Thomas Piketty, whose best-selling work helped put inequality at the core of economic debate, said history is full of examples on how to tackle large public debt, including measures that could also help reduce income disparities.

The French economist made a big splash in 2014 with his book, “Capital in the Twenty-First Century,” in which he outlines how modern capitalism has benefited the wealthy. He now sees discussions about reviving the world economy as an opportunity “to change the dominant ideology in terms of how you deal with inequality and how you regulate the economy.”

As governments pledge trillions of dollars to help economies survive the worst crisis since the Great Depression, a debate is already brewing between supporters of a return to austerity and those who warn against the impact of premature belt-tightening. The International Monetary Fund expects global debt to jump 13.1 percentage points to 96.4% of gross domestic product.

Piketty, in an interview with Bloomberg Television’s Anna Edwards and Matthew Miller, said while the world has very little experience in dealing with a pandemic of this scale, history has multiple examples of governments that successfully reduced public debt. One example was the massive wealth taxes imposed by Germany and Japan after World War II.

“In terms of large public debt crises we have a lot of precedence, so we know what are the different ways to get rid of a large public debt,” he said. Proposals such as those by Spain’s government for a recovery fund financed through perpetual European Union debt is “the kind of proposal you would not have had before the crisis.”

Sharing the cost of debt costs in Europe will help prevent the region’s most vulnerable economies from spiraling out of control, he said. Wealthier nations such as Germany and the Netherlands have so far opposed plans for joint debt issuance, arguing that it would amount to fiscal transfers.

No Safety Nets

Minouche Shafik, Director of the London School of Economics and a former Bank of England policy maker, echoed Piketty’s view that the crisis will have profound consequences for inequality and the way the economy works.

“What’s different about this crisis is that we’re having a big structural change in our economies, to things like people’s willingness to travel, to people’s preferences for operating digitally,” she said in a separate interview with Bloomberg TV’s Francine Lacqua.

“This crisis has revealed that many many people in our economies have no savings and no employment protection and no safety net supporting them. And the demand for that will grow and there will be a backlash against the sort of extreme flexibility that has occurred in our labor markets. That will require taxes to rise, to pay for that social insurance.”