There is nothing like the biggest economic crisis for 300 years – not to mention months of lockdown – to make people ask some fundamental questions. Why are “key workers” some of the worst-paid people in our societies? Why are airlines but not freelancers in the arts getting government bailouts? Why was the health service so badly underfunded when need was growing even before this pandemic?
Even more fundamentally, the Covid-19 recession is brutally exposing weaknesses in the economy, from entrenched inequalities to vulnerable supply chains. At the same time it is revealing just how much governments can intervene in the economy if they want to. So the natural question is whether the economy was in all that great shape to begin with. And if not, why can’t governments change the way it operates?
This is not an entirely new conversation. For some years now there has been a drumbeat of growing discontent about the use of growth in Gross Domestic Product (GDP) as the measure of progress. It excludes the way nature is affected by production and consumption. It excludes valuable but unpaid work such as childcare or volunteering. It ignores the distribution of gains, the fact that in so many countries the top ten per cent or one per cent have seen substantial increases in their incomes, while those of the rest have barely grown.
Increasingly, economists and statisticians have also been trying to improve the measurement of the digital economy, which is not adequately captured by existing statistics. Tech-driven changes mean that on the one hand, measures of price inflation may miss the many free apps people use – such as taking photos on a smartphone and sharing them online rather than buying a camera and paying for developing and printing. On the other hand, the digital economy is also clearly helping drive major inequalities of wealth and power, reshaping politics – not for the better – and disrupting many existing industries and jobs.
The pandemic is giving these debates new urgency. If we had been using a lens other than conventional GDP growth during the past decade, we would have had a different mental picture of economic progress. We would have been aware of the big differences in income growth between different places or groups. We would know how far we have run down the country’s natural capital to sustain lifestyles by destroying biodiversity and altering the climate. We would be more aware of the massive transformation in people’s everyday life and in business models thanks to digital platforms – and also more aware of the downsides.
So it is no wonder that the appetite is there for a far broader understanding of what is meant by progress – by the “better” in the ‘build back better’ slogan. And for an expectation that, as the economy recovers, the government will ensure it is not going to be back to business as usual. Recent polling suggests almost a third of Britons think the government should make big changes in the way the economy is run, and another 28 per cent would like moderate changes.
This is far from a consensus about what changes are needed. But the fundamental sense of unfairness is palpable. Whatever we mean by the economy growing, by things getting better, the gains will have to be more evenly shared than in the past. In particular, the new technologies transforming life will need to bring wider benefits than they have so far. An economy of tech billionaires and gig workers, with middle-income jobs undercut by automation, will not be politically sustainable. Biotech or medical innovations from 3D-printed organs to personalised cancer treatments cannot be only the preserve of the super-rich.
The tech-driven inequalities had already disrupted politics in many countries by destabilising the solid middle. Let’s hope Covid-19 can ensure that lasting change comes about, or we may be in for a revolutionary period.
Diane Coyle is the Bennett Professor for Public Policy, University of Cambridge
This article was originally published by WIRED UK
