A “New Normal” or a Worsening Nightmare?

Although the Covid-19 pandemic is itself is a new reality, the economic problems that have emerged across sectors due to its impact tell an old and familiar story. This story has pervaded macroeconomic discussions between nations and their populations since the creation of the 1944 Bretton Woods Agreement.

 

The period of economic reconstruction following World War II is often characterised as a golden age of consensus. The acknowledged experts who negotiated economic treaties, each traumatised by the memory of war, prioritised the overarching importance of bilateral friendship, economic diplomacy, and fiscal accountability over the natural human predisposition to first consider their own country’s perspective.

 

Conservative media often recall this supposed time of thrift and pragmatism when criticising the politicians, economists, and institutions that have emerged in their place. At the other end of the editorial spectrum, liberal media criticise their detractors’ perceived disinterest in regulations or pinpoint their alleged avarice. Meanwhile, the rest of the world’s population desperately and deservedly craves only shelter, food, fairness, and accountability. Unfortunately, all of these are conspicuously and devastatingly absent in today’s scenario. Yet, past experiences tell us that this phenomenon is not an anomaly caused by or exclusive to the Covid-19 era.

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Inspiration for the Creation of the 195 Project

The 195 Project is a new initiative intended to stimulate discussions and uncover viable solutions for active philanthropists operating during the COVID-19 era. This global crisis serves as a poignant and startling reminder to many who hold positions of influence in the C-Suite and beyond, that the precepts of the Bretton Woods Agreement are not appropriate today.

 

For us to be able to identify a successful and efficient solution to address the present-day human suffering, which will perpetuate for generations if not mitigated, it is important to ensure that wealth does not abrogate our ability to listen, learn, and feel with genuine empathy and compassion.

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Waking Up to a Cataclysmic Reality

In his recent remarks to The Australian, foreign policy analyst Greg Sheridan identified the concerns of this age as the fault of a break with the sobering memory of war. These

concerns are real and economic, and cataclysmic when considered in conjunction with the Covid-19 aftermath. Our post-war leaders and thinkers have eschewed the pragmatism of overcoming multigenerational poverty and, instead, embraced a form of state-building that has hinged on moral decadence. The current phenomenon is most definitely one of economic stagnation, institutional decay, and cultural and intellectual exhaustion. Yet, it has come during a time of extraordinary technological development and exponentially expanding material prosperity for the financial elite.

 

Highlighting “demographic decline, overhang of debt, constraints on education, environmental limitations, and technological stagnation” as the forces that will constrain future growth, Sheridan, like many other figures in the Western conservative culture, , repeatedly resorts to a nostalgia of the brighter past. He recalls an era that began to falter long before advances began to be made in Western state-building, in the early 1970s.

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Covid-19 has led economists to extol the new and remarkable shifts in contemporary trends and policy, with the repeated suggestion that markets, businesses and governments should now operate outside the bounds of post-war precedents. In May 2020, President Donald J. Trump threatened to default the US$1.1 trillion of sovereign debt that the US owes to the People’s Republic of China. Many observers agreed with CNN’s assessment that governments are pushing the envelope far beyond previous incidents.

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Another vivid example was when British Prime Minister Boris Johnson announced in May 2020 that the UK government will cover 80% of all British employees’ salaries, paying the bulk of almost 10 million UK private-sector workers’ wages at the peak of the pandemic. This led to the nation incurring a debt of US$72.7 billion.

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Spain’s leading financial group, CaixaBank, reports that China set the precedent for what will prove to be unprecedented. As China was the first to observe and react to Covid-19, it had a lengthier timeframe to begin economic recovery. This itself is a signal and harbinger that stands as proof for the argument that “the global coronavirus pandemic will most probably end up having economic consequences of an unprecedented scale.”

 

The Good, the Bad, the Unknown, and the Unprecedented

What is the true state of the world economy as we face the unprecedented challenges ushered in by the Covid-19 pandemic?

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History shows that the United States has delayed repayment of debts to its creditors. Franklin D. Roosevelt did so in March 1933, by suspending the gold standard metric to counter the severe disinflation and collapse of the financial system that occurred during the Great Depression. On July 15th, 1947, it was not the developing world but the United Kingdom which became the world’s single largest recipient of foreign aid, with John Maynard Keynes’ negotiation of loans exceeding US$50 billion. These obligations were not repaid until 2006. It is important to understand that these loans were not taken to pay salaries, but were incurred by factories manufacturing armaments necessary for war.

 

In China’s case, the pathos that the country provides a good barometer for global impact holds water. However, it is also a dichotomy that solely considers post-war economic rationale. It does not adequately weigh the cultural characteristics and societal trends toward innovation that have made China’s economic growth strong at worst, and at best, stratospheric. The Bretton Woods agreement, which proved impossible to implement and became the subject of significant criticism by successive generations, has taught us one powerful lesson: Those who give should never receive and those who receive should never forget.

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Our response to the COVID-19 pandemic must not be outlined by the powerful and the soluble, such as the plan defined by the victors of World War II at Bretton Woods – which all others in attendance had no choice but to accept. Neither must our fiscal and philanthropic response to this pandemic’s challenges be one of score-settling or of proving who is right in the battle of ideologies in economics.

 

BRETTON: The Power of Hindsight to Ensure a Fairer Future

The theory that emerged from the Bretton Woods experience is easy to discredit with the power of hindsight. However, the mathematical premise and the idea of security underwritten by precious metal and trust in one’s neighbour – whether they are a debtor or lender – makes perfect sense. Yet, when we separate the realities of finance and philanthropy from the rhetoric of modern politics, it is clear that the economic policies and research that succeed Bretton and Covid-19 must have a closer relationship with the developing world’s UHNWIs, economists, students, journalists, and philanthropists. This clarity has emerged from the fear of a deadly global disease that remains uncurable even as vaccines offer some hope. At this juncture, there is a common desire from all nations in all continents, to influence policies − whether in economics or in technology – to benefit the greater good.

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So many experts have demonstrated direct personal knowledge of emerging technologies in faraway markets. Those have long escaped the attention of established economists – but now characterise, rather than disregard, how capital flows, thanks to global technology. So, while the 195 Project will seek solutions, its members will take an approach that is different from that of the Bretton signatories. 

 

The Bretton Woods agreement enforced the economic policy that came to define businesses’ attitude towards money during the aftermath of the war. In contrast, the 195 Project initiatives will be based on the representative nature of our members’ business locations and interests. The BRICS countries (Brazil, Russia, India, China, and South Africa) as well as the countries of the developing world will be afforded equal dialogue in making research decisions and providing diverse perspectives on emerging technologies and trends. 

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Yet, if we are to fulfil our goal, which is to provide a better, more prosperous future with sustainable solutions to address our present challenges, we must remember that the Bretton Woods Agreement was not a failure. It taught us all an invaluable lesson. Money should not be used for political gain or for the proliferation of soft power. Money and the mechanics of finance should move at the same pace and with the same intrinsic instincts as an algorithm, code, or a pan-national business. Money should support the needy and be given without any bilateral or political motive or agenda. 

 

In the aftermath of the Covid-19 pandemic, money serves little purpose to those who have the privilege of possessing it, unless they use it to permanently solve problems such as extraordinary debt, which have plagued the world for generations, despite consistent GDP growth.

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Exercise Your Full Potential and Moral Responsibility for Good

Wealth is power. Those who control it own a personal and civic moral responsibility to use it for the greater good. Wealth can be compounded by leveraging it in an intelligent, strategic, proactive, and compassionate manner through philanthropic investment. Such an investment ensures a perpetually sustained return on investment that is greater than the sum of its parts; one that shapes the future in ways that go far beyond the capacity of financial power. 

 

What is the best way to accomplish such worthy goals and generate a positive multiplier effect to uplift this generation as well as those to come? This is the profound and vital question raised by The 195 Project. The answers to this question will ultimately be revealed through the collaborative, creative, dynamic, innovative, and philanthropically focused work executed by this intentionally purposeful think tank. Please accept this honourable challenge by joining The 195 Project and contributing your experience, insight, influence, and generosity of spirit to support the upliftment of the economy.