Let’s face it, the COVID-19 pandemic took us all by surprise. Few envisioned something like this happening when in hindsight it seemed inevitable. As many have remarked, it’s like we’re living in a movie. You’re no doubt acutely aware of the harm the virus has inflicted on people, businesses and the economies they comprise. A lot of questions that were already being asked about society, capitalism especially, are now being asked more loudly. But, as historian Walter Schiedel shows, pandemics and other great shocks can be catalysts for positive change, and this could well be the case here too.Finn Bartram reports.
Governments are once again in control
As with the 2008 financial crisis, governments and central banks are having to step in to stop the wheels coming off completely. Aid packages and ‘financial bazookas’ in the form of quantitative easing have once again been deployed to prop up economies. In short, for many countries, government intervention (and borrowing) is back in vogue as citizens look to them for both guidance and security. As such, there is the opportunity for governments to use COVID-19 bailouts and public spending as the initial building blocks of more robust, sustainable economies that can work effectively for people and the planet.
Investing in a green recovery
Like with any investment, governments using public spending projects as an economic stimulus will want to get the best returns possible, and this is where green projects can be the answer. A recent study by the University of Oxford has shown that in the UK energy-efficient programmes such as improving housing insulation or building cycle lanes deliver higher returns on government spending, in the short and long term, than conventional stimulus spending.
Milan recently announced an ambitious scheme to further expand its cycle lanes over the summer and it looks like London is following suit. Governments could also invest in technology infrastructure such as broadband or, dare we say it, 5G to improve working from home capabilities.
Such investments from governments send out clear signals to the private sector that long-term policies are being put in place to facilitate a move to a low-carbon economy, and so private capital would surely follow.
Mitigating future threats
Climate change itself is a looming threat that if unchecked could lead to some pretty dire consequences. Then there is there are other added benefits such as reduced air pollution resulting in healthier, more productive citizens. One of the few positives from COVID-19 the glimpses we’ve got into what a fossil-fuel-free world could look like. Granted we can’t make the switch immediately, but with the right investment now we can make something from this awful crisis.
