What COVID19’s Economic Slowdown means for the Future — Part 3 of 3
Part 1 of this article covered the projected scale of humanity’s economy in the future, if we continue along our present path. Part 2 covered the rationale of why we’re on this path, and why we should reconsider following it. This section will discuss the possible alternatives.
In 2015 the United Nations drafted a set of “Sustainability Goals” to guide the planet towards a seemingly sustainable future. Most of the goals make perfect sense but, somewhat ironically, goal number eight explicitly calls for “Decent work and Economic Growth”.
The rationale of this goal is based on a theory called “decoupling”. The presumption is that there is a technological solution waiting to be invented that can separate economic growth from physical demands on Earth’s biosystems. Once this solution is developed, we should be able to maintain growth indefinitely, while not using any more energy or consuming any more resources.
It’s important to differentiate between relative decoupling and absolute decoupling. Relative decoupling refers to technology and systems that reduce the relative environmental costs of growth and production. Absolute decoupling imagines a technology or system that can produce growth with no environmental impact at all, or even with a positive environmental impact.
Relative decoupling already exists, and has been part of technological progress for ages. Energy-efficient light bulbs are one of the most obvious examples. But absolute decoupling is still only a concept that advocates of “green growth” or “sustainable growth” hope will someday be invented. There is heavy criticism of the concept among ecologists, and the idea has been compared to “jumping off a cliff and hoping that someone invents anti-gravity before you land.”
Our current economic plan is like jumping off a cliff and hoping that someone invents anti-gravity before you land.
The only other option is for us to embrace an economic model that is not dependent on growth.
This is a daunting concept, given the obstacles that are currently baked into our systems, and the structural incentive of the political class to take the exact opposite path. But there is a massive amount of research done into how such a system would function, and what we would need to change in order to achieve it. Luckily, most of the projections are that it would create a world that was positively Utopian, and considerably happier than the present.
There’s strong evidence that actual voters are willing, or even eager, for such a change. Recent polling of Canadians shows that three-quarters of us imagine that the post-COVID19 world will involve “broad transformations of our society”, and that most are hopeful that we will become “more societally focused, stressing health and wellbeing”. Other recent studies show that a majority of Canadians believe that prosperity is possible without economic growth, and that two-fifths would support a politician who did not make growth a policy goal.
The same beliefs are being displayed in other countries as well. This has been a key platform piece of global Green parties for decades, but public opinion is now shifting towards these ideas, and they are being adopted by parties of other ideologies. New Zealand’s Labour-Green coalition government made headlines last year when it announced that it’s budget would focus on wellbeing rather than growth. The Green Mayor of Amsterdam recently announced that the post-COVID19 recovery plan for the city would embrace Doughnut Economics. Germany’s Greens have recently been jockeying for the spot of the country’s most popular party, meaning these concepts may be implemented in the world’s fourth biggest economy.
Most of us think that we are on the cusp of a broad transformation. Out of all this sadness, economic grief, and death, can we imagine the possibility that this will allow us to do some of the profound changes that otherwise would have been impossible? (Ekos Politics)
Many of the policies that would need to be implemented are huge and transformative. One of the main pillars that is often included in models is the Universal Basic Income (UBI), a direct payment of money to every citizen with no preconditions. This sum would be balanced to be enough to satisfy a person’s basic needs, and would mean that they don’t need to work in order to survive.
The concept of work itself would need to change in such a system. Many of the tests of UBI so far have focused on whether it would be an incentive for people to find work, or if it would dissuade them from doing so. This test misses part of the point of UBI, which is to build a system in which we are no longer defined by our work and productivity inside the market system.
The UBI would, of course, need to be paid for. Part of the projected funding of the program would come from supplanting existing expenditures, which would become obsolete with a UBI system. But since work would become less important in a non-growing economy, there would likely need to be a fairly massive shift in how we perform taxation. We would want to move away from income taxation and towards alternate models such as land-value taxes (LVT), resource-usage taxes such as carbon pricing, and wealth and inheritance taxes.
Banking itself would need to change, so that it no longer produced a constantly inflating economy. This would mean moving to a system of full-reserve banking. This would massively change our financial sector, and remove the power to create new money from banks. Under such a system, banks would return to how they were originally envisioned: as intermediaries between lenders and borrowers. Banks would derive their profits by taking a commission on the activity they perform on behalf of their clients, rather than the many speculative methods that banks currently employ such as bonds, securities, and derivatives.
Politics itself would likely need an overhaul in order to produce a system that was focused on long-term health rather than immediate four-year returns. This is one of the most difficult aspects of the transition to imagine, because the long-term culpability of the government needs to be balanced with our ability as voters to replace a government that we believe isn’t acting in our best interest. Part of this solution ties into the idea of the Universal Basic Income, and a diminished focus on work. A populace that has more free-time could devote more of that time to understanding and evaluating political issues and policies, rather than only checking-in once every few years during election time. A populace that participated more in its politics could hopefully avoid the trap of falling for charismatic leaders with catchy sound bites but terrible ideas.
This type of economy and society is what the “new normal” could look like, but it’s a bold change of direction. The global COVID19 pandemic is showing us the many ways in which our system is failing us, and opening the door to trying something different. At the same time, the climate crisis persists.
It’s possible that one crisis will give us the collective will to solve the other.
