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Beware of Post-COVID Complacency: Adam Tooze

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A year and a half into the coronavirus pandemic, America would be dangerously complacent to think that it’s back to normal. Rather, it’s “in rehab,” argues Adam Tooze, economic historian and Columbia University history professor, in an interview with ThinkAdvisor.

“We need to adopt the attitude of the alcoholic: ‘My name is America, and I have a problem’ should be our opening line,” he says.

Author of the new book, “Shutdown: How Covid Shook the World’s Economy” (Viking-Sept. 7), Tooze wrote the multi-award-winning “Crashed” about the 2008 financial crisis.

He contends that for the U.S. to let its guard down once COVID-19 is ultimately “conquered” would be disastrous since we live in a world potentially teeming with biohazards.

The delta variant shows that “if every time we get sick [from COVID, say], we’re rolling the dice on some even more dangerous mutation coming out, the only way to stop the lottery is for everyone to be vaccinated,” he maintains in the interview.

Tooze’s new book covers the pandemic — “an accident waiting to happen,” he writes — month by month, then predicts problems yet to come.

Amid the pandemic, “the entire world economy contracted 20% in a matter of weeks, and hundreds of millions lost their jobs,” writes Tooze, whose book focuses on the financial and business aspects of the plague. Nearly 95% of global economies saw their GDP shrink.

In the interview, the professor, who was previously with the University of Cambridge and Yale University, provides his forecast for delta’s economic impact and the chances he sees for a major stock market correction.

ThinkAdvisor interviewed London-born Tooze, who was speaking by phone from New York City, on Aug. 17.

The professor clearly is not a Donald Trump fan but remarks, “My book isn’t a kind of gotcha hit piece on Trump with regard to the pandemic, [but he] was far from the ideal chief executive at that particular moment.”

Here are highlights of our interview:

THINKADVISOR: In your 2018 book, “Crashed: How a Decade of Financial Crises Changed the World,” you wrote that “the U.S. is in a moment of dangerous complacency.” Is it still?

ADAM TOOZE: I think we’re at risk of it, yes. Last year was so terrifying in so many different ways — the disease, the economy, politics. They were all terrifying. 

With Biden’s inauguration, there was a belief that we’re back to normal, that America is back, that he’s made America normal again. 

But I think the [notion] that we’re normal rather than in rehab is complacent.

We need to adopt the attitude of the alcoholic: “My name is America, and I have a problem” should be our opening line.

What’s the biggest lesson the U.S. government has learned from the pandemic?

They should have prepared to roll out the new [vaccine] technologies on a global scale. They should have focused more on the distribution of getting vaccines in people’s arms. 

Nevertheless, it was a triumph of being able to do that kind of technological development very rapidly.

But what would you have been able to do if you had to do it even faster? You needed to have done new trials on lots and lots of candidates for all sorts of possible viruses ahead of time.

They had a head start doing work on coronavirus following SARS [Severe Acute Respiratory Syndrome] in early 2000. It’s absolutely crucial that we need to be in that kind of position because of more of these potential biohazards. 

What we should not do when we finally conquer this one is let our guard down. Why not have a [bio] lab rather than a prison in your congressional district? That should be the pitch to Republicans in Congress.

Is it a political point only that the anti-vaxxers are trying to make, or are there other reasons?

It’s many factors. It’s political, it’s cultural. It’s a whole web of different attitudes that say “I’m not going to do what everyone is telling me to.” 

They think it’s some sort of “nanny state.” 

The tragedy for the U.S. is that such a large part of the population resisted the idea of taking the pandemic seriously from the start. It was a disaster in the making, for sure.

Do you think the world is better prepared now to fight the coronavirus or another pandemic?

We’ve had the experience. The world has equipped itself with effective vaccines. Even if we have to be locked down [again], we’re much better prepared. 

But we’re still not out of the woods. It would be premature to focus on new crises. But delta is a sign of how serious this virus is. This is likely part of why the rate of infection we have now is so dangerous. 

If every time we get sick, we’re rolling the dice on some even more dangerous mutation coming out, the only way to stop the lottery is for everyone to be vaccinated. But we’re a long way from that.

In “Shutdown,” you write that “the coronavirus was an accident waiting to happen.” Please elaborate.

That’s what the scientists kept telling us for decades. From the 1980s onward, especially with the shock of HIV, there was the realization that we were perhaps living in a much more complicated and dangerous world given our [weakness] in handling these sorts of crises.

But the coronavirus could have been far more lethal than it was. That’s one side of the equation. The other side is that there’s very good reason to think that we were not institutionally prepared or couldn’t be.

So, yes, it was an accident waiting to happen. We were [pressing] our luck; and at some point, our luck ran out.

What could we have done differently?

In the book, I try to lay out the mechanisms by which we don’t end up taking the terrible emergency measures we had to in March 2020.

They’re on three different levels: the general level of epidemic threats, the level of medical and hospital preparation and the level of politics. A fourth could be global institutions that you might think would be necessary to handle a crisis like this but which are totally inadequately funded, like the WHO. 

What do you foresee to be the delta variant’s impact on the economy, spiking as it is among the unvaccinated and resulting in higher rates of hospitalization and deaths?

Clearly, it will slow down expected growth. The financial markets are much less optimistic, and there’s much less inflation expected. 

People don’t expect the economy to recover as fast. Bond yields haven’t been rising the way we had anticipated. That tells you quite a lot about the underlying pessimism. But they’re not indicating a total collapse as we saw in the spring of 2020.

The stock market has been strong for so long. Do you expect it to change direction anytime soon?

I’m definitely not a financial advisor that can make predictions of where the market is going.

Let’s just say the bubble isn’t deflating as fast as it was through much of last year. It hasn’t collapsed, which many people predicted it might.

It’s not a holding pattern that we’re in, exactly; but as long as the Fed continues to act the way it does, it’s difficult to see a really major correction coming our way.

If we’d had a president who had managed the pandemic in a more constructive, strategic way, would it have made a difference in how things unfolded?

Donald Trump was far from the ideal chief executive at that particular moment, and I don’t think that helped.

But one should not exaggerate the role of one individual, and President Trump in particular. My book isn’t a kind of gotcha hit piece on Trump with regard to the pandemic. 

But a more cooperative, more classically leader[like], humble president who was willing to take advice from experts and stick to it — and was willing to take the political bumps — would have done a better job, there’s no doubt. 

But in the end, there aren’t many governments anywhere in the world that have come out looking good.

Is it realistic to believe that Trump could become president again?

Yes.

Do you have a sense of how much support Wall Street is giving him?

In 2020, the money wasn’t coming from the big Wall Street players, someone like Jamie Dimon. The money going toward Trump came largely from traders, individuals, boys and girls who are now in the hierarchy.

The money was more private equity connected to hedge funds. Stephen Schwarzman of Blackstone was quite a serious backer, I think.

What about now?

I don’t know whether any of those folks support the second coming of Trump. He [may be] too damaging to the brand — too tarnished. 

That doesn’t mean the GOP won’t be with him and in fact could be quite happy to attack Wall Street for not supporting him. 

Trump is a problem, and he’s probably a little bit mad and not what you need. But if you’re a multi-billionaire running some hedge fund and wanted to put a couple of hundred-million dollars his way, what would stop you? 

You set the tone. It’s not like you’re running a huge company like JPMorgan.

What have been the side effects or after-effects of the Fed’s stimulus money?

They’re still buying, remarkably. So we’re still in the middle of this. It’s a little bit early to tell what the long-run effects will be. 

But broadly speaking, it’s difficult to avoid the conclusion that what [the Fed] did was necessary and effective in stopping what could have developed into a truly terrifying financial crisis.

It could have brought the house down. That didn’t happen.

The deficits are obvious as well. It’s possible that we’re in an inflationary bubble — and bubbles could potentially burst. But we have yet to see that.

Many Republicans say that the stimulus caused the current labor shortage because people who have been collecting expanded unemployment benefits and stimulus checks have been “getting paid not to work.” Thoughts?

The question you have to ask is: Why are there so many miserable jobs in the U.S. that pay so little that it’s preferable to stay on unemployment benefits, if that’s the case? 

Bringing people back to work in miserable jobs that pay less than the living wage seems to be a terrible way [to resolve this]. If people don’t want to work because the jobs are miserable and don’t pay enough, I don’t blame them.

Will the “she-cession”— pandemic-caused recession among working women — impact women’s rise in the labor force long term, or is it a temporary setback?

It’s very early to say. Low-income single mothers with inadequate child care were the worst affected. In crisis situations like this, the burden of care falls disproportionately on women.

We know we’re not out of the woods by any means, given the stress of an eviction crisis. 

The sorts of people that are most seriously affected by an eviction crisis typically will be minorities, single parents and young families with substantial numbers of kids. They’re the most at risk. 

(Pictured: Adam Tooze)