Renowned for his work on the 2008 crisis, economics historian Adam Tooze, a professor at Columbia University, believes that the recession linked to the coronavirus pandemic will lead to a wave of hard-to-avoid bankruptcies. If he finds "Hypocritical to say that globalization is a bad thing", he pleads for a more sensible growth while fearing that the ecological emergency is, once again, relegated to the background.
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Has humanity ever gone through a comparable crisis in the past centuries?
No. Simultaneous cessation of production, trade and travel in practically all major countries … Never has the world been through such a violent shock, on such a scale, and the magnitude of which is worsening day by day, under our eyes. In five weeks, 26 million Americans have become unemployed. As I speak, I see a line almost 300 meters long in front of a pharmacy, with people two meters apart, under my windows. Never before has such a scene been seen in the United States.
How to avoid chain bankruptcies and social disaster?
The governments of industrialized countries are doing a lot to support businesses and households – remember that American consumption is the main driver of the world economy, it is essential to maintain it. However, the damage will be inevitable. Most SMEs and small businesses, in the United States as elsewhere, generate very little financial margin. They have nothing to hold for weeks or even months. There will be many bankruptcies.
How long will it take to get over it?
There are great debates on the form that the recovery will take: in “U”, in “V”, in “L”, in “W”? It is impossible to provide an answer because no one knows how the pandemic will evolve and, consequently, how the economy will recover. The intensity of the problem in Europe, however, gives little cause for optimism. It is not certain that Germany, highly dependent on exports, will be one of the engines of the recovery.
Debt has regularly been the seed of revolutions in history. How to deal with this problem, after the crisis?
This is a very political question. Low-income countries are in a difficult position because they are very dependent on wealthy countries for their funding. The public debt of industrialized nations is different. If we simplify, the latter owe money to themselves: taxpayers must reimburse other households with wealth in these same countries.
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