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Coronavirus has spread quickly across the globe. As a result, healthcare systems in several industrialised countries have been pushed to and beyond the verge of collapse. The virus has now also reached poorer countries in Africa. Although it spreads rather slowly there and hits a younger population, it is feared that people in poorer countries will be hit particularly hard considering the relatively ill-equipped healthcare systems. In these countries, healthcare does not meet Western standards. Yet, in recent years reveals significant improvements have taken place, and today most poor countries are better prepared for health challenges than they were 20 years ago. This also regards pandemics like the current one.

Central banks are exploring new monetary policies. Unconventional ones, of course. The Bank of England (BoE) has recently announced one of such attempts. Although the main concern remains how to manage a negative-interest-rates environment, BoE Chief Economist A. Haldane most interestingly mentions the expansion of the scope of the bank’s asset-purchase plan to include risky securities.

There are situations in which people are all but obliged to act differently from what they preach. The latest example was provided the president of the European Central Bank (ECB) Christine Lagarde. In mid-March, she declared that the European Central Bank «is not here to close spreads». By saying so, she wanted to emphasise that helping a member State to sell its bonds on the market is not the ECB’s job, and that no exceptions are admitted.

Five years ago, a US American hedge fund bought the distribution rights for Daraprim, a drug to cure AIDS. Overnight, the price went from $13.50 to $750.00. This price increase caused huge public outrage. Yet, high prices for pharmaceuticals are rather common in the US. No other healthcare system around the world spends as much on drugs. Partly responsible for this is the seldom used bargaining power of public insurance programmes on the one hand and, on the other hand, the market power of pharmaceutical firms caused by patents and licensing procedures.

The economic consequences of Covid-19 will be heavy: a significant portion of production came to a halt for weeks, and international value chains were disrupted. Governments will increase expenditure massively in order to hand out subsidies and respond to unemployment, while tax revenues will decline. The upshot is that budget deficits will grow, and so will public indebtedness. The European Central Bank (ECB) will make it possible by buying government bonds (govies) and injecting new liquidity, with which commercial banks will also buy (more or less) risky govies, hoping to sell them to the ECB. But a great deal of incremental debt will not be AAA-rated, so portfolio risks follow. The need for increasing the supply of low-risk bond (see Lagarde in 2019) has therefore intensified (see here and here).

The next elections to the German Bundestag have been moved up to autumn 2021. At that moment, Angela Merkel will have served as chancellor for 16 years. As opposed to Helmut Kohl in the 1990s, she does not seek re-election. Nevertheless, her tenure – which has been extraordinarily long for a head of government in a Western democracy – justifies some thoughts about the pros and cons of changing political leaders at regular intervals.

IREF is a free-market oriented think tank. It promotes ideas, events, and academic research. With regard to research, IREF supports original projects that lead to the production of papers of academic quality of at least 7,000 words. This support is not a prize to published work, nor is it an encouragement to “work in progress”.

According to a recent representative survey conducted by Der Spiegel, a majority in Germany does not consider the country’s income distribution to be fair. 47.3 percent of the respondents consider the income distribution to be „definitely not fair“ and for 27.5 percent it is „rather not fair“. Only 4.4 percent perceive it as „definitely fair“ and 12.5 percent as „rather fair“. However, is the observed income inequality really unfair? And, what degree of inequality would be fair? An IREF Working Paper by Pablo Duarte tackles these questions empirically.

Last February, this website hosted an article titled «The unintended consequences of coronavirus». At the time the article was published, the situation was not at all dramatic in Europe. For example, the official Covid-19 figures in Italy and Germany mentioned very limited number of cases. Governments were confident that everything would be under control, as witnessed by the fact that on February 15, two tons of medical equipment were shipped to China.

The literature has put forward two main arguments to explain the recent rise of populist parties and their electoral success. On the one hand, commentators have highlighted the rising level of uncertainty about the economy and grievances among the losers in global markets. Resentment, it is argued, has been susceptible to the anti-establishment message of populist movements and parties that blames ‘Them’ for taking away from “Us” prosperity, job opportunities, and public services from ‘Us’. On the other hand, authors have emphasised the role of culture and the backlash against long-term shifts in progressive and liberal social values. Such cultural backlash is especially strong among the older generation and less educated people, who suffer the displacement of familiar traditional norms and the rapid cultural changes that seem to be eroding the basic values and customs of Western societies. Other external shocks – such as the massive recent increase in immigration – are related to both explanations. Immigrants ‘compete’ against native low-wage, unskilled workers, and at the same time bring with them new values and behaviours that may be source of tensions with the residents in the destination countries.