There is nothing quite like a crisis to make us re-evaluate our priorities, individually and as societies. As COVID-19 sweeps the globe, those who can afford to are reprioritizing spending assiduously — stocking up on groceries, health and hygiene products, and forgoing daily coffees, stadium seats and holidays. The reprioritization process is vicious. We are overloading ‘essential’ workers, from healthcare professionals and medical researchers to those supplying our grocery chains and pharmacies, while tourism operators, sports bodies and artists are left to fend for themselves as their livelihoods disappear. As the crisis worsens, the list of ‘essential’ jobs gets shorter, and the pressure on them increases. We are getting a small taste of what the many have always known — that we can live without weekend getaways, dining out and live entertainment, but not without basic food, hygiene and healthcare. We are being forced, on a broader scale than for most economic downturns, to adjust our perceptions of what is ‘essential’.
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Although it may be tempting to blame financial sectors for the ensuing economic fallout; this blame should be moderated. Yes, in the coming months, bankers will foreclose on home loans, wealth managers will lose retiree savings and insurers will refuse to pay out insurance claims. Yes, there will be cases where this should not occur. But we should be careful of the log in our own eye. We are part of the same wealthy societies that have gone from spending vast amounts of money on things we do not need, to stockpiling what we do — to the point that the shelves are empty for the elderly and disabled in our local communities, not to mention the wider global community. If we complained that the 2007–2009 global financial crisis started because the financial system outgrew the real economy, we cannot now complain that the financial system is shrinking with it.
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However, financial sectors can help us build more inclusive and sustainable post-pandemic economies. As they are naturally all about the future. Where financial sectors put our money today affects who has what tomorrow. The sooner financial sectors figure out what we want, and what we are prepared to risk getting it, the sooner they can finance it. This is why functioning financial systems make economies more inclusive and sustainable — they facilitate participation and reduce waste on things that we will regret later.
But if getting us working is good, getting us working on essentials is better. It should not take a once-in-a-lifetime crisis for us to realise that some things are more essential to our well-being than others. Now countless people are paying the price, both those who are being overworked and those lining up for unemployment benefits. While lockdowns are unique to pandemics, it is not unusual for leisure, and other industries supplying ‘less essential’ goods and services, to lay off workers in an economic crisis. We should focus our resources on the things we need, and on building the social cohesion that will enable us to better weather whatever crisis comes next, together.
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Financial sectors cannot do this without us — anymore than governments alone can stop the spread of COVID-19. But like governments, they can lead. They do not have to passively predict whether we will go straight back to our old ways, which have long perpetuated the structures of overwork and unemployment that we are merely seeing in grander proportions during this crisis. They have the knowledge as well as the economic, social and political power to influence what we want and what we are prepared to risk, through their jobs, and relationships with governments and the media.
Academia should assist financial sectors adopting this leadership role. As my article in International Affairs argues, we may have been fighting a losing battle trying to control the power of financial sectors. We cannot control how financial sectors use their knowledge and power, any more than we can control whether our colleagues wash their hands. But we can provide soap and clean water. We have built extensive knowledge of financial sector power in the years since the global financial crisis. Now let us use the years following this crisis to build on this knowledge by working out how best to direct this power towards a more inclusive and sustainable future.
Lee-Anne Sim is a PhD Student at the Australian National University, with more than ten years of professional experience in finance regulation, tax and fiscal policy.
Her recent article, ‘Influencing the Social Impact of Financial Systems: Alternative Strategies’, was published in the March 2020 issue of International Affairs.
The article was also presented at the 2020 Winter Institute, hosted at New York University as part of the theme Beyond Identity Politics: Global Challenges and Humanistic Responses.
Read the article online here.