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The Risk of Post-Pandemic Instability

With markets, policymakers, and commentators fixated on the coming economic boom in vaccinated countries, it is all too easy to miss dangers looming on the horizon. But history (and common sense) suggests that crises like the coronavirus pandemic do not simply recede into memory.

ATLANTA – With vaccinations raising hopes for an end to the pandemic, predictions about the post-COVID world are multiplying fast. From envisioning a reordered economy to forecasting how people will live, work, and play, experts are doing their best to extrapolate from developments that the virus has put into motion.

In the United States, most forecasters, whether on Wall Street or in Washington, are fixated on the short term: namely, the likelihood of higher US economic growth following mass vaccination (which will liberate consumer spending) and a new $1.9 trillion recovery package. Fortunately, two economists at the International Monetary Fund have lent some balance to the prevailing bullishness.

Offering a longer-term perspective, Philip Barrett and Sophia Chen point out that the pandemic’s political impact has yet to materialize. As they and Nan Li noted in a blog post in early February, “history is replete with examples of disease outbreaks casting long shadows of social repercussions.” Generally, the social scarring from such mass tragedies doesn’t show up for years, and there is no reason to think that the coronavirus pandemic will be an exception. Following the historical pattern, today’s lockdowns, limited mobility, and crisis-induced displays of national unity have merely masked the pandemic’s full effects.

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