We need a welfare programme for people and the planet and not just for industry and rich bankers.
After the past few months of the global economy’s downward spiral, it is now more or less clear that the dreaded ‘R’ word must be said. The world’s major economies are slipping into a recession. In all this, ironically, the only response available to leaders, who have worked so hard to privatise and deregulate our economies, is to fall back on the old idea to invest in a massive economic stimulus plan, using public funds. The classical Keynesian idea, which was worked on during the 1930’s Great Depression was to spend huge amounts of public money to bail out the economy. This is what governments hope to do, once again, in the age of private capital combined with extraordinary wealth of individual entrepreneurs and excruciating poverty and deprivation of many.
The question is whether this old-fashioned ‘New Deal’ can be reinvented given the fundamental flaws of the economic system, as we know it today. It is very clear to some of us (but still not acceptable to the financial managers of our economies) that we cannot crawl out of the economic mess unless we change the very nature of our economies. The reason is simple. Our economies are built on the principle of increased consumption to stimulate growth. The equally simple assumption is that growth will make people wealthy and they will in turn pay for the consumption and then everybody will be happy.
Over time, this ‘simple’ logic of making people wealthy to be able to afford their consumption has got lost in the conundrum of economic and fiscal instruments, designed to subsidise and advance credit, all to get that consumption-related stimulus. So, as the costs of production increased in the first world, because of increased costs of labour or environmental protection, industry moved to the second, third or even fourth world, to get a cheaper deal. This also helped to enjoin the entire world in the frenzy of consumption — buy cheap and disposable. This model has driven the banks to the ground and with climate change stepping up action it is fast costing us the earth as well. What we forgot was the principle of distribution of income, so that consumption could be afforded or that over-consumption could be avoided.
The fact is that there is an opportunity to reinvent our economies, using the global reconstruction funds, this time to do things differently. This time, public spending has to stimulate, not just the economy per se, but be used to redesign the economy so that it is affordable to many and the earth. In other words, we need a carefully constructed plan to spend to create economies, which are equitous and sustainable. The New Deal agenda should be as follows.
One, to rebuild the energy systems of the world, with massive investment in new technologies like renewable distributed systems, which reduce the cost of transmission, reduce losses and make societies more resilient. Today, energy-rich and abundant societies are the cause of the greenhouse gas emissions in the atmosphere, which threaten our world. These countries have externalised their environmental costs and have overdrawn from the natural capital of the common atmosphere. The new deal is an opportunity to undo this damage and to build a different energy-secure future for us all.
Two, to massively invest in rebuilding mobility systems for the new world. In other words, spending on railways, not on airways and on city buses and metros, not on sops for the car industry. This is a tough choice for governments, who have for too long subsidised private mobility because of the power of the private automobile and airline giants (who even today are demanding bailouts) and neglected public transport because there is no obvious votary for this public good. But this is the option for the New Deal.
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Third, to spend on urban environmental infrastructure — from clean drinking water, to sewage and garbage disposal and housing for all. But this is where governments must learn the most, not to build infrastructure that is built on the dreams of others, but to build cities which fit the purse and the environment of their location. This will need massive infusion of new technologies, built on the rationality of traditional knowledge and practice to optimise on local ecology and resources.
Fourthly, and most critically in India, we will need a review of our economic practices, where it matters the most — in agriculture and forestry. We will have to recognise that the bulk of our country, even in the future, will continue to live in rural areas. It is there that we need to understand the fact that urban and industrial sectors can never match the employment and livelihood potential of this land-based economy. We will have to understand this economy better and will have to value it better.
All in all, this is a critical time, which will determine the future. We need leaders who will not allow panic and blackmail to rule. We need a welfare programme for people and the planet and not just for industry and rich bankers.