Economic Crisis: COVID-19 Pandemic will have greater impact than the stock market crash of 1929

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It has been more than two months since the majority of businesses have been shut down. The hotel, restaurant and tourism sectors are the most strongly impacted by this major economic crisis. Companies such as Ryanair, Rolls Royce, Renault, Uber or AirBnB have had to resort to mass redundancies. Hertz in the United States and Canada has made tens of thousands of employees redundant. In the United States, the unemployment rate jumped to 14.7% in April and could reach 20% very quickly. As a reminder, it was 3.6% at the end of 2019! It should be remembered that in 1929 unemployment was half of what it is today. The scale of this disaster is global.

In the face of this unprecedented crisis, public authorities have had to take unprecedented measures. Never before had there been any question of forcing a population to remain confined, of limiting travel to a radius of 100 km from its home, or even having to produce an exit permit. All these measures have radically changed our way of life. The political authorities took these strong measures to limit the circulation of the virus and the number of deaths caused by this pandemic. But in the minds of many French people, they have been discriminatory, illogical and some even feel that they came too late.

More inequality and authoritarianism

Border closures, containment, quarantine, the pandemic gave an excuse to those who wanted to implement increased protectionism. The free movement of goods was hampered, with the result that citizens became increasingly afraid of running out of essentials. Fear that provoked shocking images of confrontations in supermarkets or hoarding of basic necessities. It should also be noted that the executive power of our countries has relied on the recommendations of a Scientific Council, composed of personalities specialised in epidemiology. For the first time in modern history, the well-being of the population has, for the first time, exceeded economic interest.

Chronicle of a recession foretold

To those who still believe that once the summer is over, everything will return to normal, it must be said: you are mistaken. Until a vaccine is found, until the virus can mutate to produce a new strain every year, no one is safe from Covid-19. Therefore, a return to normal – if at all – cannot be objectively envisaged for several months or even years. In the meantime, we are going to have to learn to live differently, to live together differently, to consume differently, to work differently; for what is most likely awaiting us is a long recession, worse than the one the world experienced after the stock market crisis of 1929.

While the first mass redundancies have started, all over the world policies cannot change this, only populists and extremists can benefit from them.

It is the impression of the immense majority, that it is in the mahogany henhouses praised by Alain Souchon (a nod to the author of Foule sentimentale), that we only see headless fowls running in all directions, straight to their rout. Politics has no place, the crisis is neither left-wing nor right-wing, it has no political affiliation. The upheaval that countries are experiencing can only be resolved with a European, if not international, consensus and revolutionary measures such as the New Deal and the Marshall Plan used during the major financial crises. Partisan agitation can only benefit extremists and populists who have no effective alternative but to take advantage of this misfortune. In fact, we are seeing the emergence of media figures who have no skills or ideas to deal with this problem.

A sign of hope in the fog

If the world is on the verge of an even more dramatic depression than that of the 1930s, we must nevertheless remain hopeful. Containment will certainly have positive sides: it will have brought us closer together. It will have taught us to work differently. It will have taught us to cherish what is essential: our lives are not only destined to play an economic role in society.

This pandemic has also made us aware that it is in fact essential to be independent in several areas, in particular: the plan for the manufacture of medicines, spare parts and the management of the stock of masks. This crisis could enable States that have learned the lesson to make more intelligent investments that could allow a certain degree of self-sufficiency in the essential elements of health, medicines and all the products essential to a country’s life. More wisdom, the crisis also obliges us to make more reforms: a reform of the system, a wide-ranging tax reform, a waiver of the debts of the poorest countries and a reduction in the debts of citizens.

We are not safe from the next virus or a major climate crisis. These drastic measures are essential if we are to be ready this time.

I’ll tell you what…

Thierry Rayer président of The Cercle d’Etudes Scientifiques Rayer and Paul-Loup Sulitzer

The Cercle d’Etudes Scientifiques Rayer cesrayer.com in collaboration with certain UNESCO delegations represented by their ambassadors aims, through the launch of the “Universae” project, to promote intercultural dialogue through education, science, culture, communication and information. A project that makes sense in this period of future socio-economic crisis.

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