It feels almost inevitable – a worldwide viral epidemic or pandemic, the onset of a ‘probable’ recession, jitters in the market, panic buying. The Novel Corona virus or something similar seems predictable when you have wet markets with unregulated selling and consumption of wildlife, people living at extremely high density and globalisation. And there have been warnings about the market since the last ‘too big to fail’ Global Financial Crisis led to interventions that continued to support unsustainable capitalism. High debt levels, overproduction, overconsumption, over-tourism, unsustainable growth levels – both for the planet and the economy, were going to cause a bust sometime soon – and many economists actually predicted it for last year, so in some ways ‘economic (and environmental) correction’ is overdue.
We live in both expected, and unprecedented times as efforts to contain and prevent a global pandemic give rise to a supply side export logistics shock leading, with other factors, to an emergent potential global economic shock. Panic is the enemy of stability as we’ve seen with the rush on food, toilet paper, and the markets.
The potential effects from a pandemic are scary. It doesn’t take much to realise how quickly hospitals and health systems would become overwhelmed if the disease spread significantly and had a higher infection and mortality rate. A cautious response that attempts to contain the virus is prudent – and may be a practice run for worse in the future. Unfortunately, the already vulnerable are more likely to suffer first and worst from the disease, especially in countries with marginal or no public health care. And with a recession, the precariat, recently employed and low paid workers are most at risk.
I’m not shedding tears though that the export of live seafood to China has been impacted by freight restrictions. I’m not sad that China’s CO2 emissions have been reduced by a quarter from the Covid 19 shutdown. There are other positives. Air pollution has dropped, people are reducing air travel, they are shopping less. It’s hoped that fuel prices will drop at the pump along with in international sales. The cost of borrowing should drop (not that New Zealanders need more debt). In New Zealand, banks might make less profit – though at $1.8-2billion per annum they can afford to.
I am concerned at the potential loss of jobs for working people, and the hardship of recession, disease and confinement. And naturally business advocates are suggesting the planned minimum wage rise be delayed. Though at this time it’s more important not just to support business continuity as owners would have, but also workers and those on the minimum wage too.
Reserve Bank Governor Adrian Orr says New Zealand is well placed to withstand economic contraction resulting from the Novel Corona Virus. “Inflation is near its mid-point. Employment is at if not slightly above its maximum sustainable rate, and our monetary policy is already very stimulatory.” With our low public debt levels, we have room to move to support businesses retain workers for the duration of a short recession. But the effects of the expansionary capitalist growth model as manifest in climate change, biodiversity loss and impoverishment as the gap between the rich and the poor widens, all show that the planet is most likely to suffer without capitalist correction.
Indeed, the Novel Corona Virus and potential recession may provide an opportunity to reconsider the social and economic settings that have led to political and environmental instability around the world. A good start has been China’s review of the wildlife trade. But the moment also allows an opportunity to review the speculative, accumulative gambling house that is the stock-market where the rise and fall of bets and hedges can determine the availability of food for nations or the environmental quality of all. The current model has food stockpiled in warehouses to keep prices high while people starve. Billionaires accumulate more billions while people starve. Tourists among the world’s elite on cruise ships patrol the world in luxury and jet to tropical holidays while people live on the street, or starve. CEO’s pay has grown 1000% over the last 40 years and they now make 478x the average worker. Liquor and fishing barons get the highest honours in the land. The amount of food we throw away globally is ‘tragically high’, and in New Zealand $1.8billion worth is discarded every year. Excess production and wasteful consumption is driving climate change and species, habitat and cultural diversity loss. The global economy can afford to slow. In fact, our future might depend on it.
Design trend advisor Li Edelkoort says the virus might be an event of ‘amazing grace’ for the planet. “The virus will slow everything down”. “We will see an arrest in the making of consumer goods. That is terrible and wonderful because we need to stop producing at such a pace. We need to change our behaviour to save the environment”. She believes we can emerge from the health crisis as more conscientious humans. “We need to find new values—values of simple experience, of friendship.” “It might just turn the world around for the better.”
Steven Pearlstein, economics columnist for the Washington Post, and Professor of Public Affairs at George Mason University in the States, says that a ‘huge and long-overdue correction in asset prices – especially stocks, bonds, real estate’ is necessary and inevitable. But he says, “the aim is not to prevent this painful process from unfolding, but to ensure it unfolds in as orderly a fashion as possible”. An orderly unfolding of the entire economic order is my hope for this juncture, and a transition to a system that’s better for people and the planet.
Even a radical ‘correction’ to capitalism isn’t the end of the world. With climate change and environmental destruction, the end of the world is more likely if we carry on with our usual trajectory of business as usual.