In a recent episode of the Finding Genius podcast, Richard Jacobs and I discussed what might happen next in relation to the COVID-19 pandemic. I began from the position that the global vaccination program won’t be perfect, but will gradually get the job done, and that drug companies will be able to update their COVID-19 vaccines to deal with new variants of the virus in a timely fashion. I argued for what we can call a positive exit out of the pandemic: in which states and individuals can start to think and act in post-pandemic ways by the end of 2021, Progress will, of course, be uneven, and there is always some chance that the virus will mutate in a profound way, crashing us back into something like the fear and uncertainty of March 2020.
A Unique Perspective on Responses to and Consequences of COVID-19:
I enjoyed starting from a positive perspective, but, as I followed the evidence and the historical precedents, I found myself finishing in a very different place than I had started. At the end of the episode I gave a short and stark summary of how and why I believe many countries will squander the gains they have made during the pandemic.
Since early in the pandemic, a growing chorus of voices have declared that this is the moment from which everything has to change. It has become normal to see the desire for a fresh start described as the Great Reset in progressive media. I would very much like for there to be a Great Reset, but, based on Human history and behaviour, I can only perceive such improvement as being possible, not probable.
For me, a Great Reset would have to include a combination of the following: taking significant action to reduce climate change, systemic unemployment, and rising inequality; valuing well-being more highly than excessive profits; reactivating and increasing the role and capabilities of democratic governance and institutions; and working collectively as a species to achieve the Sustainable Development Goals.
Yes, I know, this is a sizable list of species and planet altering goals, but we have the knowledge and resources to have a substantial positive impact in all of these areas. If every person who is committed to a Great Reset equipped themselves with the knowledge in Stephanie Kelton’s The Deficit Myth, Kate Raworth’s Doughnut Economics, and Mariana Mazzucato’s Mission Economy, then we could say exactly what we want and explain how to get there. Modern Monetary Theory shows us how we can fund action, all three books give us examples of what we might want to achieve, and Mission Economy lays out how to improve our institutions and systems to implement the improvements we prefer.
Blind Insights – Stephanie Kelton @ the Sustainable Prosperity Conference – Adelaide 2020:
Blind Insights – The Mission Economy with Special Guest Steven Hail:
However, in spite of all of the knowledge and energy that is spinning around in support of a Great Reset, I believe that such a positive outcome is improbable for the following reasons.
As it became evident that dealing with COVID-19 was going to destroy even more livelihoods than the virus was going to take lives, governments across the world turned to Reactionary Keynesianism to make sure that their citizens could survive the necessary social restrictions and inevitable economic contraction. Government spending has achieved exactly what Keynes argued it should, but this action was not taken by committed Keynesians, or enlightened Modern Monetary Theorists, who know that increased government spending is necessary, and that deficits are not the problem that Neo-Liberals make them out to be. Instead, this reactionary spending and borrowing was done by ideologically motivated politicians who have spent their careers making ill-informed arguments about the supposed necessity of a balanced budget.
Politicians did the right thing, spending money to protect livelihoods all over the world, but now that the threat of COVID-19 is easing they are talking about returning to normal, which will mean paying down debt and reducing government spending to balance their countries budgets. Extraordinary times fostered extraordinary behaviour, but there is insufficient evidence to convince me that extraordinary times have changed politicians ordinary thinking and behaviour.
In the main, politicians build their careers on consistency, and there are only a few leaders, such as Churchill and FDR, who have been willing to grow and develop with changing circumstances. During the Global Financial Crisis, for example, we had two of the most progressive political leaders of recent decades, President Obama and Prime Minister Rudd, and yet they were not able to embrace (or encourage) significant change to facilitate a fiscal Great Reset. Consequently the GFC was followed by government austerity and corporate business as usual, which left us with a moribund global economy for most of a decade. Neo-Liberalism stuck to its ideological principles, and those who could least afford it paid for those who pushed the financial system beyond its limits, simply for the sake of avarice.
The COVID-19 pandemic has been a different kind of global crisis to the GFC, but the political debates about how to get out of the crises are remarkably similar. Most politicians have not spoken about wanting to use this opportunity to build a better world, they talk about getting back to normal, which appears to be unsophisticated code for maintaining their privileged positions and not putting their careers at risk. A small number of politicians have become something like genuine leaders during the pandemic, but this is not what they were known for before the crisis, so why would they keep on taking hard decisions? Australia’s Prime Minister Morrison looked out of his depth dealing with the huge bushfires before the pandemic, and the United States Democrats chose President Biden because he was traditional enough to not frighten more conservative Democrat voters. In both cases, why would we expect these elected representatives to transcend their historical limitations, or to develop sufficient gravitas and persuasiveness, to move their parties beyond the Neo-Liberal dead-end that has dominated Western politics for decades?
Every democratic state in the world is going to have an election during the next few years, and the pressure to return to pre-COVID-19 normal life and to balance budgets is going to be immense. If the GFC is any sort of historical precedent, then we will hope that our elected representatives will act as leaders, but, instead, what we will get is more years of crippling economics and social inequality. In 2009 we might have had just enough time to work at a steady pace to solve the world’s major problems, and we didn’t. Now, we have even less time and the problems are larger.
If you want a Great Reset, then learn what you need to know and ask for it, and support politicians who know what needs to be done. Don’t conflate a politician’s willingness to do extraordinary things during extraordinary times with them being willing to change their ordinary beliefs. If we want to make a Great Reset probable, then it will have to be us, the citizens who elect our democratic representatives, who will have to learn to be extraordinary.
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