Welcome to a `systemic risk'

Welcome to a ‘systemic risk’
by Serge Halimi
[This article was published in Le Monde diplomatique, April 2021. Serge Halimi is editor of Le Monde diplomatique.]

Three days before Donald Trump took office, Chinese president Xi Jinping visited Davos and warned the US against protectionism. Now, it’s Joe Biden’s stimulus package that’s alarming China’s leaders. They see it as a ‘systemic risk’ to the current economic order.

In fact, the US has just passed one of the most progressive laws in its history. It departs from the economic strategies of the past few decades, which have favored capital income — of both ‘innovators’ and rentiers — and increasingly left the working class behind. It breaks with public policies rooted in fears of inflation returning and debt surging. And it does not try to appease neoliberals and their backers with tax cuts, which often benefit the stock market and inflate financial bubbles.

With his $1.9trn economic relief package (almost 10% of the US’s GDP), which is to be followed by a program of investment in infrastructure, clean energy and education ($3trn over 10 years), Barack Obama’s former vice-president seems to have finally learned the lessons of history. And learned from the failure of his former boss who, being both too cautious and too centrist, failed to take advantage of the financial crisis of 2007-08 to push a new New Deal. ‘With the world economy in free fall,’ Obama concluded, ‘my number one task wasn’t remaking the economic order. It was preventing further disaster’ (1). Debt-obsessed Europe, meanwhile, set about inflicting a decade of austerity on itself, closing hospital beds as it went...

One of the most promising features of the Biden package is its universality. More than 100 million Americans have already received a Treasury check for $1,400. For a quarter of a century, most western states have made their social policies conditional on ever more stringent means testing, permanent surveillance, and punitive, humiliating employment ‘activation policies’ (2). As a result, people who no longer receive anything despite being in need are encouraged to hate public policies that they have paid for but which benefit someone else. Then, riled by the media, they come to believe they are subsidizing cheats and freeloaders.

The Covid-19 crisis has interrupted that kind of talk. Work stopped so abruptly for so many workers, salaried and self-employed that blaming them for their situation would make no sense. In some countries, 60% of those who received pandemic-related emergency payouts had never received state aid before (3). The state stepped in quickly, without counting the cost and without means testing. For now, few complain, outside the financial press — and the People’s Republic of China.

Serge Halimi

Serge Halimi is president and director of Le Monde diplomatique.
Translated by George Miller