By Malcolm Christie
The world has changed beyond recognition in the last few weeks, at least in terms of economic activity (or lack of it). There has been a sudden halt to most of the things we do to earn a living and to transactions we carry out as part of day-to-day life.
We are having to do without spectator sport, pubs, restaurants, schools (or most of us anyway) and non-essential shops. Instead of going to the local supermarket every day for my newspapers and a few groceries, I now spend hours online, trying to find a delivery slot.
Ironically, this government of low-tax, low-welfare zealots has become more generous with statutory sick pay and is subsidising the private sector’s wage bills. And resources, including jobs and volunteering are being moved from other sectors into health care, food distribution and essential public services.
You might think once we exit the lockdown, life will return to ‘normal’. But I want to challenge that assumption by suggesting that some long-term changes could occur in our economy as a result of the pandemic, even moving the world a bit closer to Green Socialism.
Essence of ‘essential’?
It has been fascinating to watch the government and media trying to define ‘essential’ when it comes to identifying the key workers whose children may continue to go to school, unlike everybody else’s. Is construction essential? And what about the self-employed? How interesting that most of the ‘essential’ workers are in low-paid jobs but only now do many see how important they are.
People are also beginning to value communal action in a way they perhaps didn’t before. Individualism seems almost immoral. One definite upside of the pandemic is the way it’s undermined Mrs Thatcher’s infamous claim that ‘there is no such thing as society.’ In short, the 2020s may come to resemble the late 1940s with a range of collectivist social and economic attitudes.
Universal Basic Income
Some governments have responded to the pandemic by handing out money to the poor and unemployed in a bid to stimulate demand in the economy. They are the people most likely to spend it during a recession. The most efficient way of doing this is to guarantee every citizen a minimum basic income and the best way to eventually pay for it all is through a progressive tax system.
All of this is virtually the opposite of what happened following the 2008 financial crisis, where central banks printed money and gave it to high-street banks to lend, and then the poor paid for it all through prolonged austerity programmes. In the post-pandemic world, universal basic income and progressive taxation may be looked upon favourably by the public. The same goes for home working.
Other long-term changes could involve a collapse in demand for air travel and cruise holidays. The retail sector will probably never return to what it was in 2019. After perhaps months of shopping online, why would anyone choose to go back to the high street or shopping centre? So it is more urgent than ever that online giants such as Amazon are no longer able to evade taxes and oversight.
Making predictions is always highly uncertain. Looking at the past or present and trying to see trends, in order to guess the shape of the future, can be misleading. At a time of crisis this is especially so, as discontinuities become increasingly more common. Even so, it is worth reflecting that a crisis is often a time of political opportunity. Radical and possibly revolutionary changes that were hitherto unthinkable can suddenly take place.
The pandemic is profoundly and permanently changing the national and global economy. Social and political attitudes are changing too. It is sad that it takes a public health crisis for us to realise that individuals are frail and our strength lies in community.
Malcolm Christie is Treasurer of the AGS