Press release: Radical reset of economy needed to offset effects of COVID-19

It is vital that the Government takes rapid and concrete steps to stabilise the economy that also ensures protection for those hit hardest by the impacts of COVID-19, an ecological economics group has warned. 

Feasta, the Ireland-based Foundation for the Economics of Sustainability [1], today urged governments to begin distributing cash on a per-capita basis and to take rapid steps to simplify supply chains for essential goods, so as to stabilise the economy and offset the impact of COVID-19.

Measures to alleviate risk advocated by Feasta include a universal basic income; a relaxing of bankruptcy law for the duration of the crisis; an urgent move towards diversification and localisation of agriculture; upstream limits on the production of fossil fuel; and taxation reform [2].

Feasta representatives argue that universal basic income would be an important first step to improving financial security for everyone, regardless of their employment status, and it would not require employers or others to take on debt. They believe the other measures Feasta advocates would not only stabilise the economy and improve overall welfare, but would help to prevent a similar pandemic from breaking out in future.
 
“We need to radically reset the economy in order to help flatten the Coronavirus curve and to prevent supply chains for essential goods from collapsing in the near future,” said Caroline Whyte, an ecological economist and researcher at Feasta. She cited research[1] indicating that a global pandemic could trigger a catastrophic collapse of the world economy, because of the disruption to supply chains, to the financial system and to purchasing power.  

Whyte commented “the measures we’re advocating would not only relieve pressure on the unemployed, workers and their families in the short-term, they would also reduce the development encroachment and loss of biodiversity that are contributing to these pandemics”. 

John Sharry, a psychologist and Feasta trustee, commented “lots of people ( and most economists) are just hoping that we can ‘get through’ the crisis quickly and back to economic normal, when I think it is likely to be much more protracted and painful with economic contraction and collapse on the cards. My worry is that the current government economic actions may exacerbate the problems.” 

Sharry added: “Within the crisis there is an opportunity to move to more resilient, fairer and equitable economic and community systems. The hope is once there is a good understanding of the reality of our situation, a great deal of community cooperation can be unleashed.”

Endnotes

 

1.“Catastrophic Shocks Through Complex Socio-Economic Systems: A Pandemic Perspective”. D. Korowicz, 2013: http://images.feasta.org/2013/07/Catastrophic-shock-pandemic2.pdf2.

2. Basic income would relieve some immediate financial pressure, making it easier for people to adapt to enforced quarantine and keep their children at home, and reducing the pressure on sick workers to go to work and risk spreading an infection. It would also allow for more flexible long-term decision-making. Some types of work have been decimated by this virus, and they may no longer be viable even after the pandemic passes. Widespread new initiatives will likely be necessary.  

Bankruptcy law: These laws need to be temporarily relaxed in order to protect certain vulnerable businesses. See this paper by economist Steve Keen: “A Modern Jubilee as a cure to the financial ills of the Coronavirus”

The diversification and localisation of agriculture: This would minimise the risk of vital supply chains being disrupted owing to worker illness or the need to quarantine, and would create employment to help offset the lay-offs triggered by the virus. It would also make a future pandemic less likely, as evidence suggests that industrialised agriculture is one of the factors triggering the emergence of new pandemics: see Robert T. Jones et. al. “The impact of industrial activities on vector-borne disease transmission”.

Upstream limits on the production of fossil fuel: Evidence also suggests that climate change is a factor in the emergence of new infectious disease. See Colin J Carlson et al “Climate change will drive novel cross-species viral transmission” (January 2020 ). Placing a legal limit on the production and import of fossil fuel and gradually phasing it out over the next three decades would not only help to address this but would also provide clear guidance to investors who will need to re-think their plans after the severe shock the economy has received. See http://www.capglobalcarbon.org for a discussion of how such a programme could work. 

Taxation reform: A shift in taxation away from labour and towards resource use, including a land value tax, would help to slow the rush of reckless and irresponsible development into areas of high ecological value which is undermining biodiversity and increasing the risk of disease outbreaks.  Revenue from these taxes could contribute to a basic income. 
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Featured image source: https://www.freeimages.com/photo/reset-button-1243319

Note: Feasta is a forum for exchanging ideas. By posting on its site Feasta agrees that the ideas expressed by authors are worthy of consideration. However, there is no one ‘Feasta line’. The views of the article do not necessarily represent the views of all Feasta members. 

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