Shen Liantao: Looking forward to 2021, "good", "bad" or "ugly"

Most politicians are repeating the same mistakes, pursuing harmful monetary policies and selling out the interests of the majority to ensure that a small minority is in power. Everyone hopes that vaccines will help the economy recover, but putting everything in hope is not a wise policy

Wen | Shen Liantao

2020 is bound to be one of the toughest years we can remember in our lifetimes. In just one year, more than 300,000 people in the United States have died of COVID-19, more than the country's four years of participation in World War II. The growth rate of the world economy has fallen by between 5 and 7 percent, and millions more people are either in poor health, in poor jobs, or even in difficulty in their livelihoods. Many more have fallen below the poverty line.

What will the upcoming new decade look like? The author does not intend to predict the unknown, but describes three possible scenarios, and borrows the allusion of the Italian Western film "The Golden Three", classifying it as "good", "bad" and "ugly".

The first is the "good" scenario: the incoming Biden administration will heal America's wounds, restructure the multilateral order, restore economic growth in 2021, ease global trade tensions, and continued trade exchanges will lead to more harmonious cooperation between major powers. Climate change is being addressed, social inequalities are being reduced, investment in green infrastructure will create more jobs, and we will usher in a decade of peace and prosperity. Stocks will continue to rise as central banks stick to low interest rate policies, and tech companies reap the rewards for launching decisive innovations.

In the "bad" scenario, many practices are to cope with errands and get by. As with the global financial crisis of 2007-2009, the opportunity for reform was missed. Instead of addressing fundamental inequalities or overhauling the bad regulations that have left banks and derivatives chaotic, these people were allowed to reap more of the money the central bank released. We ended up waiting for worse climate change, huge debt burdens, and huge asset bubbles. The rich have become richer, and the poor have become so frustrated by the deteriorating situation in the country that they choose to emigrate. The middle class, which also thinks it's worse off, blames immigrants, foreigners, globalization, votes for Brexit, and votes for Trump.

In short, instead of pursuing real structural reforms, most rich countries have gone further on accommodative monetary policy while carefully avoiding the reef. Juncker of the European Commission summed up the period: "We all know what to do, but what we don't know is whether we can be re-elected if we do." "

The poison of politics has pushed us to where we are today, a terrible situation where we can't find asylum.

Today, most politicians are repeating the same mistakes, pursuing harmful monetary policies and selling out the interests of the majority to ensure that a small minority is in power. Everyone hopes that vaccines will help the economy recover, but putting everything in hope is not a wise policy. The pandemic is indeed a global crisis, and no economy will be able to emerge from secular stagnation without close cooperation. Britain's willingness to risk a no-deal Brexit sends a signal to the world that nationalist sentiments have overwhelmed economic rationality.

The recent U.S. presidential election reflects this profound polarization. Supposedly record voter turnout characterized reason over anger. But it backfired, with 47 percent of voters supporting Trump and the Republican leadership, resorting to justice to challenge the legitimacy of Biden's victory. Although institutional checks and balances have played a role, this will not be conducive to the future situation.

There are also "ugly" scenes. As late as the end of 2019, I never even dreamed of such a possibility.

For 70 years, the world has believed that America will remain united, a place of freedom, a welcoming place for immigrants, unlimited opportunities, principles of fairness, the rule of law, and global peace. When Democratic President Roosevelt introduced the "New Deal" and President Truman proposed the "Marshall Plan", the United States was a capitalist country, but in terms of taking care of the weak and the oppressed, the United States implemented a left-leaning policy. The United States fought against far-right fascism in World War II and won world leadership.

What if the United States turned to the far right and the world took on a very different look? The United States represents the interests of the world, or adheres to the game-changing "America First" philosophy that Trump insists, will produce completely different results. The Republican Party has shifted sharply to the right, and they now represent more white interests concerned about the growing diversity and diversity of American demographic and cultural values. The causes of resentment among Trump supporters are complex, but they represent an angry sentiment that is difficult for most foreigners to understand. The Democratic Party's left has united in time to stop this right-wing trend. Even they were surprised by the Republicans' rule-changing behavior.

If Republicans boycott all of Biden's agendas at home and abroad, preventing him from delivering on campaign promises, this "ugly" scenario will become a reality. By the time of the 2022 midterm elections, republicans will take the majority of seats in the Homecoming Convention, and when Republicans control the Senate, House of Representatives, and the Supreme Court, the right-leaning trend in American values and ideologies will be difficult to reverse. After the game has been set, who will set the rules?

What does this mean for the rest of the world? A radical change that could shift U.S. foreign policy from moderate to extreme, followed by a modest pullback, would make everyone feel insecure. No one can rest easy, and few people think about the long term and act on it.

Historically, the Greek and Roman Empires underwent similar transmutations, transitioning from an era of open republicanism to an era of empire and despotism. The British Empire did not go through this phase because it was always constrained by europeans, and then its position was replaced by the United States. If the most powerful military forces fail to function according to the rules they have set themselves, the rules of global neoliberalism will not take effect. Great power politics is bound to become even uglier.

We don't want to spoil the festive atmosphere of the New Year, but hope that the "bad" and "ugly" scenes will not appear. Like most Hollywood movies, the good guys end up winning.

In the movie "The Golden Three", when the good guy (Clint Eastwood) defeats the bad guy (Lee Van Cliff), it is the ugly man (Eri Wallach) who asks a question, and this is exactly the time during the pandemic, many people ask themselves: "If you are working to survive, why do you have to work and not die?" "

The answer is that most people have no choice. Let's pray that 2021 will be a good year.

The author is a Senior Fellow at the Asian Global Institute at the University of Hong Kong and a former Chairman of the Securities and Futures Commission of Hong Kong

(Translator: Zang Bo; Editor: Yuan Man)