The Crisis of Crisis

The Crisis of Crisis

Crisis de la crisis

Yvon Grenier

Crisis means a turning point, one that is typically unexpected in its manifestation or its intensity, and for which the affected population and its leaders are ill prepared. Think of the Great Depression, for instance. Since then, governments have learned to cope with economic downturn, essentially by increasing public spending. We have experienced numerous recessions since, without ever being visited by similar devastation in the economy and the fabric of society. In 2009, the Obama administration pushed through the 111th Congress a $787 billion stimulus package (The American Recovery and Reinvestment Act), equivalent to about 4% of America’s GDP (Franklin Delano Roosevelt’s New Deal represented about 1.5% of GDP). Today the recovery is tepid and unemployment is still high in the US, but again, compared to the Great Depression the current economic “crisis” is literally manageable. Furthermore, for all the squabbling among politicians and experts about the causes of, and solution to, the current global recession, they use the same language and seem to agree on the fundamentals. China’s “scientific response,” to use Premier Wen Jiabao’s expression, is well within the range of policy options adopted in North America and Europe: essentially, it is all Keynes and no Marx. Recessions are more global than ever, but so is the response by heads of state and central banks.

Crises are not what they used to be

There is a broader proposition to be drawn from this example. Perhaps because politics is short-term, we fail to notice that our postwar national and global institutions have become quite agile at dealing with crisis. They have not eliminated the possibility of crisis, but we have significantly improved our capacity to anticipate and manage them. Take the crisis in the Eurozone. After months of apparent paralysis, what The Economist called “Europe’s notoriously incremental policymaking machinery” delivered an announcement by Europe Central Bank that it would “buy unlimited amounts of the bonds of troubled euro-zone countries,” drawing from a new European Stability Mechanism worth 500 billion Euros. Europe is slowly heading in the direction of a banking union and perhaps even federalism. Dire scenarios are still possible but not very likely. Economists who fear the inflationary consequence of a stimulus package talk about 4% of inflation at worst –nothing like the hyperinflation that brought the Weimar republic to its knees (in the neighborhood of 140%).

The point here is not to minimize the seriousness of the financial situation in Europe, but to remember that this crisis is not nearly as serious as the political crisis for the resolution of which the European community was created in the first place. Clearly the postwar (and postmaterialist) generations are “free from fear” of the kind of economic devastation and material insecurity that visited preceding ones.

Interestingly, the “crisis” is not what it used to be in other areas as well. Consider the case of global conflicts and security. As Steven Pinker argued in his recent book The Better Angels of Our Nature (2011), the world has never been so peaceful. As he puts it, zero is the number of “interstate wars that has been fought since 1945 between major developed countries.” Zero is the “number of developed countries that have expanded their territory since the late 1940s by conquering another country” and zero is the number of “internationally recognized states since WWII that have gone out of existence through conquest.” One is almost tempted to give some of the credit to the much-maligned United Nations! According to the World Bank’s World Development Report, the annual number of battle deaths from civil war “fell from more than 160,000 a year in the 1980s to less than 50,000 a year in the 2000s.” To be sure, “one in four people on the planet, more than 1.5 billion, live in fragile and conflict-affected states or in countries with very high levels of criminal violence,” but in most cases they are victims of recurring civil wars. “Every civil war that began since 2003 was a resumption of a previous civil war. […] …90 percent of conflicts initiated in the 21st century were in countries that had already had a civil war.” Not much there to celebrate, except to highlight the fact that there are fewer and fewer new wars in the world.

The so-called “Arab Spring,” which started in December of 2010, seems to contradict my hypothesis about our improved hability to handle crisis. But even there, the success of Islamist parties in Tunisia and Egypt has not (yet) caused dramatic shifts in regional alliances. The major Western powers have reacted with caution (as President Obama said: “Egypt is neither our ally nor our enemy”) and with considerable coherence. Think about what most observers would have predicted, only a few years ago, as the likely consequence of a major Arab state being governed by the Muslim Brotherhood, and compare that with the range of interpretations of this event we find today! Syria is unfortunately the victim of what appears to be the policy of choice of the UN and world powers to deal with that crisis: doing as little as possible. By giving war a chance, they minimize their own cost and hope to contain the crisis within the country’s national borders. Who said that crisis-management has to be pretty?

We are not nearly as good when dealing with long-term, structural challenges

Which leads to my concluding remark, one that needs no lengthy explanation: while we are better at dealing with crisis, our leaders and institutions are struggling mightily when it comes to long-term, structural problems. Let’s call them “challenges.” No government or international institutions seem capable to deal effectively with social inequalities, the soaring cost of health care, rising public and private debt, climate change, the desuetude of many of our democratic institutions or the long-awaited reform of the UN, to name but a few issues. In our fast-paced world, important challenges like these seem to impart a distinctively numbing effect. What we are confronted with, after the “crisis of crisis,” is the challenge of treating challenges as if they were crises, with the same urgency and dedication.

There are 2 comments for this article
  1. Ricardo Bonilla Sánchez at 6:08 pm

    Creo que la palabra clave es cautela. Las “crisis” no son lo que solía ser, pero eso se debe a como el mismo Grenier menciona a que existe más cautela, cuidado, experiencia y se aprende del pasado.

  2. mon mcneil at 11:20 am

    Good post, I´ve always liked Yvon Grenier.