The state is back. But nobody knows what to do with it. Owing to Covid-19, the world’s advanced economies are operating with almost unprecedented levels of debt, central bank support and explicit state guarantees to businesses and banks.
As the crisis subsides, the textbooks – still barely revised after the austerity debacle of the early 2010s – dictate either spending cuts or tax rises. Human need – and for the West’s fragile democracies, geopolitical survival – dictates the opposite. So policymakers need to learn fast.
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