Humanity has outsmarted itself. With its ingenuity, this tribal ape has created a world its tribalism cannot manage. Intellectually, we know this: it is why we created institutions like the UN, the IMF and the G20. But we do not know it in our bones. In our bones, we know that each tribe is out for itself and the devil take the hindmost. In our bones, we think people who feel otherwise are “globalists”, which is synonymous with “traitors”.
We meet, fail and promise to do better next time. But then we fail again. We do not fail altogether. But we fail on the big things. It is not good enough. We know that. But the knowledge is not enough.
That is the story of last weekend’s meeting of G20 finance ministers and central bank governors in Venice, a glorious city sinking under rising seas. The G20 contains 63 per cent of the world’s people and 87 per cent of its output (at market prices). It contains the world’s most powerful countries and ones from every continent. It is our best chance for global economic governance. (See charts.)
Moreover, the return of the US to sane government has made a big difference. It was impossible to achieve any progress on global challenges under a government as incompetent and narcissistic as Trump’s. The intermission may prove brief. But the fact that someone as decent and intelligent as Janet Yellen represented the US at the Venice meeting lifts one’s heart.
It has also allowed progress. Indeed, the G20 communiqué offers a long list of achievements. In her summary, Kristalina Georgieva, the IMF’s managing director, commends the G20 on the “historic agreement” on a minimum corporate tax rate. She stresses the G20’s recognition of the role of carbon pricing in responding to climate change.
She notes, too, the excellent report of the high-level independent panel on “pandemic preparedness and response” and the G20’s recognition of the need for an enhanced global capacity to respond to health threats. She stresses not least her “profound appreciation” for the G20’s “support for a new SDR (Special Drawing Right) allocation of $650bn — the largest in IMF history and a shot in the arm for the world”. If the new SDRs are channelled in the right way, they can be transformative for the poorest and hardest-hit countries.
Moreover, mainly because of the success of the scientists, vaccines have turned the economic tide of the Covid-19 disaster more quickly than expected. The IMF forecasts global growth of 6 per cent this year, led by the two superpowers, China and the US. Yet, notes Georgieva, “the divergence across economies is intensifying. Essentially, the world is facing a two-track recovery.” Worse, it is the rich — among countries and within them — whose economic recovery is fastest. Not for the first time, to those who have it is given.
Yet, given the genuine achievements, why am I so critical? The answer is that humanity confronts two global challenges: escaping from this pandemic (and future pandemics); and climate change. Next to these, the agreements on corporate taxation and even SDRs, welcome though they are, are just not that important. The question is whether we can co-operate where we must.
On the pandemic, the task is to vaccinate the entire world and keep revaccinating it, if necessary. This is the only way to gain secure control over Covid-19 and its many variants. As Georgieva notes, the aim should at the least be to cover 40 per cent of the population in every country by the end of 2021, and 60 per cent by the middle of 2022. She notes, too, that “by providing faster access to vaccines to high-risk populations, more than half a million lives could be saved this year. And a normal return to activity everywhere could add $9tn to the global economy through 2025 — the $50bn cost of this pandemic plan pales by comparison.”
Indeed, it does. Yet, so far, it is the action that pales. The shortfall of funding for the Access to Covid-19 Tools Accelerator — the global partnership for delivering treatments and vaccines — for 2021 was $16.8bn in late June. This is 0.1 per cent of the public resources spent on fighting the results of Covid-19. Shamefully, the G20 has failed to resolve this. It looks now as if the children of high-income countries will be vaccinated before most of the rest of the world. This is a crime and a blunder.
Even against such a self-evidently global threat, where the costs are huge and immediate, we seem unable to act with essential urgency. The inability to co-operate in such an emergency makes one wonder whether the high-priority need for a hugely enhanced global capacity to recognise and respond to health threats will be achieved.
Given this signal failure, it is impossible to imagine we will do much more than fiddle while the planet burns. On climate, the challenge is more remote, the required changes in behaviour much larger and the co-operation needed more difficult. I would be delighted if COP26, the conference to be held in November in Glasgow, proves me wrong. I would also be surprised. Yellen pointed to the fact that the US will be providing $5.7bn in annual climate finance for developing countries by 2024. Yet, in the context of both the need and the money being spent at home, this is an error term.
Whether we like it or not — clearly, we do not — we have created a global civilisation. We all border on one another and all affect one another. We may want to continue on our tribal way. Indeed, looking at emerging relations between the US and China, it is obvious that we do. But it will not work. We live in a globalised world on a shared planet. Are we capable of acting upon the implications? That is the biggest question of the 21st century. The answer, I fear, is no.
martin.wolf@ft.com
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Source: Economy - ft.com
