Running Beyond the Edge of the Cliff

Everybody remembers the cartoon by Tex Avery, in which a character being chased by another runs off the edge of a cliff. However, because of momentum, the character keeps running and momentarily floats in the air, preoccupied by being pursued until he understands that there is no more ground left under his feet, and finally falls like a stone. As children, we all laughed a lot at this scene.

 In a very real sense, we are experiencing the same situation today, and it is much less amusing.

Human beings continue to run, carried away by the impulse of the dizzying sums of money disbursed by central banks and governments. They are approaching and preparing to go beyond the edge of the cliff, hoping to float in the air while continuing to run like the aforementioned cartoon character, while being preoccupied with the same issues as before; busy wondering if they will soon be able to have lunch in a restaurant, or go on holidays, or meet their friends. Especially in France, after months of forced rest, many people are only contemplating the next four-day weekend, which they will happily take advantage of.

Few people have realized the magnitude of the scale of the fall that awaits. Few people want to hear about the reality: in the United States, production will fall by more than a third in the second quarter, and probably by a fifth over the course of the entire year; in Europe, it will be barely a little less than that. In the United States, nearly a quarter of the population is threatened with unemployment; in Europe, it will be barely a little less than that. In France, one company out of four is considering furloughs. In emerging economies, 1.6 billion people working in the informal sector are likely to lose their family’s sole source of income. 

Do we really understand the implications of the data? When are we going to realize what is at stake?

When are we going to resign ourselves to admit that, without drugs and vaccines, another wave of the pandemic may make the future even bleaker? When are we going to stop gazing at the smiles of the spring and accept the magnitude of the dramatic events to come in the autumn, and the necessary work that must begin during the summer to prevent it? 

When are we going to stop believing that a flood of money will be enough to provide the global economy with the means to navigate the precipice without any damage?

It is not by drowning companies with unlimited lines of credit that the central banks will be able to save them from a solvency crisis. In the same vein, States will not be able to save these companies suffering from low revenues by providing them with capital, unless we are prepared to nationalize every restaurant and small and medium enterprise. The only way to save these entities is to help them find customers.

And to do this, these entities must be encouraged to produce as quickly as possible what consumers who have been saving staggering amounts of money may be willing to pay for. This means directing producers toward what I call the "industries of life." And to urgently provide training in these new trades to anyone who, without this reconversion, will otherwise soon find themselves unemployed. And for a very long time.

To take on such challenge, we cannot be satisfied with worrying only about what will happen in the next couple of weeks or even in the next two months; believing that it is enough to continue living as we did in the past and wait for the return of the world of yesterday; believing that the virtual, which has taken over many aspects of our lives, will protect us from what is at stake in reality.

If we do not do this as soon as possible, the worst is certain; and in this brief period following the lockdown will soon seem like a very happy moment in hindsight. Similar to the last moments of a civilization in suspense before its demise.

There is still time to avoid going over the edge of the cliff and take another path. It will take a lot of courage. Nothing is more difficult than overcoming denial of reality. Nothing is more liberating either.

j@attali.com