The future of the economy depends on compassion

A new kind of imagination is called upon to tackle the world that has emerged with the Coronavirus pandemic.

Public policymaking was already in flux in the last decade under the twin influences of disruptive technology, especially in social media, and the rise of populist politics. Policy timelines, and feedback loop mechanisms, have been broken under these twin pressures.

Since the 2008 economic downturn, questions have consistently been asked if policymaking has the necessary tools to respond to the crisis that it faced. The Covid-19 pandemic has now shattered the last stand of business-as-usual.

But reinventing fundamental structures of economic and social policy is easier said than done. We now know that merely tinkering with the structure, as was attempted by various governments following the 2008 debacle, would not be enough.

Tragically, policy debates, especially led by activists, still seem trapped in arguments where both capitalism and socialism are nouns rather than adverbs, which is what they ought to be, compelling us to consider what kind of capitalism or socialism or any kind of -ism could help us reimagine our world.

A few years ago, economist Dennis Snower, then president of the Kiel Institute for the World Economy wrote on the World Economic Forum platform that, “What makes these [successful] economies function is not a policeman protecting every shop window, but rather people’s trust, fairness, and fellow-feeling to honor (sic) promises and obey the prevailing rules.”

But this sense of trust and honour is ebbing around the world as societies become more tribal, where ideology has been weaponised, and all debate is polemic. As inequality grows around the world, as seen in these charts from the data site Our World in Data, the pandemic has further strengthened the demand for equity in access, and opportunity.

Trust is ebbing in institutions as disruptive technology expands the digital divide leaving millions out of its beneficial processes, or, even for people who are native users of tech, questions of privacy, manipulation, and control becoming ever bigger questions.

As climate change propels greater crises around the world in this decade, no nation would be able to survive and sustain itself merely by blocking its borders. Covid-19 has brought about the language of creating bubbles in airspace and between countries. But the coming years shall teach us that no bubble can block air pollution, and when the seas start to rise, they do not obey any borders.

Politics and public policy are still severely dependent on displays of strength, which are no doubt important in some cases, but the process and tonality of politics and public policymaking will progressively move towards a place of greater, more real-time feedback from the people, and much deeper, abiding empathy.

In the future, politicians, and public policy experts, including economists, would be faced with populations constantly struggling with disrupted lives—either through climate change, or technology, or both.

Without requisite empathy, officials in positions of power would soon realise that their authority is hollow. There would be temptation in this, on the part of the wealthy and powerful parts of the world, to capture every remaining resource (as seen with a recent announcement of the sale of Sierra Leone rainforest to a Chinese fisheries company), which in turn would create even more fractious divisions, and potentially more conflict. Questions of identity, already deeply divisive around the world, are pushing politicians to seek band-aids instead of structural solutions.

As the gulf of mistrust widens around the world, the language of politics and public policy needs a dramatic change. Embedding the message of empathy in policy is as important as the actual crafting of policy around an empathetic theme.

Rebuilding trust would require a different political and policy language. One of the prime ways to build trust in technology is to showcase its use in unbiased delivery of governance goods—for instance, in the direct transfer of support funds to rural India using tech, and cutting out any interloper, during the pandemic. The use of blockchain, for instance, could potentially revolutionise and clean the very contentious area of land and property transactions.

It is now impossible to ignore that green politics must form a core, if not the core, of every political movement. Unless there is a consensus on the enormous work needed to mitigate the impact of climate change and pursue alternative economic policies, we face a dire future.

In economics, some form of universal basic income or lifestyle support may become impossible to avoid in the years to come, but in what manner this could be crafted remains hard to explain, though the Finland experiment results are generally accepted to have been positive. This debate can no longer be pushed to the backburner.

Covid-19 would be with us for a long time and by the time it ends, climate change-led devastation and spread of disease would be impacting many parts of the world. To rise to this challenge, politics and policy must move to a new language of compassion.

Views are personal. The author is a historian and a columnist. He is a multiple award-winning author of nine books.