The 2008–09 financial crisis precipitated a decline in credibility for experts, who were blamed by many for causing, or at least not preventing, the economic collapse. Chicago Booth’s Raghuram G. Rajan considers whether the COVID-19 crisis may have the opposite effect, contributing to a decline in political populism.
This crisis comes at a very interesting time across the world. We see the rise of populist nationalist governments. We see the undermining of professional capabilities. “The elite are biased and think only of themselves”—at least, that was the narrative going into this crisis.
Now, unlike the financial crisis, which many people blamed the bankers for, as well as the administrative elite that let them take the risk that they actually took, this crisis is more what economists would call exogenous. It's coming from the outside. It's virtually an act of God, as they sometimes term this. And to that extent, it's harder to find somebody to blame.
Of course, politicians are doing their best to do that. But it's also possible to recognize expertise here. We have seen countries which have a more reasonable administration taking early action. We've seen that in Taiwan, in South Korea.
We've seen more-populist administrations thinking somehow that magical thinking would be enough to stave off this crisis. We've seen administrations finally come to recognize the value of professional expertise and bring more competent people on board in managing the crisis.
So one hope is, politically, this reestablishes the value of competence, of professionalism, and gives those with those credentials greater credibility—something which is very necessary if we are to navigate the challenges of the future. How the medical establishment, how the administrative establishment performs in this crisis will be very important to see whether they regain the credibility that professionals had before the global financial crisis.
That change may also imply that people now will also demand more expertise from their leaders, and be less willing to elect leaders that talk a good game, but are a little less capable, administratively.
But that remains to be seen. I think it all depends on how this plays out, and whether our populist leaders can claim credit eventually for whatever happens regardless of their direct contribution to the outcomes.