The Great Pause

Originally published by Open Democracy 

Written by: Amanda Janoo and Gemma Bone Dodds

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As world leaders scramble to limit the spread of COVID-19 and save millions of lives, we are increasingly hearing concerns regarding how social distancing and lockdown measures will impact the economy.

Governments and economic commentators fear a “stock market crash” and a “recession worse than 2009”, and are developing economic stimulus plans accordingly. But using GDP and stock market values as a barometer of economic health is misguided. The existing policy landscape is constrained by economic ideas and tools built for another time.

In this moment, our economic policies must be oriented towards meeting basic needs, promoting essential activities and facilitating a ‘Great Pause’ while we figure out to overcome this global pandemic. There is no longer an economic status quo available to us. What does this mean in practice?

1. The stock market is not a reflection of our economic reality

Stock market values are often used as a measure of economic vitality because they are meant to anticipate future monetary values. The problem of course is that no one knows what the future will look like. Therefore, now more than ever, the stock market has only the narrowest ability to reflect the real world and is therefore not a good guide for us in these times. If policy makers want to avoid a financial collapse, they should seriously consider shutting down the stock market for a period to limit run-away, anxiety-ridden trading. Or at least ensure that any Quantitative Easing or liquidity injections are based on a quid pro quo that cancels debts for businesses and citizens.

2. We will enter a recession – and that’s okay

When you hear policy markers fearing a recession, this means they are fearing that GDP will fall for at least two consecutive quarters. As the economist Frances Coppola has argued, “recession is the wrong word, because it implies this is bad. Better to call it ‘protective contraction’. We need a huge drop in GDP”.

If we learn one thing in all of this, it is that we are the economy. As we take a moment to stand still, the economy equally becomes more still. Our tendency to move, gather and work together are fundamental drivers of the economy. As millions stay at home to protect themselves and others, the economy will contract. Doing anything other than reducing economic activity right now would be putting our collective wellbeing in danger. GDP will drop during this time, and that’s okay.

And remember: just because the economy is not growing does not mean that we cannot ensure that everyone’s basic needs are met. Now more than ever we need to recognise that the economy is the system by which we provide for one another. A system that can and should provide for what our families and societies need most.

3. Economic policies for a ‘Great Pause’

During this period of crisis, we must abandon the old metrics of economic progress and listen to what people need. Economic policy responses must be swift and strategic and focus on meeting everyone’s basic needs and safeguarding essential parts of the economy. Combined, policies must enable a ‘Great Pause’: allowing us to bunker down, buy time, and keep ourselves and others safe while we focus on ensuring equitable access to health, food, housing, income, while enabling businesses (especially SMEs) to pause their operations until we have a handle on COVID-19.

Make no mistake, such policies will require significant public expenditures and we must implement strategies now to ensure that the economic costs are paid by those who are able to afford it. We cannot repeat the mistakes made following the 2009 economic recession and allow for governments to balance budgets through toxic austerity measures.

This is a unique moment for global solidarity, as only a globally coordinated response can combat this pandemic. Now is the time to go into offshore bank accounts, to close tax loopholes and to generate a global relief fund so that we do not allow this crisis to further consolidate wealth into the hands of the few. As we work to protect those closest to home, we must not forget that no country alone can combat a pandemic. We are all in this together.

4. Building back better

As we secure lives and livelihoods, we can take the opportunity of this ‘Great Pause’ to learn and reflect on what is truly important to us. And instead of rebuilding a broken system, we must consider the policies required to build back better so that our economy delivers social and ecological wellbeing.

We have a once-in-a-lifetime chance to learn from the complete disruption of the economic status quo. We have known for some time that the 21st century obsession with growth creates extreme inequality and environmental degradation, but we haven’t yet found a way to create a path to something different.

This is a time to ask important questions – what is important to us when our very lives are under threat? What have we found that actually, we can live without? Where have we found meaning, and connection? What do we realise we have taken for granted and what can live without? What do we need our economy to deliver so that we can all live meaningful and fulfilling lives?

We have already seen how many of the workers who have been kept in poverty wages and economic precarity are actually the most critical for our collective wellbeing. Healthcare workers, farmers, grocery clerks, delivery drivers and caregivers have become the heroes of our day. Meanwhile, this moment of pause has brought increasing clarity to the things we value most, we now see how valuable (in every sense of the world) food, health, income security, education, mobility, access to nature, social connection and public services are to us.

This Great Pause gives us the time to consider how we can build an economy on these foundations. We must not return to business as usual, looking to financial markets and GDP growth figures for guidance. Economic policies must be oriented towards protecting and promoting the economic activities that are essential for social and environmental wellbeing. We have an opportunity to build back better.

The shape of the new economy is not a distant, dry set of policies. It is something we are living in and exploring right now. Let’s be present, move forward with compassion and explore the shape of things to come.

We invite interested people to engage in the conversation at WellbeingEconomy.org.

13 Comments

  • Paul Sutton April 3, 2020 5:42 pm

    I am sending the link to this article to my state and local representatives. I would like to see more discussion of the policy proposal of Jubilee. Where ALL Debts are cancelled. All home mortgages. All car loans. All credit card debt. All student loans. This would dramatically reduce wealth inequality and buy us time to recover. Bank deposits up to FDIC limits would be honored. Why is Jubilee or debt cancellation not discussed more? The debt system got us into this problem in the first place. The debt burden is too large. Paying off debt will overwhelm most of us.

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  • greeley wells April 10, 2020 5:15 pm

    Wonderful, meaningful, true, needed, essential, magnificent and well put! How can we do this! We must start NOW!!!!!!

  • Barry Lalley April 12, 2020 11:34 pm

    EXCELLENT article. Short, clear and to the point. Getting it out to everyone. Please do the same everyone. The Revolution has begun!

  • Trackback: La grande pausa
  • Ngahau Davis April 14, 2020 7:07 am

    Hopefully following the great pause comes the great awakening ? I think this is a time for courageous conversation and action and to really look deeply at some of the question asked in the piece above. We need to face our our own fears about what a new world may look like and be open to try new ways of doing things and be on guard not to return to the status quo of known safety or comfort of the known and pass up the opportunity for real social and societal reform and change to a new more equitable economy that values people, environment and a society that sees difference as strength not a weakness or something not to be afraid of but like the beauty of a flower garden with vibrant colors and different amazing fragrances.
    we live on a planet that can produce abundance and can take care of all of it’s living inhabitants but we allow a economy of scarcity to become the norm just to make more profit for the few and a world where commodity brokers who sit in air-condition offices decide the fate of hard working farmers who cant even cover the cost of producing food.
    I’m a indigenous person and like many other indigenous people around the world our values and the cultural thinking has been seen as primitive while western world is seen a so called civilized society but what we are witnessing is a planet at a tipping point due to deforestation, intensified farming ,globe warming and all profit driven and the gab between the haves and the have not get wider things need to change the question is have we woken up yet and realized its not about whether i want to change but we need to change for the sake of humanity and the planet and life over all.

  • Gray Southon April 25, 2020 9:50 pm

    This is a start, but only a small start. When you have satisfied everyone’s needs (however defined), through some bureaucratic and possibly invasive process of extracting from the rich and providing to those that really need it,, then comes the process of rejuvenating the systems of continuing to provide those needs. This is the future economy of very different infrastructures, and organisations. We also need to cope with those discarded by winding down the economy of activities deemed superfluous. We have a society inculcated with the belief that indulgence is inherently good, and the more they can accumulate money and spend on their own enjoyment, then the better they and the society are. How are we to change all these attitudes? And who is the ‘we’ who are going to make all these decisions?

  • Linda Black May 1, 2020 4:42 am

    I really appreciate this article and heartily agree with it.
    One of the things that i think needs to change is the current widely held view that we should continually strive for more and more wealth. When is enough, enough? For example i saw a newsletter the other day with the leading article being ‘the world’s youngest billionaire’. Its time to stop gross wealth being a lauded aspiration.
    Prosperity is a different matter and sufficiency should be an essential baseline for all of us.

  • Jon Rose May 5, 2020 10:47 am

    2. We will enter a recession and THAT’S NOT OK FOR DEVELOPING COUNTRIES

    The head of the United Nations has called for “massive and urgent support” needed for developing countries. He is calling for a worldwide relief package of at least 10% of the global economy’s output. The economic impact on advanced economies and a lack of international leadership from potential donor countries not only makes this aspirational goal unlikely, it also puts in jeopardy current funding programs.

    The W.H.O. is warning the worst-case scenario of disruptions to the malaria program could see malaria deaths doubling to over 700,000 deaths (i.e. approx 350,000 extra deaths compared to last year). Currently, there are 250,000 Covid-19 deaths globally with an estimated average of 13 years of life lost for each death. As two-thirds of malaria deaths are children overall years of life lost would be many times greater in this worst-case scenario. In 2018 there were 228 million cases of Malaria worldwide.

    Negative social media stories regarding the W.H.O. and the Bill and Melinda Gates Foundation is drawing attention away from this urgent as well as the emerging needs of Developing Countries in this crisis.

    There is also an impending disaster as developing countries are facing their first wave of Covid-19. Poor nutrition, over-crowded sub-standard housing, lack of soap, water and sanitation, poor health services, a predominately informal workforce with minimal or no welfare supports present a bleak outlook. As resources dwindle, escalation of social unrest, conflicts, and war could lead to further misery.

    To facilitate a more equitable global wellbeing response to Covid-19, its critical to raise public consciousness of the urgent needs of developing countries at this time. This could be in the form of letters to political leaders from individuals and organizations, petitions, social media posts, and stories in other mass media. Governments are more likely to act where there is both public consciousness and public demand for intervention. Leaders of the advanced economies already know of this need through requests from the United Nations and the G20 virtual Health Ministers meeting in April.

    Members of WeGov may have an important role to play in this regard.

    Suggestions or comments are welcome.

  • Cynthia B. May 9, 2020 6:00 am

    If from an accounting stand point, human, natural, and social capital were considered as asset, our economy would stop seeing them as expenses and tax. There would also be more incentives for companies to keep their employees in economic downturn essentially shifting their vision towards more long-term approaches. Accounting is the forgotten discipline in economic sciences, but has the most potent way to address the systemic issues of today.

  • Fernando Centeno May 12, 2020 4:58 pm

    Yes, these are great goals but I view them as recycled ideas. What’s missing is how humanistic well-being goals effectively deal with the insider power players at all levels of govt.

    Too many go along with the status quo. And too many do not think in structural socioecomomic transformation terms.

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