Alan Sitkin, Assistant Professor & Director (People) International Business, considers whether the immediacy of COVID-19 will lead to an under-investment in sustainability.
This article is part of our new series, Regent's Review: thoughts, research and academic discussion on the COVID-19 pandemic.
Summary
- We are experiencing a uniquely pessimistic moment in history. One major concern is that sustainability investments are going to be put on the backburner in the UK.
- Without international cooperation, every nation will face its challenges alone. That will make recovery harder.
- This is a time for all-hands-on-deck. Thankfully, there are things we can do to remedy the situation.
Post-pandemic, will we prioritise sustainability?
The global COVID-19 pandemic is going to cause huge uncertainty for the foreseeable future. Governments and companies are all trying to weather the storm by borrowing huge sums that they have to spend in the here and now. This has very negative implications for future budgets – money spent today simply won’t be available tomorrow.
In turn, there is now the very real risk that sustainable investments may end up being de-prioritised, especially in the UK. That breaks my heart, but all funding indicators are currently blinking red.
Challenges
The problem is if UK policy-makers react without thought for the benefits of international cooperation.
This is true in the short term – one absurd example being the failure of our government to remain part of an EU procurement process that would have given us earlier life-saving access to the stock of protective personal equipment available on the continent. Not to mention the common sense of collaborating cross-border in the search for a vaccine.
But it is also true post-crisis. Without international business, immiseration will set in, adding to the huge financial challenges that we will all face anyway. My worry is that resurgent xenophobes, who always blame all kinds of problems on "the other", will continue to spread their inane interpretations of human history, ignoring the lessons that informed policy-makers draw from constructs like games theory or the prisoner’s dilemma.
These small state ideologues' extremist devotion to what they call financial 'freedom' would deprive our government of any macro-economic remedy other than to inflate its way out of the astronomic levels of debt that we will be carrying. That would be a terrible environment to start funding the sustainability projects that the UK – and our planet – need to survive.
Remedies
Yet there are some concrete things the UK can do to restart the green transition that all citizens of good faith were aspiring for before the crisis began.
- Work as closely as possible with our EU partners. It is thoughtless to say we support Adam Smith's market principles only to reject the biggest market around. Trade creates wealth. We will need the money – including for sustainability investments.
- Repatriate the trillions of dollars currently hiding in tax havens – that will go a long way towards offsetting present and future budget deficits.
- Price fossil fuels – a rare, depleting resource – at their real (higher) value. This will send the correct signal to the market and make the cost of developing renewables seem far less daunting.
- Maximise public/private collaboration. It is as wrong-headed to vilify the state sector as it is the private sector. All-hands-on-deck means exactly that.
More broadly, we need better informed economic education to guide voters’ electoral choices. This will be easier post-crisis – radical shifts in thinking often occur after things have gone wrong (c.f. Keynesianism's rise post-1929).
No one likes paying taxes but isn't it clear that we've been absurdly under-funding our public goods in the UK? Regarding healthcare, for instance, we spend 6.5% of our GDP on the NHS. Germany spends 11%. Given the different health outcomes we are witnessing at present, this has not just been a terrible mistake on our part. It is a tragedy.
The same applies to the two countries' level of sustainability investments, both present and future. Ultimately, we are talking about two models of society, one that is suffering terribly and the other enjoying a much more optimistic outlook. I know which one I prefer.
Updated 18 March 2021 to give fresh insight, one year from the start of the COVID-19 pandemic.
