The Banking Executive Magazine - February 2022

How Much Has the Pandemic Cost? limited ability to borrow, these coun- tries’ governments have had few op- tions for propping up their economies. Vaccine shortages and weak health systems have left them even more vulnerable. The International Monetary Fund re- cently warned that, because of the pandemic, incomes in 40 fragile and conflict-affected states are falling even further behind the rest of the world. It is not difficult to discern why: such countries lack the institu- tional capacity or resources to man- age or mitigate social, economic, political, security, or environmental risks effectively. Already, violence is at a 30-year high globally. Fragile states – home to nearly one billion people – may account for 60% of the world’s poor by 2030. All of this is taking its toll on the global economy. The latest edition of the World Bank’s Global Economic Prospects report cautiously predicts that global growth will slow from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023. Behind this forecast are the threats posed by new COVID-19 variants, rising inflation, mounting debt, widening inequality, and worrying security challenges. Economists like Viscusi, Summers, and IMF and World Bank staff meas- ure policy options and their conse- quences in terms of monetary costs or GDP. But the dilemma policymak- ers face is fundamentally a moral one, rooted not least in the question of when individual preferences should prevail over collective inter- ests. Moreover, despite the apparent straightforwardness of cost-benefit calculations, the pandemic is ulti- mately a systemic challenge that is entangled with others, from inequal- ity to climate change. There are no simple solutions. As Mi- nouche Shafik, the director of the London School of Economics and Political Science, recently argued, the pandemic has made plain the need for a new social contract fit for contemporary challenges. The old social contract had its roots in the Domination Code, embodied in Genesis 1:26, when God said: “Let Us make man in Our image, after Our likeness, to rule over the fish of the sea and the birds of the air, over the livestock, and over all the Earth itself and every creature that crawls upon it.” And yet, not all people were granted the same authority. In 1493, the Catholic Church’s Doc- trine of Discovery granted Christians the right to enslave non-Christians and seize their property. That doctrine was echoed in the US in 1823, when the Supreme Court ruled that the state had more rights than indigenous people. As the late anthropologist David Graeber and his co-author David Wengrow show, the ideas of freedom and equality that guided the European Enlighten- ment were shaped by Europeans’ first contact with American Indians in North America. The social contract we need must re- flect the forces and values shaping the world we live in today, including the deep interconnections among our economies and societies, the in- herent value of all humans, and the shared existential challenge of cli- mate change. Today, the choice is not to dominate or be dominated; it is to work together or perish together. the BANKING EXECUTIVE 34 ISSUE 158 FEBRUARY 2022