in his “America First” agenda. Despite the populist rhetoric, Americans in the main have benefited little. His large tax cuts for the wealthy, healthcare access cuts and increases in the defence budget are regressive, resulting in increased inequality.

RADICAL RIGHT

Yet the right continues to win votes, partly because it is becoming ever more radical, offering out-of-the-box “unthinkable” policies — from building walls to exiting the European Union — that appeal to those who want change above all else.

Unless social democrats advance radical and attractive progressive public policies, the radical right will continue to rise, and with it the trend toward inequality, economic risks and environmental degradation.

How we got to this point is not difficult to discern. 

Four decades of neoliberal policies have eroded living conditions in most countries. Governments of both the left and the right, advised by the International Monetary Fund, the World Bank and other organisations, have been pursuing supply-side policies focused on improving business competitiveness, which has meant lower wages, more “flexible” labour markets, lower corporate taxation and greater income inequality. While companies sharpened their competitive edge amid falling living standards and rising public debts, global demand has stagnated.

NEW NORMAL

Governments have also pursued social expenditure cuts and privatisation of public services. The average citizen has seen a big decline in welfare and growth has slowed as neoliberal short-term policies do not address the long-term causes of the problem: overproduction and excess capacity.

If the course is not changed, austerity policies will continue spreading. Austerity will become “the new normal”, affecting 113 countries, or more than 70 per cent of the world population, and fuelling more social discontent.

Absurdly, governments are cutting social expenditures but increasing military spending and supporting large corporations with public funds and regulation. As half of the world’s population live in poverty (less than $5.50 a day), this is likely to result in more protests and conflicts.

FINANCING OPTIONS

Austerity is not necessary. Even in the poorest countries, there are alternatives. The International Labour Organisation, United Nations Women and Unicef report at least eight financing options to generate resources sustainably and avoid cuts to public services. For example, countries can curb illicit financial flows, crack down on tax evasion, increase the progressivity of the tax system, reduce debt service by better managing debt or adopt more accommodative macroeconomic frameworks. There are many successful examples in recent times.

If governments opted out of austerity, we could see more countries raising revenue for national development, increasing public investments that benefit people and supporting real economic activity and human development with a view to generating decent employment and ensuring environmental sustainability.

Besides improving financial regulation and redressing financialisation, these policies would help avoid the danger of recession and the possible economic and financial crisis predicted by institutions like the UN, J.P. Morgan and Moody’s.

26M HECTARES

But even if the world avoids economic calamity in 2020, environmental devastation will continue. The world is losing more than 26 million hectares of trees each year, mostly tropical rainforests, affecting both climate and wildlife. Deforestation, overfishing, carbon emissions and waste generation are expected to increase in absolute terms.

Ms Ortiz, director of Global Social Justice Programme, Initiative for Policy Dialogue, at Columbia University, was Director of the ILO and Unicef. Project Syndicate: www.project-syndicate.org.​