O mundo vive um inferno astral de ameaças de curto e longo prazo. Em brilhante palestra recente, Tharman Shanmugaratnam, ministro sênior de Singapura, listou cinco riscos que, para ele, configuram uma “longa tempestade perfeita” para o planeta. Neste artigo, discutirei as implicações desse quadro para o Brasil, procurando também identificar as oportunidades disponíveis.
O pano de fundo é conhecido. Ao acordar do sonho do mundo pacífico e integrado do fim da história de Fukuyama, nos deparamos com crescentes tensões, que se manifestam em múltiplas esferas. A mais chocante de todas e primeiro tema da lista de Tharman é a tragédia ucraniana, que configura o rompimento de uma governança global que garantia a soberania e a integridade territorial de todas as nações.
A esse retorno da Guerra Fria original, de natureza ideológica (modificada) e militar, se soma a Guerra Fria.2 entre os Estados Unidos e a China, também ideológica, mas muito mais complexa em suas frentes de disputa.
O embate entre os dois gigantes caracteriza um período de ausência de uma liderança global hegemônica que, como bem diagnosticou Charles P. Kindleberger, tende a ser muito instável. Do ponto de vista econômico, as duas guerras frias forçosamente demandam um importante repensar de alianças e relações de produção e comércio globais.
Para o Brasil, será necessário retornar à política externa tradicional do Itamaraty, voltada para a busca do interesse nacional através de boas relações viabilizadas pelo nosso histórico apego a princípios universais e pela nossa natural vocação multilateral. Nos cabe primeiramente e o quanto antes uma defesa inequívoca da integridade de todas as nações. Temos também que zelar pela manutenção de relações mutuamente benéficas com a maior parte dos países.
Em seu segundo grande tema, o autor discute o perigo de uma prolongada estagflação. O epicentro do problema encontra-se nos Estados Unidos, onde uma economia superaquecida por políticas expansionistas vem sendo atingida pelos choques de oferta da pandemia e das guerras frias. Para o Brasil, o risco maior advém da real possibilidade de o banco central americano ter de elevar os juros bem além do que os mercados já antecipam. Nos faria lembrar da frase “quando o Norte espirra, o Sul pega pneumonia”.
Um cenário alternativo, também nada reconfortante, seria uma queda ainda maior das Bolsas, acompanhada de um novo colapso nos preços dos imóveis, hoje acima em termos reais dos níveis da bolha que estourou em 2008.
Do lado de cá, o quadro é ainda mais complicado do que nos Estados Unidos, pois mesmo em recessão a inflação atingiu dois dígitos. Não é difícil imaginar uma tempestade perfeita para o Brasil, onde desafios externos e internos se reforçam. O próximo presidente terá que conduzir a política econômica com coragem e competência, de preferência com o apoio qualitativo das respostas aos demais desafios, que discuto a seguir.
A ameaça existencial da mudança climática é o terceiro tema do discurso. Aqui o Brasil terá a oportunidade de promover uma guinada verdadeiramente alquímica: trocar uma posição de pária ambiental, decorrente de posturas que aumentaram o desmatamento e o crime organizado, por uma guinada que nos poria em uma posição de liderança global no tema, com consequências extremamente positivas fora e dentro do país.
A criação de um mercado de carbono, como vem sendo discutido no Congresso e prometido pelo Executivo, seria um passo essencial nessa direção. É fundamental que o mercado seja desenhado de forma a permitir a plena inserção do país no mercado global de carbono, alternativa não disponível no momento. Vejo amplo potencial para investimentos no setor, em ambiente de concorrência e plenamente alinhados com o interesse público (estou investindo nessa área).
O elevado risco de novas pandemias vem a seguir. A ciência recomenda todo cuidado com o tema. Aqui também vejo amplo espaço para um cavalo de pau. Será necessário reforçar sob todos os ângulos o SUS, que, com seus 4% do PIB de recursos, precisa urgentemente subir na escala de prioridades dos orçamentos de todas as esferas de governo.
Cabe também incluir nas prioridades da nação mais apoio à pesquisa. Fontes de recursos para tais esforços não faltam, como tenho argumentado aqui. Falta sim transparência orçamentária e vontade política.
Em último lugar na lista, mas não menos importante, são as desigualdades de crescimento e bem-estar dentro dos países e entre eles, os mais ricos em vantagem em ambos os casos. Essa situação vem se agravando com as “tempestades perfeitas” e representa um terreno fértil para populismos e autoritarismos. O Brasil tem muito a fazer nessa área.
Com sucesso nessas frentes, o Brasil se qualificaria para ser relevante na reconstrução de uma governança global ora em frangalhos. As vantagens seriam imensas, pois ajudaria a si próprio em tudo mais. No entanto, sem sucesso, os prejuízos para a população seriam enormes. Um futuro melhor só virá se e quando a nossa democracia não mais estiver ameaçada e um tanto disfuncional.
Filantropos e acadêmicos dizem que está na hora de um novo conjunto de ideias orientar a economia
O salário da maioria dos americanos está estagnado há décadas. A desigualdade aumentou acentuadamente. A globalização e a tecnologia enriqueceram alguns, mas também provocaram a perda de empregos e o empobrecimento de comunidades.
Esses problemas, segundo muitos economistas, são em parte subprodutos de políticas governamentais e práticas corporativas moldadas por um conjunto de ideias que defendiam o livre mercado, o livre comércio e um papel de não interferência do governo na economia. Seu rótulo mais comum é o “neoliberalismo”.
Um grupo de filantropos e acadêmicos diz que está na hora de um novo conjunto de ideias orientar a economia. Para pensar em alternativas, as fundações William and Flora Hewlett e Omidyar Network anunciaram nesta quarta-feira (16) que estão investindo mais de US$ 41 milhões (R$ 212 milhões) em pesquisas econômicas e políticas com esse objetivo.
“O neoliberalismo está morto, mas não criamos um substituto“, disse Larry Kramer, presidente da Fundação Hewlett.
Os destinatários iniciais das doações para criar programas de pesquisa são a Escola Kennedy da Universidade Harvard, a Universidade Howard, a Universidade Johns Hopkins, além do MIT (Instituto de Tecnologia de Massachusetts) e o Instituto Santa Fé.
Segundo Kramer, a Fundação Ford e a Open Society Foundations também se comprometeram a aderir à iniciativa e fazer doações ainda este ano para centros de pesquisa no exterior.
As universidades concordaram não só em fornecer um espaço para os centros de pesquisa, mas em reunir acadêmicos e estudantes de várias disciplinas, comunicar suas descobertas e arrecadar fundos para manter os programas em andamento.
A expectativa é de que outros financiadores e universidades façam o mesmo. “Nosso papel é fornecer fertilizante e água para cultivar algo diferente”, disse Kramer. “Achamos que esta é a próxima onda intelectual.”
O esforço, com amplo financiamento, se baseia na tese de que as ideias fornecem a estrutura para as políticas e os limites do debate público. A visão de mundo do livre mercado foi promovida com mais empenho nas décadas de 1960 e 1970 por um grupo de economistas da Universidade de Chicago, liderado por Milton Friedman, que ficou conhecida como Escola de Chicago.
Na década de 1980, o governo de Ronald Reagan, nos EUA, e o de Margaret Thatcher, na Grã-Bretanha, abraçaram com entusiasmo o modelo neoliberal. Foi também a mentalidade principal do governo Clinton para acordos de livre comércio e desregulamentação financeira. Isso também valeu para o governo Obama de modo geral, em áreas como comércio, resgate de bancos e fiscalização antitruste.
Não é tanto o caso do governo Biden. Jennifer Harris, que liderou o programa de economia e sociedade na Hewlett, onde começou o trabalho na nova iniciativa, juntou-se à equipe do Conselho Econômico Nacional do governo no ano passado.
Nos últimos anos, muitos economistas proeminentes questionaram a prudência de se deixar tantas realizações humanas ao sabor dos mercados. Os economistas estão pesquisando cada vez mais a desigualdade, e esse é um foco das universidades que recebem as bolsas.
“Reduzir a desigualdade deve ser uma meta do progresso econômico”, disse Dani Rodrik, economista da Escola Kennedy em Harvard e líder no projeto de reimaginação da economia. “Temos toda essa nova tecnologia, mas ela não abrange partes extensas da força de trabalho nem partes suficientes do país.”
Os beneficiários das doações são entusiastas qualificados do mercado. “Os mercados são ótimos, mas temos que superar essa noção de que ‘os mercados são autônomos, então deixe que o mercado resolva'”, disse David Autor, economista do trabalho no MIT. “Esse fatalismo é uma decisão.”
Autor é um dos líderes do programa do MIT para moldar o futuro do trabalho. “Estamos chamando isso de ‘moldagem’ porque é intervencionista”, disse ele.
O projeto do MIT pesquisará os desafios enfrentados por trabalhadores sem diploma universitário de quatro anos —quase dois terços da força de trabalho dos EUA— e medidas que podem melhorar seus empregos ou levá-los a ocupações mais bem remuneradas.
O grupo do MIT também vai explorar políticas e incentivos para orientar o desenvolvimento tecnológico de forma a aumentar a produtividade dos trabalhadores, em vez de substituí-los.
Cada um dos centros terá uma abordagem diferente. O programa de Howard examinará as desigualdades raciais e econômicas. O centro Johns Hopkins vai explorar a ascensão e disseminação do neoliberalismo e as lições aprendidas. E o Instituto Santa Fé desenvolverá novos modelos econômicos —atualizados com insights e dados da economia comportamental, estudos de inovação e a concorrência nos mercados digitais.
A Hewlett está contribuindo com US$ 35 milhões (R$ 181 milhões) em doações para as quatro universidades, e a Omidyar Network está fazendo uma de US$ 6,5 milhões (R$ 33,6 milhões) para o Santa Fe Institute.
A Fundação Hewlett, criada em 1966 por um cofundador da Hewlett-Packard e sua mulher, é uma das maiores entidades filantrópicas dos Estados Unidos. A Omidyar Network, criada em 2004 por Pierre Omidyar, fundador do eBay, e sua mulher, Pam, inclui uma fundação e um braço de investimento que apoia empreendimentos de impacto social com fins lucrativos.
Ambas as fundações são identificadas como de esquerda porque apoiam o trabalho em áreas como mudança climática, igualdade de gêneros e justiça econômica. Mas Mike Kubzansky, CEO da Omidyar Network, disse que os desafios econômicos de hoje superam as divisões partidárias.
“Acho que há um amplo consenso de que o conjunto tradicional de ideias econômicas já passou do prazo de validade”, disse.
Lifting hundreds of millions of people out of “extreme poverty” – where they live on less than US$1.90 per day – would drive a global increase in emissions of less than 1%, according to new research.
The study, published in Nature Sustainability, highlights the global inequality in emissions between people in rich and poor countries. For example, it finds that the average carbon footprint of a person living in sub-Saharan Africa is 0.6 tonnes of carbon dioxide (tCO2). Meanwhile, the average US citizen produces 14.5tCO2 per year.
The authors find that the average carbon footprint in the top 1% of emitters was more than 75-times higher than that in the bottom 50%.
“The inequality is just insane,” the lead author of the study tells Carbon Brief. “If we want to reduce our carbon emissions, we really need to do something about the consumption patterns of the super-rich.”
A scientist not involved in the research says that “we often hear that actions taken in Europe or the US are meaningless when compared to the industrial emissions of China, or the effects of rapid population growth in Africa. This paper exposes these claims as wilfully ignorant, at best”.
Emissions inequality
Humans release tens of billions of tonnes of CO2 into the atmosphere every year. However, the distribution of these emissions is unequal – as they are disproportionately produced by people in wealthier countries who typically live more carbon-intensive lifestyles.
The new study uses what it calls “outstandingly detailed” global expenditure data from the World Bank Consumption Dataset from 2014 to assess the carbon footprints of people in different countries, and with different consumption levels.
Dr Klaus Hubacek is a professor of science, technology and society at the University of Groningen and an author on the study. He tells Carbon Brief what is included in consumption figures:
“Driving the model with the consumption patterns calculates the carbon emissions not only directly through expenditure for heating and cooling, but the embodied carbon emissions in the products they buy. So it’s taking account of the entire global supply chains to calculate those carbon emissions.”
Dr Yuli Shan – a faculty research fellow in climate change economics at the University of Groningen – is also an author on the study. He explains that using consumption data ensures that carbon emissions are linked to the countries that use goods and services, rather than the countries that produce them. This is important, because “poor countries emit large quantities of CO2 due to the behaviour of people in developed countries”, he adds.
The map below shows the average carbon footprints of residents of the 116 countries included in the study. The shading indicates the size of the carbon footprint, for low (blue) to high (red). Note the exponential scale on the colour bar.
National average carbon footprints for 116 countries, from low (blue) to high (red). Note the exponential scale on the colour bar. Source: Bruckner et al (2022).
The authors find that Luxembourg has the highest average national per capita carbon footprint in the study, at 30tCO2 per person, followed by the US with 14.5tCO2. It is worth noting that a number of countries with high per-capita emissions are not included in the study, such as Australia, Canada, Japan, Saudi Arabia and Iran, as these are not included in the dataset.
In contrast, Madagascar, Malawi, Burkina Faso, Uganda, Ethiopia and Rwanda all have average carbon footprints of less than 0.2tCO2.
Dr Shoibal Chakravarty is a visiting professor at the Divecha Centre for Climate Change and was also not involved in the research. He tells Carbon Brief that the study “significantly improves on previous attempts” to measure per-capita emissions, and is “more rigorous that past efforts”.
The rich and the ‘super-rich’
Within each country, the authors also split the population into groups based on how much they spend, on average. Benedikt Bruckner – the lead author on the study, also from the University of Groningen – tells Carbon Brief that while previous studies typically used four or five groups, this study uses more than 200.
The high number of “expenditure bins” allows for “more precise, more detailed [and] more accurate” analysis, Hubacek says.
When including bins, the spread of carbon footprints ranges from less than 0.01 tCO2 for more than a million people in sub-Saharan countries to hundreds of tonnes of CO2 for about 500,000 individuals at the top of the “global expenditure spectrum”, the authors find.
The authors then split the global population into the top 1%, next 9%, next 40% and bottom 50% of emitters. Their share of global emissions (left) and average carbon footprint (right) are shown in red, yellow, light blue and dark blue below, respectively.
The global share of carbon emissions (left) and average carbon footprints (right) of the top 1%, next 9%, next 40% and bottom 50% of emitters. Chart by Carbon Brief, using Highcharts. Credit: Bruckner et al (2022).
The study finds that the average carbon footprint in the top 1% of emitters is more than 75-times higher than that in the bottom 50%.
This gap is “astonishing”, Dr Wiliam Lamb – a researcher at the Mercator Research Institute who was not involved in the study – tells Carbon Brief. He adds that responsibility for global emissions lies with the “super-rich”:
“In the public conversation on climate change, we often hear that actions taken in Europe or the US are meaningless when compared to the industrial emissions of China, or the effects of rapid population growth in Africa. This paper exposes these claims as wilfully ignorant, at best. By far the worst polluters are the super-rich, most of whom live in high income countries.”
Lamb notes that the expenditure of the “super-rich” may be even higher than suggested by this analysis, because “their earnings may be derived from investments, while their expenditures can be shrouded in secrecy.”
Dr Bruckner also highlights this underestimation, noting that while the highest carbon footprints in this study go up to hundreds of tonnes of CO2 per year, past studies into the super-rich have produced carbon footprint estimates of more than 1,000 tonnes per year. “The inequality is just insane,” he tells Carbon Brief. He adds:
“If we want to reduce our carbon emissions, we really need to do something about the consumption patterns of the super-rich.”
Eradicating poverty
In 2015, the United Nations set a series of Sustainable Development Goals – the first of which is to “end poverty in all its forms everywhere”. The goal focuses on eradicating “extreme poverty” – defined as living on less than US$1.90 per day – as well as halving poverty as defined by national poverty lines.
The map below shows the proportion of people in the 119 countries mapped are living in extreme poverty, from a low level (blue) to high (red).
National population shares living below the extreme poverty line. Source: Bruckner et al (2022).
More than a billion people were living below the extreme poverty line of US$1.90 per day in 2014, according to the study. The authors find that “extreme poverty” is mostly concentrated in Africa and south Asia – where per capita CO2 emissions are generally the lowest.
“Carbon inequality is a mirror to extreme income and wealth inequality experienced at a national and global level today,” the study says.
To investigate how poverty alleviation would impact global carbon emissions, the authors devised a range of possible “poverty alleviation and eradication scenarios”.
These scenarios assume no changes in population or energy balance. Instead, they shift people living in poverty into an expenditure group above the poverty line – and assume that their consumption patterns and carbon footprints change accordingly given present-day consumption habits in their country.
The authors find that eradicating “extreme poverty” – by raising everyone above the US$1.90 per day threshold – would drive up global carbon emissions by less than 1%.
Countries in Africa and south Asia would see the greatest increase in emissions, the authors find. For example, they find that emissions in low and lower-middle income countries in sub-Saharan Africa – such as Madagascar – would double if everyone were lifted out of extreme poverty.
Meanwhile, the study finds that lifting 3.6 billion people over the poverty line of US$5.50 per day would drive an 18% increase in global emissions.
The study shows that “eradicating extreme poverty is not a concern for climate mitigation”, says Dr Narasimha Rao – an associate professor of energy systems at the Yale School of Environment, who was not involved in the study.
The study investigates how the average carbon footprints of different countries line up with the Paris warming targets.
The graphic below shows average carbon footprints in a range of countries and regions, including the US, Middle East, North Africa and Turkey (MENAT) and sub-Saharan Africa. The colour of each column indicates the region’s average expenditure per person, measured using “purchasing power parity” to account for the different costs of living between different countries.
Regional average carbon footprints for countries and regions. The dotted lines indicate the carbon footprints needed to adhere to the temperature goals set out in the Paris Agreement. Source: Bruckner et al (2022).
The dotted lines show the target per-capita footprint that the world would need to adopt to limit warming to 2C (top line) and 1.5C (bottom line).
The authors find that according to existing literature, humanity needs to reach an average carbon footprint of 1.6-2.8tCO2 in the coming decade to limit warming to 1.5C or 2C above preindustrial levels.
In this chart, the US exceeds this amount the most dramatically. Meanwhile, individuals in sub-Saharan Africa are well below the global target range – emitting only 0.6tCO2 per year on average.
“From a climate justice perspective, the clear focus of climate policy should be on high emitters,” Lamb tells Carbon Brief. He adds:
“We have a moral imperative to reduce emissions as fast as possible in order to avoid climate impacts where they will land the worst – in the Global South – as well as to ease the burden of the transition on vulnerable populations.”
“[The analysis] is critical to setting equitable and just targets for climate mitigation, such that those who contribute the most to current emissions mitigate the most in alignment with the UNFCCC’scommon but differentiated responsibility and polluter pays principle.”
Bruckner et al (2022), Impacts of poverty alleviation on national and global carbon emissions, Nature Sustainability, doi:10.1038/s41893-021-00842-z
Um dos criadores do Fome Zero, Walter Belik critica o desmonte da rede de segurança alimentar pelo governo Bolsonaro
Suzana Petropouleas – 23 de janeiro de 2022
Um dos criadores do Fome Zero e um dos principais pesquisadores em segurança alimentar no Brasil, Walter Belik, professor aposentado do Instituto de Economia da Unicamp, defende que o governo Bolsonaro conduz uma política deliberada de desmonte das iniciativas contra a fome no país.
Belik relembra a criação do Fome Zero como um projeto pluripartidário. Desenhado originalmente como um programa de distribuição de cupons para troca por alimentos, ele foi substituído pelo Bolsa Família, carro-chefe da política social de Lula, e o nome passou a designar uma estratégia de segurança alimentar. As iniciativas pavimentaram a saída do Brasil do Mapa da Fome da FAO (Organização das Nações Unidas para Alimentação da Agricultura) em 2014.
O cenário mudou a partir de 2015, diz Belik, com a escalada inflacionária, a ausência de recomposição do valor de benefícios sociais e um desmonte das políticas de segurança alimentar, sobretudo no governo Bolsonaro.
O país voltou ao Mapa da Fome em 2018 e, em 2020, registrou 55,2% da população convivendo com a insegurança alimentar, segundo pesquisa da Rede Penssan. Cenas observadas em 2021, como pessoas buscando ossos e carcaças para se alimentar e os diversos protestos contra a fome, não podem ser creditadas só à crise provocada pela pandemia, diz ele.
A que o sr. atribui o avanço da fome nos últimos anos?
O aumento era previsível. Tivemos uma redução até 2014 e a subida começa a aparecer já em 2017. O ano de 2018 já configura uma volta do Brasil ao Mapa da Fome. Esse dado se confirma e agrava nos anos seguintes, segundo dados da Reden Penssan e ONU. Em 2022, a tendência é de continuidade nesse aumento.
A ONU associa a insuficiência alimentar grave e moderada a um quadro de fome. Tomando as duas porcentagens, chegamos a um quadro de aproximadamente 25% da população em situação vulnerável. É bastante crítico. É um quadro complicadíssimo, um quarto da população está passando fome no Brasil.
Os impactos para a economia são enormes, porque existe um custo social da fome. Esse custo deve ser gerenciado pelas políticas públicas. Ele impacta no sistema de segurança social, no Orçamento, na saúde, na educação —com atraso de aprendizagem das crianças—, e no mercado de trabalho, com redução da mão de obra e da produtividade.
Colocando na balança, prevenir seria mais barato. A fome custa caro.
O quanto a pandemia afetou a fome?
Não dá para atribuir a fome só à Covid, pois se tivéssemos uma rede de proteção social em funcionamento, não teríamos um quadro tão complicado quanto o que estamos vivendo.
O programa de estoques de regulação da Conab, por exemplo, baseado principalmente em compras da agricultura familiar, acabou. Boa parte da crise de desabastecimento e alta de preços em 2020 tem a ver com a ideia de que o Brasil não precisa de estoques reguladores de alimentos, o que é absurdo não só do ponto de vista de segurança alimentar, mas nacional.
O país depender de importações e da variação de preços internacionais é absurdo, diante do quadro de abundância que temos no Brasil.
O sr. fala em desmonte da rede de segurança alimentar no governo Bolsonaro. Quais políticas foram afetadas?
A lista é extensa. O Bolsa Família, desidratado, passou de um programa de transferência de renda com condicionalidades para um de doação. Com o Auxílio Brasil, a ideia de proteção e assistência social dessas famílias foi escanteada.
O Pronaf [Programa de Fortalecimento da Agricultura Familiar] foi desidratado e os valores cortados em 35%. O programa de reforma agrária, a Secretaria de Agricultura Familiar, o programa de estoques de regulação da Conab e o programa de cisternas, todos foram descontinuados.
O PAA [Programa de Aquisição de Alimentos], que priorizava a compra de alimentos de agricultura familiar para doações ou alimentação escolar e chegou a comprar quase R$ 1 bilhão, garantindo renda para os pequenos produtores, acabou.
O programa de banco de alimentos virou o “Comida no Prato”, assistencialista e criado pelo governo para faturar em cima do trabalho feito há duas décadas pelos bancos de alimentos do Brasil, organizados pela sociedade civil, basicamente. O programa de restaurantes populares foi descontinuado, e hoje vivemos um congestionamento nos restaurantes populares de R$ 1, graças à perda de renda da população. O programa de cozinhas comunitárias acabou.
Agora, o governo quer mexer no PAT [Programa de Alimentação do Trabalhador] e reduzir a isenção fiscal das empresas que promovem o vale-alimentação ou tem restaurante na empresa. Todos os programas de abastecimento, como modernização ou mesmo privatização das Ceasas, também acabaram. Elas se tornaram obsoletas, mas têm papel importantíssimo no abastecimento urbano.
Uma coisa é consertar um programa, outro é extingui-lo. Tem uma lista enorme de programas finalizados em nome de resolver problemas fiscais e respeitar o teto de gastos, que depois foi furado.
Por que o sr. critica o programa Comida no Prato?
Esse caso é escandaloso. Em 2017, foi criada a Rede Brasileira de Banco de Alimentos, ideia de muito tempo atrás que visava melhorar a comunicação entre os mais de 200 bancos pelo país e reduzir custos. São na maioria ONGs e entidades civis.
O governo Bolsonaro centralizou os cadastros de doações de novos doadores, como supermercados ou indústrias, e promete isenção do ICMS a elas. Ora, esse imposto é estadual e a maioria dos alimentos doados são frescos. Estados como São Paulo não cobram ICMS sobre eles. É uma medida inócua e populista.
No caso dos industrializados, onde incide IPI, não há isenção nenhuma.
O governo quer concentrar as informações em torno dele para depois dizer que está fazendo uma ação de solidariedade, mas ele não faz nada, quem faz são as empresas que doam e as ONGS. É escandaloso. É para funcionar na propaganda política de 2022. Uma tristeza de ver.
Como a questão da fome pode afetar as eleições de 2022?
Se em campanhas anteriores os temas eram corrupção e segurança pública, esse ano vai ser saúde, em primeiro lugar, e alimentação.
Estamos numa situação de retrocesso que é única no mundo. Não há sequer um caso na história documentado pela FAO de um país que saiu do Mapa e voltou. Nenhum. Esse é o tamanho da tragédia que estamos vivendo.
A tragédia que estamos vivendo com a fome choca qualquer pessoa que trabalha na área ou vê a situação. Deve ser prioridade número um na cabeça de qualquer programa de governo. Lógico que, vindo do Bolsonaro, não é algo sério, é eleitoreiro. Mas diria que os outros têm uma preocupação com isso e, nas campanhas, será fundamental.
O sr. defende um Fome Zero 2.0 caso Lula, que lidera as pesquisas, seja eleito?
Não sou filiado ao PT. Não sei exatamente o que está sendo discutido hoje, em nível de programa de governo. Mas diria que qualquer pessoa de bom senso vai ter que atacar esse problema como o número um.
Talvez não seja mais uma bandeira do PT, mas uma bandeira da sociedade civilizada como um todo. É uma questão civilizatória. Mais da metade da população vive em insegurança alimentar, segundo os últimos dados. Você não pode virar as costas para isso.
Não é possível que algum candidato, que tenha algum senso de solidariedade e uma certa empatia pelo povo brasileiro, possa conviver com uma situação como essa. Não é possível. Então não é um problema só do candidato Lula, mas de todos candidatos.
Por que o Fome Zero não conseguiu eliminar a fome de forma estrutural?
Programas de transferência de renda são o primeiro passo. Quem tem fome tem pressa. Tem que garantir uma cesta básica, alimentação na mesa dessas famílias.
O passo seguinte, de fato gigantesco, é atacar as questões da pobreza de forma multidimensional. Dados mostram que o gasto em transporte ultrapassou o gasto com alimentação, tradicionalmente o maior das famílias. Como garantir alimentação se o sujeito vai gastar uma parte da transferência de renda para pagar o transporte para trabalhar? Aproximadamente 30 milhões estão em trabalhos precários e não têm vale-transporte. Gasta-se para trabalhar.
Habitação é outro item de despesa que está no mesmo nível do gasto com alimentação, em torno de 20%.
Não dá para ter um programa de alimentação sem analisar essas outras dimensões que compõem a pobreza. O que que precisa ser feito? O que não foi feito? É passar dessa fase de programa ligados à segurança alimentar para programas mais gerais, que possam garantir a erradicação da pobreza, o objetivo número um do milênio da ONU. E erradicar a pobreza não é só renda, tem outras questões relacionadas.
O que um programa de combate à fome atual deve fazer de diferente do que foi feito no Fome Zero?
O programa número um agora seria de abastecimento dos centros urbanos, tema para o qual o programa não apresentou respostas de maior amplitude. Foram respostas pontuais.
Tem que modernizar as relações de abastecimento e comercialização, do campo ao consumidor final. Estamos numa era da economia digital e devemos aproveitar todos os elementos dados pelas plataformas digitais: reduzir a intermediação, agilizar sistemas, promover a padronização e classificação no campo e a definição de embalagem para redução do desperdício, melhorar sistemas de transporte e plataformas de comercialização, além de conectar centrais de distribuição com a agricultura familiar, principalmente os produtores mais pobres.
É possível fazer. Também é preciso estabelecer relações mais permanentes entre o consumidor e o produtor, por exemplo, através de modelo de assinatura de cestas de alimentos frescos e saudáveis.
A qualidade da alimentação também piorou na pandemia, com aumento do consumo de ultraprocessados. Como atacar esse problema?
Ultraprocessados são mais baratos e fáceis de encontrar.
Precisamos garantir melhoria da renda no campo e no abastecimento na cidade. Temos uma rede de Ceasas (Centrais de Abastecimento) maravilhosa, construída na década de 70, que está se deteriorando. Ela pode cumprir esse papel.
A Ceagesp (Companhia de Entrepostos e Armazéns Gerais de São Paulo), por exemplo, tem seu volume comercializado estagnado há dez anos. Está sendo comida pelas bordas pelo atacado moderno, que atua via supermercados. É importante prover este sistema de distribuição para feiras livres, de pequenos comércios, compra direta para o consumidor.
De nada adianta você fazer uma transferência de renda de R$ 600 e a pessoa comprar um alimento muito industrializado. Algumas áreas são verdadeiros desertos alimentares e isso piorou na pandemia: não tem feira, não tem distribuição, circulação de alimento fresco.
A ideia é que você possa reconectar as pessoas que recebem transferência de renda com uma alimentação saudável, garantindo renda também no campo.
No curto prazo, algo deve mudar no panorama da fome no Brasil?
Esse ano ainda será bastante complicado. Com a situação fiscal do Brasil se estabeleceram alguns tetos. As emendas parlamentares tratam de questões ligadas a infraestrutura. Então não há nenhum programa consistente voltado para combater este problema agora, no curto prazo. E a pandemia, que se imaginava controlada, passa por novo descontrole. Não vejo muita condição de resolver o problema.
Ainda mais porque teremos um ano de recessão, com previsões de crescimento em zero, 0,29%. E com crescimento zero tem-se a persistência do desemprego e queda de renda.
O quadro internacional também está relativamente complicado, então vamos continuar com aumentos de preços. Diria que 2022 não vai apresentar nenhum refresco. Em 2023, com seja lá quem ganhar a eleição, que não seja o Bolsonaro, teremos a possibilidade de atacar esse problema de frente.
Raio-x
Walter Belik, 66, é graduado em administração de empresas pela FGV, com mestrado pela mesma instituição e e doutorado em economia na Unicamp. Fez pós-doutorado no University College de Londres e no Departamento de Agricultura e Economia dos Recursos Naturais da University of California, em Berkeley, Estados Unidos. É professor aposentado de economia agrícola do Instituto de Economia da Unicamp e professor convidado na University of Kassel, Alemanha. Coordenou a Iniciativa América Latina e Caribe Sem Fome da FAO (Organização para a Agricultura e Alimentação das Nações Unidas), até 2008 e desde 2013 é membro do Painel de Alto Nível da ONU de Experts para a Segurança Alimentar Mundial. Publicou mais de 200 artigos científicos, além de livros e textos de divulgação na área de agricultura e alimentação.
Source: Potsdam Institute for Climate Impact Research (PIK)
Summary: Economic growth goes down when the number of wet days and days with extreme rainfall go up, a team of scientists finds. The data analysis of more than 1,500 regions over the past 40 years shows a clear connection and suggests that intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy.
Economic growth goes down when the number of wet days and days with extreme rainfall go up, a team of Potsdam scientists finds. Rich countries are most severely affected and herein the manufacturing and service sectors, according to their study now published as cover story in the journal Nature. The data analysis of more than 1,500 regions over the past 40 years shows a clear connection and suggests that intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy.
“This is about prosperity, and ultimately about people’s jobs. Economies across the world are slowed down by more wet days and extreme daily rainfall — an important insight that adds to our growing understanding of the true costs of climate change,” says Leonie Wenz from the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC) who led the study.
“Macro-economic assessments of climate impacts have so far focused mostly on temperature and considered — if at all — changes in rainfall only across longer time scales such as years or months, thus missing the complete picture,” explains Wenz. “While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year. Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the US, Japan, or Germany.”
A first-of-its-kind global analysis of subnational rainfall effects
“We identify a number of distinct effects on economic production, yet the most important one really is from extreme daily rainfall,” says Maximilian Kotz, first author of the study and also at the Potsdam Institute. “This is because rainfall extremes are where we can already see the influence of climate change most clearly, and because they are intensifying almost everywhere across the world.”
The analysis statistically evaluates data of sub-national economic output for 1554 regions worldwide in the period 1979-2019, collected and made publicly available by MCC and PIK. The scientists combine these with high resolution rainfall data. The combination of ever increasing detail in climatic and economic data is of particular importance in the context of rain, a highly local phenomenon, and revealed the new insights.
“It’s the daily rainfall that poses the threat“
By loading the Earth’s atmosphere with greenhouse gases from fossil power plants and cars, humanity is heating the planet. Warming air can hold more water vapour that eventually becomes rain. Although atmospheric dynamics make regional changes in annual averages more complicated, daily rainfall extremes are increasing globally due to this water vapour effect.
“Our study reveals that it’s precisely the fingerprint of global warming in daily rainfall which have hefty economic effects that have not yet been accounted for but are highly relevant,” says co-author Anders Levermann, Head of the Potsdam Institute’s Complexity Science domain, professor at Potsdam University and researcher at Columbia University’s Lamont Doherty Earth Observatory, New York. “Taking a closer look at short time scales instead of annual averages helps to understand what is going on: it’s the daily rainfall which poses the threat. It’s rather the climate shocks from weather extremes that threaten our way of life than the gradual changes. By destabilizing our climate we harm our economies. We have to make sure that our burning of fossil fuels does not destabilize our societies, too.”
Journal Reference:
Maximilian Kotz, Anders Levermann, Leonie Wenz. The effect of rainfall changes on economic production. Nature, 2022; 601 (7892): 223 DOI: 10.1038/s41586-021-04283-8
Summary: Human behavior drives the evolution of biological organisms in ways that can profoundly adversely impact human welfare. Understanding people’s incentives when they do so is essential to identify policies and other strategies to improve evolutionary outcomes. In a new study, researchers bring the tools of economics and game theory to evolution management.
Human behavior drives the evolution of biological organisms in ways that can profoundly adversely impact human welfare. Understanding people’s incentives when they do so is essential to identify policies and other strategies to improve evolutionary outcomes. In a new study publishing November 16thin the open access journal, PLOS Biology, researchers led by Troy Day at Queens University and David McAdams at Duke University bring the tools of economics and game theory to evolution management.
From antibiotic-resistant bacteria that endanger our health to control-resistant crop pests that threaten to undermine global food production, we are now facing the harmful consequences of our failure to efficiently manage the evolution of the biological world. As Day explains, “By modelling the joint economic and evolutionary consequences of people’s actions we can determine how best to incentivize behavior that is evolutionarily desirable.”
The centerpiece of the new analysis is a simple mathematical formula that determines when physicians, farmers, and other “evolution managers” will have sufficient incentive to steward the biological resources that are under their control, trading off the short-term costs of stewardship against the long-term benefits of delaying adverse evolution.
For instance, when a patient arrives in an urgent-care facility, screening them to determine if they are colonized by a dangerous superbug is costly, but protects future patients by allowing superbug carriers to be isolated from others. Whether the facility itself gains from screening patients depends on how it weighs these costs and benefits.
The researchers take the mathematical model further by implementing game theory, which analyzes how individuals’ decisions are interconnected and can impact each other — such as physicians in the same facility whose patients can infect each other or corn farmers with neighboring fields. Their game-theoretic analysis identifies conditions under which outcomes can be improved through policies that change incentives or facilitate coordination.
“In the example of antibiotic-resistant bacteria, hospitals could go above and beyond to control the spread of superbugs through methods like community contact tracing,” McAdams says. “This would entail additional costs and, alone, a hospital would likely not have an incentive to do so. But if every hospital took this additional step, they might all collectively benefit from slowing the spread of these bacteria. Game theory gives you a systematic way to think through those possibilities and maximize overall welfare.”
“Evolutionary change in response to human interventions, such as the evolution of resistance in response to drug treatment or evolutionary change in response to harvesting, can have significant economic repercussions,” Day adds. “We determine the conditions under which it is economically beneficial to employ costly strategies that limit evolution and thereby preserve the value of biological resources for longer.”
Journal Reference:
Troy Day, David A. Kennedy, Andrew F. Read, David McAdams. The economics of managing evolution. PLOS Biology, 2021; 19 (11): e3001409 DOI: 10.1371/journal.pbio.3001409
DOES ANYONE really understand what is going on in the world economy? The pandemic has made plenty of observers look clueless. Few predicted $80 oil, let alone fleets of container ships waiting outside Californian and Chinese ports. As covid-19 let rip in 2020, forecasters overestimated how high unemployment would be by the end of the year. Today prices are rising faster than expected and nobody is sure if inflation and wages will spiral upward. For all their equations and theories, economists are often fumbling in the dark, with too little information to pick the policies that would maximise jobs and growth.
Yet, as we report this week, the age of bewilderment is starting to give way to greater enlightenment. The world is on the brink of a real-time revolution in economics, as the quality and timeliness of information are transformed. Big firms from Amazon to Netflix already use instant data to monitor grocery deliveries and how many people are glued to “Squid Game”. The pandemic has led governments and central banks to experiment, from monitoring restaurant bookings to tracking card payments. The results are still rudimentary, but as digital devices, sensors and fast payments become ubiquitous, the ability to observe the economy accurately and speedily will improve. That holds open the promise of better public-sector decision-making—as well as the temptation for governments to meddle.
The desire for better economic data is hardly new. America’s GNP estimates date to 1934 and initially came with a 13-month time lag. In the 1950s a young Alan Greenspan monitored freight-car traffic to arrive at early estimates of steel production. Ever since Walmart pioneered supply-chain management in the 1980s private-sector bosses have seen timely data as a source of competitive advantage. But the public sector has been slow to reform how it works. The official figures that economists track—think of GDP or employment—come with lags of weeks or months and are often revised dramatically. Productivity takes years to calculate accurately. It is only a slight exaggeration to say that central banks are flying blind.
Bad and late data can lead to policy errors that cost millions of jobs and trillions of dollars in lost output. The financial crisis would have been a lot less harmful had the Federal Reserve cut interest rates to near zero in December 2007, when America entered recession, rather than in December 2008, when economists at last saw it in the numbers. Patchy data about a vast informal economy and rotten banks have made it harder for India’s policymakers to end their country’s lost decade of low growth. The European Central Bank wrongly raised interest rates in 2011 amid a temporary burst of inflation, sending the euro area back into recession. The Bank of England may be about to make a similar mistake today.
The pandemic has, however, become a catalyst for change. Without the time to wait for official surveys to reveal the effects of the virus or lockdowns, governments and central banks have experimented, tracking mobile phones, contactless payments and the real-time use of aircraft engines. Instead of locking themselves in their studies for years writing the next “General Theory”, today’s star economists, such as Raj Chetty at Harvard University, run well-staffed labs that crunch numbers. Firms such as JPMorgan Chase have opened up treasure chests of data on bank balances and credit-card bills, helping reveal whether people are spending cash or hoarding it.
These trends will intensify as technology permeates the economy. A larger share of spending is shifting online and transactions are being processed faster. Real-time payments grew by 41% in 2020, according to McKinsey, a consultancy (India registered 25.6bn such transactions). More machines and objects are being fitted with sensors, including individual shipping containers that could make sense of supply-chain blockages. Govcoins, or central-bank digital currencies (CBDCs), which China is already piloting and over 50 other countries are considering, might soon provide a goldmine of real-time detail about how the economy works.
Timely data would cut the risk of policy cock-ups—it would be easier to judge, say, if a dip in activity was becoming a slump. And the levers governments can pull will improve, too. Central bankers reckon it takes 18 months or more for a change in interest rates to take full effect. But Hong Kong is trying out cash handouts in digital wallets that expire if they are not spent quickly. CBDCs might allow interest rates to fall deeply negative. Good data during crises could let support be precisely targeted; imagine loans only for firms with robust balance-sheets but a temporary liquidity problem. Instead of wasteful universal welfare payments made through social-security bureaucracies, the poor could enjoy instant income top-ups if they lost their job, paid into digital wallets without any paperwork.
The real-time revolution promises to make economic decisions more accurate, transparent and rules-based. But it also brings dangers. New indicators may be misinterpreted: is a global recession starting or is Uber just losing market share? They are not as representative or free from bias as the painstaking surveys by statistical agencies. Big firms could hoard data, giving them an undue advantage. Private firms such as Facebook, which launched a digital wallet this week, may one day have more insight into consumer spending than the Fed does.
Know thyself
The biggest danger is hubris. With a panopticon of the economy, it will be tempting for politicians and officials to imagine they can see far into the future, or to mould society according to their preferences and favour particular groups. This is the dream of the Chinese Communist Party, which seeks to engage in a form of digital central planning.
In fact no amount of data can reliably predict the future. Unfathomably complex, dynamic economies rely not on Big Brother but on the spontaneous behaviour of millions of independent firms and consumers. Instant economics isn’t about clairvoyance or omniscience. Instead its promise is prosaic but transformative: better, timelier and more rational decision-making. ■
AS PART OF his plan for socialism in the early 1970s, Salvador Allende created Project Cybersyn. The Chilean president’s idea was to offer bureaucrats unprecedented insight into the country’s economy. Managers would feed information from factories and fields into a central database. In an operations room bureaucrats could see if production was rising in the metals sector but falling on farms, or what was happening to wages in mining. They would quickly be able to analyse the impact of a tweak to regulations or production quotas.
Cybersyn never got off the ground. But something curiously similar has emerged in Salina, a small city in Kansas. Salina311, a local paper, has started publishing a “community dashboard” for the area, with rapid-fire data on local retail prices, the number of job vacancies and more—in effect, an electrocardiogram of the economy.
What is true in Salina is true for a growing number of national governments. When the pandemic started last year bureaucrats began studying dashboards of “high-frequency” data, such as daily airport passengers and hour-by-hour credit-card-spending. In recent weeks they have turned to new high-frequency sources, to get a better sense of where labour shortages are worst or to estimate which commodity price is next in line to soar. Economists have seized on these new data sets, producing a research boom (see chart 1). In the process, they are influencing policy as never before.
This fast-paced economics involves three big changes. First, it draws on data that are not only abundant but also directly relevant to real-world problems. When policymakers are trying to understand what lockdowns do to leisure spending they look at live restaurant reservations; when they want to get a handle on supply-chain bottlenecks they look at day-by-day movements of ships. Troves of timely, granular data are to economics what the microscope was to biology, opening a new way of looking at the world.
Second, the economists using the data are keener on influencing public policy. More of them do quick-and-dirty research in response to new policies. Academics have flocked to Twitter to engage in debate.
And, third, this new type of economics involves little theory. Practitioners claim to let the information speak for itself. Raj Chetty, a Harvard professor and one of the pioneers, has suggested that controversies between economists should be little different from disagreements among doctors about whether coffee is bad for you: a matter purely of evidence. All this is causing controversy among dismal scientists, not least because some, such as Mr Chetty, have done better from the shift than others: a few superstars dominate the field.
Their emerging discipline might be called “third wave” economics. The first wave emerged with Adam Smith and the “Wealth of Nations”, published in 1776. Economics mainly involved books or papers written by one person, focusing on some big theoretical question. Smith sought to tear down the monopolistic habits of 18th-century Europe. In the 20th century John Maynard Keynes wanted people to think differently about the government’s role in managing the economic cycle. Milton Friedman aimed to eliminate many of the responsibilities that politicians, following Keynes’s ideas, had arrogated to themselves.
All three men had a big impact on policies—as late as 1850 Smith was quoted 30 times in Parliament—but in a diffuse way. Data were scarce. Even by the 1970s more than half of economics papers focused on theory alone, suggests a study published in 2012 by Daniel Hamermesh, an economist.
That changed with the second wave of economics. By 2011 purely theoretical papers accounted for only 19% of publications. The growth of official statistics gave wonks more data to work with. More powerful computers made it easier to spot patterns and ascribe causality (this year’s Nobel prize was awarded for the practice of identifying cause and effect). The average number of authors per paper rose, as the complexity of the analysis increased (see chart 2). Economists had greater involvement in policy: rich-world governments began using cost-benefit analysis for infrastructure decisions from the 1950s.
Second-wave economics nonetheless remained constrained by data. Most national statistics are published with lags of months or years. “The traditional government statistics weren’t really all that helpful—by the time they came out, the data were stale,” says Michael Faulkender, an assistant treasury secretary in Washington at the start of the pandemic. The quality of official local economic data is mixed, at best; they do a poor job of covering the housing market and consumer spending. National statistics came into being at a time when the average economy looked more industrial, and less service-based, than it does now. The Standard Industrial Classification, introduced in 1937-38 and still in use with updates, divides manufacturing into 24 subsections, but the entire financial industry into just three.
The mists of time
Especially in times of rapid change, policymakers have operated in a fog. “If you look at the data right now…we are not in what would normally be characterised as a recession,” argued Edward Lazear, then chairman of the White House Council of Economic Advisers, in May 2008. Five months later, after Lehman Brothers had collapsed, the IMF noted that America was “not necessarily” heading for a deep recession. In fact America had entered a recession in December 2007. In 2007-09 there was no surge in economics publications. Economists’ recommendations for policy were mostly based on judgment, theory and a cursory reading of national statistics.
The gap between official data and what is happening in the real economy can still be glaring. Walk around a Walmart in Kansas and many items, from pet food to bottled water, are in short supply. Yet some national statistics fail to show such problems. Dean Baker of the Centre for Economic and Policy Research, using official data, points out that American real inventories, excluding cars and farm products, are barely lower than before the pandemic.
There were hints of an economics third wave before the pandemic. Some economists were finding new, extremely detailed streams of data, such as anonymised tax records and location information from mobile phones. The analysis of these giant data sets requires the creation of what are in effect industrial labs, teams of economists who clean and probe the numbers. Susan Athey, a trailblazer in applying modern computational methods in economics, has 20 or so non-faculty researchers at her Stanford lab (Mr Chetty’s team boasts similar numbers). Of the 20 economists with the most cited new work during the pandemic, three run industrial labs.
More data sprouted from firms. Visa and Square record spending patterns, Apple and Google track movements, and security companies know when people go in and out of buildings. “Computers are in the middle of every economic arrangement, so naturally things are recorded,” says Jon Levin of Stanford’s Graduate School of Business. Jamie Dimon, the boss of JPMorgan Chase, a bank, is an unlikely hero of the emergence of third-wave economics. In 2015 he helped set up an institute at his bank which tapped into data from its network to analyse questions about consumer finances and small businesses.
The Brexit referendum of June 2016 was the first big event when real-time data were put to the test. The British government and investors needed to get a sense of this unusual shock long before Britain’s official GDP numbers came out. They scraped web pages for telltale signs such as restaurant reservations and the number of supermarkets offering discounts—and concluded, correctly, that though the economy was slowing, it was far from the catastrophe that many forecasters had predicted.
Real-time data might have remained a niche pursuit for longer were it not for the pandemic. Chinese firms have long produced granular high-frequency data on everything from cinema visits to the number of glasses of beer that people are drinking daily. Beer-and-movie statistics are a useful cross-check against sometimes dodgy official figures. China-watchers turned to them in January 2020, when lockdowns began in Hubei province. The numbers showed that the world’s second-largest economy was heading for a slump. And they made it clear to economists elsewhere how useful such data could be.
Vast and fast
In the early days of the pandemic Google started releasing anonymised data on people’s physical movements; this has helped researchers produce a day-by-day measure of the severity of lockdowns (see chart 3). OpenTable, a booking platform, started publishing daily information on restaurant reservations. America’s Census Bureau quickly introduced a weekly survey of households, asking them questions ranging from their employment status to whether they could afford to pay the rent.
In May 2020 Jose Maria Barrero, Nick Bloom and Steven Davis, three economists, began a monthly survey of American business practices and work habits. Working-age Americans are paid to answer questions on how often they plan to visit the office, say, or how they would prefer to greet a work colleague. “People often complete a survey during their lunch break,” says Mr Bloom, of Stanford University. “They sit there with a sandwich, answer some questions, and that pays for their lunch.”
Demand for research to understand a confusing economic situation jumped. The first analysis of America’s $600 weekly boost to unemployment insurance, implemented in March 2020, was published in weeks. The British government knew by October 2020 that a scheme to subsidise restaurant attendance in August 2020 had probably boosted covid infections. Many apparently self-evident things about the pandemic—that the economy collapsed in March 2020, that the poor have suffered more than the rich, or that the shift to working from home is turning out better than expected—only seem obvious because of rapid-fire economic research.
It is harder to quantify the policy impact. Some economists scoff at the notion that their research has influenced politicians’ pandemic response. Many studies using real-time data suggested that the Paycheck Protection Programme, an effort to channel money to American small firms, was doing less good than hoped. Yet small-business lobbyists ensured that politicians did not get rid of it for months. Tyler Cowen, of George Mason University, points out that the most significant contribution of economists during the pandemic involved recommending early pledges to buy vaccines—based on older research, not real-time data.
Still, Mr Faulkender says that the special support for restaurants that was included in America’s stimulus was influenced by a weak recovery in the industry seen in the OpenTable data. Research by Mr Chetty in early 2021 found that stimulus cheques sent in December boosted spending by lower-income households, but not much for richer households. He claims this informed the decision to place stronger income limits on the stimulus cheques sent in March.
Shaping the economic conversation
As for the Federal Reserve, in May 2020 the Dallas and New York regional Feds and James Stock, a Harvard economist, created an activity index using data from SafeGraph, a data provider that tracks mobility using mobile-phone pings. The St Louis Fed used data from Homebase to track employment numbers daily. Both showed shortfalls of economic activity in advance of official data. This led the Fed to communicate its doveish policy stance faster.
Speedy data also helped frame debate. Everyone realised the world was in a deep recession much sooner than they had in 2007-09. In the IMF’s overviews of the global economy in 2009, 40% of the papers cited had been published in 2008-09. In the overview published in October 2020, by contrast, over half the citations were for papers published that year.
The third wave of economics has been better for some practitioners than others. As lockdowns began, many male economists found themselves at home with no teaching responsibilities and more time to do research. Female ones often picked up the slack of child care. A paper in Covid Economics, a rapid-fire journal, finds that female authors accounted for 12% of economics working-paper submissions during the pandemic, compared with 20% before. Economists lucky enough to have researched topics before the pandemic which became hot, from home-working to welfare policy, were suddenly in demand.
There are also deeper shifts in the value placed on different sorts of research. The Economist has examined rankings of economists from IDEAS RePEC, a database of research, and citation data from Google Scholar. We divided economists into three groups: “lone wolves” (who publish with less than one unique co-author per paper on average); “collaborators” (those who tend to work with more than one unique co-author per paper, usually two to four people); and “lab leaders” (researchers who run a large team of dedicated assistants). We then looked at the top ten economists for each as measured by RePEC author rankings for the past ten years.
Collaborators performed far ahead of the other two groups during the pandemic (see chart 4). Lone wolves did worst: working with large data sets benefits from a division of labour. Why collaborators did better than lab leaders is less clear. They may have been more nimble in working with those best suited for the problems at hand; lab leaders are stuck with a fixed group of co-authors and assistants.
The most popular types of research highlight another aspect of the third wave: its usefulness for business. Scott Baker, another economist, and Messrs Bloom and Davis—three of the top four authors during the pandemic compared with the year before—are all “collaborators” and use daily newspaper data to study markets. Their uncertainty index has been used by hedge funds to understand the drivers of asset prices. The research by Messrs Bloom and Davis on working from home has also gained attention from businesses seeking insight on the transition to remote work.
But does it work in theory?
Not everyone likes where the discipline is going. When economists say that their fellows are turning into data scientists, it is not meant as a compliment. A kinder interpretation is that the shift to data-heavy work is correcting a historical imbalance. “The most important problem with macro over the past few decades has been that it has been too theoretical,” says Jón Steinsson of the University of California, Berkeley, in an essay published in July. A better balance with data improves theory. Half of the recent Nobel prize went for the application of new empirical methods to labour economics; the other half was for the statistical theory around such methods.
Some critics question the quality of many real-time sources. High-frequency data are less accurate at estimating levels (for example, the total value of GDP) than they are at estimating changes, and in particular turning-points (such as when growth turns into recession). In a recent review of real-time indicators Samuel Tombs of Pantheon Macroeconomics, a consultancy, pointed out that OpenTable data tended to exaggerate the rebound in restaurant attendance last year.
Others have worries about the new incentives facing economists. Researchers now race to post a working paper with America’s National Bureau of Economic Research in order to stake their claim to an area of study or to influence policymakers. The downside is that consumers of fast-food academic research often treat it as if it is as rigorous as the slow-cooked sort—papers which comply with the old-fashioned publication process involving endless seminars and peer review. A number of papers using high-frequency data which generated lots of clicks, including one which claimed that a motorcycle rally in South Dakota had caused a spike in covid cases, have since been called into question.
Whatever the concerns, the pandemic has given economists a new lease of life. During the Chilean coup of 1973 members of the armed forces broke into Cybersyn’s operations room and smashed up the slides of graphs—not only because it was Allende’s creation, but because the idea of an electrocardiogram of the economy just seemed a bit weird. Third-wave economics is still unusual, but ever less odd. ■
As a new Oxford paper shows, the incredibly rapid fall in the cost of renewables offers hope–but only if movements can push banks and politicians hard enough
This is one of the first solar panels and batteries ever installed, in the state of Georgia in 1955. At the time it was the most expensive power on earth; now it’s the cheapest, and still falling fast.
So far in the global warming era, we’ve caught precious few breaks. Certainly not from physics: the temperature has increased at the alarming pace that scientists predicted thirty years ago, and the effects of that warming have increased even faster than expected. (“Faster Than Expected” is probably the right title for a history of climate change so far; if you’re a connoisseur of disaster, there is already a blog by that name). The Arctic is melting decades ahead of schedule, and the sea rising on an accelerated schedule, and the forest fires of the science fiction future are burning this autumn. And we haven’t caught any breaks from our politics either: it’s moved with the lumbering defensiveness one would expect from a system ruled by inertia and vested interest. And so it is easy, and completely plausible, to despair: we are on the bleeding edge of existential destruction.
But one trend is, finally, breaking in the right direction, and perhaps decisively. The price of renewable energy is now falling nearly as fast as heat and rainfall records, and in the process perhaps offering us one possible way out. The public debate hasn’t caught up to the new reality—Bill Gates, in his recent bestseller on energy and climate, laments the “green premium” that must be paid for clean energy. But he (and virtually every other mainstream energy observer) is already wrong—and they’re all about to be spectacularly wrong, if the latest evidence turns out to be right.
Last Wednesday, a team at Oxford University released a fascinating paper that I haven’t seen covered anywhere. Stirringly titled “Empirically grounded technology forecasts and the energy transition,” it makes the following argument: “compared to continuing with a fossil-fuel-based system, a rapid green energy transition will likely result in overall net savings of many trillions of dollars–even without accounting for climate damages or co-benefits of climate policy.” Short and muscular, the paper begins by pointing out that at the moment most energy technologies, from gas to solar, have converged on a price point of about $100 per megawatt hour. In the case of coal, gas, and oil, however, “after adjusting for inflation, prices now are very similar to what they were 140 years ago, and there is no obvious long-range trend.” Sun, wind, and batteries, however, have dropped exponentially at roughly ten percent a year for three decades. Solar power didn’t exist until the late 1950s; since that time it has dropped in price about three orders of magnitude.
They note that all the forecasts over those years about how fast prices would drop were uniformly wrong, invariably underestimating by almost comic margins the drop in costs for renewable energy. This is a massive problem: “failing to appreciate cost improvement trajectories of renewables relative to fossil fuels not only leads to under-investment in critical emission reduction technologies, it also locks in higher cost energy infrastructure for decades to come.” That is, if economists don’t figure out that solar is going to get steadily cheaper, you’re going to waste big bucks building gas plants designed to last for decades. And indeed we have (and of course the cost of them is not the biggest problem; that would be the destruction of the planet.)
Happily, the Oxford team demonstrates that there’s a much easier and more effective way to estimate future costs than the complicated calculations used in the past: basically, if you just figure out the historic rates of fall in the costs of renewable energy, you can project them forward into the future because the learning curve seems to keep on going. In their model, validated by thousands of runs using past data, by far the cheapest path for the future is a very fast transition to renewable energy: if you replace almost all fossil fuel use over the next twenty years, you save tens of trillions of dollars. (They also model the costs of using lots of nuclear power: it’s low in carbon but high in price).
To repeat: the cost of fossil fuels is not falling; any technological learning curve for oil and gas is offset by the fact that we’ve already found the easy stuff, and now you must dig deeper. But the more solar and windpower you build, the more the price falls—because the price is only the cost of setting up the equipment, which we get better at all the time. The actual energy arrives every morning when the sun rises. This doesn’t mean it’s a miracle: you have to mine lithium and cobalt, you have to site windmills, and you have to try and do those things with as little damage as possible. But if it’s not a miracle, it’s something like a deus ex machina—and the point is that these machines are cheap.
If we made policy with this fact in mind—if we pushed, as the new $3.5 trillion Senate bill does, for dramatic increases in renewable usage in short order, then we would not only be saving the planet, we’d be saving tons of money. That money would end up in our pockets—but it would be removed from the wallets of people who own oil wells and coal mines, which is precisely why the fossil fuel industry is working so hard to gum up the works, trying to slow down everything from electric cars to induction cooktops and using all their economic and political muscle to prolong the transition. Their economically outmoded system of energy generation can only be saved by political corruption, which sadly is the fossil fuel industry’s remaining specialty. So far the learning curve of their influence-peddling has been steep enough to keep carbon levels climbing.
That’s why we need to pay attention to the only other piece of good news, the only other virtuous thing that’s happened faster than expected. And that’s been the growth of movements to take on the fossil fuel industry and push for change. If those keep growing—if enough of us divest and boycott and vote and march and go to jail—we may be able to push our politicians and our banks hard enough that they actually let us benefit from the remarkable fall in the price of renewable energy. Activists and engineers are often very different kinds of people—but their mostly unconscious alliance offers the only hope of even beginning to catch up with the runaway pace of global warming.
So if you’re a solar engineer working to drop the price of power ten percent a year, don’t you dare leave the lab—the rest of us will chip in to get you pizza and caffeine so you can keep on working. But if you’re not a solar engineer, then see you in the streets (perhaps at October’s ‘People vs Fossil Fuels’ demonstrations in DC). Because you’re the other half of this equation.
From top left: Mariana Mazzucato, Carlota Perez, Kate Raworth, Stephanie Kelton, Esther Duflo. 20-first
Few economists become household names. Last century, it was John Maynard Keynes or Milton Friedman. Today, Thomas Piketty has become the economists’ poster-boy. Yet listen to the buzz, and it is five female economists who deserve our attention. They are revolutionising their field by questioning the meaning of everything from ‘value’ and ‘debt’ to ‘growth’ and ‘GDP.’ Esther Duflo, Stephanie Kelton, Mariana Mazzucato, Carlota Perez and Kate Raworth are united in one thing: their amazement at the way economics has been defined and debated to date. Their incredulity is palpable.
It reminds me of many women I’ve seen emerge into power over the past decade. Like Rebecca Henderson, a Management and Strategy professor at Harvard Business School and author of the new Reimagining Capitalism in a World on Fire. “It’s odd to finally make it to the inner circle,” she says, “and discover just how strangely the world is being run.” When women finally make it to the pinnacle of many professions, they often discover a world more wart-covered frog than handsome prince. Like Dorothy in The Wizard of Oz, when they get a glimpse behind the curtain, they discover the machinery of power can be more bluster than substance. As newcomers to the game, they can often see this more clearly than the long-term players. Henderson cites Tom Toro’s cartoon as her mantra. A group in rags sit around a fire with the ruins of civilisation in the background. “Yes, the planet got destroyed” says a man in a disheveled suit, “but for a beautiful moment in time we created a lot of value for shareholders.”
You get the same sense when you listen to the female economists throwing themselves into the still very male dominated economics field. A kind of collective ‘you’re kidding me, right? These five female economists are letting the secret out – and inviting people to flip the priorities. A growing number are listening – even the Pope (see below).
All question concepts long considered sacrosanct. Here are four messages they share:
Get Over It – Challenge the Orthodoxy
Described as “one of the most forward-thinking economists of our times,” Mariana Mazzucato is foremost among the flame throwers. A professor at University College London and the Founder/Director of the UCL Institute for Innovation and Public Purpose, she asks fundamental questions about how ‘value’ has been defined, who decides what that means, and who gets to measure it. Her TED talk, provocatively titled “What is economic value? And who creates it?” lays down the gauntlet. If some people are value creators,” she asks, what does that make everyone else? “The couch potatoes? The value extractors? The value destroyers?” She wants to make economics explicitly serve the people, rather than explain their servitude.
Stephanie Kelton takes on our approach to debt and spoofs the simplistic metaphors, like comparing national income and expenditure to ‘family budgets’ in an attempt to prove how dangerous debt is. In her upcoming book, The Deficit Myth (June 2020), she argues they are not at all similar; what household can print additional money, or set interest rates? Debt should be rebranded as a strategic investment in the future. Deficits can be used in ways good or bad but are themselves a neutral and powerful policy tool. “They can fund unjust wars that destabilize the world and cost millions their lives,” she writes, “or they can be used to sustain life and build a more just economy that works for the many and not just the few.” Like all the economists profiled here, she’s pointing at the mind and the meaning behind the money.
Get Green Growth – Reshaping Growth Beyond GDP
Kate Raworth, a Senior Research Associate at Oxford University’s Environmental Change Institute, is the author of Doughnut Economics. She challenges our obsession with growth, and its outdated measures. The concept of Gross Domestic Product (GDP), was created in the 1930s and is being applied in the 21st century to an economy ten times larger. GDP’s limited scope (eg. ignoring the value of unpaid labour like housework and parenting or making no distinction between revenues from weapons or water) has kept us “financially, politically and socially addicted to growth” without integrating its costs on people and planet. She is pushing for new visual maps and metaphors to represent sustainable growth that doesn’t compromise future generations. What this means is moving away from the linear, upward moving line of ‘progress’ ingrained in us all, to a “regenerative and distributive” model designed to engage everyone and shaped like … a doughnut (food and babies figure prominently in these women’s metaphors).
Carlota Perez doesn’t want to stop or slow growth, she wants to dematerialize it. “Green won’t spread by guilt and fear, we need aspiration and desire,” she says. Her push is towards a redefinition of the ‘good life’ and the need for “smart green growth” to be fuelled by a desire for new, attractive and aspirational lifestyles. Lives will be built on a circular economy that multiplies services and intangibles which offer limitless (and less environmentally harmful) growth. She points to every technological revolution creating new lifestyles. She says we can see it emerging, as it has in the past, among the educated, the wealthy and the young: more services rather than more things, active and creative work, a focus on health and care, a move to solar power, intense use of the internet, a preference for customisation over conformity, renting vs owning, and recycling over waste. As these new lifestyles become widespread, they offer immense opportunities for innovation and new jobs to service them.
Get Good Government – The Strategic Role of the State
All these economists want the state to play a major role. Women understand viscerally how reliant the underdogs of any system are on the inclusivity of the rules of the game. “It shapes the context to create a positive sum game” for both the public and business, says Perez. You need an active state to “tilt the playing field toward social good.” Perez outlines five technological revolutions, starting with the industrial one. She suggests we’re halfway through the fifth, the age of Tech & Information. Studying the repetitive arcs of each revolution enables us to see the opportunity of the extraordinary moment we are in. It’s the moment to shape the future for centuries to come. But she balances economic sustainability with the need for social sustainability, warning that one without the other is asking for trouble.
Mariana Mazzucato challenges governments to be more ambitious. They gain confidence and public trust by remembering and communicating what they are there to do. In her mind that is ensuring the public good. This takes vision and strategy, two ingredients she says are too often sorely lacking. Especially post-COVID, purpose needs to be the driver determining the ‘directionality’ of focus, investments and public/ private partnerships. Governments should be using their power – both of investment and procurement – to orient efforts towards the big challenges on our horizon, not just the immediate short-term recovery. They should be putting conditions on the massive financial bail outs they are currently handing out. She points to the contrast in imagination and impact between airline bailouts in Austria and the UK. The Austrian airlines are getting government aid on the condition they meet agreed emissions targets. The UK is supporting airlines without any conditionality, a huge missed opportunity to move towards larger, broader goals of building a better and greener economy out of the crisis.
Get Real – Beyond the Formulae and Into the Field
All of these economists also argue for getting out of the theories and into the field. They reject the idea of nerdy theoretical calculations done within the confines of a university tower and challenge economists to experiment and test their formulae in the real world.
Esther Duflo, Professor of Poverty Alleviation and Development Economics at MIT, is the major proponent of bringing what is accepted practice in medicine to the field of economics: field trials with randomised control groups. She rails against the billions poured into aid without any actual understanding or measurement of the returns. She gently accuses us of being no better with our 21st century approaches to problems like immunisation, education or malaria than any medieval doctor, throwing money and solutions at things with no idea of their impact. She and her husband, Abhijit Banerjee, have pioneered randomised control trials across hundreds of locations in different countries of the world, winning a Nobel Prize for Economics in 2019 for the insights.
They test, for example, how to get people to use bed nets against malaria. Nets are a highly effective preventive measure but getting people to acquire and use them has been a hard nut to crack. Duflo set up experiments to answer the conundrums: If people have to pay for nets, will they value them more? If they are free, will they use them? If they get them free once, will this discourage future purchases? As it turns out, based on these comparisons, take-up is best if nets are initially given, “people don’t get used to handouts, they get used to nets,” and will buy them – and use them – once they understand their effectiveness. Hence, she concludes, we can target policy and money towards impact.
Mazzucato is also hands-on with a number of governments around the world, including Denmark, the UK, Austria, South Africa and even the Vatican, where she has just signed up for weekly calls contributing to a post-Covid policy. ‘I believe [her vision] can help to think about the future,’ Pope Francis said after reading her book, The Value of Everything: Making and Taking in the Global Economy. No one can accuse her of being stuck in an ivory tower. Like Duflo, she is elbow-deep in creating new answers to seemingly intractable problems.
She warns that we don’t want to go back to normal after Covid-19. Normal was what got us here. Instead, she invites governments to use the crisis to embed ‘directionality’ towards more equitable public good into their recovery strategies and investments. Her approach is to define ambitious ‘missions’ which can focus minds and bring together broad coalitions of stakeholders to create solutions to support them. The original NASA mission to the moon is an obvious precursor model. Why, anyone listening to her comes away thinking, did we forget purpose in our public spending? And why, when so much commercial innovation and profit has grown out of government basic research spending, don’t a greater share of the fruits of success return to promote the greater good?
Economics has long remained a stubbornly male domain and men continue to dominate mainstream thinking. Yet, over time, ideas once considered without value become increasingly visible. The move from outlandish to acceptable to policy is often accelerated by crisis. Emerging from this crisis, five smart economists are offering an innovative range of new ideas about a greener, healthier and more inclusive way forward. Oh, and they happen to be women.
Em 2009, países desenvolvidos prometeram destinar ao menos US$ 100 bilhões anuais aos países pobres a partir de 2020. Passado o prazo, a meta segue distante de ser atingida
Nos escombros do fracasso diplomático da Conferência do Clima de Copenhague (COP 15), em 2009, uma das poucas novidades que se salvaram foi a promessa de países desenvolvidos de ampliar os recursos oferecidos às nações mais pobres para financiar a ação contra a mudança do clima, de forma escalonada, ao longo da década de 2010. Ao final desse período, em 2020, a ideia era que esses recursos somassem ao menos US$ 100 bilhões anuais, valor que passaria a servir como “piso” para o financiamento da ação climática dali em diante.
Passados oito meses do prazo definido pelos países ricos em Copenhague, a promessa de financiamento climático de US$ 100 bilhões não poderia estar mais distante de ser uma realidade. Dados da Organização para Cooperação e Desenvolvimento Econômico (OCDE) indicam que o volume de recursos mobilizados em 2018, último ano com informações totalizadas, foi de cerca de US$ 80 bilhões.
Economistas e especialistas em financiamento para o clima duvidam que os dados referentes aos anos de 2019 e 2020 indiquem um cenário diferente disso. Pior: é muito provável que a pandemia tenha prejudicado a disponibilidade de novos recursos financeiros para ação climática nos países pobres. A incerteza quanto à retomada econômica pós-pandemia também afeta as expectativas para o futuro de curto prazo: com os governos e as empresas na ponta dos pés, enquanto não houver uma normalização efetiva da atividade econômica, dificilmente haverá recursos adicionais para a ação climática internacional.
O problema é que, com a crise climática se intensificando e a pandemia aprofundando o abismo do desenvolvimento entre países ricos e pobres, o financiamento externo para ação climática nas nações em desenvolvimento virou uma questão de vida ou morte. Sem dinheiro, esses países dificilmente terão condições de tirar do papel seus compromissos de mitigação apresentados no Acordo de Paris. A falta de uma sinalização dos países ricos quanto ao cumprimento dessa promessa ameaça gerar uma crise diplomática capaz de prejudicar as conversas na próxima Conferência do Clima (COP 26), programada para novembro em Glasgow, na Escócia, e colocar um incômodo ponto de interrogação no futuro do Acordo de Paris.
Tropeços do passado reforçam incertezas
Desde o começo, a incerteza em torno da viabilidade prática do compromisso financeiro estabelecido pelos governos ricos em 2009 era considerável. Mesmo com o sucesso diplomático obtido em 2015, na COP 21, quando os países aprovaram o Acordo de Paris, o financiamento climático seguiu como um problema político relevante na agenda de negociação.
Os anos subsequentes à Conferência de Paris não ajudaram: a articulação política internacional que tinha possibilitado a aprovação do Acordo na COP 21, encabeçada por Estados Unidos, China e União Europeia, se desfez depois da eleição do negacionista Donald Trump para a Casa Branca. Além de retirar os EUA do Acordo de Paris, Trump também voltou atrás nas promessas financeiras feitas pelo antecessor, Barack Obama.
Sem os EUA, a economia mais rica do planeta, qualquer compromisso financeiro internacional seria inviável, especialmente para a agenda climática. A União Europeia tentou assumir o protagonismo nessa questão, reforçando os desembolsos financeiros junto ao Fundo Climático Verde (GCF, sigla em inglês), estabelecido pela Convenção das Nações Unidas sobre Mudança do Clima (UNFCCC) para receber e administrar os recursos prometidos em Copenhague. Nos últimos anos, o bloco europeu destinou cerca de US$ 20 bilhões anuais, consolidando-se como o principal doador do GCF.
Ao mesmo tempo, os EUA de Trump limitaram-se a cumprir compromissos pregressos de financiamento que somaram pouco mais de US$ 2,5 bilhões. Para se ter ideia, a estimativa em 2009 era de que os americanos assumissem cerca de 40% do bolo do financiamento climático anual a partir de 2020 – ou seja, ao menos US$ 40 bilhões, somando recursos públicos e privados.
O humor mudou um pouco em 2020. Mesmo com a pandemia, a grande novidade foi o retorno dos Estados Unidos à arena multilateral para o clima, com a vitória de Joe Biden. Diferentemente de Trump, Biden colocou a questão climática no centro de sua plataforma eleitoral e dos esforços de recuperação econômica pós-pandemia no país. Além de retornar ao Acordo de Paris, o novo governo dos EUA prometeu recuperar o tempo perdido com novos compromissos financeiros para ação climática nos países pobres.
Em abril, durante a Cúpula sobre o Clima realizada pela Casa Branca com líderes internacionais, Biden prometeu dobrar o volume de financiamento climático americano para US$ 5,7 bilhões até 2024. O dinheiro adicional é obviamente bem-vindo, mas a bagatela não esconde a realidade: os EUA seguirão muito distantes daquilo que deveria ser sua parcela justa de responsabilidade nessa questão.
Essa realidade ficou ainda mais evidente nas últimas semanas, com o fracasso do G-7 e do G-20 em chegar a um acordo em torno de novos compromissos financeiros para a ação climática nos países em desenvolvimento. Havia uma grande expectativa de que esses “clubes”, tendo em vista a COP 26 em novembro, apresentassem ao menos alguma sinalização de dinheiro novo para as nações mais pobres tirarem do papel seus planos climáticos nacionais submetidos no âmbito do Acordo de Paris. No entanto, a decepção foi gritante.
Em xeque, o espírito do Acordo de Paris
Negociadores de países como Índia, Bangladesh e pequenas nações insulares do Pacífico não esconderam a irritação com a falta de novos compromissos financeiros por parte dos governos mais ricos. Ambientalistas também criticaram esse ponto, ressaltando o óbvio: sem recursos, a ação climática nos países pobres ficará inviabilizada, o que coloca em xeque o espírito do Acordo de Paris – por meio do qual todas as nações, ricas ou pobres, comprometeram-se a agir contra a mudança do clima.
“A confiança [entre os países] está em jogo”, observou a negociadora Diann Black-Layne, de Antígua e Barbuda, ao Climate Home pouco após a cúpula do G-7, em junho passado. “O Acordo de Paris foi construído com base na confiança, e pode desmoronar se ela for quebrada”. Sem um compromisso renovado e ampliado para facilitar a ação climática no mundo em desenvolvimento, “só vai ficar mais difícil daqui em diante conseguir o tipo de consenso político necessário” para agir contra a crise climática em nível global.
Crise de energia pode derrubar o PIB e aumentar a inflação no ano que vem, aponta relatório da RPS Capital
Douglas Gavras – 19 de agosto de 2021
O Brasil pode entrar em um quadro de estagflação (combinação de fraqueza econômica e preços em alta), caso não volte a chover no quarto trimestre do ano, segundo avaliação dos analistas da RPS Capital.
“Se o período úmido for ruim, a gente pode ter complicações e o risco não é pequeno. O cenário de estiagem precisa passar até outubro, quando ocorre a transição desse período mais chuvoso”, diz Gabriel Barros, da RPS.
Para o analista, o governo tem adotado algumas medidas, que vão na direção correta, mas não são suficientes para evitar um cenário preocupante nos reservatórios das usinas.
“O que o governo tem anunciado é mais focado em grandes consumidores, ao deslocar o pico de carga da indústria para suavizar a curva”, diz. Como a situação é dramática, no entanto, deveria ser adotado um plano mais amplo de economia de energia.
Ele lembra que a inflação de alimentos ainda deve pesar no bolso, combinada com o aumento de preços da energia.
A inflação medida pelo IPCA (Índice Nacional de Preços ao Consumidor Amplo) subiu 0,96% em julho, o maior resultado para o mês desde 2002, quando a alta foi de 1,19%.
No ano, o indicador acumula alta de 4,76% e, em 12 meses, 8,99%. Segundo o IBGE (Instituto Brasileiro de Geografia e Estatística), oito dos nove grupos pesquisados apresentaram alta no mês. A maior pressão veio do aumento de 3,10% na habitação, pela alta de 7,88% na energia elétrica.
Além disso, a economia se beneficiou de um avanço na vacinação, o que deve movimentar o setor de serviços no segundo semestre. “Esses negócios estão em um momento de recompor preços e a inflação de serviços mostrou que está viva”, diz o analista.
Conforme o setor for reabrindo, a inflação como um todo também deve ficar mais alta. “São vários choques sequenciais e acontecendo ao mesmo tempo, criando uma tempestade perfeita para o BC”, diz o economista.
Diante desse quadro, caso o período de seca seja prolongado e não tenha chuva no fim do ano, cresce a possibilidade de que a economia não aguente mais um choque, explica Barros. “Uma seca mais aguda poderia gerar um cenário de estagflação.”
A geração hidrelétrica continua representando a maior parcela do parque gerador do país, que já representou 90% durante o apagão de 2001 e está em torno de 70%. Com a seca histórica, os reservatórios atingiram nível crítico e o governo precisou acionar térmicas (mais caras) para manter a geração.
“A reabertura da economia ajuda, mas tem de ter energia. Sem energia, isso vai derrubar o PIB (Produto Interno Bruto) e aumentar a inflação no ano que vem.”
The social cost of carbon could guide us toward intellinget policies – only if we knew what it was.
In contrast to the existential angst currently in fashion around climate change, there’s a cold-eyed calculation that its advocates, mostly economists, like to call the most important number you’ve never heard of.
It’s the social cost of carbon. It reflects the global damage of emitting one ton of carbon dioxide into the sky, accounting for its impact in the form of warming temperatures and rising sea levels. Economists, who have squabbled over the right number for a decade, see it as a powerful policy tool that could bring rationality to climate decisions. It’s what we should be willing to pay to avoid emitting that one more ton of carbon.
This story was part of our May 2019 issue
For most of us, it’s a way to grasp how much our carbon emissions will affect the world’s health, agriculture, and economy for the next several hundred years. Maximilian Auffhammer, an economist at the University of California, Berkeley, describes it this way: it’s approximately the damage done by driving from San Francisco to Chicago, assuming that about a ton of carbon dioxide spits out of the tailpipe over those 2,000 miles.
Common estimates of the social cost of that ton are $40 to $50. The cost of the fuel for the journey in an average car is currently around $225. In other words, you’d pay roughly 20% more to take the social cost of the trip into account.
The number is contentious, however. A US federal working group in 2016, convened by President Barack Obama, calculated it at around $40, while the Trump administration has recently put it at $1 to $7. Some academic researchers cite numbers as high as $400 or more.
Why so wide a range? It depends on how you value future damages. And there are uncertainties over how the climate will respond to emissions. But another reason is that we actually have very little insight into just how climate change will affect us over time. Yes, we know there’ll be fiercer storms and deadly wildfires, heat waves, droughts, and floods. We know the glaciers are melting rapidly and fragile ocean ecosystems are being destroyed. But what does that mean for the livelihood or life expectancy of someone in Ames, Iowa, or Bangalore, India, or Chelyabinsk, Russia?
For the first time, vast amounts of data on the economic and social effects of climate change are becoming available, and so is the computational power to make sense of it. Taking this opportunity to compute a precise social cost of carbon could help us decide how much to invest and which problems to tackle first.
“It is the single most important number in the global economy,” says Solomon Hsiang, a climate policy expert at Berkeley. “Getting it right is incredibly important. But right now, we have almost no idea what it is.”
That could soon change.
The cost of death
In the past, calculating the social cost of carbon typically meant estimating how climate change would slow worldwide economic growth. Computer models split the world into at most a dozen or so regions and then averaged the predicted effects of climate change to get the impact on global GDP over time. It was at best a crude number.
Over the last several years, economists, data scientists, and climate scientists have worked together to create far more detailed and localized maps of impacts by examining how temperatures, sea levels, and precipitation patterns have historically affected things like mortality, crop yields, violence, and labor productivity. This data can then be plugged into increasingly sophisticated climate models to see what happens as the planet continues to warm.
The wealth of high-resolution data makes a far more precise number possible—at least in theory. Hsiang is co-director of the Climate Impact Lab, a team of some 35 scientists from institutions including the University of Chicago, Berkeley, Rutgers, and the Rhodium Group, an economic research organization. Their goal is to come up with a number by looking at about 24,000 different regions and adding together the diverse effects that each will experience over the coming hundreds of years in health, human behavior, and economic activity.
It’s a huge technical and computational challenge, and it will take a few years to come up with a single number. But along the way, the efforts to better understand localized damages are creating a nuanced and disturbing picture of our future.
So far, the researchers have found that climate change will kill far more people than once thought. Michael Greenstone, a University of Chicago economist who co-directs the Climate Impact Lab with Hsiang, says that previous mortality estimates had looked at seven wealthy cities, most in relatively cool climates. His group looked at data gleaned from 56% of the world’s population. It found that the social cost of carbon due to increased mortality alone is $30, nearly as high as the Obama administration’s estimate for the social cost of all climate impacts. An additional 9.1 million people will die every year by 2100, the group estimates, if climate change is left unchecked (assuming a global population of 12.7 billion people).
Unfairly Distributed
However, while the Climate Impact Lab’s analysis showed that 76% of the world’s population would suffer from higher mortality rates, it found that warming temperatures would actually save lives in a number of northern regions. That’s consistent with other recent research; the impacts of climate change will be remarkably uneven.
The variations are significant even within some countries. In 2017, Hsiang and his collaborators calculated climate impacts county by county in the United States. They found that every degree of warming would cut the country’s GDP by about 1.2%, but the worst-hit counties could see a drop of around 20%.
If climate change is left to run unchecked through the end of the century, the southern and southwestern US will be devastated by rising rates of mortality and crop failure. Labor productivity will slow, and energy costs (especially due to air-conditioning) will rise. In contrast, the northwestern and parts of the northeastern US will benefit.
“It is a massive restructuring of wealth,” says Hsiang. This is the most important finding of the last several years of climate economics, he adds. By examining ever smaller regions, you can see “the incredible winners and losers.” Many in the climate community have been reluctant to talk about such findings, he says. “But we have to look [the inequality] right in the eye.”
The social cost of carbon is typically calculated as a single global number. That makes sense, since the damage of a ton of carbon emitted in one place is spread throughout the world. But last year Katharine Ricke, a climate scientist at UC San Diego and the Scripps Institution of Oceanography, published the social costs of carbon for specific countries to help parse out regional differences.
India is the big loser. Not only does it have a fast-growing economy that will be slowed, but it’s already a hot country that will suffer greatly from getting even hotter. “India bears a huge share of the global social cost of carbon—more than 20%,” says Ricke. It also stands out for how little it has actually contributed to the world’s carbon emissions. “It’s a serious equity issue,” she says.
Estimating the global social cost of carbon also raises a vexing question: How do you put a value on future damages? We should invest now to help our children and grandchildren avoid suffering, but how much? This is hotly and often angrily debated among economists.
A standard tool in economics is the discount rate, used to calculate how much we should invest now for a payoff years from now. The higher the discount rate, the less you value the future benefit. William Nordhaus, who won the 2018 Nobel Prize in economics for pioneering the use of models to show the macroeconomic effects of climate change, has used a discount rate of around 4%. The relatively high rate suggests we should invest conservatively now. In sharp contrast, a landmark 2006 report by British economist Nicholas Stern used a discount rate of 1.4%, concluding that we should begin investing much more heavily to slow climate change.
There’s an ethical dimension to these calculations. Wealthy countries whose prosperity has been built on fossil fuels have an obligation to help poorer countries. The climate winners can’t abandon the losers. Likewise, we owe future generations more than just financial considerations. What’s the value of a world free from the threat of catastrophic climate events—one with healthy and thriving natural ecosystems?
Outrage
Enter the Green New Deal (GND). It’s the sweeping proposal issued earlier this year by Representative Alexandria Ocasio-Cortez and other US progressives to address everything from climate change to inequality. It cites the dangers of temperature increases beyond the UN goal of 1.5 °C and makes a long list of recommendations. Energy experts immediately began to bicker over its details: Is achieving 100% renewables in the next 12 years really feasible? (Probably not.) Should it include nuclear power, which many climate activists now argue is essential for reducing emissions?
In reality, the GND has little to say about actual policies and there’s barely a hint of how it will attack its grand challenges, from providing a secure retirement for all to fostering family farms to ensuring access to nature. But that’s not the point. The GND is a cry of outrage against what it calls “the twin crises of climate change and worsening income inequality.” It’s a political attempt to make climate change part of the wider discussion about social justice. And, at least from the perspective of climate policy, it’s right in arguing that we can’t tackle global warming without considering broader social and economic issues.
The work of researchers like Ricke, Hsiang, and Greenstone supports that stance. Not only do their findings show that global warming can worsen inequality and other social ills; they provide evidence that aggressive action is worth it. Last year, researchers at Stanford calculated that limiting warming to 1.5 °C would save upwards of $20 trillion worldwide by the end of the century. Again, the impacts were mixed—the GDPs of some countries would be harmed by aggressive climate action. But the conclusion was overwhelming: more than 90% of the world’s population would benefit. Moreover, the cost of keeping temperature increases limited to 1.5 °C would be dwarfed by the long-term savings.
Nevertheless, the investments will take decades to pay for themselves. Renewables and new clean technologies may lead to a boom in manufacturing and a robust economy, but the Green New Deal is wrong to paper over the financial sacrifices we’ll need to make in the near term.
That is why climate remedies are such a hard sell. We need a global policy—but, as we’re always reminded, all politics is local. Adding 20% to the cost of that San Francisco–Chicago trip might not seem like much, but try to convince a truck driver in a poor county in Florida that raising the price of fuel is wise economic policy. A much smaller increase sparked the gilets jaunes riots in France last winter. That is the dilemma, both political and ethical, that we all face with climate change.
Bridge and tunnel Joe Biden’s splurge on infrastructure moves a step closer
And on the climate and the safety-net, too. Congress works, maybe?
“THE ICEMAN COMETH” is a play about the downtrodden patrons of Harry Hope’s saloon, who exchange reveries for one another’s pipe dreams. For a while President Joe Biden’s aspirations for a gargantuan infrastructure and social-services package—spending $4trn in order to “build back better”—resembled those of a misbegotten Eugene O’Neill character. The weeks dragged on and negotiations appeared fruitless. Yet in the usually soporific month of August, Mr Biden finds that his pipe dream might in fact yield some actual pipes, plus extra sending on the safety net and climate change too.
On August 10th the Senate passed a bipartisan infrastructure package spanning 2,700 pages, which contains plans to spend $550bn, or 2.5% of GDP, most of it on bridges, roads and railway lines. And then in the early hours of August 11th, the Senate fired the starting gun for the drafting of a budget resolution—a $3.5trn package stuffed with all of Mr Biden’s other partisan aims, the details of which will be negotiated in the months to come.
The White House has made greater headway than many expected. Yet turning this into actual spending will require still more effort. To mollify antsy progressives, neither bill is expected to arrive on the president’s desk without the other. Nancy Pelosi, the Democratic speaker of the House of Representatives, has pledged as much and is not known for bluffing.
So success for Mr Biden continues to depend on an odd-couple strategy: yoking the bipartisan bits of his agenda (traditional spending on roads, bridges, broadband and waterways, largely unmatched by tax increases) to the purely Democratic wish-list (enormous spending on climate-change mitigation and a safety-net expansion, along with much higher taxes on wealthy people and corporations). This approach withstood early defections by Republicans who feared they had been had. Now it must prove itself capable of delivering the remaining legislation, which will be mostly an exercise in Democratic cohesion. If all this works, it will probably become the defining accomplishment of the Biden presidency.
Securing both bills will be hard. To pass their other policy aspirations without any Republican votes, Democrats will now employ a procedure known as budgetary reconciliation, which sidesteps a filibuster if certain conditions are met. Shepherding such a package through Congress requires co-ordinating efforts from a score of committees. That task can now begin: in the early hours of August 11th Democrats passed a budget resolution, a skeletal framing document that gives each committee instructions on how much it can spend. This marks the true start of the hard work: drafting legislative text, collating it into one mega-package and passing it without any Democratic defections—for anything less, in the face of unified Republican opposition, would spell defeat.
Reconciliation is not pretty. Since its use is limited to budgetary matters, it cannot be resorted to often. And since Democrats fear that they will lose their slim majorities in the coming mid-term elections, they have an incentive to hitch any partisan priority that they want to become law onto this omnibus bill.
This bill will be stuffed therefore. Committees will draw up plans to spend hundreds of billions on climate-change research, electric-vehicle charging stations and a Civilian Climate Corps; more than $1trn on various safety-net enhancements like extended child-tax credits, subsidised child care and family leave; and educational benefits from pre-kindergarten to community college. There will be a parallel effort to pay for this by raising the taxes on corporate profits, especially of the overseas variety, and high personal incomes.
These legislative schemes would almost certainly increase American deficits and debts beyond their already eye-popping levels. The Congressional Budget Office (CBO), a non-partisan scorekeeper, estimates that America will run a $3trn deficit in Mr Biden’s first year—much of that is the result of the $1.9trn stimulus measure that the president signed into law soon after assuming office. At 13.4% of GDP, the deficit will be the highest in the first year of any modern president (see chart).
The proposed spending on infrastructure and the safety-net would be spread over ten years, not concentrated in just one. Still, it is remarkable that, if Mr Biden gets his way, he could sign legislation authorising the spending of just under $6trn, almost 30% of GDP, in his first year in office. More of the infrastructure spending will be covered by revenue than was the case for the covid-19 relief measure, but a substantial portion will not be.
The CBO‘s assessment of the bipartisan package passed by the Senate found that it would add $256bn to the federal debt. The budget resolution recently passed by Democrats would allow $1.75trn to be added to the tab—suggesting that only half of their proposal could be paid for (and belying the White House’s repeated insistence that it would be fully funded). Already, Janet Yellen, the treasury secretary, warns that the debt ceiling will need to be raised by October 1st to accommodate the current pace of spending.
Almost none of the legislating over the next few months will appeal to Republicans. But that is the point of the segmentation strategy that Mr Biden has chosen. He has pulled off a surprising victory in the bipartisan campaign. The partisan battle promises to be every bit as arduous. ■
For more coverage of Joe Biden’s presidency, visit our dedicated hub
This article appeared in the United States section of the print edition under the headline “Function in Washington”
A 1972 MIT study predicted that rapid economic growth would lead to societal collapse in the mid 21st century. A new paper shows we’re unfortunately right on schedule.
A remarkable new study by a director at one of the largest accounting firms in the world has found that a famous, decades-old warning from MIT about the risk of industrial civilization collapsing appears to be accurate based on new empirical data.
As the world looks forward to a rebound in economic growth following the devastation wrought by the pandemic, the research raises urgent questions about the risks of attempting to simply return to the pre-pandemic ‘normal.’
In 1972, a team of MIT scientists got together to study the risks of civilizational collapse. Their system dynamics model published by the Club of Rome identified impending ‘limits to growth’ (LtG) that meant industrial civilization was on track to collapse sometime within the 21st century, due to overexploitation of planetary resources.
The controversial MIT analysis generated heated debate, and was widely derided at the time by pundits who misrepresented its findings and methods. But the analysis has now received stunning vindication from a study written by a senior director at professional services giant KPMG, one of the ‘Big Four’ accounting firms as measured by global revenue.
Limits to growth
The study was published in the Yale Journal of Industrial Ecology in November 2020 and is available on the KPMG website. It concludes that the current business-as-usual trajectory of global civilization is heading toward the terminal decline of economic growth within the coming decade—and at worst, could trigger societal collapse by around 2040.
The study represents the first time a top analyst working within a mainstream global corporate entity has taken the ‘limits to growth’ model seriously. Its author, Gaya Herrington, is Sustainability and Dynamic System Analysis Lead at KPMG in the United States. However, she decided to undertake the research as a personal project to understand how well the MIT model stood the test of time.
The study itself is not affiliated or conducted on behalf of KPMG, and does not necessarily reflect the views of KPMG. Herrington performed the research as an extension of her Masters thesis at Harvard University in her capacity as an advisor to the Club of Rome. However, she is quoted explaining her project on the KPMG website as follows:
“Given the unappealing prospect of collapse, I was curious to see which scenarios were aligning most closely with empirical data today. After all, the book that featured this world model was a bestseller in the 70s, and by now we’d have several decades of empirical data which would make a comparison meaningful. But to my surprise I could not find recent attempts for this. So I decided to do it myself.”
Titled ‘Update to limits to growth: Comparing the World3 model with empirical data’, the study attempts to assess how MIT’s ‘World3’ model stacks up against new empirical data. Previous studies that attempted to do this found that the model’s worst-case scenarios accurately reflected real-world developments. However, the last study of this nature was completed in 2014.
The risk of collapse
Herrington’s new analysis examines data across 10 key variables, namely population, fertility rates, mortality rates, industrial output, food production, services, non-renewable resources, persistent pollution, human welfare, and ecological footprint. She found that the latest data most closely aligns with two particular scenarios, ‘BAU2’ (business-as-usual) and ‘CT’ (comprehensive technology).
“BAU2 and CT scenarios show a halt in growth within a decade or so from now,” the study concludes. “Both scenarios thus indicate that continuing business as usual, that is, pursuing continuous growth, is not possible. Even when paired with unprecedented technological development and adoption, business as usual as modelled by LtG would inevitably lead to declines in industrial capital, agricultural output, and welfare levels within this century.”
Study author Gaya Herrington told Motherboard that in the MIT World3 models, collapse “does not mean that humanity will cease to exist,” but rather that “economic and industrial growth will stop, and then decline, which will hurt food production and standards of living… In terms of timing, the BAU2 scenario shows a steep decline to set in around 2040.”
The ‘Business-as-Usual’ scenario (Source: Herrington, 2021)
The end of growth?
In the comprehensive technology (CT) scenario, economic decline still sets in around this date with a range of possible negative consequences, but this does not lead to societal collapse.
The ‘Comprehensive Technology’ scenario (Source: Herrington, 2021)
Unfortunately, the scenario which was the least closest fit to the latest empirical data happens to be the most optimistic pathway known as ‘SW’ (stabilized world), in which civilization follows a sustainable path and experiences the smallest declines in economic growth—based on a combination of technological innovation and widespread investment in public health and education.
The ‘Stabilized World’ Scenario (Source: Herrington, 2021)
Although both the business-as-usual and comprehensive technology scenarios point to the coming end of economic growth in around 10 years, only the BAU2 scenario “shows a clear collapse pattern, whereas CT suggests the possibility of future declines being relatively soft landings, at least for humanity in general.”
Both scenarios currently “seem to align quite closely not just with observed data,” Herrington concludes in her study, indicating that the future is open.
A window of opportunity
While focusing on the pursuit of continued economic growth for its own sake will be futile, the study finds that technological progress and increased investments in public services could not just avoid the risk of collapse, but lead to a new stable and prosperous civilization operating safely within planetary boundaries. But we really have only the next decade to change course.
“At this point therefore, the data most aligns with the CT and BAU2 scenarios which indicate a slowdown and eventual halt in growth within the next decade or so, but World3 leaves open whether the subsequent decline will constitute a collapse,” the study concludes. Although the ‘stabilized world’ scenario “tracks least closely, a deliberate trajectory change brought about by society turning toward another goal than growth is still possible. The LtG work implies that this window of opportunity is closing fast.”
In a presentation at the World Economic Forum in 2020 delivered in her capacity as a KPMG director, Herrington argued for ‘agrowth’—an agnostic approach to growth which focuses on other economic goals and priorities.
“Changing our societal priorities hardly needs to be a capitulation to grim necessity,” she said. “Human activity can be regenerative and our productive capacities can be transformed. In fact, we are seeing examples of that happening right now. Expanding those efforts now creates a world full of opportunity that is also sustainable.”
She noted how the rapid development and deployment of vaccines at unprecedented rates in response to the COVID-19 pandemic demonstrates that we are capable of responding rapidly and constructively to global challenges if we choose to act. We need exactly such a determined approach to the environmental crisis.
“The necessary changes will not be easy and pose transition challenges but a sustainable and inclusive future is still possible,” said Herrington.
The best available data suggests that what we decide over the next 10 years will determine the long-term fate of human civilization. Although the odds are on a knife-edge, Herrington pointed to a “rapid rise” in environmental, social and good governance priorities as a basis for optimism, signalling the change in thinking taking place in both governments and businesses. She told me that perhaps the most important implication of her research is that it’s not too late to create a truly sustainable civilization that works for all.
Cash is gradually dying out. Will we ever have a digital alternative that offers the same mix of convenience and freedom?
Mike Orcutt
January 3, 2020
If you’d rather keep all that to yourself, you’re in luck. The person in the store (or on the street corner) may remember your face, but as long as you didn’t reveal any identifying information, there is nothing that links you to the transaction.
This is a feature of physical cash that payment cards and apps do not have: freedom. Called “bearer instruments,” banknotes and coins are presumed to be owned by whoever holds them. We can use them to transact with another person without a third party getting in the way. Companies cannot build advertising profiles or credit ratings out of our data, and governments cannot track our spending or our movements. And while a credit card can be declined and a check mislaid, handing over money works every time, instantly.
We shouldn’t take this freedom for granted. Much of our commerce now happens online. It relies on banks and financial technology companies to serve as middlemen. Transactions are going digital in the physical world, too: electronic payment tools, from debit cards to Apple Pay to Alipay, are increasingly replacing cash. While notes and coins remain popular in many countries, including the US, Japan, and Germany, in others they are nearing obsolescence.
This trend has civil liberties groups worried. Without cash, there is “no chance for the kind of dignity-preserving privacy that undergirds an open society,” writes Jerry Brito, executive director of Coin Center, a policy advocacy group based in Washington, DC. In a recent report, Brito contends that we must “develop and foster electronic cash” that is as private as physical cash and doesn’t require permission to use.
The central question is who will develop and control the electronic payment systems of the future. Most of the existing ones, like Alipay, Zelle, PayPal, Venmo, and Kenya’s M-Pesa, are run by private firms. Afraid of leaving payments solely in their hands, many governments are looking to develop some sort of electronic stand-in for notes and coins. Meanwhile, advocates of stateless, ownerless cryptocurrencies like Bitcoin say they’re the only solution as surveillance-proof as cash—but can they be feasible at large scales?
We tend to take it for granted that new technologies work better than old ones—safer, faster, more accurate, more efficient, more convenient. Purists may extol the virtues of vinyl records, but nobody can dispute that a digital music collection is easier to carry and sounds almost exactly as good. Cash is a paradox—a technology thousands of years old that may just prove impossible to re-create in a more advanced form.
In (government) money we trust?
We call banknotes and coins “cash,” but the term really refers to something more abstract: cash is essentially money that your government owes you. In the old days this was a literal debt. “I promise to pay the bearer on demand the sum of …” still appears on British banknotes, a notional guarantee that the Bank of England will hand over the same value in gold in exchange for your note. Today it represents the more abstract guarantee that you will always be able to use that note to pay for things.
The digits in your bank account, on the other hand, refer to what your bank owes you. When you go to an ATM, you are effectively converting the bank’s promise to pay into a government promise.
Most people would say they trust the government’s promise more, says Gabriel Söderberg, an economist at the Riksbank, the central bank of Sweden. Their bet—correct, in most countries—is that their government is much less likely to go bust.
That’s why it would be a problem if Sweden were to go completely “cashless,” Söderberg says. He and his colleagues fear that if people lose the option to convert their bank money to government money at will and use it to pay for whatever they need, they might start to lose trust in the whole money system. A further worry is that if the private sector is left to dominate digital payments, people who can’t or won’t use these systems could be shut out of the economy.
This is fast becoming more than just a thought experiment in Sweden. Nearly everyone there uses a mobile app called Swish to pay for things. Economists have estimated that retailers in Sweden could completely stop accepting cash by 2023.
Creating an electronic version of Sweden’s sovereign currency—an “e-krona”—could mitigate these problems, Söderberg says. If the central bank were to issue digital money, it would design it to be a public good, not a profit-making product for a corporation. “Easily accessible, simple and user-friendly versions could be developed for those who currently have difficulty with digital technology,” the bank asserted in a November report covering Sweden’s payment landscape.
The Riksbank plans to develop and test an e-krona prototype. It has examined a number of technologies that might underlie it, including cryptocurrency systems like Bitcoin. But the central bank has also called on the Swedish government to lead a broad public inquiry into whether such a system should ever go live. “In the end, this decision is too big for a central bank alone, at least in the Swedish context,” Söderberg says.
The death of financial privacy
China, meanwhile, appears to have made its decision: the digital renminbi is coming. Mu Changchun, head of the People’s Bank of China’s digital currency research institute, said in September that the currency, which the bank has been working on for years, is “close to being out.” In December, a local news report suggested that the PBOC is nearly ready to start tests in the cities of Shenzhen and Suzhou. And the bank has been explicit about its intention to use it to replace banknotes and coins.
Cash is already dying out on its own in China, thanks to Alipay and WeChat Pay, the QR-code-based apps that have become ubiquitous in just a few years. It’s been estimated that mobile payments made up more than 80% of all payments in China in 2018, up from less than 20% in 2013.
AP Images
It’s not clear how much access the government currently has to transaction data from WeChat Pay and Alipay. Once it issues a sovereign digital currency—which officials say will be compatible with those two services—it will likely have access to a lot more. Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington, DC, told the New York Times in October that the system will give the PBOC “extraordinary power and visibility into the financial system, more than any central bank has today.”
We don’t know for sure what technology the PBOC plans to use as the basis for its digital renminbi, but we have at least two revealing clues. First, the bank has been researching blockchain technology since 2014, and the government has called the development of this technology a priority. Second, Mu said in September that China’s system will bear similarities to Libra, the electronic currency Facebook announced last June. Indeed, PBOC officials have implied in public statements that the unveiling of Libra inspired them to accelerate the development of the digital renminbi, which has been in the works for years.
As currently envisioned, Libra will run on a blockchain, a type of accounting ledger that can be maintained by a network of computers instead of a single central authority. However, it will operate very differently from Bitcoin, the original blockchain system.
The computers in Bitcoin’s network use open-source software to automatically verify and record every single transaction. In the process, they generate a permanent public record of the currency’s entire transaction history: the blockchain. As envisioned, Libra’s network will do something similar. But whereas anyone with a computer and an internet connection can participate anonymously in Bitcoin’s network, the “nodes” that make up Libra’s network will be companies that have been vetted and given membership in a nonprofit association.
Unlike Bitcoin, which is notoriously volatile, Libra will be designed to maintain a stable value. To pull this off, the so-called Libra Association will be responsible for maintaining a reserve (pdf) of government-issued currencies (the latest plan is for it to be half US dollars, with the other half composed of British pounds, euros, Japanese yen, and Singapore dollars). This reserve is supposed to serve as backing for the digital units of value.
Both Libra and the digital renminbi, however, face serious questions about privacy. To start with, it’s not clear if people will be able to use them anonymously.
With Bitcoin, although transactions are public, users don’t have to reveal who they really are; each person’s “address” on the public blockchain is just a random string of letters and numbers. But in recent years, law enforcement officials have grown skilled at combining public blockchain data with other clues to unmask people using cryptocurrencies for illicit purposes. Indeed, in a July blog post, Libra project head David Marcus argued that the currency would be a boon for law enforcement, since it would help “move more cash transactions—where a lot of illicit activities happen—to a digital network.”
As for the Chinese digital currency, Mu has said it will feature some level of anonymity. “We know the demand from the general public is to keep anonymity by using paper money and coins … we will give those people who demand it anonymity,” he said at a November conference in Singapore. “But at the same time we will keep the balance between ‘controllable anonymity’ and anti-money-laundering, CTF [counter-terrorist financing], and also tax issues, online gambling, and any electronic criminal activities,” he added. He did not, however, explain how that “balance” would work.
Sweden and China are leading the charge to issue consumer-focused electronic money, but according to John Kiff, an expert on financial stability for the International Monetary Fund, more than 30 countries have explored or are exploring the idea. In some, the rationale is similar to Sweden’s: dwindling cash and a growing private-sector payments ecosystem. Others are countries where commercial banks have decided not to set up shop. Many see an opportunity to better monitor for illicit transactions. All will have to wrestle with the same thorny privacy issues that Libra and the digital renminbi are raising.
Robleh Ali, a research scientist at MIT’s Digital Currency Initiative, says digital currency systems from central banks may need to be designed so that the government can “consciously blind itself” to the information. Something like that might be technically possible thanks to cutting-edge cryptographic tools like zero-knowledge proofs, which are used in systems like Zcash to shield blockchain transaction information from public view.
However, there’s no evidence that any governments are even thinking about deploying tools like this. And regardless, can any government—even Sweden’s—really be trusted to blind itself?
Cryptocurrency: A workaround for freedom
That’s wishful thinking, says Alex Gladstein, chief strategy officer for the Human Rights Foundation. While you may trust your government or think you’ve got nothing to hide, that might not always remain true. Politics evolves, governments get pushed out by elections or other events, what constitutes a “crime” changes, and civil liberties are not guaranteed. “Financial privacy is not going to be gifted to you by your government, regardless of how ‘free’ they are,” Gladstein says. He’s convinced that it has to come in the form of a stateless, decentralized digital currency like Bitcoin.
In fact, “electronic cash” was what Bitcoin’s still-unknown inventor, the pseudonymous Satoshi Nakamoto, claimed to be trying to create (before disappearing). Eleven years into its life, Nakamoto’s technology still lacks some of the signature features of cash. It is difficult to use, transactions can take more than an hour to process, and the currency’s value can fluctuate wildly. And as already noted, the supposedly anonymous transactions it enables can sometimes be traced.
But in some places people just need something that works, however imperfectly. Take Venezuela. Cash in the crisis-ridden country is scarce, and the Venezuelan bolivar is constantly losing value to hyperinflation. Many Venezuelans seek refuge in US dollars, storing them under the proverbial (and literal) mattress, but that also makes them vulnerable to thieves.
What many people want is access to stable cash in digital form, and there’s no easy way to get that, says Alejandro Machado, cofounder of the Open Money Initiative. Owing to government-imposed capital controls, Venezuelan banks have largely been cut off from foreign banks. And due to restrictions by US financial institutions, digital money services like PayPal and Zelle are inaccessible to most people. So a small number of tech-savvy Venezuelans have turned to a service called LocalBitcoins.
It’s like Craigslist, except that the only things for sale are bitcoins and bolivars. On Venezuela’s LocalBitcoins site, people advertise varying quantities of currency for sale at varying exchange rates. The site holds the money in escrow until trades are complete, and tracks the sellers’ reputations.
It’s not for the masses, but it’s “very effective” for people who can make it work, says Machado. For instance, he and his colleagues met a young woman who mines Bitcoin and keeps her savings in the currency. She doesn’t have a foreign bank account, so she’s willing to deal with the constant fluctuations in Bitcoin’s price. Using LocalBitcoins, she can cash out into bolivars whenever she needs them—to buy groceries, for example. “Niche power users” like this are “leveraging the best features of Bitcoin, which is to be an asset that is permissionless and that is very easy to trade electronically,” Machado says.
However, this is possible only because there are enough people using LocalBitcoins to create what finance people call “local liquidity,” meaning you can easily find a buyer for your bitcoins or bolivars. Bitcoin is the only cryptocurrency that has achieved this in Venezuela, says Machado, and it’s mostly thanks to LocalBitcoins.
This is a long way from the dream of cryptocurrency as a widely used substitute for stable, government-issued money. Most Venezuelans can’t use Bitcoin, and few merchants there even know what it is, much less how to accept it.
Still, it’s a glimpse of what a cryptocurrency can offer—a functional financial system that anyone can join and that offers the kind of freedom cash provides in most other places.
Decentralize this
Could something like Bitcoin ever be as easy to use and reliable as today’s cash is for everyone else? The answer is philosophical as well as technical.
To begin with, what does it even mean for something to be like Bitcoin? Central banks and corporations will adapt certain aspects of Bitcoin and apply them to their own ends. Will those be cryptocurrencies? Not according to purists, who say that though Libra or some future central bank-issued digital currency may run on blockchain technology, they won’t be cryptocurrencies because they will be under centralized control.
True cryptocurrencies are “decentralized”—they have no one entity in charge and no single points of failure, no weak spots that an adversary (including a government) could attack. With no middleman like a bank attesting that a transaction took place, each transaction has to be validated by the nodes in a cryptocurrency’s network, which can number many thousands. But this requires an immense expenditure of computing power, and it’s the reason Bitcoin transactions can take more than an hour to settle.
A currency like Libra wouldn’t have this problem, because only a few authorized entities would be able to operate nodes. The trade-off is that its users wouldn’t be able to trust those entities to guarantee their privacy, any more than they can trust a bank, a government, or Facebook.
Is it technically possible to achieve Bitcoin’s level of decentralization and the speed, scale, privacy, and ease of use that we’ve come to expect from traditional payment methods? That’s a problem many talented researchers are still trying to crack. But some would argue that shouldn’t necessarily be the goal.
In a recent essay, Jill Carlson, cofounder of the Open Money Initiative, argued that perhaps decentralized cryptocurrency systems were “never supposed to go mainstream.” Rather, they were created explicitly for “censored transactions,” from paying for drugs or sex to supporting political dissidents or getting money out of countries with restrictive currency controls. Their slowness is inherent, not a design flaw; they “forsake scale, speed, and cost in favor of one key feature: censorship resistance.” A world in which they went mainstream would be “a very scary place indeed,” she wrote.
In summary, we have three avenues for the future of digital money, none of which offers the same mix of freedom and ease of use that characterizes cash. Private companies have an obvious incentive to monetize our data and pursue profits over public interest. Digital government money may still be used to track us, even by well-intentioned governments, and for less benign ones it’s a fantastic tool for surveillance. And cryptocurrency can prove useful when freedoms are at risk, but it likely won’t work at scale anytime soon, if ever.
How big a problem is this? That depends on where you live, how much you trust your government and your fellow citizens, and why you wish to use cash. And if you’d rather keep that to yourself, you’re in luck. For now.
Summary: With widespread, sustained declines in fertility, the world population will likely peak in 2064 at around 9.7 billion, and then decline to about 8.8 billion by 2100 — about 2 billion lower than some previous estimates, according to a new study.
Improvements in access to modern contraception and the education of girls and women are generating widespread, sustained declines in fertility, and world population will likely peak in 2064 at around 9.7 billion, and then decline to about 8.8 billion by 2100 — about 2 billion lower than some previous estimates, according to a new study published in The Lancet.
The modelling research uses data from the Global Burden of Disease Study 2017 to project future global, regional, and national population. Using novel methods for forecasting mortality, fertility, and migration, the researchers from the Institute for Health Metrics and Evaluation (IHME) at the University of Washington’s School of Medicine estimate that by 2100, 183 of 195 countries will have total fertility rates (TFR), which represent the average number of children a woman delivers over her lifetime, below replacement level of 2.1 births per woman. This means that in these countries populations will decline unless low fertility is compensated by immigration.
The new population forecasts contrast to projections of ‘continuing global growth’ by the United Nations Population Division, and highlight the huge challenges to economic growth of a shrinking workforce, the high burden on health and social support systems of an aging population, and the impact on global power linked to shifts in world population.
The new study also predicts huge shifts in the global age structure, with an estimated 2.37 billion individuals over 65 years globally in 2100, compared with 1.7 billion under 20 years, underscoring the need for liberal immigration policies in countries with significantly declining working age populations.
“Continued global population growth through the century is no longer the most likely trajectory for the world’s population,” says IHME Director Dr. Christopher Murray, who led the research. “This study provides governments of all countries an opportunity to start rethinking their policies on migration, workforces and economic development to address the challenges presented by demographic change.”
IHME Professor Stein Emil Vollset, first author of the paper, continues, “The societal, economic, and geopolitical power implications of our predictions are substantial. In particular, our findings suggest that the decline in the numbers of working-age adults alone will reduce GDP growth rates that could result in major shifts in global economic power by the century’s end. Responding to population decline is likely to become an overriding policy concern in many nations, but must not compromise efforts to enhance women’s reproductive health or progress on women’s rights.”
Dr Richard Horton, Editor-in-Chief, The Lancet, adds: “This important research charts a future we need to be planning for urgently. It offers a vision for radical shifts in geopolitical power, challenges myths about immigration, and underlines the importance of protecting and strengthening the sexual and reproductive rights of women. The 21st century will see a revolution in the story of our human civilisation. Africa and the Arab World will shape our future, while Europe and Asia will recede in their influence. By the end of the century, the world will be multipolar, with India, Nigeria, China, and the US the dominant powers. This will truly be a new world, one we should be preparing for today.”
Accelerating decline in fertility worldwide
The global TFR is predicted to steadily decline, from 2.37 in 2017 to 1.66 in 2100 — well below the minimum rate (2.1) considered necessary to maintain population numbers (replacement level) — with rates falling to around 1.2 in Italy and Spain, and as low as 1.17 in Poland.
Even slight changes in TFR translate into large differences in population size in countries below the replacement level — increasing TFR by as little as 0.1 births per woman is equivalent to around 500 million more individuals on the planet in 2100.
Much of the anticipated fertility decline is predicted in high-fertility countries, particularly those in sub-Saharan Africa where rates are expected to fall below the replacement level for the first time — from an average 4.6 births per woman in 2017 to just 1.7 by 2100. In Niger, where the fertility rate was the highest in the world in 2017 — with women giving birth to an average of seven children — the rate is projected to decline to around 1.8 by 2100.
Nevertheless, the population of sub-Saharan Africa is forecast to triple over the course of the century, from an estimated 1.03 billion in 2017 to 3.07 billion in 2100 — as death rates decline and an increasing number of women enter reproductive age. North Africa and the Middle East is the only other region predicted to have a larger population in 2100 (978 million) than in 2017 (600 million).
Many of the fastest-shrinking populations will be in Asia and central and eastern Europe. Populations are expected to more than halve in 23 countries and territories, including Japan (from around 128 million people in 2017 to 60 million in 2100), Thailand (71 to 35 million), Spain (46 to 23 million), Italy (61 to 31 million), Portugal (11 to 5 million), and South Korea (53 to 27 million). An additional 34 countries are expected to have population declines of 25 to 50%, including China (1.4 billion in 2017 to 732 million in 2100; see table).
Huge shifts in global age structure — with over 80s outnumbering under 5s two to one
As fertility falls and life expectancy increases worldwide, the number of children under 5 years old is forecasted to decline by 41% from 681 million in 2017 to 401 million in 2100, whilst the number of individuals older than 80 years is projected to increase six fold, from 141 million to 866 million. Similarly, the global ratio of adults over 80 years to each person aged 15 years or younger is projected to rise from 0.16 in 2017 to 1.50 in 2100, in countries with a population decline of more than 25%.
Furthermore, the global ratio of non-working adults to workers was around 0.8 in 2017, but is projected to increase to 1.16 in 2100 if labour force participation by age and sex does not change.
“While population decline is potentially good news for reducing carbon emissions and stress on food systems, with more old people and fewer young people, economic challenges will arise as societies struggle to grow with fewer workers and taxpayers, and countries’ abilities to generate the wealth needed to fund social support and health care for the elderly are reduced,” says Vollset.
Declining working-age populations could see major shifts in size of economies
The study also examined the economic impact of fewer working-age adults for all countries in 2017. While China is set to replace the USA in 2035 with the largest total gross domestic product (GDP) globally, rapid population decline from 2050 onward will curtail economic growth. As a result, the USA is expected to reclaim the top spot by 2098, if immigration continues to sustain the US workforce.
Although numbers of working-age adults in India are projected to fall from 762 million in 2017 to around 578 million in 2100, it is expected to be one of the few — if only — major power in Asia to protect its working-age population over the century. It is expected to surpass China’s workforce population in the mid-2020s (where numbers of workers are estimated to decline from 950 million in 2017 to 357 million in 2100) — rising up the GDP rankings from 7th to 3rd.
Sub-Saharan Africa is likely to become an increasingly powerful continent on the geopolitical stage as its population rises. Nigeria is projected to be the only country among the world’s 10 most populated nations to see its working-age population grow over the course of the century (from 86 million in 2017 to 458 million in 2100), supporting rapid economic growth and its rise in GDP rankings from 23rd place in 2017 to 9th place in 2100.
While the UK, Germany, and France are expected to remain in the top 10 for largest GDP worldwide at the turn of the century, Italy (from rank 9th in 2017 to 25th in 2100) and Spain (from 13th to 28th) are projected to fall down the rankings, reflecting much greater population decline.
Liberal immigration could help sustain population size and economic growth
The study also suggests that population decline could be offset by immigration, with countries that promote liberal immigration better able to maintain their population size and support economic growth, even in the face of declining fertility rates.
The model predicts that some countries with fertility lower than replacement level, such as the USA, Australia, and Canada, will probably maintain their working-age populations through net immigration (see appendix 2 section 4). Although the authors note that there is considerable uncertainty about these future trends.
“For high-income countries with below-replacement fertility rates, the best solutions for sustaining current population levels, economic growth, and geopolitical security are open immigration policies and social policies supportive of families having their desired number of children,” Murray says. “However, a very real danger exists that, in the face of declining population, some countries might consider policies that restrict access to reproductive health services, with potentially devastating consequences. It is imperative that women’s freedom and rights are at the top of every government’s development agenda.”
The authors note some important limitations, including that while the study uses the best available data, predictions are constrained by the quantity and quality of past data. They also note that past trends are not always predictive of what will happen in the future, and that some factors not included in the model could change the pace of fertility, mortality, or migration. For example, the COVID-19 pandemic has affected local and national health systems throughout the world, and caused over half a million deaths. However, the authors believe the excess deaths caused by the pandemic are unlikely to significantly alter longer term forecasting trends of global population.
Writing in a linked Comment, Professor Ibrahim Abubakar, University College London (UCL), UK, and Chair of Lancet Migration (who was not involved in the study), says: “Migration can be a potential solution to the predicted shortage of working-age populations. While demographers continue to debate the long-term implications of migration as a remedy for declining TFR, for it to be successful, we need a fundamental rethink of global politics. Greater multilateralism and a new global leadership should enable both migrant sending and migrant-receiving countries to benefit, while protecting the rights of individuals. Nations would need to cooperate at levels that have eluded us to date to strategically support and fund the development of excess skilled human capital in countries that are a source of migrants. An equitable change in global migration policy will need the voice of rich and poor countries. The projected changes in the sizes of national economies and the consequent change in military power might force these discussions.”
He adds: “Ultimately, if Murray and colleagues’ predictions are even half accurate, migration will become a necessity for all nations and not an option. The positive impacts of migration on health and economies are known globally. The choice that we face is whether we improve health and wealth by allowing planned population movement or if we end up with an underclass of imported labour and unstable societies. The Anthropocene has created many challenges such as climate change and greater global migration. The distribution of working-age populations will be crucial to whether humanity prospers or withers.”
The study was in part funded by the Bill & Melinda Gates Foundation. It was conducted by researchers at the University of Washington, Seattle, USA.
Story Source:
Materials provided by The Lancet. Note: Content may be edited for style and length.
Journal Reference:
Stein Emil Vollset, Emily Goren, Chun-Wei Yuan, Jackie Cao, Amanda E Smith, Thomas Hsiao, Catherine Bisignano, Gulrez S Azhar, Emma Castro, Julian Chalek, Andrew J Dolgert, Tahvi Frank, Kai Fukutaki, Simon I Hay, Rafael Lozano, Ali H Mokdad, Vishnu Nandakumar, Maxwell Pierce, Martin Pletcher, Toshana Robalik, Krista M Steuben, Han Yong Wunrow, Bianca S Zlavog, Christopher J L Murray. Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100: a forecasting analysis for the Global Burden of Disease Study. The Lancet, 2020; DOI: 10.1016/S0140-6736(20)30677-2
Though severe deprivation is rising, not everyone is worse off.
Jul 6th 2020
NO ONE WELCOMES a recession, but downturns are especially difficult when you are poor. Rising unemployment means rising poverty: the recession of 2007-09 prompted the share of Americans classified as poor, on a widely used measure, to jump from 12% to 17%, as jobs vanished by the million and businesses went bust. That economic shock, as bad as it was, pales in comparison with what America is seeing today under the coronavirus pandemic. The jobs report for June, published on July 2nd, showed that unemployment remained well above the peak of a decade ago.
Severe deprivation is certainly on the rise. According to a new survey from the Census Bureau, since the pandemic began the share of Americans who “sometimes” or “often” do not have enough to eat has grown by two percentage points, representing some 4m households. An astonishing 20% of African-American households with children are now in this position. Meanwhile, the proportion of Americans saying that they are able to make the rent is falling. More people are typing “bankrupt” into Google.
Yet these trends, as shocking as they are, do not appear to be part of a generalised rise in poverty. The official data will not be available for some time. A new paper from economists at the University of Chicago and the University of Notre Dame, however, suggests that poverty, as measured on an annual basis, may have actually fallen a bit in April and May, continuing a trend seen in the months before the pandemic hit (see chart 1).
Why? The main reason is that fiscal policy is helping to push poverty down. The stimulus plan passed by Congress is twice the size of the one passed to fight the recession of a decade ago. Much of it, including cheques worth up to $1,200 for a single person and a $600-a-week increase in unemployment insurance (UI) for those out of work, is focused on helping households through the lockdowns. At the same time, unemployment now looks unlikely to rise to 25% or higher, as some economists had predicted in the early days of the pandemic, thereby exerting less upward pressure on poverty than had been feared.
The upshot is that the current downturn looks different from previous ones. Household income usually falls during a recession—as it did the last time, pushing up poverty. But a paper in mid-June from Goldman Sachs, a bank, suggests that this year nominal household disposable income will actually increase by about 4%, pretty much in line with its growth rate before the pandemic hit (see chart 2). The extra $600 in UI ensures, in theory, that three-quarters of job losers will earn more on benefits than they had done in work.
By international standards, America’s unexpected success at reducing poverty nonetheless remains modest. Practically every other rich country has a lower poverty rate. It is also a fragile accomplishment. The extra $600-a-week payments are supposed to expire at the end of July. The authors of a recent paper from Columbia University argue that poverty could rise sharply in the second half of the year, a valid concern if unemployment has not decisively fallen by then. Goldman’s paper assumes that Congress will extend the extra unemployment insurance, but for the value of the payment to drop to $300. Even then, household disposable income would probably fall next year.
Whether extra stimulus would help those at the very bottom of America’s socio-economic ladder—including people not able to buy sufficient food—is another question. Six per cent of adults do not have a current (checking), savings or money-market account, making it difficult for them to receive money from Uncle Sam. Some may have been caught up in the delays which have plagued the UI system, and a small number may be undocumented immigrants not entitled to fiscal help at all. Others report not being able to gain access to shops, presumably closed under lockdowns. A surefire way to improve the lot of people in such unfortunate positions is to get the virus under control and the economy firing on all cylinders once again. But, for now, that looks some way off.
The pandemic shows how hard it will be to decarbonise—and creates an opportunity
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
FOLLOWING THE pandemic is like watching the climate crisis with your finger jammed on the fast-forward button. Neither the virus nor greenhouse gases care much for borders, making both scourges global. Both put the poor and vulnerable at greater risk than wealthy elites and demand government action on a scale hardly ever seen in peacetime. And with China’s leadership focused only on its own advantage and America’s as scornful of the World Health Organisation as it is of the Paris climate agreement, neither calamity is getting the co-ordinated international response it deserves.
The two crises do not just resemble each other. They interact. Shutting down swathes of the economy has led to huge cuts in greenhouse-gas emissions. In the first week of April, daily emissions worldwide were 17% below what they were last year. The International Energy Agency expects global industrial greenhouse-gas emissions to be about 8% lower in 2020 than they were in 2019, the largest annual drop since the second world war.
That drop reveals a crucial truth about the climate crisis. It is much too large to be solved by the abandonment of planes, trains and automobiles. Even if people endure huge changes in how they lead their lives, this sad experiment has shown, the world would still have more than 90% of the necessary decarbonisation left to do to get on track for the Paris agreement’s most ambitious goal, of a climate only 1.5°C warmer than it was before the Industrial Revolution.
But as we explain this week (see article) the pandemic both reveals the size of the challenge ahead and also creates a unique chance to enact government policies that steer the economy away from carbon at a lower financial, social and political cost than might otherwise have been the case. Rock-bottom energy prices make it easier to cut subsidies for fossil fuels and to introduce a tax on carbon. The revenues from that tax over the next decade can help repair battered government finances. The businesses at the heart of the fossil-fuel economy—oil and gas firms, steel producers, carmakers—are already going through the agony of shrinking their long-term capacity and employment. Getting economies in medically induced comas back on their feet is a circumstance tailor-made for investment in climate-friendly infrastructure that boosts growth and creates new jobs. Low interest rates make the bill smaller than ever.
Take carbon-pricing first. Long cherished by economists (and The Economist), such schemes use the power of the market to incentivise consumers and firms to cut their emissions, thus ensuring that the shift from carbon happens in the most efficient way possible. The timing is particularly propitious because such prices have the most immediate effects when they tip the balance between two already available technologies. In the past it was possible to argue that, although prices might entrench an advantage for cleaner gas over dirtier coal, renewable technologies were too immature to benefit. But over the past decade the costs of wind and solar power have tumbled. A relatively small push from a carbon price could give renewables a decisive advantage—one which would become permanent as wider deployment made them cheaper still. There may never have been a time when carbon prices could achieve so much so quickly.
Carbon prices are not as popular with politicians as they are with economists, which is why too few of them exist. But even before covid-19 there were hints their time was coming. Europe is planning an expansion of its carbon-pricing scheme, the largest in the world; China is instituting a brand new one. Joe Biden, who backed carbon prices when he was vice-president, will do so again in the coming election campaign—and at least some on the right will agree with that. The proceeds from a carbon tax could raise over 1% of GDP early on and would then taper away over several decades. This money could either be paid as a dividend to the public or, as is more likely now, help lower government debts, which are already forecast to reach an average of 122% of GDP in the rich world this year, and will rise further if green investments are debt-financed.
Carbon pricing is only part of the big-bang response now possible. By itself, it is unlikely to create a network of electric-vehicle charging-points, more nuclear power plants to underpin the cheap but intermittent electricity supplied by renewables, programmes to retrofit inefficient buildings and to develop technologies aimed at reducing emissions that cannot simply be electrified away, such as those from large aircraft and some farms. In these areas subsidies and direct government investment are needed to ensure that tomorrow’s consumers and firms have the technologies which carbon prices will encourage.
Some governments have put their efforts into greening their covid-19 bail-outs. Air France has been told either to scrap domestic routes that compete with high-speed trains, powered by nuclear electricity, or to forfeit taxpayer assistance. But dirigisme disguised as a helping hand could have dangerous consequences: better to focus on insisting that governments must not skew their bail-outs towards fossil fuels. In other countries the risk is of climate-damaging policies. America has been relaxing its environmental rules further during the pandemic. China—whose stimulus for heavy industry sent global emissions soaring after the global financial crisis—continues to build new coal plants (see article).
Carpe covid
The covid-19 pause is not inherently climate-friendly. Countries must make it so. Their aim should be to show by 2021, when they gather to take stock of progress made since the Paris agreement and commit themselves to raising their game, that the pandemic has been a catalyst for a breakthrough on the environment.
Covid-19 has demonstrated that the foundations of prosperity are precarious. Disasters long talked about, and long ignored, can come upon you with no warning, turning life inside out and shaking all that seemed stable. The harm from climate change will be slower than the pandemic but more massive and longer-lasting. If there is a moment for leaders to show bravery in heading off that disaster, this is it. They will never have a more attentive audience. ■
This article appeared in the Leaders section of the print edition under the headline “Seize the moment”
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
AMID COVID-19’s sweeping devastation, its effect on greenhouse gases has emerged as something of a bright spot. Between January and March demand for coal dropped by 8% and oil by 5%, compared with the same period in 2019. By the end of the year energy demand may be 6% down overall, according to the International Energy Agency (IEA), an intergovernmental forecaster, amounting to the largest drop it has ever seen.
Because less energy use means less burning of fossil fuels, greenhouse-gas emissions are tumbling, too. According to an analysis by the Global Carbon Project, a consortium of scientists, 2020’s emissions will be 2-7% lower than 2019’s if the world gets back to prepandemic conditions by mid-June; if restrictions stay in place all year, the estimated drop is 3-13% depending on how strict they are. The IEA’s best guess for the drop is 8%.
That is not enough to make any difference to the total warming the world can expect. Warming depends on the cumulative emissions to date; a fraction of one year’s toll makes no appreciable difference. But returning the world to the emission levels of 2010—for a 7% drop—raises the tantalising prospect of crossing a psychologically significant boundary. The peak in carbon-dioxide emissions from fossil fuels may be a lot closer than many assume. It might, just possibly, turn out to lie in the past.
That emissions from fossil fuels have to peak, and soon, is a central tenet of climate policy. Precisely when they might do so, though, is so policy-dependent that many forecasters decline to give a straight answer. The IEA makes a range of projections depending on whether governments keep on with today’s policies or enact new ones. In the scenario which assumes that current policies stay in place, fossil-fuel demand rises by nearly 30% from 2018 to 2040, with no peak in sight.
The IEA, though, has persistently underestimated the renewable-energy sector. Others are more bullish. Carbon Tracker, a financial think-tank, predicted in 2018 that with impressive but plausible growth in renewable deployment and relatively slow growth in overall demand, even under current policy fossil-fuel emissions should peak in the 2020s—perhaps as early as 2023. Michael Liebreich, who founded BloombergNEF, an energy-data outfit, has also written about a possible peak in the mid 2020s. Depending on how the pandemic pans out he now thinks that it may be in 2023—or may have been in 2019.
Previously, drops in emissions caused by economic downturns have proved only temporary setbacks to the ongoing rise in fossil-fuel use. The collapse of the Soviet Union in 1991, the Asian financial crash in 1997 and the financial crisis of 2007-09 all saw emissions stumble briefly before beginning to rise again (see chart). But if a peak really was a near-term prospect before the pandemic, almost a decade’s worth of setback could mean that, though emissions will rise over the next few years, they never again reach the level they stood at last year.
The alternative, more orthodox pre-covid view was that the peak was both further off and destined to be higher. On this view, emissions will regain their pre-pandemic level within a few years and will climb right on past it. Covid’s damage to the economy probably means that the peak, when it arrives, will be lower than it might have been, says Roman Kramarchuk of S&P Global Platts Analytics, a data and research firm. But an economic dip is unlikely to bring it on sooner.
What, though, if covid does not merely knock demand back, but reshapes it? This shock, unlike prior ones, comes upon an energy sector already in the throes of change. The cost of renewables is dipping below that of new fossil-fuel plants in much of the world. After years of development, electric vehicles are at last poised for the mass market. In such circumstances covid-19 may spur decisions—by individuals, firms, investors and governments—that hasten fossil fuels’ decline.
So far, renewables have had a pretty good pandemic, despite some disruptions to supply chains. With no fuel costs and the preferential access to electricity grids granted by some governments, renewables demand jumped 1.5% in the first quarter, even as demand for all other forms of energy sank. America’s Energy Information Administration expects renewables to surpass coal’s share of power generation in America for the first time this year.
Coal prices have fallen, given the low demand, which may position it well post-pandemic in some places. Even before covid, China was building new coal-fired plants (see article). But the cost of borrowing is also low, and likely to stay that way, which means installing renewables should stay cheap for longer. Renewable developers such as Iberdrola and Orsted, both of which have weathered covid-19 rather well so far, are keen to replace coal on an ever larger scale.
Those who see demand for fossil fuels continuing to climb as populations and economies grow have assumed demand for oil will be much more persistent than that for coal. Coal is almost entirely a source of electricity, which makes it ripe for replacement by renewables. Oil is harder to shift. Electric vehicles are sure to eat into some of its demand; but a rising appetite for petrochemicals and jet fuel, to which lithium-ion batteries offer no competition, was thought likely to offset the loss.
Breaking bounds
Now oil’s future looks much more murky, depending as it does on a gallimaufry of newly questionable assumptions about commuting, airline routes, government intervention, capital spending and price recovery. In the future more people may work from home, and commuting accounts for about 8% of oil demand. But those who do commute may prefer to do so alone in their cars, offsetting some of those gains. Chinese demand for oil has picked up again quickly in part because of reticence about buses and trains.
As to planes, Jeff Currie of Goldman Sachs estimates that demand for oil will recover to pre-crisis levels by the middle of 2022, but that demand for jet fuel may well stay 1.7m barrels a day below what it was as business travel declines. That is equivalent to nearly 2% of oil demand.
Such uncertainty means more trouble for the oil sector, whose poor returns and climate risks have been repelling investors for a while. Companies are slashing spending on new projects. By the mid-2020s today’s underinvestment in oil may boost crude prices—making demand for electric vehicles grow all the faster.
Natural gas, the fossil fuel for which analysts have long predicted continued growth, has weathered the pandemic better than its two older siblings. But it, too, faces accelerating competition. One of gas’s niches is powering the “peaker” plants which provide quick influxes of energy when demand outstrips a grid’s supply. It looks increasingly possible for batteries to take a good chunk of that business.
Those hoping for fossil fuels’ imminent demise should not be overconfident. As lockdowns around the world end, use of dirty fuels will tick back up, as they have in China. Energy emissions no longer rise in lockstep with economic growth, but demand for fossil fuels remains tied to it. Mr Currie of Goldman Sachs, for one, is wary of declaring a permanent decoupling: “I’m not willing to say there is a structural shift in oil demand to GDP.” Even so, a peak of fossil fuels in the 2020s looks less and less farfetched—depending on what governments do next in their struggle with the pandemic. Of all the uncertainties in energy markets, none currently looms larger than that. ■
The seventh contribution to our growing collection of writings on Covid-19 and this moment of crisis. Federica Caso is currently a teaching assistant at the University of Queensland, where she also completed her PhD in 2019. Her expertise is on militarisation and war memory in liberal societies. She also works on the politics of culture, art, and gender. Her most recent publication is titled “The Political Aesthetics of the Body of the Soldier in Pain” which features in Catherine Baker’s edited volume Making War on Bodies.
In this pandemic, the war rhetoric has spread as fast as the coronavirus itself. Recently, US President Donald Trump has characterised himself as a wartime president. Hospitals are preparing for war and healthcare workers are heralded as the frontline soldiers in the war against COVID-19. Economists ask how the coronavirus war economy will change the world. Wartime terms such as shelter-in-place, panic-buying, and lockdown have entered our daily and most mundane conversations.
The language of war is so normalised that in a recent episode of the New York Times’ podcast The Daily, a medical doctor answers questions from US American children about the coronavirus using war metaphors. We have come to believe that these children, aged no more than 6 and raised in ‘peacetime’ and prosperity, naturally know about invasion, bombing, weapons, and strategic warfare. We have come to believe that this is the best language to teach them about life processes.
It is important to pay attention to the language that we use to describe the coronavirus pandemic because it determines how we respond to it.
The War Metaphor
This is not the first time that the language of war is stretched to contexts that are not legalistically wartimes. In the last fifty years, we have heard of the war of drugs, the war on poverty, the war on crime, and the war on plastic.
War is a powerful metaphor. It is an effective, immediate, and emotive tool to communicate urgency to the general public. It also conveys a sense of struggle and righteousness that can justify exceptional measures.
The power of the war metaphor is derived from the role that war played in crafting the modern nation-state and the European model of the international system. Modern warfare is codified as an instrument of policy to protect the political community. In this dominant depiction, war is a measure that states take in the name of the nation to defend their citizens against a threatening foreign enemy. This is largely how we have memorialised war, and this is the type of war that we invoke when we deploy the metaphor of war.
The Power of the War Rhetoric in the Coronavirus Pandemic
The coronavirus pandemic is not only invoking metaphors from war, it is also unleashing war rhetoric. To clarify the distinction between war metaphor and war rhetoric consider the difference between the doctor hosted by The Daily that I mentioned before who uses examples from warfare to explain children how viruses work, and President Trump characterising himself as a war president. One assumes that children are familiar with the language of war more than the language of life, and therefore draws from the former to explain the latter. President Trump characterising himself as a war president is asking Americans to trust his abilities to deal with this difficult situation.
The war rhetoric presumes that we are at war when we are not to construct the realities of war. These war realities are invoked as a means of interrupting normalcy and call for exceptional measures. This strategy in the coronavirus pandemic has some merits.
The first invocation of the war rhetoric comes from doctors and health workers. For example, Italian doctors cry that the situation in the hospitals “is like a war”, and Australian health workers are preparing themselves for war. Here the war rhetoric functions to raise awareness about the challenges that the health system faces during this pandemic and the need for preparedness. The influx of patients and the shortage of supply and medical equipment are likened to wartime situations as a way of warning about the coming challenges to health systems worldwide.
The rhetoric of war is also invoked by politicians to compel compliance with orders designed to slow the spread of the virus. We are now all familiar with the expression “shelter-in-place,” which has its origin in the Cold War. Shelter-in-place evokes bunkers and nuclear fallout, and Governor of New York Andrew Cuomo has raised concerns that the expression fuels panic among the public. He is right and this is why the expression works. The language of war is imbued with fear, which makes it a compelling way to communicate when seeking obedience.
Finally, the rhetoric of war is enabling economic changes and flexibility that are much needed to face the challenges posed by the coronavirus pandemic. Economists are comparing the current unemployment rates, drops in market shares, and goods shortages to wartime scenarios. They are calling for wartime economic thinking to stimulate the economy and nationalise key services and industries. For example, in the US, the war rhetoric has tabled the need for the Defence Production Act, first introduced in 1950 during the Korean War, to support the production and distribution of medical materials such as ventilators and face masks. Given the fear around the nationalisation of industry and the spread of socialism in the US, the rhetoric of war might be a strategy to persuade the sceptical in the political class that the State must intervene in the economy.
We are not at War and We Should Stop Using the War Rhetoric
While the war rhetoric is effective to communicate urgency and implement special measures, we are not at war. The coronavirus is not an enemy. It is a parasitic agent that attaches to living organisms to generate new viral particles. There is no war to be waged against such a thing, and we should consider carefully before continuing to use the war rhetoric.
The first reason why we should stop using the rhetoric of war is that it fuels hatred, antagonism, and nationalism. For example, tapping into the war mentality, US President Trump antagonised China when he labelled the coronavirus “the Chinese virus.” We are also witnessing the mushrooming of conspiracy theories that incite mistrust. Furthermore, cases of racism towards Asians in the West are also testament of the divisive attitude brought by the war rhetoric.
Secondly, the rhetoric of war breeds and legitimises authoritarianism. Fear is a tool of control. Frightened people are more likely to accept exceptional measures and limitations to their freedoms. For example, in Hungary, Prime Minister Viktor Orbán has used emergency powers to extend his rule indefinitely. Several states around the world are implementing curfews with an increased deployment of police in the streets and ensuing police brutality. China is rolling out a new surveillance system that tells people when they should quarantine. Germany is developing an app that uses geolocation to do contact tracing. We will soon be confronted with the implications of this enhanced surveillance.
Third, as the war on terror taught us, a war with an elusive enemy is an endless war. A war against the coronavirus begs the question of how far are we willing to go to win, what counts as victory, and what are we ready to relinquish to win. After 9/11, the US introduced The Patriot Act which stripped Americans of many civil rights and freedoms in the name of security. The elusive enemy of war on terror has bred widespread wars in the Middle East and justified authoritarian measures in other parts of the world. There are lessons to be learnt from the post-9/11 rush to the war rhetoric that are instructive to avoid repeating another two decades of global violence.
Finally, the language of war authorises war behaviours and psychology. We are living in anxious times: people fear disease and death; many have lost their job and their business; we are keeping physically away from each other; services including mental health facilities and abortion clinics are closed; and we are watching the news as if it were the scariest TV series. When we embellish all of this with the language of war either to compel obedience or to give ourselves a boost of excitement, we also justify and encourage the fight or flight mentality and muscular, selfish behaviours such as hoarding toilet paper, face masks, hand sanitiser, and even guns.
Rhetorical Revelations
An analysis of the use of the war rhetoric during the coronavirus pandemic brings two revelations.
First, the rhetoric of a war against the coronavirus externalises responsibilities for the fact that our system is ill-equipped to protect people. For minority groups and poor people this is not news. But for the middle class and wealthy white people it is. The coronavirus is magnifying the deficiencies of our political, social, and economic system. It is forcing on us some of the questions that have long been at the fringes of leftist activism such as unemployment, prisons’ overpopulation, access to health care, mutual aid and community support, and funding for the arts. These were questions that before affected mostly minority groups and the poorer segments of society. Now, they affect most of us.
A case in point of how the war rhetoric externalises responsibilities is the crisis that the health system is facing today. We are speaking of medical workers as soldiers and of hospitals as battlefields. This conceals that the present crisis is mostly the product of our trust in neoliberal economic logics and in technological progress.
The coronavirus pandemic is revealing that our hospitals are highly technological but cannot accommodate large numbers of sick people. Since the 1980s, the development of medical technology and treatments for diseases that previously kept patients in hospitals, prompted a reduction in hospital beds. Empty beds are not cost-efficient. And even if now we can source beds from hotels and private hospitals, we still face the problem of the shortage of medical equipment such as face masks and hand sanitiser. The political economy of these shortages is rather common: many countries in the West have outsourced the production of medical equipment such as face masks and ventilators to reduce costs (the political economy of ventilators in the US is even more disturbing). It is no surprise that China, the largest world producer of face masks, is keeping them in the country to protect its own people and medical workers in the face of its own pandemic challenges.
The language of war conceals that the economic model on which we run hospitals and health care is deficient, if not sick. It implies instead that it is under attack by an external enemy. Viruses are an occurrence of life, they are not enemies. We can speculate that the coronavirus is here to stay, that it can come back, or than another virus like it will eventually emerge. We cannot declare a war every time. We must be prepared with policies and equipment such that life does not have to stop every time. The recognition that our health system is diseased from the capitalist logics of efficiency, cost reduction, and profit maximisation is the starting point to build resilient hospitals and medical workforce. Health workers should not be considered frontline soldiers. Life is not a battle.
The language of war devolves our own responsibilities further through discourse around the need to protect the vulnerable. We know that the coronavirus is more likely to kill the vulnerable. The elderly immediately come to mind. Initially, this information inspired the confidence that we could have kept running business as usual if we avoided contact with the vulnerable. This was the early strategy of the UK, for example. Soon we have realised that the extent of the category of the vulnerable is much larger than we could have ever imagined. Emerging data reveal that the vulnerable to the coronavirus also include those with weak immune systems, those suffering from hypertension, diabetes, cardiac ischemia, and chronic renal and lung conditions. We have been confronted with the fact that conditions such as diabetes, obesity, and depression, which are widespread in today’s world but are generally not considered life-threatening, make us vulnerable to death when compounded with a disease such as that caused by the coronavirus.
There is a connection between poor health and socio-economic conditions. Most cases of vulnerability are bred by social policies, which means that the coronavirus will hit some communities harder than others. For example, in Australia, this disparity is revealed by the health directives which indicate that while the cut-off of vulnerability for non-Indigenous Australians is 60 years old for those with pre-existing conditions, and 70 for those without, it is 50 for First Nations people. As Chelsea Bond explains, poor health in Aboriginal communities is the product of 200 years of neglect. While the health agenda focused on finding cures for diseases that were endemic in Europe and that were affecting the settlers, Indigenous people were denied access to medical treatment and control over their health agenda.
The rhetoric of war against the coronavirus puts the blame for sickness and death onto an external invisible enemy, while masking that in fact our current political and economic system is at the basis of many of the health conditions that make us vulnerable to this virus. The number of those vulnerable to the coronavirus due to underlying conditions suggests that the health agenda has failed us because of the politics of class, race, and sexuality. We are not at war with an invisible enemy, the head and lymph of our health system is sick.
The second revelation is that we are ill-equipped to deal with death. Charles Einstein suggests that we are not at war with the virus, we are at war with death. The triumph over death has been considered to be the ultimate sign of civilisation. Medical technologies that make us live longer are heralded as symbol of progress and make us believe that we have control over death. The coronavirus is challenging our triumph over death and we are fighting to reclaim it.
We are in denial of death and we cannot accept it as part of life. We are so possessed by the belief that we have to defeat death that when it presents itself, we do anything we can to avoid it, even if the price is human life itself.
This pandemic has presented us with death. To avoid it, we are asked to forgo human contact: no handshakes, no hugs, no sex, no gatherings, and no public life. We are living secluded in our homes, desperately attempting to make technology a viable substitute for our previous life. We Facetime our friends and family, use Zoom to teach, learn, and exercise, and invent new ways to date remotely. This works enough to avoid total isolation, but not to sustain human life in the long term. Indeed, this is a small and temporary price to pay to save lives. But how long can this go on? And what are the implications of this lifestyle? As hospitals prepare themselves for the worse, we are facing a surge of isolation, depression, domestic abuse, and alcoholism, all problems that we have to live with to avoid death.
The coronavirus is shaking the ground of our civilizational triumph over death. To be sure, people die every day and they died even before the coronavirus. Many people die of preventable diseases, domestic and intimate partner violence, and of hunger. While there are organisations, campaigns, and activities of mutual aid that operate every day to save lives, there are also structures of power that cause, benefit, or cannot care for the many who die of preventable death. This pandemic is begging the question of whose life matter – once again.
Coronavirus deaths were unforeseen and are threatening the legitimacy and efficacy of our structures of power. They are putting people out of work, affecting oil price, changing patterns of capitalist consumption, and prompting government to subsidise citizens and workers around the world. They are undermining confidence in the robustness of the medical, social, economic, and political system. This is why we cannot be in denial of coronavirus deaths like we are for other types of deaths caused by power imbalances and structural inequality.
A critical look at death worldwide reveals that many die from perverse operations of power. But we are all dying from these power imbalances. We can see this if we consider the bigger picture of the unfolding climate disaster. We are all slowing but surely dying. Life in the Pacific Islands is under serious and immediate threat from raising sea levels. Australia has witnessed a long and unprecedented summer of bushfires that is likely to come back. Draughts and famine are threating life in many African states. Levels of pollution and industrial urbanisation in Asia are alarming. The fluctuating temperature of the last few winters in Europe are affecting summer crop production. Scientists keep predicting how many years human life on Earth can continue as is unless we reverse the trends, 20, 30, 13, 50 years. And yet, we remain in denial of our own mortality.
The rhetoric of war about the coronavirus reveals that despite (or possibly because of) the scientific progress that we have made, we are clinging onto anything that keeps life going, no matter what kind of life. And with the war rhetoric in place, if we die, at least we die heroically, as if in war. Our rejection of death is making us blind to the question about what kind of life is worth living and what is worth living for.
Like war, the coronavirus pandemic is a collective trauma. The ways in which we have dealt with war traumas have instantiated various forms of structural violence: nationalism, state borders, toxic (militaristic) masculinity, muscular politics, economic competition, expansionism, and settler colonialism. And this is another reason why we must avoid the language of war to describe the coronavirus pandemic, for we don’t want another collective trauma to turn into an opportunity to instantiate more structural violence. In the face of collective trauma, Emma Hutchison invites us to consider the politics of grief to reshape our sense of collectivity. This demands that we name and face our injuries, negative emotions, and their sources as a way of integrating the experience in our narratives of communal life and adapt accordingly. Through the politics of grief, we do not re-enact the past over and over again; we empower ourselves to write a different future. We need to come to terms with the limitations of our systems of politics, economy, society, and beliefs that the coronavirus pandemic is showing us. These limitations are the source of our collective trauma and the items that we need to address to grieve and integrate the traumatic experience of this pandemic.
Modern day internet wisdom suggests that
If you are in conflict with someone and they are unaware, then you are in conflict within yourself.
This quote captures our so-called war with the coronavirus. We are not at war against the virus. As Annamaria Testa remarks, we cannot be at war with the coronavirus because it is not an enemy. It does not hate us and does not want our destruction. The virus is not even aware of us, and knows nothing of us or of itself.
Instead, we are at war with ourselves and the systems that we have created. We hate that the virus is stripping naked in front us the limitations of our systems, political, economic, social, and of beliefs. We hate that our health system cannot save us as we wanted and expected. We hate that, after all, screen time is not a very good substitute for human touch and company. We hate that once again we have to trust untrustworthy politicians to get us through this. We hate that the dreams that we built on the shaky grounds of our sick systems are becoming perverse fantasies. We hate that we have to relinquish again our freedoms and liberties for the fantasy of security. We hate to feel that the ground under our feet is crumbling fast and inexorably. If anything, we are at war with ourselves, just like a cancer patient might be at war with their own cancer.
But the language of war is no good either for the cancer patient or for the demise of the Anthropocene. This is not a war. This is a lesson and an opportunity to change ourselves and our systems and structures. The virus made visible the deficiencies of the status quo. It has made us hit pause. And it is demanding that we make changes. Going back to “normal” is going back to the same system that led us here. And this “new normal” of shelter-in-place, no human contact, and enhanced digital and police surveillance is a perverse fantasy of safety.
Perda total ou em parte da renda mensal já atingiu 40% dos brasileiros. Foto: AFP.
Pesquisa da CNI mostra que a maioria da população brasileira continua favorável ao isolamento social, apesar das possíveis perdas econômicas
Pesquisa da Confederação Nacional da Indústria (CNI), divulgada nesta quinta-feira 07, mostra que a perda do poder de compra já atingiu quatro em cada dez brasileiros desde o início da pandemia. Do total de entrevistados, 23% perderam totalmente a renda e 17% tiveram redução no ganho mensal, atingindo o percentual de 40%.
Quase metade dos trabalhadores (48%) tem medo grande de perder o emprego. Somado ao percentual daqueles que têm medo médio (19%) ou pequeno (10%), o índice chega a 77% de pessoas que estão no mercado de trabalho e têm medo de perder o emprego. De modo geral, nove em cada dez entrevistados consideram grandes os impactos da pandemia de coronavírus na economia brasileira.
A pesquisa mostra também que o impacto na renda e o medo do desemprego levaram 77% dos consumidores a reduzir, durante o período de isolamento social, o consumo de pelo menos um de 15 produtos testados. Ou seja, de cada quatro brasileiros, três reduziram seus gastos. Apenas 23% dos entrevistados não reduziram em nada suas compras, na comparação com o hábito anterior ao período da pandemia.
Questionada sobre como pretende se comportar no futuro, a maioria dos brasileiros planeja manter no período pós-pandemia o nível de consumo adotado durante o isolamento, sendo que os percentuais variam de 50% a 72% dos entrevistados, dependendo do produto. Essa tendência, segundo a CNI, pode indicar que as pessoas não estão dispostas a retomar o mesmo patamar de compras que tinham antes.
Apenas 1% dos entrevistados respondeu que vai aumentar o consumo de todos os 15 itens testados pela pesquisa após o fim do isolamento social. Para 46%, a pretensão é aumentar o consumo de até cinco produtos; 8% vão aumentar o consumo de seis a dez produtos; e 2% de 11 a 14 produtos. Para 44% dos entrevistados, não haverá aumento no consumo de nenhum dos itens.
Isolamento social
Os dados revelam que a população brasileira continua favorável ao isolamento social (86%), apesar das possíveis perdas econômicas, e quase todo mundo (93%) mudou sua rotina durante o período de isolamento, em diferentes graus.
No cenário pós-pandemia, três em cada dez brasileiros falam em voltar a uma rotina igual à que tinham antes. Em relação ao retorno para o trabalho depois de terminado o isolamento social, 43% dos trabalhadores formais e informais afirmaram que se sentem seguros, enquanto 39% se dizem mais ou menos seguros e 18%, inseguros.
“As atenções dos governos, das empresas e da sociedade devem estar voltadas, prioritariamente, para preservar vidas. Entretanto, é crucial que nos preocupemos também com a sobrevivência das empresas e com a manutenção dos empregos. É preciso estabelecer uma estratégia consistente para que, no momento oportuno, seja possível promover uma retomada segura e gradativa das atividades empresariais”, disse o presidente da CNI, Robson Braga de Andrade.
A maior parte dos entrevistados (96%) considera importante que as empresas adotem medidas de segurança, como a distribuição de máscaras e a adoção de uma distância mínima entre os colaboradores. Para 82% dos trabalhadores, essas medidas serão eficientes para proteger os empregados.
Dívidas
Um dado apontado pela pesquisa e considerado preocupante pela CNI é o endividamento, que atinge mais da metade da população (53%). O percentual é a soma dos 38% que já estavam endividados antes da pandemia e os 15% que contraíram dívidas nos últimos 40 dias, período que coincide com o começo do isolamento social.
Entre aqueles que têm dívida, 40% afirmam que já estão com algum pagamento em atraso em alguma dessas dívidas. A maioria dos endividados em atraso (57%) passou a atrasar suas parcelas nos últimos 40 dias, ou seja, período que coincide com o isolamento social.
O levantamento, realizado pelo Instituto FSB Pesquisa, contou com 2.005 entrevistados, a partir de 16 anos, de todas as unidades da Federação, entre os dias 2 e 4 de maio e tem margem de erro de dois pontos percentuais.
Democrats are seeking to raise benefits as research shows a rise in food insecurity without modern precedent amid the pandemic. But Republicans have balked at a long-term expansion of the program.
Credit…Bryan Anselm for The New York Times
WASHINGTON — As a padlocked economy leaves millions of Americans without paychecks, lines outside food banks have stretched for miles, prompting some of the overwhelmed charities to seek help from the National Guard.
New research shows a rise in food insecurity without modern precedent. Among mothers with young children, nearly one-fifth say their children are not getting enough to eat, according to a survey by the Brookings Institution, a rate three times as high as in 2008, during the worst of the Great Recession.
The reality of so many Americans running out of food is an alarming reminder of the economic hardship the pandemic has inflicted. But despite their support for spending trillions on other programs to mitigate those hardships, Republicans have balked at a long-term expansion of food stamps — a core feature of the safety net that once enjoyed broad support but is now a source of a highly partisan divide.
Democrats want to raise food stamp benefits by 15 percent for the duration of the economic crisis, arguing that a similar move during the Great Recession reduced hunger and helped the economy. But Republicans have fought for years to shrink the program, saying that the earlier liberalization led to enduring caseload growth and a backdoor expansion of the welfare state.
For President Trump, a personal rivalry may also be in play: In his State of the Union address in February, he boasted that falling caseloads showed him besting his predecessor, Barack Obama, whom Newt Gingrich, the former Republican House speaker, had derided as “the food stamp president.” Even as the pandemic unfolded, the Trump administration tried to push forward with new work rules projected to remove more people from aid.
Mr. Trump and his congressional allies have agreed to only a short-term increase in food stamp benefits that omits the poorest recipients, including five million children. Those calling for a broader increase say Congress has spent an unprecedented amount on programs invented on the fly while rejecting a proven way to keep hungry people fed.
“This program is the single most powerful anti-hunger tool that we have and one of the most important economic development tools,” said Kate Maehr, the head of the Chicago food bank. “Not to use it when we have so many people who are in such great need is heartbreaking. This is not a war that charity can win.”
The debate in Congress is about the size of benefits, not the numbers on the rolls. The Supplemental Nutrition Assistance Program, or SNAP, as food stamps are also known, expands automatically to accommodate need.
“SNAP is working, SNAP will increase,” said Representative K. Michael Conaway of Texas, the top Republican on the House Agriculture Committee, which oversees the program. “Anyone who qualifies is going to get those benefits. We do not need new legislation.”
Mr. Conaway noted that Republicans have supported huge spending on other programs to temper the economic distress, and increased benefits for some SNAP recipients (for the duration of the health emergency, not the economic downturn). Democrats, he said, want to leverage the pandemic into a permanent food stamp expansion.
Credit…Erin Schaff/The New York Times
“I’m a little bit jaded,” he said. “The last time we did this, those changes were sold as being temporary — when unemployment improved, the rolls would revert back. That didn’t happen.”
Rejecting what he called the Democrats’ narrative of “hardhearted Republicans,” he warned against tempting people to become dependent on government aid. “I don’t want to create a moral hazard for people to be on welfare.”
Food stamp supporters say the program is well suited for the crisis because it targets the poor and benefits can be easily adjusted since recipients get them on a debit card. The money gets quickly spent and supplies a basic need.
During the Great Recession, Congress increased maximum benefits by about 14 percent and let states suspend work rules. Caseloads soared. By the time the rolls peaked in 2013, nearly 20 million people had joined the program, an increase of nearly 70 percent, and one in seven Americans received food stamps, including millions with no other income.
Supporters saw a model response. The share of families suffering “very low food security” — essentially, hunger — fell after the benefit expanded (and rose once the increase expired). Analysts at the left-leaning Center on Budget and Policy Priorities, Arloc Sherman and Danilo Trisi, found that in 2012 the program lifted 10 million people out of poverty.
“This is what you want a safety net to do — expand in times of crisis,” said Diane Schanzenbach, an economist at Northwestern University.
But a backlash quickly followed, as a weak recovery and efforts to increase participation kept the rolls much higher than they had been before the recession.
Republican governors reinstated work rules for childless adults, and one of them, Sam Brownback of Kansas, succeeded in pushing three-quarters of that population from the rolls. A new conservative think tank, the Foundation for Government Accountability, said the policy “freed” the poor and urged others to follow. By the time Mr. Trump introduced his brand of conservative populism, skepticism of food stamps was part of the movement’s genome.
In a history that spans more than a half-century, the program has alternately been celebrated as “nutritional aid” and attacked as “welfare.”
Its current form dates to a 1977 compromise between two Senate lions, the liberal George McGovern and the conservative Bob Dole. But almost simultaneously Ronald Reagan added to a stream of racialized attacks on the program, invoking the image of a “strapping young buck” who used food stamps to buy steaks. As president, Reagan went on to enact large cuts.
Credit…Juan Arredondo for The New York Times
After President Bill Clinton pledged to “end welfare” in the 1990s by restricting cash aid, conservatives sought to include big cuts in food stamps, which he resisted. The law he signed subjected cash aid to time limits and work requirements but allowed similar constraints on just one group of food stamp recipients — adults without minor children, roughly 10 percent of the caseload. (Other provisions disqualified many immigrants.)
His Republican successor, George W. Bush, called himself a “compassionate conservative” and promoted food stamps — partly to help people leaving cash welfare to work — and the caseloads grew by nearly two-thirds.
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“I don’t see it as a welfare program,” said Eric M. Bost, Mr. Bush’s first food stamp administrator. “I see it as a nutritional assistance program. You can only use it to buy food.”
Food stamps remain central to the American safety net — costing much more ($60 billion) than cash aid and covering many more people (38 million). To qualify, a household must have an income of 130 percent of the poverty line or less, about $28,000 for three people. Before the pandemic, the average household had a total income of just over $10,000 and received a benefit of about $239 a month.
But Mr. Trump has done all he can to shrink the program. He sought budget cuts of 30 percent. He tried to replace part of the benefit with “Harvest Boxes” of cheaper commodities. He tried to reduce eligibility and expand work rules to a much larger share of the caseload. When Congress balked, he pursued his goals through regulations. His chief of staff, Mark Meadows, called last year for using erroneous food stamp payments to fund the border wall.
“Under the last administration, more than 10 million people were added to the food stamp rolls,” Mr. Trump said in his State of Union speech (understating the growth). “Under my administration, seven million Americans have come off food stamps.”
In December, Mr. Trump issued a rule that made it harder for states to waive work mandates in areas of high unemployment. Conservatives say liberal states have abused waivers to gut the work rules — only six of California’s 58 counties, for example, enforced the requirement at the start of the year.
“Millions of able-bodied, working-age adults continue to collect food stamps without working or even looking for work,” Mr. Trump said.
But opponents of the Trump work rule, which applies to able-bodied adults, say it will punish indigents willing to work but unable to find jobs. Before the pandemic, the administration predicted nearly 700,000 people would lose benefits. They have average cash incomes of about $367 a month.
Credit…Al Drago for The New York Times
“This rule would take a group of people who are already incredibly poor, and make them worse off,” said Stacy Dean, vice president of the Center on Budget and Policy Priorities, which favors broad access to benefits.
Even as the pandemic unfolded in mid-March, Agriculture Secretary Sonny Perdue vowed to implement the work rule on April 1 as scheduled. A federal judge halted the move, and Congress deferred the rule until the pandemic ends.
A second target of administration ire is a policy that lets states expand eligibility by waiving certain limits on income and assets. About 40 states do so, although the budget center found more than 99 percent of benefits go to households with net incomes below the poverty line ($21,700 for a family of three).
Critics of the policy — “broad-based categorical eligibility” — say it encourages abuse by allowing people with significant savings to collect benefits. The Trump administration is seeking to eliminate it and has predicted that 3.1 million people would lose benefits, 8 percent of the caseload.
The Republican distrust of food stamps has now collided with a monumental crisis. Cars outside food banks have lined up for miles in places as different as San Antonio, Pittsburgh and Miami Beach.
Among those seeking food bank help for the first time was Andrew Schuster, 22, a long-distance trucker who contracted Covid-19 and returned home to recover outside Cleveland.
Unable to get unemployment benefits as the state’s website crashed, he exhausted his $1,200 stimulus check on rent and watched his food shelves empty. He was down to ramen noodles when he learned the Second Harvest Food Bank of North Central Ohio was distributing food at his high school.
“I felt kind of embarrassed, really, because of the stigma of it,” Mr. Schuster said. But a box of milk, corn and pork loin “lifted a weight off my shoulders — I was almost in tears.”
Mr. Schuster, who voted for Mr. Trump, said that he used to think people abused food stamps, but that he may need to apply. “I never thought I would need it.”
While Mr. Schuster’s income fell, others have seen expenses rise. Jami Clinkscale of Columbus, Ohio, who lives on a disability check of $580 a month, has gone from feeding two people to six after taking in grandchildren when their mother was evicted. She feeds them on $170 of food stamps and frequents food pantries. “I’ve eaten a lot less just to make sure they get what they need,” she said.
The new research by the Brookings Institution underscores the rising need. Analyzing data from the Covid Impact Survey, a nationally representative sample, Lauren Bauer, a Brookings fellow in economic studies, found that nearly 23 percent of households said they lacked money to get enough food, compared with about 16 percent during the worst of the Great Recession. Among households with children, the share without enough food was nearly 35 percent, up from about 21 percent in the previous downturn.
When food runs short, parents often skip meals to keep children fed. But Ms. Bauer’s own survey of households with children 12 and younger found that more than 17.4 percent reported the children themselves not eating enough, compared with 5.7 percent in the Great Recession. (Her survey is called the Survey of Mothers With Young Children.) Inadequate nutrition can leave young children with permanent developmental damage.
Credit…Charlie Riedel/Associated Press
“This is alarming,” she said. “These are households cutting back on portion sizes, having kids skip meals. The numbers are much higher than I expected.”
Ms. Bauer said disruptions in school meal programs may be part of the problem, with some families unable to reach distribution sites and older siblings at home competing for limited food.
Republicans say the government is spending trillions to meet such needs. In addition to the stimulus checks, Congress has added $600 a week to jobless benefits through July and raised food stamp benefits during the pandemic for about 60 percent of the caseload, at a cost of nearly $2 billion a month. They note that Democrats have not only pushed a longer benefit increase but proposed to permanently block Mr. Trump’s work rules and asset limitations.
“This is a backdoor way to get permanent changes,” Mr. Conaway said.
Democrats say the emergency help will end before the economy recovers and mostly bypasses the neediest families, few of whom qualify for jobless benefits. About 40 percent of food stamp households — the poorest — were left out of the benefit expansion. (The increase gives all households the maximum benefit, $509 for a family of three, though the poorest 40 percent already received it.)
Prospects for a congressional deal remain unclear and may depend on horse-trading in a larger coronavirus bill. But Speaker Nancy Pelosi is adamant that it should contain a broader food stamp expansion.
“First of all, it’s a moral thing to do,” she said in an interview with MSNBC. “Second of all, the people need it. And third of all, it’s a stimulus to the economy.”
Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub
IN THE 1970s Mori Masahiro, a professor at the Tokyo Institute of Technology, observed that there was something disturbing about robots which looked almost, but not quite, like people. Representations in this “uncanny valley” are close enough to lifelike for their shortfalls and divergences from the familiar to be particularly disconcerting. Today’s Chinese economy is exploring a similarly unnerving new terrain. And the rest of the world is following in its uncertain steps.
Whatever the drawbacks of these new lowlands, they are assuredly preferable to the abyss of lockdown. Measures taken to reverse the trajectory of the pandemic around the world have brought with them remarkable economic losses.
Not all sectors of the economy have done terribly. New subscriptions to Netflix increased at twice their usual rate in the first quarter of 2020, with most of that growth coming in March. In America, the sudden stop of revenue from Uber’s ride-sharing service in March and April has been partially cushioned by the 25% increase of sales from its food-delivery unit, according to 7Park Data, a data provider.
Yet the general pattern is grim. Data from Womply, a firm which processes transactions on behalf of 450,000 small businesses across America, show that businesses in all sectors have lost substantial revenue. Restaurants, bars and recreational businesses have been badly hit: revenues have declined some two-thirds since March 15th. Travel and tourism may suffer the worst losses. In the EU, where tourism accounts for some 4% of GDP, the number of people travelling by plane fell from 5m to 50,000; on April 19th less than 5% of hotel rooms in Italy and Spain were occupied.
According to calculations made on behalf of The Economist by Now-Casting Economics, a research firm that provides high-frequency economic forecasts to institutional investors, the world economy shrank by 1.3% year-on-year in the first quarter of 2020, driven by a 6.8% year-on-year decline in China’s GDP. The Federal Reserve Bank of New York draws on measures such as jobless claims to produce a weekly index of American economic output. It suggests that the country’s GDP is currently running about 12% lower than it was a year ago (see chart 1).
These figures fit with attempts by Goldman Sachs, a bank, to estimate the relationship between the severity of lockdowns and their effect on output. It finds, roughly, that an Italian-style lockdown is associated with a GDP decline of 25%. Measures to control the virus while either keeping the economy running reasonably smoothly, as in South Korea, or reopening it, as in China, are associated with a GDP reduction in the region of 10%. That chimes with data which suggest that if Americans chose to avoid person-to-person proximity of the length of an arm or less, occupations worth approximately 10% of national output would become unviable.
The “90% economy” thus created will be, by definition, smaller than that which came before. But its strangeness will be more than a matter of size. There will undoubtedly be relief, fellow feeling, and newly felt or expressed esteem for those who have worked to keep people safe. But there will also be residual fear, pervasive uncertainty, a lack of innovative fervour and deepened inequalities. The fraction of life that is missing will colour people’s experience and behaviour in ways that will not be offset by the happy fact that most of what matters is still available and ticking over. In a world where the office is open but the pub is not, qualitative differences in the way life feels will be at least as significant as the drop in output.
The plight of the pub demonstrates that the 90% economy will not be something that can be fixed by fiat. Allowing pubs—and other places of social pleasure—to open counts for little if people do not want to visit them. Many people will have to leave the home in order to work, but they may well feel less comfortable doing so to have a good time. A poll by YouGov on behalf of The Economist finds that over a third of Americans think it will be “several months” before it will be safe to reopen businesses as normal—which suggests that if businesses do reopen some, at least, may stay away.
Ain’t nothing but tired
Some indication that the spending effects of a lockdown will persist even after it is over comes from Sweden. Research by Niels Johannesen of Copenhagen University and colleagues finds that aggregate-spending patterns in Sweden and Denmark over the past months look similarly reduced, even though Denmark has had a pretty strict lockdown while official Swedish provisions have been exceptionally relaxed. This suggests that personal choice, rather than government policy, is the biggest factor behind the drop. And personal choices may be harder to reverse.
Discretionary spending by Chinese consumers—the sort that goes on things economists do not see as essentials—is 40% off its level a year ago. Haidilao, a hotpot chain, is seeing a bit more than three parties per table per day—an improvement, but still lower than the 4.8 registered last year, according to a report by Goldman Sachs published in mid-April. Breweries are selling 40% less beer. STR, a data-analytics firm, finds that just one-third of hotel beds in China were occupied during the week ending April 19th. Flights remain far from full (see chart 2).
This less social world is not necessarily bad news for every company. UBS, a bank, reports that a growing number of people in China say that the virus has increased their desire to buy a car—presumably in order to avoid the risk of infection on public transport. The number of passengers on Chinese underground trains is still about a third below last year’s level; surface traffic congestion is as bad now as it was then.
Wanting a car, though, will not mean being able to afford one. Drops in discretionary spending are not entirely driven by a residual desire for isolation. They also reflect the fact that some people have a lot less money in the post-lockdown world. Not all those who have lost jobs will quickly find new ones, not least because there is little demand for labour-intensive services such as leisure and hospitality. Even those in jobs will not feel secure, the Chinese experience suggests. Since late March the share of people worried about salary cuts has risen slightly, to 44%, making it their biggest concern for 2020, according to Morgan Stanley, a bank. Many are now recouping the loss of income that they suffered during the most acute phase of the crisis, or paying down debt. All this points to high saving rates in the future, reinforcing low consumption.
A 90% economy is, on one level, an astonishing achievement. Had the pandemic struck even two decades ago, only a tiny minority of people would have been able to work or satisfy their needs. Watching a performance of Beethoven on a computer, or eating a meal from a favourite restaurant at home, is not the same as the real thing—but it is not bad. The lifting of the most stringent lockdowns will also provide respite, both emotionally and physically, since the mere experience of being told what you can and cannot do is unpleasant. Yet in three main ways a 90% economy is a big step down from what came before the pandemic. It will be more fragile; it will be less innovative; and it will be more unfair.
Take fragility first. The return to a semblance of normality could be fleeting. Areas which had apparently controlled the spread of the virus, including Singapore and northern Japan, have imposed or reimposed tough restrictions in response to a rise in the growth rate of new infections. If countries which retain relatively tough social-distancing rules do better at staving off a viral comeback, other countries may feel a need to follow them (see Chaguan). With rules in flux, it will feel hard to plan weeks ahead, let alone months.
Can’t start a fire
The behaviour of the economy will be far less predictable. No one really knows for how long firms facing zero revenues, or households who are working reduced hours or not at all, will be able to survive financially. Businesses can keep going temporarily, either by burning cash or by tapping grants and credit lines set up by government—but these are unlimited neither in size nor duration. What is more, a merely illiquid firm can quickly become a truly insolvent one as its earnings stagnate while its debt commitments expand. A rise in corporate and personal bankruptcies, long after the apparently acute phase of the pandemic, seems likely, though governments are trying to forestall them. In the past fortnight bankruptcies in China started to rise relative to last year. On April 28th HSBC, one of the world’s largest banks, reported worse-than-expected results, in part because of higher credit losses.
Furthermore, the pandemic has upended norms and conventions about how economic agents behave. In Britain the share of commercial tenants who paid their rent on time fell from 90% to 60% in the first quarter of this year. A growing number of American renters are no longer paying their landlords. Other creditors are being put off, too. In America, close to 40% of business-to-business payments from firms in the spectator-sports and film industries were late in March, double the rate a year ago. Enforcing contracts has become more difficult with many courts closed and social interactions at a standstill. This is perhaps the most insidious means by which weak sectors of the economy will infect otherwise moderately healthy ones.
In an environment of uncertain property rights and unknowable income streams, potential investment projects are not just risky—they are impossible to price. A recent paper by Scott Baker of Northwestern University and colleagues suggests that economic uncertainty is at an all-time high. That may go some way to explaining the results of a weekly survey from Moody’s Analytics, a research firm, which finds that businesses’ investment intentions are substantially lower even than during the financial crisis of 2007-09. An index which measures American nonresidential construction activity 9-12 months ahead has also hit new lows.
The collapse in investment points to the second trait of the 90% economy: that it will be less innovative. The development of liberal capitalism over the past three centuries went hand in hand with a growth in the number of people exchanging ideas in public or quasi-public spaces. Access to the coffeehouse, the salon or the street protest was always a partial process, favouring some people over others. But a vibrant public sphere fosters creativity.
Innovation is not impossible in a world with less social contact. There is more than one company founded in a garage now worth $1trn. During lockdowns, companies have had to innovate quickly—just look at how many firms have turned their hand to making ventilators, if with mixed success. A handful of firms claim that working from home is so productive that their offices will stay closed for good.
Yet these productivity bonuses look likely to be heavily outweighed by drawbacks. Studies suggest the benefits of working from home only materialise if employees can frequently check in at an office in order to solve problems. Planning new projects is especially difficult. Anyone who has tried to bounce ideas around on Zoom or Skype knows that spontaneity is hard. People are often using bad equipment with poor connections. Nick Bloom of Stanford University, one of the few economists to have studied working from home closely, reckons that there will be a sharp decline in patent applications in 2021.
Cities have proven particularly fertile ground for innovations which drive long-run growth. If Geoffrey West, a physicist who studies complex systems, is right to suggest that doubling a city’s population leads to all concerned becoming on aggregate 15% richer, then the emptying-out of urban areas is bad news. MoveBuddha, a relocation website, says that searches for places in New York City’s suburbs are up almost 250% compared with this time last year. A paper from New York University suggests that richer, and thus presumably more educated, New Yorkers—people from whom a disproportionate share of ideas may flow—are particularly likely to have left during the epidemic.
Something happening somewhere
Wherever or however people end up working, the experience of living in a pandemic is not conducive to creative thought. How many people entered lockdown with a determination to immerse themselves in Proust or George Eliot, only to find themselves slumped in front of “Tiger King”? When mental capacity is taken up by worries about whether or not to touch that door handle or whether or not to believe the results of the latest study on the virus, focusing is difficult. Women are more likely to take care of home-schooling and entertainment of bored children (see article), meaning their careers suffer more than men’s. Already, research by Tatyana Deryugina, Olga Shurchkov and Jenna Stearns, three economists, finds that the productivity of female economists, as measured by production of research papers, has fallen relative to male ones since the pandemic began.
The growing gender divide in productivity points to the final big problem with the 90% economy: that it is unfair. Liberally regulated economies operating at full capacity tend to have unemployment rates of 4-5%, in part because there will always be people temporarily unemployed as they move from one job to another. The new normal will have higher joblessness. This is not just because GDP will be lower; the decline in output will be particularly concentrated in labour-intensive industries such as leisure and hospitality, reducing employment disproportionately. America’s current unemployment rate, real-time data suggest, is between 15-20%.
The lost jobs tended to pay badly, and were more likely to be performed by the young, women and immigrants. Research by Abi Adams-Prassl of Oxford University and colleagues finds that an American who normally earns less than $20,000 a year is twice as likely to have lost their job due to the pandemic as one earning $80,000-plus. Many of those unlucky people do not have the skills, nor the technology, that would enable them to work from home or to retrain for other jobs.
The longer the 90% economy endures, the more such inequalities will deepen. People who already enjoy strong professional networks—largely, those of middle age and higher—may actually quite enjoy the experience of working from home. Notwithstanding the problems of bad internet and irritating children, it may be quite pleasant to chair fewer meetings or performance reviews. Junior folk, even if they make it into an office, will miss out on the expertise and guidance of their seniors. Others with poor professional networks, such as the young or recently arrived immigrants, may find it difficult or impossible to strengthen them, hindering upward mobility, points out Tyler Cowen of George Mason University.
The world economy that went into retreat in March as covid-19 threatened lives was one that looked sound and strong. And the biomedical community is currently working overtime to produce a vaccine that will allow the world to be restored to its full capacity. But estimates suggest that this will take at least another 12 months—and, as with the prospects of the global economy, that figure is highly uncertain. If the adage that it takes two months to form a habit holds, the economy that re-emerges will be fundamentally different.
A Pakistani worker in Karachi sorts wheat grain on April 7 to make flour to keep people fed during the country’s lockdown amid the ongoing COVID-19 pandemic. Photo: Shahzaib Akber (EPA-EFE)
That strawberry you’re eating while self-isolating from the coronavirus?
Chances are it came from a farm. Or it may have come from a large agricultural operation many, many kilometers away from your home, harvested by hand, possibly by migrant workers brought in from other towns, cities, or even countries.
But can that system continue to bring you strawberries as the global coronavirus pandemic continues? Or bread? Pasta? Cooking oil?
The coronavirus has already sent the global economy into a tailspin, with tens of millions of people being put out of work, as factories from Wuhan to Bavaria to Michigan suspend operations.
What does this mean for the food we eat?
If you live in a rural setting in a temperate climate where the growing season is under way, you might be preparing to eat produce from your backyard or your dacha.
But if you live in a city – as more than half the world’s population does — chances are you rely on the global food supply chain to make sure your bread and milk, or noodles and bananas, are in stock at the market.
What happens when the people picking our fruits and vegetables get sick or have to quarantine? What happens when the packers who make sure the potatoes and onions are boxed and put onto trucks to be driven to towns and cities can’t work? What happens when wheat can’t be milled or shipped to bakeries to be baked into bread and sold at markets and food stores?
Could we be facing global food shortages in the coming months?
A man stands in front of empty shelves in a supermarket in Moscow on March 17.
“Massive disruptions to global food supply system will result from the pandemic,” Chris Elliot, a professor at Queen’s University in Belfast, wrote in a post on Twitter.
Here’s what we know about how the coronavirus is affecting food supplies.
What’s Going On?
In mid-March, the pandemic was accelerating in most countries, even as a handful began to show signs of “flattening the curve” – the term used for slowing the rate of new infections.
But the stress on the global food supply system was already clear.
“A protracted pandemic crisis could quickly put a strain on the food supply chains, a complex web of interactions involving farmers, agricultural inputs, processing plants, shipping, retailers, and more,” Maximo Cullen, the chief economist for the United Nations’ Food and Agriculture Organization, warned in a paper.
Panic buying and hoarding in some places added to worries that retailers and wholesalers whose inventories might be small already could be wiped out.
By early April, the World Food Program – another UN agency – tried to reassure nervous consumers.
“Global markets for basic cereals are well-supplied and prices generally low,” the program said in a report released on April 3.
“Disruptions are so far minimal; food supply is adequate, and markets are relatively stable,” spokeswoman Elizabeth Byrs was quoted as saying.
“But we may soon expect to see disruptions in food supply chains” if big importers lose confidence in the reliable flow of basic food commodities, she said.
Workers load a truck with food aid in Bydgoszcz, Poland, on April 8. Two Polish companies, Polski Cukier and Polskie Przetwory, donated food products to help those most in need because of the coronavirus pandemic.
For industrialized nations, whose food supply chains were already undergoing a shift due to changing consumer habits and tastes, that bodes for more uncertainty.
“We’re talking about a radical change to a food chain that was already going through a radical chain,” James Tillotson, a retired professor of food policy and international business at the Friedman School at Tufts University in the United States, told RFE/RL.
Who’s Most At Risk?
For major industrial nations, whose populations tend to be particularly concentrated in urban and suburban centers, the food supply chains are longer, more complex, and, possibly, more vulnerable.
For less industrial, more rural, and agrarian economies, supply chains tend to be shorter and simpler. If you’re not getting your eggs and milk from chickens and cows and goats in your backyard, for example, then you might be getting them from the farmers in the next village over.
Other commodity goods — such as wheat, corn, or soybeans — are sold and shipped in bulk, often over long distances. That means there are more points where the supply chain can be disrupted.
Add to that the fear factor: Consumers fearing the possibility of shortages rush to buy more than they otherwise would, thus causing the shortages they’d feared. Some food markets in Moscow, for example, reported shelves being emptied of ready-to-eat buckwheat.
That’s led some countries to cut back on food exports in a bid to ensure they have enough food for their own citizens.
Vietnam, a major exporter of rice, has suspended exports of that product and other commodities. India, a major producer of rice, like Vietnam, has also suspended exports.
In Kazakhstan, one of the world’s major exporters of wheat, the government has restricted exports of that commodity. Earlier, the government had suspended exports of other goods like onions, sugar, sunflower oil, and even buckwheat – a grain that has emotional resonance for many older Kazakhs and Russians as a way to ward off hunger.
Last month, Russia, the world’s largest wheat producer, suspended exports of processed grains such as buckwheat, rice, and oat flakes.
Restricted supplies have pushed up prices, not only locally but globally in some cases.
In the Boston area, for example, the price of a dozen eggs has tripled in recent weeks, Tillotson said.
Higher prices and supply restrictions have created opportunities for black marketeers. Police in Kyrgyzstan this week detained shipments of milled wheat flour that was being smuggled out of the country in sacks labeled “cement.”
In an unusual public appeal, activists, academics, and a group of executives for some of the world’s biggest food-processing companies warned on April 9 that the number of people going hungry around the world could increase dramatically in the coming months.
Sacks of flour stacked at a storage facility in Novosibirsk, Russia. Production of bread, grains, and pasta has been boosted in the Novosibirsk region due to increased demand amid the COVID-19 pandemic.
“There could not be a more important time in which to keep trade flows open and predictable,” according to the letter addressed to world leaders.
The letter urged food exporters to keep supplying international markets, and also called for supporting populations most at risk of hunger, as well as investing in local production.
Who’s Harvesting?
The process of picking crops and packing them for shipment is itself under stress, experts warned, as field workers struggle to get protective equipment to shield them from coronavirus infection or as workers are prevented from traveling to farms by lockdowns and travel restrictions.
“The issue of the health of the farm labor force as well as labor availability is one of the biggest challenges to production,” risk analyst group Fitch Solutions said in a March 25 report.
In the United States, migrant workers comprise the bulk of farm and agriculture labor. And in California, one of the leading U.S. states for producing food and agricultural goods, state officials have imposed a stay-at-home order to minimize people moving around and transmitting infection. That has affected farm labor.
The same holds true across Europe, where farms are doing spring planting and struggling to find workers to pick crops like strawberries and lettuce after border closures among European Union member choked off the flow of foreign laborers.
“At this point, it concerns vegetable growers who need manpower, both indoors and outdoors, in terms of sowing and doing spring work,” Stojan Marinkovic, president of the Republika Srpska Farmers’ Association, told RFE/RL’s Balkan Service. “We are aware that this is a large group of people working in one place, so they have to take care of protecting both themselves and the people around them.”
Sooner or later, however, coronavirus infections will fall, governments will ease restrictions on travel and retailers, and supply chains will revert to normal, experts predict.
At that point, people may face a different problem: what to do with all the extra goods in their larders, cupboards, and freezers.
“If people are buying more goods now, it is not necessarily because they are using more — they are stockpiling. When things get back to normal, consumers will have a lot of canned soup and toilet paper at home and won’t need to buy more,” Goker Aydin, an operations management expert at the Carey Business School at Johns Hopkins University, said.
In recent decades, life has gotten better, more comfortable, and longer for many people around the world. Conventional wisdom holds that these gains in human well-being are underpinned by fossil fuel energy. After all, a country’s energy use tends to be correlated with its inhabitants’ life expectancy at any given point in time.
But this assumption doesn’t hold up to scrutiny, a new analysis indicates. And that, in turn, suggests the hopeful conclusion that decarbonization need not put future gains in well-being at risk.
Researchers in the UK and Germany analyzed data on energy extraction, carbon emissions, economic activity, food supply, residential electricity availability, and life expectancy in 70 countries around the world between 1971 and 2014.
They used a relatively new method called functional dynamic decomposition: a series of mathematical equations to analyze the changing relationships between two variables – such as carbon emissions and life expectancy – and assess whether changes in one drive changes in the other.
The method cannot demonstrate causality, but a lack of association between two variables over time is evidence of lack of causation.
In fact, while some variables are correlated at particular points, one does not drive the other over time, the researchers report in the journal Environmental Research Letters. They call this a “carbon-development paradox.”
The new results “demonstrate that fossil fuels are not, as often imagined or stated, significant contributors to improvements in human development,” the researchers write.
Carbon emissions, primary energy use, and economic activity as measured by market exchange rate income (MER, which depends on international trade) are all “dynamically coupled” over time.
So are economic activity as measured by purchasing power parity (PPP, which indicates how far people’s incomes go within their home country), food supply, residential electricity, and life expectancy.
“Recent improvements in life expectancy are only weakly coupled to increases in primary energy or carbon emissions,” the researchers write. Instead, life expectancy gains are more closely linked growth in real incomes, access to food, and availability of electricity at home.
And although increases in carbon emissions account for much of the increase in primary energy over time, they account for a relatively small amount of the increase in residential electricity.
Increases in primary energy account for the vast majority of increases in MER income, but only about half of increases in PPP. “Economic growth is thus not enough on its own: the question is what type of economic growth,” the researchers write.
So stoking the furnace of the economy with fossil fuels won’t necessarily result in human flourishing. And reducing energy use and carbon emissions won’t necessarily result in human suffering.
“Our results directly counter the claims by fossil fuel companies that their products are necessary for well-being,” lead author Julia Steinberger of the University of Leeds said in a statement. “Reducing emissions and primary energy use, while maintaining or enhancing the health of populations, should be possible.”
To do that, governments will need to prioritize people’s access to food, renewable energy, and other goods that are more directly related to well-being—rather than economic growth for its own sake.
Uma (in)certa antropologia 
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