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Saturday, June 25, 2022

Today’s crises are different

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As one generation gives way to another, a new cohort of global challenges replaces the old. Rare events like the Covid-19 pandemic and the risk that dangerous new viruses could emerge at any time are not the only example. Extreme weather events resulting from climate change are already having catastrophic consequences. Information technology and data are sometimes used for malicious or war purposes. Today’s soaring food prices and rising world hunger can also be linked to under-spreading of open source technologies.

It seems we live in constant danger. Crises are no longer improbable individual events that affect a few. They are much more common, multidimensional and interdependent; and by crossing national borders, they have the potential to impact the entire world simultaneously. Moreover, they are associated with so many externalities that neither markets nor national governments have sufficient incentives to solve them.

Solutions to these problems depend on the availability of global public goods; but the current international system is unable to provide adequate care. For example, we need large, coordinated investments in preparing for and responding to pandemics, or in reducing greenhouse gas emissions (a global public concern), since no single country alone will be able to solve current crises, let alone prevent new ones.

It is imperative to rethink how multilateralism works. The international financial architecture of the post-war period was designed to support national governments in providing national public goods. A priority now is to think about the new institutions needed to deliver public goods across borders.

In 2010-19, the percentage of global land area affected by extreme drought in a month reached 22%, compared to 13% in 1950-99

The overlapping nature of the current crises underscores the need for a new structural framework. The increase in extreme weather events (e.g. floods and droughts) increases the risk of infectious and waterborne diseases. Rising average temperatures and changing precipitation patterns are reducing the potential productivity of staple foods (e.g. 6% in the case of maize) that are critical to food security, an essential component of health. In 2010-19, the proportion of global land area was affected by extreme drought in any given month it reached 22%, while in 1950-99 it was 13%.

Previous emergencies such as the global financial crisis of 2008/09 (which was actually a developed world phenomenon) or the economic crises in Asia and Latin America in the late 1990s were essentially economic in nature and the result of an excessive accumulation of financial risk. The solutions were in the hands of central banks and finance ministers, and included passing new monetary rules and fiscal policies that would reverse job losses and revive economic activity.

The current crises are interdependent and of a truly global scale, with the potential to have far greater impacts

The current crises, on the other hand, are interdependent and of a truly global scale, with the potential to have a much larger impact. What distinguishes them is that the solutions no longer depend exclusively on the performance of the national economic authorities. An effective response requires leadership and action from governments around the world. An example of this approach is the proposal to World Council on Health Threats. The early detection of pandemic threats and the development of herd immunity against known pathogens are classic examples of global public goods with the properties of non-rivalry and non-exclusion.

But in every country, taxpayers have no incentive to offer goods with a global reach. Nor is it possible to delegate this task to official development assistance (ODA) or philanthropy because the numbers just don’t add up. Total ODA achieved last year 170 billion euros, with private donors adding a few billion more. But billions of dollars are needed to provide global public goods. In addition, the official aid budgets are too different and priorities are changing. But what seems urgent and politically attractive does not always align with what is important, namely the focus on the delivery of global public goods.

That is why we need to create a new multilateral system. Ideally, its main elements should be modeled based on the tools used to deliver national public goods: taxation, incentives, and accountability.

Since global public goods require significant and stable levels of financing, we must point to the creation of international taxation funded by universal contributions based on ability to pay. Of course, leadership is also needed at the national level to ensure an appropriate intergovernmental and intersectoral response.

Giving taxpayers and governments the right incentives to act will not be easy. But most countries take the International Monetary Fund’s regular missions very seriously Article IV; Include an assessment of national response to climate and pandemic risks would be a good starting point. In addition, rating agencies should expand their methods of assessing the risks of governments and companies.

The world is not prepared to face the new generation of crises. Rather than just focusing on shortcomings in one particular area in times of crisis, we need to understand why we continue to fail to deliver the global public goods that all of these new crises require. If we don’t solve this problem, certain errors will continue to appear. If, for example, another pandemic threatens tomorrow, You wouldn’t find us better prepared as Covid-19.

The current crises (climate, health and food) should be enough to set in motion the mechanisms of global cooperation needed to address these threats.

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Source elpais.com

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