Shutdown: How Covid Shook the World's Economy

"Yes, it’s about the impact of the pandemic. Adam Tooze is an economic historian so he brings a historical perspective to the way he writes this first draft of history. It’s not a piece of journalism, but it’s very much addressing something that’s still happening to us. It’s this instant analysis of what happened. Get the weekly Five Books newsletter There are some other excellent books about the science of the pandemic, like the book by Sarah Gilbert and Catherine Green, Vaxxers , on the vaccine development, and Spike by Jeremy Farrar on the epidemiology and policy. But for an economist, what’s interesting about Adam Tooze’s book is the integration of economic policymaking alongside the unfolding events of the pandemic. It’s mainly focused on the US but does touch on global events too. His previous book, Crashed , was about the great financial crisis. What that very clearly established was the important role that the Federal Reserve Board played in maintaining world systemic economic stability. That, in effect, happened again in 2020. The actions the Fed took to make sure that we didn’t have an even bigger economic crisis—through financial markets seizing up and panicking—were important. The book is a ripping yarn of events, month by month. You feel that you’re plunged into that decision-making and it was economic aspects of the decisions that I found particularly interesting. In the US, the discussion has been about the size of the fiscal stimulus needed, so there has been some debate, and there’s also a debate around modern monetary theory and how much you should worry about ‘printing money.’ But I think you’re right to suggest that policy has actually succeeded incredibly well. As a result, the economic debate has been lacking a tempestuous quality, I suppose. When this all started, it was an unprecedented event in modern history, that economies were shut down by governments. It was remarkable that governments could do that at all, given that we had got so used to thinking about how limited and ineffective they are compared to market organisations. The fact was that, despite this, there wasn’t a massive recession. If you cast your mind back to March and April 2020, the Bank of England , for instance, was saying that we would have the worst recession in 300 years. Measures of GDP absolutely plunged. Obviously, there are many people who were worse off as a result, but it wasn’t a complete disaster. In that sense, the economic policy response has been very successful. There’s also, in a more subterranean way, integration going on between the epidemiology and the more detailed economics—trying to understand better people’s own personal responses to the news about the virus in terms of their economic activity. Previously, these two kinds of modelling had gone on parallel tracks. Over time, once the pandemic started, they became more integrated with each other. I think so. That’s certainly what Adam Tooze argues. I find it very persuasive. And, of course, it was relatively recent in the scale of economic history."