“The Covid-19 pandemic has worked like an X-ray machine, revealing the hidden challenges under the surface of many societies,” Markus K Brunnermeier says in the introduction to his book. Indeed, the pandemic has hit every country — the adverse health impact was just the starting point; the virus ended up disrupting every aspect of society, and the global economic order.
Complex supply chains built and refined over decades had to be abruptly shut down or broken to prevent or slow the infection’s spread. Jobs and livelihoods were lost, inequalities of all kinds widened, governments were pushed to pile on millions of dollars of debt to extend relief, and central banks had to resort to every possible way to stimulate the economy even as health systems collapsed and countries and societies turned more insular and protectionist.
The Covid-19 shock pushed back most countries by several years, possibly decades. And just as it appeared that the world was starting to break free from the seemingly unending cycles of lockdowns, Russia invaded Ukraine, unleashing consequences that reverberated around the world — from costlier fuel prices to scarcity of food items to dramatically heightened geopolitical tensions.
Within just a couple of years, the world economy has swung from trying to avoid a prolonged deflation to desperately fighting inflation. The post-Cold War consensus around globalisation, already under strain from the time of the global financial crisis of 2008-09, has now developed into a militant desire to reduce dependence on other countries.
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Was the world prepared to survive these shocks in 2020? Is it prepared in 2022? More importantly, will it be prepared in the future? If so, how?
In The Resilient Society, Princeton University economist Brunnermeier details the global economic fallout of the Covid disruption. Many of the book’s key insights are distilled from a Princeton webinar series called Markus Academy, which featured influential economists, including more than a dozen Nobel laureates.
In the end, for the author, the touchstone for any society, economy, or indeed the world is “resilience”, or the ability to rebound. It is resilience that sets the reed apart from the robust oak, which has the ability to resist. “I bend but do not break” — that is the essence of resilience.
After explaining the concept and how societies could be redesigned to become resilient in part 1 of the book, Brunnermeier uses Covid to explain the core elements of resilience management in part 2. In parts 3 and 4, he looks at macroeconomic and global challenges that countries face.
The book was released last year, but the Ukraine crisis shows, even though the world has moved to the next shock, Brunnermeier was spot on in underscoring the need to be resilient. The main lesson for societies
is to give up the “just in time” production approach that accords primacy to efficiency, and instead move towards a “just in case” approach that allows for safety buffers.