Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

income inequality us Andrew Lichtenstein/Corbis via Getty Images

From Economic Crisis to World War III

The response to the 2008 economic crisis has relied far too much on monetary stimulus, in the form of quantitative easing and near-zero (or even negative) interest rates, and included far too little structural reform. This means that the next crisis could come soon – and pave the way for a large-scale military conflict.

BEIJING – The next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict.

The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates.

But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labor markets to tax systems, fertility patterns, and education policies.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/lje0Ctx;
  1. lhatheway8_Spencer PlattGetty Images_stockmarketcoronavirus Spencer Platt/Getty Images

    A COVID-19 Emergency Response Plan

    Larry Hatheway

    The rapid escalation of the COVID-19 crisis may be setting the stage for a global recession. Economic policymakers have no time to waste in preparing a response – preferably one that makes full use of low and falling bond yields, below-target inflation, and the lessons of the last recession.

    0
  2. fischer166_JIM WATSONAFP via Getty Images_trumplookingangrywef Jim Watson/AFP via Getty Images

    The West’s Final Countdown?

    Joschka Fischer

    With the US presidential election approaching, no one can say they didn't foresee the possibility of Donald Trump winning a second term – an event that would pose an existential threat to the very idea of "the West." So why are European leaders spending their time squabbling over agriculture subsidies?

    8

Edit Newsletter Preferences