On Thursday, the Jackson School and the Law School Center for Global Legal Challenges hosted a talk on COVID-19 and its impacts on the global economic order. The discussion was a part of the ongoing series titled “COVID and the Global World Order.”

The talk featured Mark Van Der Weide, the general counsel of the Federal Reserve Board; Oriana Bandiera, the Sir Anthony Atkinson Chair in Economics and director of STICERD at the London School of Economics; and Guy Ryder, director-general of the International Labour Organization. Daniel Markovits, a professor at Yale Law School, moderated the talk. The event, hosted through Zoom and available to anyone interested in the talk, focused on global economic approaches to the pandemic, as well as the pandemic’s short- and long-term effects.

“I think the one word I can use is cataclysmic,” Ryder said. “It’s been a cataclysmic impact on labor markets.”

Van Der Weide began the talk by outlining the Federal Reserve’s response to the crisis, noting the contrast between the Fed’s response in 2008 and its response to the current recession, caused by the pandemic.

“The 2020 event was a lot faster,” Van Der Weide said. “There was a lot faster unraveling of the financial markets and you saw a much quicker response from the Fed and other central banks as well.”

According to Van Der Weide, while the 2008 recession took nearly a year to play out, the stock market crash this spring happened in a matter of weeks. In 2020, the U.S. economy went from “green light to red light” in about three weeks, Van Der Weide said.

As a response to this crisis, the Fed created additional, faster lending services and grew its balance sheet much more rapidly, with an increase of $3 trillion in a couple of months. In 2008, the Fed took several years to grow its balance sheet by the same amount. This spring, central banks around the world acted on a broader level, focusing on “real economy lending” in an effort to stabilize the economy rather than just assist large financial institutions, Van Der Weide said.

“Fundamentally, the U.S. banking system has been a strongly positive force in 2020 which was, again, the exact opposite of what we saw in 2008, where the banking system was at the epicenter of what was going wrong,” Van Der Weide said.

Bandiera then presented on the pandemic’s effect on less economically developed countries, using Bangladesh as a case study. Bandiera noted that this is the “first significant increase in global poverty in the last 20 years.”

“We fear that [this] effect of the pandemic on poverty will outlive the pandemic,” Bandiera said, adding that salaried employment is rare in developing countries and, thus, access to a stable income is less available.

Ryder concluded the talk and spoke of the four main ways that governments are appropriately reacting to the pandemic: economic stimulus, more targeted support for enterprises, protection of the working class and the extent to which governments have been willing and able to cooperate with organized labor on one side and business on the other.

According to Ryder, challenges the world will face in the next stage of the pandemic include protecting the health of world citizens, dealing with the cost of the pandemic and deciding whether to revitalize or abandon jobs that have been threatened by the crisis.

In the Q&A session that followed, the three speakers discussed the comparative abilities of technocratic and democratic governments to handle the crisis, the stability of the dollar in a post-COVID-19 world and the increasing inequalities that have been exacerbated by the pandemic.

All three experts said that there will be difficulties ahead. Ryder spoke about food security in developing economies and protection of essential workers, while Bandiera discussed increasing gender inequality caused by a lack of reliable child care.

Ryder noted the irony of the newfound appreciation of essential workers by government officials when compared with the greater economic and health risks that essential workers must face during the pandemic. Specifically, Ryder acknowledged the lack of government protection for essential workers in the United States.

Finally, Bandiera said that she believes that one of the largest impacts of the pandemic will be on educational inequality in the next generation.

“I think the worst effect will come in the next generation where children of low socioeconomic status have been deprived of months of education, while children of better-off families are either in private schools that offer online provision or are privately tutored,” Bandiera said.

In 2020, the reduction in employment amounts to a loss of 495 million jobs worldwide.

Maia Decker | maia.decker@yale.edu