Covid-19 and 'Green New Deal' - I

The multiple failings of neoliberal agenda since its beginnings in the late 1970s - manifested in economic policies, including those of structural adjustment programmes by multilateral institutions like International Monetary Fund (IMF) and backed by manifestos of numerous political parties overall for many years - were, unfortunately, not enough to understand the consequences of this agenda, whereby primarily, consumption globally going on steroids, 'profit over people' becoming a norm rather than an exception, and income and wealth distribution acutely perpetuating into the hands of few almost everywhere.

The world missed a chance during all those years to reshape the economy and before it politics that formulated policy broadly away from markets, which delivered 'little for many and a lot for few', and put the climate crisis on the fast-track. Another opportunity to turn the system to work for all, and not just a few, was squandered away after the Global Financial Crisis 2007/08 (GFC). Can the world afford to miss yet another chance - especially when climate change crisis has significantly become an existential threat - and not move towards a 'Green New Deal'? Indeed not.

The world would have been very different, perhaps a lot more profoundly different, especially in terms of income inequality, politics of xenophobia and fear mongering, and climate crisis, had President Roosevelt not come up with the original 'New Deal' in the first place, which shifted political discourse and public policy away from the 'prolonged misery shock' seen in the advanced countries after the Great Depression of the 1930s with the 'New Deal' having positive repercussions for developing countries as well, both in terms of bringing social policy and welfare aspects centre-stage in development policy. Yet, the rise of neoliberal policy almost everywhere dismantled the positive effects of the 'New Deal' and its broader impact in the next few decades; and by now immensely raising the need for not just a 'New Deal', but a 'Green New Deal'.

At a time when Covid-19 was just appearing on world stage late last year, world-renowned scholar Naomi Klein in her latest book 'On fire: the (burning) case for a Green New Deal' like many voices globally, vociferously put forward the case in these words: 'The idea is a simple one: in the process of transforming the infrastructure of our societies... humanity has a once-in-a-century chance to fix an economic model that is failing the majority of people on multiple fronts... from wage stagnation to gaping inequalities to crumbling services to the breakdown of any semblance of social cohesion... a Green New Deal could instill a sense of collective higher purpose... [and] takes its inspiration from Franklin Delano Roosevelt's original New Deal, which responded to the misery and breakdown of the Great Depression with a flurry of policies and public investments...'

At the same time, it needs to be understood that unlike what the 'Green New Deal' is being thought of by governments generally, and in doing so they are immensely limiting the scope of what it really should encompass, the 'Green New Deal' is not a 'stimulus package' but rather a 'survival package' as a leading political economic thinker and an opinion writer for the Guardian, George Monbiot calls it, and points out that 'In other words, let's have what many people were calling for long before this disaster hit: a 'Green New Deal'. But please let's stop describing it as a stimulus package. We have stimulated consumption too much over the past century, which is why we face environmental disaster. Let us call it a survival package, whose purpose is to provide incomes, distribute wealth and avoid catastrophe, without stoking perpetual economic growth. Bail out the people, not the corporations. Bail out the living world, not its destroyers. Let's not waste our second chance.'

The neoliberal assault, and its consequences in terms of first individual economies more and more working for a few in many countries, secondly, the GFC happening as a result of extremely irresponsible financial sector and weak government oversight/regulations, and now the immense loss of life and economy caused by Covid-19 due primarily to the unprepared policy on the back of wrong market signals (left primarily unregulated), all point towards a different policy response from public policy, whereby governments can no longer continue to be the 'nanny state'- a phenomenon highlighted by renowned scholar, Dean Banker, in his 2006 published book 'The conservative nanny state: how the rich use the government to stay rich and get richer' - for the already super wealthy sectors like oil, aviation, and banks, and continue to care less for the workers; all those people in need for financial help in general, and the climate, which is changing for the worse at an alarming rate. For instance, as George Monbiot points out 'The [British] government has given 'easyJet' a £600m loan even though, just a few weeks ago, the company frittered away £171m in dividends: profit is privatised, risk is socialised.'

Sadly, the governments almost everywhere are still not smelling the coffee - perhaps because of the deep pockets of the corporate world and overall influence/wealth of elites/oligarchs, in turn having more say in terms of election funding/results than the general electorate - and are likely to squander away the opportunity by not learning from the dangerous consequences of the neoliberal assault on economies and politics, and how it led to GFC, and now the pandemic, and the fast deteriorating climate. In this regard, George Monbiot, argued in his recent piece 'Airlines and oil giants are on the brink. No government should offer them a lifeline' that similar to the situation of GFC, perhaps even more so due to the scale of devastation under the pandemic, governments everywhere have an opportunity to fix the system towards a 'Green New Deal', because corporate interests everywhere are dependent on government for bailouts.

To quote, he indicated: 'Governments should provide financial support to company workers while refashioning the economy to provide new jobs in different sectors. They should prop up only those sectors that will help secure the survival of humanity and the rest of the living world...This is our second great chance to do things differently. It could be our last. The first, in 2008, was spectacularly squandered. Vast amounts of public money were spent reassembling the filthy old economy, while ensuring that wealth remained in the hands of the rich. Today, many governments appear determined to repeat that catastrophic mistake... But the dependency of enterprises on public policy has seldom been greater in capitalist nations than it is today. Many major industries are now entirely beholden to the state for their survival...

The Bank of England has decided to buy debt from oil companies such as BP, Shell and Total... In the US, the first bailout includes $25 billion for airlines. Overall, the bailout involves sucking as much oil as possible into strategic petroleum reserves and sweeping away pollution laws, while freezing out renewable energy. Several European countries are seeking to rescue their airlines and car manufacturers.'

(To be continued)

(The writer holds PhD in Economics from the University of Barcelona; he previously worked at International Monetary Fund)

He tweets@omerjaved7