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The Fog of Waronomics

With the global fallout from Russia's war against Ukraine coming on the heels of the pandemic, many governments have increasingly adopted short-term emergency measures that come at the expense of future prosperity. To avoid an eventual reckoning, they should emulate a country that actually is at war: Ukraine.

LONDON – In extraordinary times such as wars, pandemics, and natural disasters, all politicians introduce extraordinary measures to soften the negative economic and social impact on their country’s citizens. But only the best among them will do so with the future in mind, helping to create the conditions for longer-term prosperity. As the late Queen Elizabeth II put it, “What leaders do for their people today is government and politics. But what they do for the people of tomorrow – that is statesmanship.”

Owing to the fallout from Russia’s invasion of Ukraine, many governments today are acting as if they are also at war. But they have failed to heed the queen’s implicit advice because short-termism has become all too common in economic decision-making.

The current moment stands in stark contrast to the beginning of 2021, when most governments were focused on building resilience, preparing for another pandemic, and gently winding down the financial support that they had provided during the COVID-19 crisis. Preventing excessive strains on government budgets had become a priority alongside longer-term challenges like the fight against climate change. But that now seems like eons ago.

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