According to her son, Eleanor Roosevelt said the same prayer every night and closed with this wish: ‘save us from ourselves and show us a vision of a world made new.’ This prayer reminds me that in the midst of managing crisis we must also keep one eye on the better future we want to create.
COVID-19 is both a public health emergency, bringing personal tragedy into households across the globe, and an economic crisis. GDP and government revenues are falling as unemployment and poverty rise. The European Commission is projecting a 7.5% drop in growth this year with unemployment rising to at least 9%. Irish GDP is expected to decline by at least 10%, while the April unemployment rate jumped to a new record high of 28.2%. Last week our worst-case scenario looked like the Great Depression. This week, the Bank of England announced British GDP will likely fall by 14% – a fall in welfare last seen in 1706!
It is natural that we want this nightmare to end and that we yearn for a return to normal. But we must remember normal wasn’t working. The economy of December 2019 generated exorbitant wealth for some while leaving 820 million people to suffer from chronic hunger; it resulted in more than 9 million people dying from air pollution; and over 6 million children losing their lives to preventable illnesses. In addition, instead of addressing the climate crisis, the economy of December 2019 was creating an uninhabitable Earth.
We must resist the temptation to re-establish a pattern of environmental destruction, social injustice and economic inequality and must instead ‘reinvent’ – turn this moment of crisis into an opportunity to build a 21st century economy and society – one that is low-carbon, resilient and inclusive. The stimulus packages under development are our best and possibly last chance.
The world’s largest economies have begun to design and deploy economic stimulus measures that will surpass €5 trillion within the next eight weeks. This includes a €1 trillion package proposed by the European Commission. This is just the beginning. More spending will come as the crisis deepens and how we spend this money will shape our world for at least a generation.
Stimulus packages are typically designed to mobilise money quickly; ensure that expenditure is temporary; and target a specific problem such as recapitalising banks or boosting consumer spending. They often dump money into the real economy guided by panic rather than purpose. This time, our efforts need to be guided by a unified moral purpose – namely to build a low-carbon, resilient and inclusive economy.
A low-carbon economy provides an opportunity to emerge from the COVID-19 pandemic while addressing the second defining crisis of our era – global climate change. We must reduce our greenhouse gas emissions by 7% each year and 45% by the end of this decade. Investment in six areas – renewable energy, energy efficiency, low-emissions transport, sustainable land-use, food loss and waste, and improved urban development – gets the job done. These investments address urban sprawl, traffic congestion, affordable housing and air pollution. They increase food security and nutrition while tackling obesity. Most importantly, they create jobs and place Ireland at the centre of tomorrow’s economy. Taken together, ‘green stimulus’ packages could deliver at least €24 trillion in net global economic benefits and create more than 65 million new low-carbon jobs by 2030. We can claim some of those jobs for Ireland by using stimulus to fund research and development, take on early-stage risk and protect private investment in commercial projects. We can create green infrastructure banks and rural development banks to invest in entrepreneurs; accelerate capital flow to sustainable start-ups; and create the skilled workforce needed to transform our energy, transport and food systems. We can insist that any company receiving public money in a bail-out or contracts through public procurement must reduce their own carbon footprint.
COVID-19 brings our failure to build a resilient economy and society into sharp relief. We underinvested in our healthcare system, celebrated employers who offered zero-hour contracts, and neglected to address intersecting political, social and economic inequalities. Our economic stimulus must therefore be an investment in societal resilience. This means reinventing the social contract with renewed focus on health and unemployment benefits, labour standards, and social care services.
Addressing the Nation on St Patrick’s Day, the Taoiseach said ‘our economy will bounce back, but the damage will be significant and lasting. The bill will be enormous, and it may take years to pay it.’ During past crises the bill has been handed to those living on the margins through austerity and cuts to social programmes. However, an inclusive economy requires solidarity as well as stimulus. So this time, companies receiving government support should pay their fair share of taxes, and refrain from using public money for stock buybacks, which reward shareholders and increase executive pay but offer little to workers and the real economy. Ireland should match Poland and Denmark by banning companies registered in tax havens from accessing financial aid and should go one step further by demanding the repatriation of more than €5 trillion of global wealth sheltered in tax havens. We should lead a global coalition to phase out fossil fuel subsidies and expand carbon pricing at home to shift the burden for economic recovery from incomes to polluters. In developing countries, COVID-19 is driving the flight of capital, the collapse of currencies, the fall in commodity prices, disruption in supply chains, and exacerbating the burden of existing debt. Ireland should therefore champion a global solidarity package to support developing countries with a commitment to spend 0.7% of national income on overseas development aid.
Some may call this a ‘Green New Deal’ – in truth it is a down payment on a 21st century economy. It is saving ourselves with a vision of a world made new.
Dr. Edward Cameron is a senior advisor to companies, philanthropies, governments and global non-profits.
Feature picture: Climate change protesters march in Paris streets by Jeanne Menjoulet. Licensed under CC BY-NC-ND 2.0
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