Anne O Krueger, a former World Bank chief economist and former first deputy managing director of the International Monetary Fund, is Senior Research Professor of International Economics at the School of Advanced International Studies, Johns Hopkins University, and Senior Fellow at the Center for International Development, Stanford University
Given China’s desire to be a respected member of the international community, a more satisfactory US approach would involve seeking cooperation and mutual gain when possible and limiting confrontation to vital issues.
Rather than pursue more debt relief to help the developing world weather the COVID-19 crisis, rich countries should provide pandemic-related necessities directly. Debt relief is so imprecise a mechanism that it is as likely to benefit private-sector creditors as it is to help the poor.
WASHINGTON, DC – The US federal debt-to-GDP ratio rose sharply during the 2008-09 Great Recession and continued rising thereafter, going from 62 percent in 2007 to 90 percent in 2010. By 2019, it had reached 106 percent, and the Congressional Budget Office was warning that the trust funds for Social Security and Medicare would be exhausted by 2028. Many economists argued that a debt-to-GDP ratio of 100 percent was already worryingly high, and that the future tax increases needed to reduce it would be massive.
WASHINGTON, DC – After ravaging the developed world, COVID-19 is now devastating developing and emerging-market countries, most of which lack the medical and financial capacity to combat the pandemic and its economic effects.
WASHINGTON, DC – COVID-19 has confronted the world with a horrific crisis. Because developing a vaccine will likely take at least a year, governments need to buy time to keep health-care facilities from being overwhelmed and to minimize the number of people who fall ill and die, not least by reducing the rate of new infections.
WASHINGTON, DC – The global economy was ripe for a recession even before the coronavirus pandemic struck. Many commentators have been warning that stock markets were overheated, that advanced economies were heading for a slowdown, and that US President Donald Trump’s protectionist policies had disrupted supply chains and ushered in an era of heightened uncertainty. Now, the stock market has finally crashed, and a recession has become almost inevitable.
WASHINGTON, DC – Would you believe the following story if you heard it? Imagine a small, rural town with one general store that sells to, and buys from, the farmers living in the surrounding area. Owing to their large families, the farmers have been running up a tab at the store, and they now owe the store a great deal of money. So, they organize a protest to demand that the store raise its prices on seed, fertilizer, and the like, while reducing the price it will pay for the farmers’ grains.
WASHINGTON, DC – Following America’s disastrous 1930 Smoot-Hawley Tariff Act, the subsequent international trade war, and eventually World War II, the United States went on to lead the world toward a more open multilateral trading system. In 1947, the international community adopted the General Agreement on Tariffs and Trade, which would later become the World Trade Organization. Under this international body, trade was bound to the rule of law and the principle of non-discrimination among trading partners.
WASHINGTON, DC – The private sector performs well when firms can compete on a level playing field. But if the state is willing to influence market outcomes for individual firms, politically connected parties can gain an advantage over their more efficient competitors.
WASHINGTON, DC – Imagine a man who has lived too extravagantly and eventually must go to the doctor for treatment of an acute disease, along with several other chronic conditions. The doctor prescribes a ten-day course of antibiotics, and advises his patient to start taking better care of himself. After three days of taking the pills and following the doctor’s orders, the man feels much better. But he finds the quiet life painful, so he forgets the medicine and his doctor’s advice and doubles down on debauchery.