Exiting the permanent crisis in the global south
The case for a global financial reset in the wake of Covid-19
Even in the wealthiest countries on earth, years of austerity combined with ‘market knows best’ ideology has hollowed out our ability to deal with coronavirus. But for many countries in the global south, the weakness of the public sector was not a democratic choice but was imposed by rich countries and international institutions like the IMF. This has created a permanent crisis in some parts of the world where, for instance, Burkina Faso has just 11 ventilators for 19 million citizens, Mozambique has no intensive care unit capacity, and Sierra Leone has 1 doctor per 50,000 of its people.
In order to make up for the ‘lack’ of public money, these countries have been told they need to attract private investment to pay for services like healthcare. And they’ve been told to give up any attempt at control over their economy, and ‘leave it to the market’. Now, with capital fleeing to safety in the rich countries, commodity markets plunging and export markets collapsing, these governments are left with none of the tools being used by rich countries to intervene in their economies and protect their people.
The market has failed them. It’s time for a global reset. We are calling for:
- Immediate, unconditional debt cancellation to free up government spending in these countries. We are calling for at least $40 billion in 2020, but suggest much more will be needed as the crisis pans out.
- An unprecedented package of support to build up public healthcare services and welfare provision globally.
- A coronavirus wealth tax to pay for these services short-term and tax justice to allow countries to pay for them in the long-term
- A global reset: fundamental reform to the global economy including sweeping new financial regulation, a radical reset in global trade rules, and government cooperation and intervention to fight climate change throughout the global economy.
International co-ordination is desperately needed on a level last seen in the post-war settlement in 1945. This is not easy. We can, however, mobilise around those parts of the multilateral framework which provide for people’s needs, like the World Health Organisation (WHO), and use regional integration to lay the groundwork for a better system.