Eric Lonergan & Mark Blyth in OECD Forum:
The global pandemic has re-written the rules of global macroeconomic policy for us. We have witnessed significant monetary and fiscal policy innovation; growing unwillingness to accept that the design of stimulus should be independent of broader environmental and social goals; and a far more acute focus on the competence and scope of the State.
These trends were already in evidence pre-pandemic, as we outlined in our book Angrynomics. In the book we argue that populism is a coherent response to economic and political failure. We argue that mainstream politics lost its motivating force because centrist politics and neo-liberal economics had major shortcomings, and were indeed complicit in the two conjoined crises facing OECD populations: rising wealth and income inequality, environmental self-destruction, and a consequent outpouring of social distress.
In response to the pandemic, mainstream policy actors have finally shown a desire to act on these issues. But we believe that this response needs to be both better focused and normalised in order to preserve liberal democracy. Meaningfully tackling wealth inequality and ending environmental destruction should be recognised as interdependent urgent crises, not just opportunistic dimensions of the pandemic policy response that policymakers could renege on once COVID has abated.