Another year of living dangerously

Twenty twenty will be another year of living dangerously if short-term policies continue to be pursued at the expense of long-term vision.

The year 2019 ended with widespread demonstrations, rising inequality and a crisis of representation in many countries. The world is sleepwalking toward recession and a new crisis, while depleting the environment. Governments, and ultimately people, can reverse these alarming trends in 2020.

Sixty-one countries will have presidential or parliamentary elections in 2020. Many citizens are tired of conventional orthodox policies; they want change, and they will choose new parties as a way to achieve this.

This is an important opportunity to redress the current situation, but many of the new emerging leaders are far-right demagogues who blame today’s problems on social-welfare policies, migrants and the poor, while aiming to remove all remaining constraints on capital. As in the United Kingdom, many whom neoliberalism has harmed will vote for these politicians, making the world a more unequal and riskier place.

A lot will be decided in the United States, still the world’s hegemonic power. How US citizens (many without much knowledge of global affairs) vote in the 2020 presidential election will have profound consequences for the rest of the planet’s citizens.

The US president, Donald Trump, has already had a big impact on the world, eroding multilateral institutions, trade agreements and global initiatives as part of his ‘America First’ agenda. Despite the populist rhetoric, Americans in the main have benefited little. Trump’s large tax cuts for the wealthy, cuts to health-care access and increases in the US defence budget are regressive, resulting in increased inequality.

Radical and attractive

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 in 2020, the radical right will continue to rise, and with it the trend toward increasing 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.

Governments have also pursued cuts in social expenditures and the privatisation of public services. Paradoxically, most of the savings from these cuts have gone toward supporting private companies with tax breaks and bailouts in an effort to generate growth. Thus, the average citizen has experienced a significant decline in welfare, and growth has remained slow, because neoliberal short-term policies do not address the long-term structural causes of the problem: overproduction and excess capacity.

Austerity policies

If the current course is not changed, austerity policies will continue spreading in 2020, cutting into pensions, wages, social programmes and labour protections. In 2020, 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, many governments are cutting social expenditures but increasing military spending and supporting large corporations with public funds and limited regulation. At a time when half of the world’s population still lives in poverty (defined as less than $5.50 per day), this is likely to result in more protests and conflicts in 2020.

Austerity is not necessary. Even in the poorest countries, there are alternatives. The International Labour Organization, 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 were to opt out of austerity, we could see more countries successfully raising revenue for national development in 2020, increasing public investments that benefit people, and supporting real economic activity and human development, with a view toward generating decent employment and ensuring environmental sustainability.

In addition to improving financial regulation and redressing financialisation processes, these policies would help avoid the danger of recession and the possible economic and financial crisis predicted by institutions such as the UN, JP Morgan and Moody’s.

Environmental devastation

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, an area the size of the UK, mostly tropical rainforests, affecting both climate and wildlife. Unless adequate policies are implemented, deforestation, overfishing, carbon emissions and waste generation are all expected to increase in absolute terms next year.

These are not just national issues. Global problems require global solutions and multilateralism needs to be strengthened, not weakened, to work together to form sustainable solutions to improve people’s lives.

A better future for all is possible. Governments, and ultimately citizens, can improve the world in 2020. But if they continue obsessing about stock prices and quarterly earnings at the expense of a long-term vision, hiking defence spending and cutting welfare, and blaming migrants and the poor, while allowing the rich to become richer and the environment to be further damaged, it will be another long year of living dangerously.

Republication forbidden. Copyright Project Syndicate 2020 Another year of living dangerously