Robert Costanza: The likelihood of a global economic crisis is high
June 6, 2020 года
The ongoing COVID-19 pandemic continues to change the usual lives of people all around the world. Following the changes in the lives of consumers, the world economy itself is also changing. The authorities and residents of all the countries perceive the threat of the pandemic itself and the economic consequences of the prolonged quarantine differently.
On April 12, Wikinews asked Professor Robert Costanza, a member of the Club of Rome and the Royal Society of Arts, to comment on current events. Having agreed to an interview, Costanza sent the text of his future article in the English-language magazine «Solutions» to Roman Balabin — Costanza offered to publish it in Russian. In his article, a professor at the School of Public Policy at the Australian National University and a former director of the Institute of Environmental Economics at the University of Vermont, Costanza outlined his vision of the challenges and opportunities that the world has been given by this pandemic. On May 15, his article «COVID-19 And The Transition To A Sustainable Wellbeing Economy» was published under a free license.
The ongoing COVID-19 pandemic has focused attention on human health in the short term. How do we slow the spread of the virus and contain the damage? It has also revealed the dependence of the global economy on long supply chains and high demand for services. The likelihood of a global economic crisis caused by the virus is high. Governments around the world are putting in place emergency stimulus packages aimed at preventing this, but we may be missing the real lessons the crisis has to teach.
The first is that human health and sustainable wellbeing should be the real goals of our increasingly interlinked and interdependent economic, social, and natural systems. The headlong pursuit of GDP growth at all costs has blinded many countries to the other factors that contribute to sustainable wellbeing and the hidden costs of GDP addiction. Countries are investing massive amounts to keep GDP from falling in the short run, while ignoring the fact that GDP was never designed to measure societal wellbeing and is an increasingly poor guide to real progress. The vast majority of GDP growth is now going to the top 1 % of the population and growing inequality is having severe negative effects on community wellbeing. People who are just scraping by cannot afford health care and cannot afford to miss work, even when they are sick. This is a major issue during the current COVID-19 crisis. It should be obvious that a more equitable distribution of income and wealth and a stronger social safety net would help control future pandemics and would also improve sustainable human wellbeing at all times.
The other major problem with our blind pursuit of GDP growth is that it ignores the damages to our ecological life support system that our current approach to growth causes. Climate disruption is only the best known of these. Natural ecosystems provide non-marketed benefits that support sustainable human wellbeing in a complex variety of ways, including flood and storm protection, water supply, recreation, carbon sequestration, and many others. The value of these services globally has been estimated to total $US 125 trillion in 2011, significantly larger than global GDP at the time. In addition, we are losing $US 20 trillion a year of ecosystem services due to changes in land use and mismanagement, including desertification, loss of wetlands and coral reefs, deforestation, flooding, and bushfires.
To address these problems, we need a fundamental shift in our economic paradigm and our approach to development. We need an economy and society based achieving sustainable wellbeing with dignity and fairness for humans and the rest of nature. This is in stark contrast to current economies that are wedded to a very narrow vision of development — indiscriminate growth of GDP that is not shared and has severe negative side effects.
A wellbeing economy on the other hand is embedded in society and the rest of nature. It must be understood and managed as an integrated, interdependent system of social relations that pursues balance and prosperity, rather than the maximization of production and consumption. It is an economy that values both social and natural dimensions as fundamental components of national wealth and as critical factors in determining wellbeing.
Wellbeing is the outcome of a convergence of factors, including good human mental and physical health, equitable access to government and community institutions, racial and social justice, good social relationships and a flourishing natural environment. Only a holistic approach to prosperity can achieve and sustain wellbeing. A system of economic governance aimed at promoting wellbeing will therefore account for all the impacts (both positive and negative) of economic activity. This includes valuing goods and services derived from a healthy society (social capital) and a thriving biosphere (natural capital). Social and natural capital are part of the commons. They are not (and should not be) owned by anyone in particular, but instead belong to everyone and make significant contributions to sustainable wellbeing.
Transformative change often happens when a crisis opens the door. Can we use the COVID-19 crisis to confront the questions now being asked of the current system, which has caused ongoing economic, financial, social, and ecological problems? To make this transformation we need to galvanize a critical mass and promote tested alternatives that can achieve our common goals. In order to achieve the transformation to the new economy and society we all want, we need to work together as a unified front. The new Wellbeing Economy Alliance (WEAll) is designed to help facilitate that transformation.
WEAll is a global movement of individuals and organizations coalescing around the need to shift economies away from a narrow focus on marketed goods and services (i.e. GDP) to one more broadly focused on sustainable wellbeing. These include activists, NGOs, academics, governments, and entrepreneurs of various types from around the world. There are many espoused versions of these basic ideas using different approaches and languages, but sharing a common goal. The United Nations Sustainable Development Goals (SDGs) are an important step in articulating this common goal. The challenge is to acknowledge, harmonize, and amplify these many initiatives, while allowing a diversity of language to communicate with a variety of audiences.
The ongoing COVID-19 crisis may have a silver lining if it opens the door for the long overdue transition to a world focused on the sustainable wellbeing of humans and the rest of nature — the world we all want.
On May 24, Professor Costanza answered two questions about the long-term effects of COVID on the population:
Roman Balabin: In connection with COVID-19, a number of governments introduced temporary unconditional income for their citizens («helicopter money»). Do you support such social support measures?
Robert Costanza: Yes, we should support people financially during the crisis. But what has perhaps been more successful is giving money to businesses to keep people employed on paid leave, rather than paying people after they have lost their jobs. We should also think of this support to companies as reclaiming a public stake, not a handout.
RB: Will such measures remain after the epidemic?
RC: The idea of Universal Basic Income (UBI) is being discussed in several countries. I prefer to think of «guaranteed jobs and income». People should have a right to fulfilling employment if they can work and enough income to support basic needs if they can’t. Franklin D. Roosevelt proposed just such a right in his «Second Bill of Rights» in 1944. Versions are also part of several «Green New Deal» proposals and embedded in the UN Sustainable Development Goals. There is much work to be done to transform our economies and societies to sustainable wellbeing based on renewable energy. Our policies should facilitate putting everyone who can to work on this transformation and making sure that everyone has enough. There is a Swedish word: «Lagom», which means that everyone has enough with no sacrifice. We need a Lagom economy, not a «growth at all costs» economy.
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