Shutdown | Adam Tooze

Summary of: Shutdown: How Covid Shook the World’s Economy
By: Adam Tooze

Introduction

As you dive into the summary of ‘Shutdown: How Covid Shook the World’s Economy’ by Adam Tooze, prepare to explore the unprecedented global landscape created by COVID-19. The book takes you on a journey through the pandemic’s impact on the world economy, political decisions, and public health systems. You will gain insights into how governments, institutions, and individuals reacted, adapted, and survived the chaos of 2020. This summary also highlights the COVID-19 response in China, the consequences of uncoordinated actions in the West, and the massive economic measures propelled by the US and EU to prevent a complete collapse.

Unpreparedness Epidemic

The book summary discusses how the spread of Covid-19 was the result of widespread unpreparedness, and how long-term factors such as global mobility, urbanization, and climate change contribute to the generation of new diseases. The summary also sheds light on how poverty increases the incidence and lethality of communicable disease, making it clear that governments and healthcare systems were aware of the catastrophic potential of a virus like Covid-19 but failed to prepare for it adequately.

China’s Response to COVID-19

In 2019, a deadly virus emerged in Wuhan, causing panic and chaos as it rapidly spread. While the local Communist Party leadership initially kept quiet about the outbreak, China’s President Xi Jinping quickly mobilized a response, which involved deploying his protege, Chen Yixin, to lead efforts to contain the disease.

Under Xi’s guidance, the government declared a “People’s War” on the virus, and swiftly implemented extreme tactics such as locking down Wuhan and neighboring provinces, and shutting down businesses across the country. While these measures were harsh and had significant economic consequences, they were effective in containing the virus. By February 2020, the World Health Organization announced that China had contained the virus.

Despite the initial secrecy surrounding the outbreak, China’s rapid and decisive response ultimately bolstered the Communist Party’s legitimacy. For Xi and the Party, the pandemic was a win, as China recovered quickly while the virus ravaged other countries around the world.

Slow and Uncoordinated: The West’s Response to COVID-19

After the UK’s departure from the EU and Donald Trump’s acquittal, the Western world was slow to respond to the emerging COVID-19 crisis. The lack of coordination and preparedness resulted in a worldwide recession, individual states taking action, and the federal government’s absence from the effort in the US. The economic effect of the virus appeared in the West when the price of oil dropped by 65% in just 24 hours due to China’s lockdown and a disagreement between Russia and Saudi Arabia. Unlike China’s government-imposed lockdown, the Western world had a shutdown from within, with individual states, municipalities, private institutions, and individuals leading the social distancing effort.

Rescuing the World Economy in the Face of Covid

As COVID-19 swept across the world, the global economy began to collapse. The market for US Treasuries was hit, jeopardizing the safety of the global economy. In response, the US Federal Reserve, led by Jerome Powell, bought its own IOUs, stabilizing the world’s most important market. The Federal Reserve went on to lend directly to businesses, issue credit, and buy corporate debt. Meanwhile, the US Senate approved the largest stimulus package in history, breaking the prevailing economic orthodoxy of small government and free markets.

Europe’s Economic Recovery Amid the COVID-19 Pandemic

In the wake of COVID-19, Europe faced a severe economic threat, compounded by Italy’s mounting debt and vulnerability. As the virus spread, the EU and the US adopted contrasting responses. While the former opted for an unprecedented relief package, the latter relied on ad hoc measures. Meanwhile, China took unabated steps to reassert itself economically and politically. Consequently, the pandemic reinvigorated China’s economy and reinforced the Chinese Communist Party’s dominance. Although Europe eventually rebounded, China’s unflinching response to the pandemic enabled it to become the world’s preeminent economic power, with purchasing power surpassing that of the US and its companies receiving more foreign investment than any other country.

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