This summer, social and economic literature has been dominated by topics relating to the likely changes that the pandemic is expected to bring about in the way countries manage their economies.
One book that, in my opinion, deserves to be read by political, business and community leaders is The Economics of Belonging: A Radical Plan to win back the Left Behind and Achieve Prosperity for All.
Its author Martin Sandby is an FT economics commentator. With many wondering while there is still so much muddled thinking on the way forward to reverse the adverse socio-economic consequences of the last forty years, Sandby’s book makes some interesting proposals.
The pandemic has shown how, in a time of crisis, we all need to stand together to survive as a society. Doctors, nurses, paramedics, ambulance staff, were among those who deservedly earned the admiration of most of us for their often impeccable dedication to help the sick and vulnerable.
But there was a bigger army of people in humbler jobs of cleaners, care workers, shelf-stackers in supermarkets and bus drivers, delivery couriers and cashiers who helped to make the pandemic less traumatic for all of us.
It will be tragic if we resort to business as usual at the economic level when this public health crisis is over. We need to ensure that how economies work in the future will not keep penalising those who have been left behind in the last forty years.
This is not only critical to stem the rise of populism in the Western hemisphere but because the widening income and wealth gap destroys the wellbeing of society.
Professor of Political Science at Bocconi University, Catherine de Vries, argues that “the rhetoric of how the post-war golden days were better is unlikely to produce the remarkable convergence in income and wealth levels between the rich and the poor, between workers of different educational levels”.
The present economic model of employing low-productivity, low-wage labour needs to be replaced by one that distances itself from the precariat and stimulus an economy of belonging. This new economic paradigm has already been introduced in Scandinavia countries, especially Norway.
Invisible workers suffered the most in this public health crisis
Globalisation is not the root cause of the widening gap between the haves and the have-nots in Western societies. It is the technology-driven changes combined with fiscal policies that have reinforced the underlying forces of divergence.
The decline in employment in manufacturing gave rise to new jobs in services. But many of these jobs were less productive, less well paid and less secure than the ones they replaced.
This phenomenon saw a rise in service industries like catering and tourism as a high number of under-skilled workers competed for low paid jobs, often offering precarious conditions of work.
At the same time, many western countries shifted the tax burdens away from capital and high-wage income further widening income and wealth inequality. This strategy shattered the post-war economic promise that everyone could expect a secure place in the national economy.
The Reagan and Thatcher reign in the 1980s admittedly saw an era of job creation. But not all new jobs were equal.
Low skilled manual and routine work lost out to knowledge work. Income and job security increasingly depended on workers’ education background. This explains why countries with poor educational achievement levels face a more daunting challenge to revive their economies.
The pandemic has reinforced the theory that low-skilled, low-paid jobs expose workers to dramatic risks when a crisis hits the economy. The invisible workers who moonlight in the black economy, the low-paid workers on zero-hours contracts, those from ethnic minorities, and irregular immigrants have suffered the most in this public health and economic crisis.
These fractures in societies were evident before the pandemic. The need for moral clarity is now more urgent than ever. Sandby argues that political leaders should now adopt the “Roosevelt hyperactive New Deal centrist radicalism reforms” during the Great Depression in the US, and the Scandinavian compromises between capital and labour to model their new economic strategies.
The pandemic has shown how some western political leaders quickly jettisoned their conservative and rigid mind-sets and became accidental radicals.
A significant section of society is still unhappy with the way mainstream parties lacking any ideology nibble at today’s daunting societal problems. These parties now need to take more evident positions to convince a sceptical electorate.
In next week’s article, I will discuss some ideas on how our leaders can make the economy work for all.