A sigh of relief, a gasp of breath

In emerging markets, short-term panic gives way to long-term worry

Emergency measures have helped keep economies alive, but could have nasty side-effects in the long term

Fatigue. shortness of breath. Frayed nerves. Lungs mottled by scars. Months have passed since early survivors of covid-19 recovered from the disease. But some still report lingering after-effects.

The disease, it seems, can inflict lasting damage, even in cases that did not prove critical. The same may be true of the pandemic’s impact on economies, especially in the developing world. Some acute dangers seem to be receding.

But chronic problems loom. What does not kill these economies may still leave them weaker.

A few months ago the coronavirus shock looked financially lethal. But emerging-market bonds, currencies, and shares have rallied strongly since plumbing dramatic depths in March (see chart), thanks to a determined effort by the Federal Reserve, America’s central bank, to allay financial stress at home by relieving a shortage of dollars worldwide.

In China, the biggest emerging economy of all, the revival of activity has been remarkable. Its gdp somehow grew by 11.5% in the second quarter, compared with the first, an annual pace of 59%, according to ubs, a bank.

That left it 3.2% higher than in the prelapsarian era of April-June 2019. Capital Economics, a consultancy, now expects that by the end of this year China’s output will have caught up to where it would have been without the pandemic.

China’s growth has helped lift commodity prices, benefiting the roughly two-thirds of developing countries that export oil, metals and other primary products. The dollar value of Indonesia’s goods exports in June was 2.3% above that of a year earlier, defying expectations of a 12.3% fall. Other big emerging economies have also reported pockets of resilience or piecemeal recovery.

In Mexico remittances were over 3% higher in May than a year earlier, perhaps because its emigrants took the opportunity to send money home while the peso was cheap. India in May and June regained over 90m of the 114m jobs lost in April, according to the Centre for Monitoring Indian Economy, a research firm.

Two big concerns remain, however. The long-term worry is that the virus leaves behind economic scars even after it departs. The more immediate concern is that it has yet to depart.

Indeed, the surprisingly strong response to the easing of lockdowns (dubbed “revenge consumption”) in some countries may have contributed to an uptick in infections in parts of China and Vietnam (as well as richer economies like Australia and Japan) that had successfully contained the virus.

And the resumption of ordinary life has no doubt contributed to the continued strong growth in infections in India and much of Latin America. The “recovery is unlikely to be a smooth process”, note analysts at Capital Economics.

Nor is it likely to be complete. Past epidemics have left a permanent mark. Three years after sars, mers, Ebola and Zika, investment was 9% lower in stricken economies, on average, compared with the unstricken, according to the World Bank. Output per worker was almost 4% lower. The lasting damage from covid-19 is likely to be far worse.

The pandemic has, for example, interrupted the education of many of the developing world’s youngsters. Those aged between five and 19 constitute a bigger share of the population in poor countries than in rich ones (26% versus 17%) and therefore a more significant share of the future workforce.

The hiatus in their schooling is also more likely to become permanent. People cannot afford to remain on the “sidelines” in poor countries, points out Ayhan Kose of the World Bank.

Youngsters feel a “bigger push” to get a part-time job, which can easily end up severing their ties to school.

Human capital is not the only kind that will suffer. When growth prospects are weak and uncertain, entrepreneurs are unlikely to invest in new premises, ideas or machinery, even if they can raise the finance to do so. According to the bank, governments in 58 developing countries have offered credit guarantees of various kinds to encourage lending. But banks remain risk-averse, says Bhanu Baweja of ubs.

The pandemic has also disrupted trade, which was already unsettled by tensions between America and China. For emerging economies, trade and foreign investment are sources of both hard currency and know-how. Firms learn about the world by selling to it; countries learn by hosting firms from elsewhere.

By damaging global supply chains and denting international collaboration, “the pandemic could alter the very structures upon which the growth of recent decades was built”, warn Mr Kose and his co-authors in the bank’s latest “Global Economic Prospects” report.

If that is true, some industries in emerging economies will need reinvention. But contrary to folk wisdom, a crisis is not a good time for such a makeover. Research by Lucia Foster and Cheryl Grim of America’s Census Bureau and John Haltiwanger of the University of Maryland found that the reallocation of workers across firms slowed in America during its last recession.

The crisis winnowed out productive firms as well as weaker rivals. Job destruction increased.

But job creation fell just as much. In better times, workers can leave sunset industries for promising, sunrise sectors. But in a crisis, ousted workers simply get lost in the gloaming.

To their credit, policymakers in emerging economies have tried to keep banks and firms intact. In March central banks in 42 developing countries cut interest rates, according to the World Bank, far more than in any month in 2008. Many have also become more ecumenical lenders of last resort. India’s central bank, for example, is helping to shore up shadow banks.

A number of central banks have also bought sovereign bonds, helping governments provide as much stimulus as they dare (see chart). During the global financial crisis, recalls Mr Kose, some policymakers would say: “Maybe we shouldn’t do this, or we shouldn’t do that.” Those conversations have not happened this time.

On top of fiscal stimulus, financial regulators have become more forgiving. They have eased prudential limits on banks and allowed lenders to indulge in creative accounting, turning a blind eye to souring loans. In Russia, financial institutions can value the securities they hold at prices on March 1st. India introduced a moratorium on loan payments.

In some cases these macro-imprudential measures have interrupted reforms going in the other direction. China’s credit push reverses several years of attempted deleveraging. In the Philippines, an amendment to the central bank’s charter had strengthened its financial independence from the finance ministry. Now the central bank is busy buying its bonds.

Measures of this kind were necessary. But they may prove tricky to undo.

Governments will have to arrest the increase in their debt without jeopardising the recovery.

And regulators will eventually have to allow some loans to be written off and some firms to go bust, if new industries are to enjoy room to grow.

One reason why covid-19 inflicts lasting harm on those infected is the aggressive immune reaction it can trigger. This “cytokine storm” may help kill the disease. But it can also endanger the patient. Policymakers in developing countries must take care to prevent something similar happening to their economies.

They have responded with justifiable aggression to the pandemic. If left unchecked, however, this storm of defensive measures could have some nasty side-effects of its own.

The parallel universe of private equity returns

If IRR metrics had any sound basis in fact, we would all be as rich as Croesus

Jonathan Ford

US savers may soon be able to invest their 401(k) retirement accounts in private equity, but should navigate the numbers carefully © Getty Images

Ever wondered about the extraordinary performance figures that listed private equity firms trumpet in their official stock market filings?

Take, for instance, the latest Form 10-K issued by Apollo, one of the world’s largest buyout groups. This claims that its private equity funds have “consistently produced attractive long-term investment returns . . . generating a 39 per cent gross internal rate of return (IRR) on a compound basis from inception through December 31, 2019”.

Or how about the one from KKR, which says it has “generated a cumulative gross IRR of 25.6 per cent” since the firm’s inception back in 1976?

It’s not just the eye-popping scale of these returns that captures the attention. It’s their amazing “since inception” consistency. Not only do the firms generate stratospheric numbers — far higher than anything produced by the boring old stock market — but they can apparently do it year in, year out, with no decay in returns. 

A recent study of the back catalogue of these SEC filings by the Oxford academic Ludovic Phalippou reveals the extraordinary durability of their performance.

Take Apollo, for example. Its long-term IRR has barely moved from the 39 per cent level over the past several decades. True, it did hit 40 per cent in 2008, before dropping back by a full percentage point the following year.

But since then it has been like a stuck record. Financial crises? Great recessions? Market fluctuations? It seems that nothing can knock it off that 39 per cent.

It’s a similar story with KKR. The firm's IRR since inception has fallen by just 0.7 of a percentage point in the years since 2007 and, at 25.6 per cent, remains barely below the 26.1 per cent return generated by its early “legacy” funds between 1976 and 1996.

Buyout bosses like to talk up this consistency, as if it demonstrates private equity’s “edge”. The reality is that these consistent IRRs show nothing of the kind. What they actually demonstrate is a big flaw in the way the IRR itself is calculated. 

Baked into the formula is an expectation that all cash distributions can be reinvested at the same rate that the fund in question is earning.

Even when measuring the returns of a single fund over its own lifetime, this is a heroic assumption that can lead to returns being materially overstated. But apply it across multiple funds, compounded over many decades, and the results swiftly become completely unhinged.

To see how, imagine that KKR made a distribution of $100m in 1980 on a fund that generated a 25 per cent return. Compounded over 40 years at that assumed high reinvestment rate, the pot would now be worth a theoretical $752bn.

Plug that into your since-inception IRR and, as Prof Phalippou points out, with time the results will be ever more firmly driven by those enormous notional sums clicking out their theoretical percentage uplift every year. Indeed, probably KKR could lose every penny of its current $30bn of private-equity funds and its since-inception IRR wouldn’t change very much. 

Of course it is easy to see why the industry doesn’t mind headlining a number that is about as meaningful as the pig-iron output statistics the USSR blared out in its heyday to advertise its industrial prowess. After all, these IRRs support its central claim to deliver high and stable returns. (To be fair, it should be stressed that private equity firms do offer other more meaningful performance measures although they make few of these publicly available).

But what’s concerning is the ease with which this mathematical circularity has been allowed to create a distorted impression. The main audience for private equity to date has been large, so-called “sophisticated investors”. The fact that these absurd numbers still get headline exposure makes one wonder whether these investors understand them. That is disturbing.

Even more worrying is the way that policymakers appear to have set these financial pig-iron statistics in stone. The industry standard for reporting — the Global Investment Performance Standards — actually makes it mandatory for private equity to report a since-inception IRR or “money-weighted return”.

The Chartered Financial Analysts Institute, guardians of these standards, asserts that GIPS is based on “the principles of fair representation and full disclosure”. Really? 

If IRRs since-inception could be banked, our pension funds would all be as rich as Croesus. Manifestly, if sadly, that is not the case.

Realistic numbers matter. The US authorities are thinking of letting the American public loose on private equity with their 401(k) pension plans. Retail investors need to know what they are getting into. It’s time the way private equity reports performance was rethought.

The Mysterious Life of Birds Who Never Come Down

Swifts spend all their time in the sky. What can their journeys tell us about the future?

By Helen Macdonald

Illustration by Daniel Barreto

I found a dead common swift once, a husk of a bird under a bridge over the River Thames, where sunlight from the water cast bright scribbles on the arches above. I picked it up, held it in my palm, saw the dust in its feathers, its wings crossed like dull blades, its eyes tightly closed, and realized that I didn’t know what to do.

This was a surprise. Encouraged by books, I’d always been the type of Gothic amateur naturalist who preserved interesting bits of the dead. I cleaned and polished fox skulls; disarticulated, dried and kept the wings of roadkill birds. But I knew, looking at the swift, that I could not do anything like that to it.

The bird was suffused with a kind of seriousness very akin to holiness. I didn’t want to leave it there, so I took it home, swaddled it in a towel and tucked it in the freezer. It was in early May the next year, as soon as I saw the first returning swifts flowing down from the clouds, that I knew what I had to do. I went to the freezer, took out the swift and buried it in the garden one hand’s-width deep in earth newly warmed by the sun.

Swifts are magical in the manner of all things that exist just a little beyond understanding. Once they were called the “Devil’s bird,” perhaps because those screaming flocks of black crosses around churches seemed pulled from darkness, not light. But to me, they are creatures of the upper air, and of their nature unintelligible, which makes them more akin to angels. Unlike all other birds I knew as a child, they never descended to the ground.

When I was young, I was frustrated that there was no way for me to know them better. They were so fast that it was impossible to focus on their facial expressions or watch them preen through binoculars. They were only ever flickering silhouettes at 30, 40, 50 miles an hour, a shoal of birds, a pouring sheaf of identical black grains against bright clouds.

There was no way to tell one bird from another, nor to watch them do anything other than move from place to place, although sometimes, if the swifts were flying low over rooftops, I’d see one open its mouth, and that was truly uncanny, because the gape was huge, turning the bird into something uncomfortably like a miniature basking shark.

Even so, watching them with the naked eye was rewarding in how it revealed the dynamism of what before was merely blankness. Swifts weigh about 1½ ounces, and their surfing and tacking against the pressures of oncoming air make visible the movings of the atmosphere.

They still seem to me the closest things to aliens on Earth. I’ve seen them up close now, held a live grounded adult in my hands before letting it fall back into the sky. You know those deep-sea fish dragged by nets from fathoms of blackness, how obvious it is that they aren’t supposed to exist where we are? The adult swift was like that in reverse. Its frame was tough and spare, and its feathers were bleached by the sun.

Its eyes seemed unable to focus on me, as if it were an entity from an alternate universe whose senses couldn’t quite map onto our phenomenal world. Time ran differently for this creature. If you record swifts’ high-pitched, insistent screaming and slow it down to human speed, you can hear what their voices sound like as they speak to one another: a wild, bubbling, rising and falling call, something like the song of common loons.

Often, during stressful times when I was small — while changing schools, when bullied or after my parents had argued — I’d lie in bed before I fell asleep and count in my head all the different layers between me and the center of the earth: crust, mantle, outer core, inner core.

Then I’d think upward in expanding rings of thinning air: troposphere, stratosphere, mesosphere, thermosphere, exosphere. Miles beneath me was molten rock, miles above me limitless dust and vacancy, and there I’d lie with the warm blanket of the troposphere over me and a red cotton duvet cover too, and the smell of the night’s dinner lingering upstairs, and downstairs the sound of my mother busy at her typewriter.

This evening ritual wasn’t a test of how much I could keep in my mind at once, or of how far I could send my imagination. It had something of the power of incantation, but it did not seem a compulsion, and it was not a prayer. No matter how tightly the day’s bad things had gripped me, there was so much up there above me, so much below, so many places and states that were implacable, unreachable, entirely uninterested in human affairs.

Listing them one by one built imaginative sanctuary between walls of unknowing knowns. It helped in other ways too. Sleeping was like losing time, somehow like not being alive, and drifting into it at night there sometimes came a panic that I might not find my way back from wherever I had gone. My own private vespers felt a little like counting the steps up a flight of steep stairs. I needed to know where I was. It was a way of bringing me home.

Swifts nest in obscure places, in dark and cramped spaces: hollows beneath roof tiles, behind the intakes for ventilation shafts, in the towers of churches. To reach them, they fly straight at the entrance holes and enter seemingly at full tilt. Their nests are made of things snatched from the air: strands of dried grass pulled aloft by thermals; molted pigeon-breast feathers; flower petals, leaves, scraps of paper, even butterflies.

During World War II, swifts in Denmark and Italy grabbed chaff, reflective scraps of tinfoil dropped from aircraft to confuse enemy radar, flashing and twirling as it fell. They mate on the wing. And while young martins and swallows return to their nests after their first flights, young swifts do not. As soon as they tip themselves free of the nest hole, they start flying, and they will not stop flying for two or three years, bathing in rain, feeding on airborne insects, winnowing fast and low to scoop fat mouthfuls of water from lakes and rivers.
Common swifts spend only a few months on their breeding grounds, another few months in winter over the forests and fields of sub-Saharan Africa, and the rest of the time they’re moving, making a mockery of borders. To avoid heavy rain, which makes it impossible for them to feed, swifts with nests in English roofs will fly clockwise around low-pressure systems, traveling across Europe and back again.

They love to assemble in the complicated, unstable air behind weather depressions to feast upon the abundance of insects there. They depart us quietly. By the second week of August, the skies around my home are suddenly empty, after which I’ll see the occasional single straggler and think: That’s it. That’s the last one, and hungrily watch it rise and glide through turbulent summer air.

On warm summer evenings, swifts that aren’t sitting on eggs or tending their chicks fly low and fast, screaming in speeding packs around rooftops and spires. Later they gather higher in the sky, their calls now so attenuated by air and distance that to the ear they corrode into something that seems less than sound, to suspicions of dust and glass. And then, all at once, as if summoned by a call or a bell, they fall silent and rise higher and higher until they disappear from view.

These ascents are called vespers flights, or vesper flights, after the Latin vesper for evening.

Vespers are evening devotional prayers, the last and most solemn of the day, and I have always thought “vesper flights” the most beautiful phrase, an ever-falling blue. Many times I’ve tried to see them do it. But always the dark got too deep, or the birds skated too wide and far across the sky for me to follow.

For years we thought vesper flights were simply swifts flying higher up to sleep on the wind. Like other birds, they can put half of their brain to sleep, with the other half awake. But it’s possible that swifts properly sleep up there too, drift into REM sleep in which flying is automatic, at least for short periods. During World War I, a French aviator on special night operations cut his engine at 10,000 feet and glided down in silent, close circles over enemy lines, a light wind against him, the full moon overhead.

“We suddenly found ourselves,” he wrote, “among a strange flight of birds which seemed to be motionless, or at least showed no noticeable reaction. They were widely scattered and only a few yards below the aircraft, showing up against a white sea of cloud underneath.”

He had flown into a small party of swifts in deep sleep, miniature black stars illuminated by the reflected light of the moon. He managed to catch two — I know this is impossible, but I like to imagine that he or his navigator simply stretched out a hand and picked them gently from the air — and one swift was pulled dead from the engine after the flight returned to earth. The remote air, the coldness, the stillness and the high birds over white cloud suspended in sleep. It’s an image that drifts in and out of my dreams.

In the summer of 1979, an aviator, ecologist and expert in the science of aircraft bird strikes named Luit Buurma began making radar observations in the Netherlands for flight-safety purposes. His plots showed vast flocks of birds over the wide waters of the Ijsselmeer that turned out to be swifts from Amsterdam and the surrounding region.

In the evening, they flew toward the lake, and between 9 and 10 o’clock they hawked low over the water to feed upon swarms of freshwater midges. Just after 10, they began to rise, until 15 minutes later, all were more than 600 feet high, gathered together in dense, wheeling flocks.

Then the ascent began: five minutes later they were out of sight, and their vesper flights took them to heights of up to 6,000 feet. Using a special data processor linked to a large military air-defense radar in the north of Friesland to more closely study their movements, Buurma discovered that swifts weren’t staying up there to sleep.

In the hours after midnight, they came down once again to feed over the water. It turns out that swifts, beloved genii locorum of bright summer streets, are just as much nocturnal creatures of thick summer darkness.

But Buurma made another discovery: Swifts weren’t just making vesper flights in the evenings.

They made them again just before dawn. Twice a day, when light levels exactly mirror each other, swifts rise and reach the apex of their flights at nautical twilight.

Since Buurma’s observations, other scientists have studied these ascents and speculated on their purpose. Adriaan Dokter, an ecologist with a background in physics, has used Doppler weather radar to find out more about this phenomenon. He and his co-authors have written that swifts might be profiling the air as they rise through it, gathering information on air temperature and the speed and direction of the wind.

Their vesper flights take them to the top of what is called the convective boundary layer. The C.B.L. is the humid, hazy part of the atmosphere where the ground’s heating by the sun produces rising and falling convective currents, blossoming thermals of hot air; it’s the zone of fair-weather cumulus clouds and everyday life for swifts.

Once swifts crest the top of this layer, they are exposed to a flow of wind that’s unaffected by the landscape below but is determined instead by the movements of large-scale weather systems. By flying to these heights, swifts cannot only see the distant clouds of oncoming frontal systems on the twilit horizon, but they can also use the wind itself to assess the possible future courses of these systems. What they are doing is forecasting the weather.

And they are doing more. As Dokter and his colleagues write, migratory birds orient themselves through a complex of interacting compass mechanisms. During vesper flights, swifts have access to them all. At this panoptic height, they can see the scattered patterns of the stars overhead, and at the same time they can calibrate their magnetic compasses, getting their bearings according to the light-polarization patterns that are strongest and clearest in twilit skies.

Stars, wind, polarized light, magnetic cues, the distant stacks of clouds a hundred miles out, clear cold air, and below them the hush of a world tilting toward sleep or waking toward dawn.

What they are doing is flying so high that they can work out exactly where they are, to know what they should do next. They’re quietly, perfectly, orienting themselves.

The behavioral ecologist Cecilia Nilsson and her team have discovered that swifts don’t make these flights alone. They ascend as flocks every evening before singly drifting down, while in the morning they fly up alone and return to earth together. To orient themselves correctly, to make the right decisions, they need to pay attention not only to the cues of the world around them but also to one another.

Nilsson and her colleagues hypothesize that swifts on their vesper flights are working according to what is called the many-wrongs principle. That is, they’re averaging all their individual assessments in order to reach the best navigational decision.

If you’re in a flock, decisions about what to do next are improved if you exchange information with those around you. We can speak to one another; what swifts do is pay attention to what other swifts are doing. And in the end it can be as simple as this: They follow one another.

The realm of my own life is the quotidian, the everyday, where I sleep and eat and work and think. Until now, I’ve been privileged enough to experience it as a place of relative quiet. It’s a space of rising and falling hopes and worries, costs and benefits, plans and distractions, and it can batter and distract me, just as high winds and rainfall send swifts off-course. Sometimes it’s a hard place to be, but it’s home to me.

Thinking about swifts has made me think more carefully about the ways in which I’ve dealt with difficulty. When I was small, I comforted myself with thoughts of layers of rising air; later I hid myself among the whispers of recorded works of fiction, helping myself fall asleep by playing audiobooks on my phone.

We all have our defenses. Some of them are self-defeating, but others are occasions for joy: the absorption of a hobby, the writing of a poem, speeding on a Harley, the slow assembly of a collection of records or shells.

“The best thing for being sad,” said T.H. White’s Merlyn, “is to learn something.” As my friend Christina says, all of us have to live our lives most of the time inside the protective structures that we have built; none of us can bear too much reality.

And with the coronavirus pandemic’s terrifying grip on the globe, as so many of us cling desperately to the remnants of what we assumed would always be normality — sometimes in ways that put us, our loved ones and others in danger — my usual defenses against difficulty have begun to feel uncomfortably provisional and precarious.

Swifts have, of late, become my fable of community, teaching us about how to make right decisions in the face of oncoming bad weather. They aren’t always cresting the atmospheric boundary layer at dizzying heights; most of the time they are living below it in thick and complicated air.

That’s where they feed and mate and bathe and drink and are. But to find out about the important things that will affect their lives, they must go higher to survey the wider scene, and there communicate with others about the larger forces impinging on their realm.

Not all of us need to make that climb, just as many swifts eschew their vesper flights because they are occupied with eggs and young — but surely some of us are required, by dint of flourishing life and the well-being of us all, to look clearly at the things that are so easily obscured by the everyday.

To take time to see the things we need to set our courses toward or against; the things we need to think about to know what we should do next. To trust in careful observation and expertise, in its sharing for the common good. When I read the news and grieve, my mind has more than once turned to vesper flights, to the strength and purpose that can arise from the collaboration of numberless frail and multitudinous souls.

If only we could have seen the clouds that sat like dark rubble on our own horizon for what they were; if only we could have worked together to communicate the urgency of what they would become.

Helen Macdonald is a contributing writer for the magazine and the author of the best-selling memoir “H Is for Hawk.” Her article this week is adapted from her new collection of essays, “Vesper Flights,” to be published in August.

Responsibility or Ruin

Although the top priority today is to contain the COVID-19 pandemic and mitigate its economic fallout, we must not ignore the long-term implications of the crisis. Our actions now determine the fate of all other species on the planet, yet we are not fully in control of nature.

 Joschka Fischer

fischer171_Romy Arroyo FernandezNurPhoto via Getty Images_protest

BERLIN – After many months, the global economy is still reeling from the shock of the COVID-19 pandemic. Never before in peacetime has our technology-driven modern society experienced anything remotely similar to this.

Will there be a “second wave,” followed by more waves thereafter? That frightening question is now preoccupying people around the world, but particularly policymakers and national leaders.

Nobody knows the answer. There is no playbook for a scenario in which a high-tech world economy interconnected by global supply chains is brought to its knees by a microscopic pathogen.

It would be a mistake to assess the meaning of this abrupt stop only from a short-term perspective. To be sure, the immediate priority is the fight against COVID-19. The pandemic has had dire economic and social implications for billions of people, and it seems to be hastening a global shift in political and economic power.

But the crisis will also have consequences that last far beyond the coming months and years. It is not unreasonable to expect that future historians will remember 2020 as the beginning of an era of transformative change. This could be the moment when, having realized the consequences of how we have organized our economic systems and engaged with nature, we finally commit to a decisive shift toward sustainability.

In that case, the coronavirus will have served as a timely wake-up call. But if we fail to make the necessary changes, the pandemic of 2020 will mark the beginning of an unprecedented human catastrophe.

One thing is already certain: the crisis should finally disabuse us of our naive trust in human progress. For too long, it has simply been assumed that the adverse unintentional consequences of constant economic growth would be offset or minimized by the fruits of that growth.

Despite the obvious facts and scientists’ warnings, we convinced ourselves that we are ultimately in control of nature. Yet for all our fantasies about colonizing space, the fact is that our power extends only to a certain point, usually defined by the horizon of human interests. Beyond lies everything that we still don’t know.

The immediate lesson of the COVID-19 crisis is that human civilization urgently needs a deeper sense of responsibility. Most of us will have already come to this realization subjectively. The question is whether we will act on it collectively, by launching the changes we need.

There are 7.7 billion people on the planet, and that figure is expected to grow to 9.7 billion by 2050. Our insatiable demand for material resources will continue to grow, implying that our exploitation of the planet will continue to outpace natural systems’ regenerative capacity.

That reality has launched the geological epoch called the Anthropocene: For better or worse, humankind has reached the point at which our own actions will determine the future for almost every other species on the planet.

Such enormous power entails enormous responsibility. Until the beginning of the Industrial Revolution, human activity had little relative impact on the planet itself. Now, it has an utterly disproportionate, all-encompassing effect.

Population growth and mass consumption, driven by exponential improvements in technology, have led to a dramatic decline in natural resources that once seemed inexhaustible. And the emissions from all this production have caused the atmosphere to heat up at breathtaking speed.

We can either assume responsibility and muster the courage and vision to undertake a Great Transformation, or we can wait, with eyes wide open, for the Four Horsemen of the Apocalypse. With COVID-19, the first rider has already appeared.

Faced with such a choice, there are many questions one could ask. To what purpose should we deploy artificial intelligence and quantum computers? Many will be tempted to develop more sophisticated instruments of war, or even more refined consumer platforms. But what we really need is better systems analysis with which to improve public health, conserve the environment, and maintain a habitable climate.3

In the future, feeding humanity will not be possible without protecting the world’s plant life.

Given an unprecedented mass extinction of plant and animal species, we should harbor no illusions about our ability to fulfill this basic task. While the pandemic has taught most people to heed scientific advice in certain contexts, we may remain in denial when it comes to even more dangerous developments such as climate change.

Inevitably, leading the Great Transformation will be a task for the world’s most highly developed economies, because they have the necessary know-how and financial resources. Among them, Western democracies, in particular, must take seriously the idea of freedom that they purport to represent.

Freedom and responsibility are tightly linked: Those who desire freedom shirk their responsibilities at their own peril. The COVID-19 crisis has made this plain: to avoid lockdowns and other restrictions, one may first have to abide by them.

There is one more byproduct of the crisis that cannot be ignored. The United States and China are currently moving toward a confrontation over global leadership. But what will tomorrow’s world even look like?

Will power be defined primarily by military superiority, as in the past? Or will it be tied to completely new and fundamentally different sources? Will a traditional understanding of power even still be what holds the world together?

Europe has been offered an unexpected opportunity, provided that it doesn’t bet on superpower competition. Instead, it must gather the courage to set the example of collective responsibility that humanity needs.

Joschka Fischer was German Foreign Minister and Vice Chancellor from 1998-2005, a term marked by Germany's strong support for NATO's intervention in Kosovo in 1999, followed by its opposition to the war in Iraq. Fischer entered electoral politics after participating in the anti-establishment protests of the 1960s and 1970s, and played a key role in founding Germany's Green Party, which he led for almost two decades.