In the future, determinist historians are likely to present the current Corona virus Covid 19 pandemic with its brutal economic and social effects as “a revenge” of nature against the master of the Anthropocene, homo sapiens. I’m not much of that school, but nevertheless it is worth making certain correlations between contemporary society, economics, and climate change with the pandemic.
Correlations that are not necessarily of immediate cause-effect and take place within a complex and intricate web. I will simplify it as much as possible to facilitate the debate. At the origin of the virus is the leap from the animal to the human environment as has occurred with countless other bacterial and viral epidemics. We do not know exactly how Covid 19 infected the first human being but the focus seems to have been a market in Hunan where wild animals were sold.
The virus emerged in China and refers to the Chinese ideogram weijicrise/opportunity. The pandemic has climatic consequences. In the short term, one of them may give rise to misplaced celebrations. This year, emissions of greenhouse gases will fall due to the brutal recession that the pandemic causes, especially in China, where emissions from coal-fired power plants will certainly plummet. The retraction of air transport, industry, etc. will also have this effect globally.
But it is never good to celebrate emission reductions because of a recession, because the subsequent recovery, without technological change or changes in consumption patterns, is usually brutal. Just look at the great recession from the 2008 crisis. It is necessary that, this time, the recovery, when it happens, is “clean”.
Another distinct victim of the pandemic is the Washington Consensus, the prescription of classical economics made dogma. What the left likes to call neo-liberalism. In fact, the pandemic shakes their sacrosanct stronghold, the “delenda Public Deficit,” that horror of horrors.
In the last decades the international financial establishment, both private and public (governments, multilateral agencies), have made fiscal stringency their Holy Grail. The European Union with its sacred limit of 3% of GDP and the rating agencies that impose arbitrary limits to countries such as Brazil, far below what is allowed in European countries, by a series of criteria, some understandable -historical of defaulters-, others perfectly subjective, almost exoteric in their chutometry. It is a religion that has faithful followers, among them, with due prominence, Paulo Guedes.
The press here didn’t report it, but French President Francois Macron has dealt a mortal blow -unofficially assumed- to the EU’s strict “fiscal discipline.” His measures to protect workers and businesses that are victims of the recession caused by the pandemic send “austerity” into the space.
They take back that Depression and WWII era approach to the deficit issue. Franklin Roosevelt was originally a staunch supporter of “fiscal balance,” even at the beginning of the New Deal, before he blew it out of the water. Public investment -not to be confused with electioneering spending- allowed capitalism to recover, win WWII, rebuild Europe, and ensure the “30 glorious years” of capitalism with the creation of the walfare state in the West.
Macron, by guaranteeing resources from the French state to compensate workers’ wages, subjected to a brutal reduction in the working day, and to prevent companies from going bankrupt, will certainly exceed the 3% ceiling, and soon Germany, the staunchest supporter of fiscal balance – the poor Greeks should say so – will end up joining the wheel as well.
Across the ocean, Trump has already done it, only to give an indecent tax break to the rich. Now he will have to deepen the deficit even more to deal with the virus that he and Bolsonaro have snubbed so much.
Summary of the opera: when the dust settles it is to be expected that everyone will see that the king is naked. What is true for Covid 19 should be true, much more so, for decarbonization. Not least because that virus is a dick next to the catastrophes that out-of-control climate change promises the human race of sorcerer’s apprentices.