The Current

Pandemic could prompt swing to nationalist politics, says economist Thomas Piketty

French economist Thomas Piketty says crises like the COVID-19 pandemic can trigger “major political and ideological change,” but the direction of that change is not certain.

'Diverse' crisis response can range from push for public services to border closures: Piketty

French economist Thomas Piketty's new book, Capital and Ideology, looks at how large-scale crises can trigger 'major political and ideological change.' (Reuters)
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World-renowned economist Thomas Piketty says the COVID-19 pandemic could nudge world governments toward greater political and economic isolation.

"I think there's a risk that the big winner in terms of political ideology from this crisis could be the sort of nationalist movement, broadly speaking," said Piketty, author of the global bestseller Capital in the 21st Century.

"In France, I can already see who is going to argue for a complete closing of frontiers [and emphasizing] migrants in a very negative manner,"  he told The Current's Matt Galloway.

Piketty said his new book, Capital and Ideology, argues that inequality is not an inevitable outcome of economics, and looks at how large-scale crises can trigger "major political and ideological change."

Those ideological shifts coming out of a crisis "can be very diverse," he said.

"Some going in the direction of reinforcing the need for public services, but some going in the direction of reinforcing the need for borders, closed borders."

In the U.S. on Monday, U.S. President Donald Trump tweeted that he will suspend all immigration into the United States temporarily, due to the COVID-19 pandemic. The president said the aim was to protect American jobs, but he was accused by Democrats of trying to distract from shortcomings in his administration's response to the outbreak.

Post-pandemic, Piketty argued there will be very different groups of people trying to exploit the crisis in different ways, and to tip the balance of power in their favour.

"That balance of power is not only material, it's also intellectual and ideological," he said.

"It's a battle of ideas about how to organize the economy."

Pandemic's 'violence of inequality'

Piketty said what strikes him most about COVID-19 is the "violence of inequality" that it highlights.

"If you are in a very small apartment with a large family, lockdown doesn't mean at all the same thing [as] that if you are in a large apartment," he said.

Piketty said people without savings or income support face a very different pandemic experience than those who can afford to stay indoors or work from home. (Fabrizio Bensch/Reuters )

If you don't have income or savings or government financial support, you at some point need to find work — even if it puts your health at risk, he added.

He pointed out that while some countries have no social safety net, there are rich countries like Canada where sections of the population, such as homeless people, aren't included.

That "violence of inequality" could be addressed in the wake of the pandemic, he said, particularly if countries "learn how to build new international co-operation when necessary."

On the positive side, countries could agree to less long-distance trade for the sake of the environment, he said. There could also be agreements about ensuring access to essential products, such as medical supplies, perhaps by producing them on home soil.

"We need to put in our international treaties some very viable and explicit targets about sustainable development, equitable development," he said.

"This includes co-operation in terms of pandemics, in terms of health, of course. But this also includes co-operation in terms of taxation, because otherwise how do you fund a public health system?"

The global economy will be hit three times harder by COVID-19 than it was by the 2008 financial crisis, but is expected to bounce back — eventually, according to the IMF. 1:31

Taxation reform needed: Piketty

He argued that the international economic model "allows the most prosperous economic actors to basically escape taxation."

That gives you "the right to accumulate wealth in your country, by using the public infrastructure, the education system of your country — and then you just push on a button and send your money elsewhere," he told Galloway.

"No tax administration knows where you are, and then you end up telling the more disadvantaged social group, or the middle class: 'Well, sorry guys, but you're going to have to pay,'" he said.

"At some point the people in the middle and in the bottom don't like that," he said.

"I think we cannot have free capital mobility anymore."

On Monday, Denmark said it would block companies registered in tax havens from accessing financial aid related to the coronavirus pandemic.

The future belongs to all of us, and to what we will do with it.- Thomas Piketty

Piketty argued that how these issues are addressed in the post-pandemic world "very much depends on the mobilization of the different social groups — trade unions, political parties."

"It's not written in advance what's going to happen," he said.

"The future belongs to all of us, and to what we will do with it."


Written by Padraig Moran, with files from Thomson Reuters. Produced by Julie Crysler.

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