[Bbanggubneun Tajagi] No One Knows, the Fear After the Pandemic

Big Picture Economics - Written by Kim Kyungsoo

"When economic stagnation continues, anger and conflict intensify... Liberalization and globalization cornered"

Insightful analysis of the global economic downturn since the 2008 financial crisis

Where to go after the pandemic

[Asia Economy Reporter Shim Nayoung] The 'pandemic' caused by the spread of the novel coronavirus infection (COVID-19) has plunged the global economy into a zero-visibility state. Paul Krugman, Nobel laureate in Economics in 2008 and professor at the City University of New York, warned regarding the Federal Reserve's (Fed) interest rate cuts, "With the current level of measures, we will experience the most severe recession since the Great Depression."

"What is certain is that as the global economy continues to stagnate, the world's anger will grow and conflicts will worsen. Until then, the world will corner liberalism and globalization in the name of democracy." Kim Kyungsoo, Professor Emeritus at Sungkyunkwan University and former president of the Korean Economic Association in 2018, foresaw this in his book Big Picture Economics, stating, "At present, it is difficult to predict when the global economy will recover from stagnation."

The author evaluated globalization as having "made a significant contribution to freeing billions from hunger?from China and India to Ethiopia?and reducing income gaps between developed and developing countries." However, the 2008 financial crisis and the subsequent recession shattered trust in globalization and free trade.

He described the phenomenon of globalization, which had progressed over half a century since the early 1980s, turning into a "scrap of paper" after 2008 as "a world that threw away the golden straitjacket." The golden straitjacket means "when a country wears this straitjacket, economic prosperity is promised, but economic sovereignty must be sacrificed." This term was coined by Thomas Friedman, a columnist for the American daily The New York Times, to refer to globalization.

The author continued, "The golden straitjacket did not deliver the promised prosperity. When the global financial crisis occurred and the Great Recession began, the general public came to believe that their lives were threatened by globalization pushed by elites, and eventually expressed that anger through action. Social media became the perfect interactive medium to share and spread this anger."

He also noted, "Brexit, Trump and America First, populism, trade wars, social media, and so on. The familiar landscape of the world has receded, and we feel as if we are entering an increasingly unfamiliar world."

The spark of rejection against globalization was President Donald Trump's America First policy. The author cited the background of the America First concept as the "mortality rate of middle-aged white Americans."

Consider the 2015 report titled "Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century," published by Angus Deaton, Nobel laureate in Economics in 2015 and professor at Princeton University, and his wife Anne Case, also a Princeton professor. "The mortality trend of white Americans, which was lower than that of major developed countries, reversed from the late 1990s and showed the highest rates in the 2010s," the report concluded. Among white Americans with lower education levels, deaths from drug abuse, suicide, and liver disease increased.

The author of Big Picture Economics diagnosed that changes in mortality rates were related to US-China trade. He pointed out, "Between 1980 and 2007, regions that faced intense competition from Chinese imports experienced severe employment declines among low-skilled manufacturing workers," and noted, "'China shock' had long-term ripple effects in regions concentrated with industries that lost competitiveness."

This economic change, which began in the US, spread to social and political spheres, ushering in an "era of dangerous lives." South Korea was identified as the biggest victim of the decline of liberalism due to its high external dependence and geopolitical risks as a small open economy.

The author pieced together a "big picture" from articles contributed to daily newspapers over three years. He examined the global economic integration at the end of the 20th century, China's rise, the financial crisis, and the subsequent Great Recession. The conclusion is that faith in liberalism, which led the era for 70 years after World War II, is shaking.

"This is not a brief downpour like a midsummer shower but a sign pointing toward a different era," the author argues. If so, the global economy after the pandemic may once again stand before an unimaginable cliff.

This content was produced with the assistance of AI translation services.