Completely new economic thinking is needed
Diana Coyle sees two major shortcomings needing to be corrected in the realm of economics and economists (FT, 5 October 2021). One is the absence of ethics and the other is the failure of economists to update their assumptions, benchmarks and models. The main shortcoming, however, is the lack of the much-needed new approach of sustainability. It is not only the challenge of climate change and big corporations, but also the lack of the fusion of geography, geopolitics, new technologies, culture-based economic growth, sustainable budgets/public debts/current accounts, full employment and many more elements of balanced growth. All the challenges are intertwined, so we need a somewhat “holistic” approach from the future “Economics of Sustainability”.
Published on 15 October 2021
We badly need a green and sustainable recovery
It is true that around the world, cities have paid a high price for the Covid-19 pandemic (World Bank, WeForum, 11 May 2021). Indeed, we need a green and sustainable recovery. Regarding a green recovery, we should really focus on energy-efficient building retrofits, municipal waste and water management, and urban transport. We also need a sustainable recovery ensuring a competitive business environment, access to excellent universities and a safety-smart environment for families and companies. All in all, we need both sides of the same coin: a green climate/smart growth plan and a sustainable safety/smart social environment.
Published on 21 May 2021
Environmental risks are much larger than climate risks
Indeed, climate risks can directly affect monetary policies and financial stability (Central Banking Staff, Central Banking, 12 January 2022). However, there are even bigger environmental risks coming from the sea change in the geopolitical decisions of the global powers. When it comes to energy, finance, food, raw materials, rare earth metals, access to global transport, and – soon – water supplies, it is still not climate change, but the total U-turn of global politics that plays the major role in all these calamities. We might rerun the global crisis of the 17th century (as shown so brilliantly by Professor Geoffrey Parker), when after the year 1638, environmental catastrophes led to the explosion of prices and shortages globally, resulting in worldwide revolts, revolutions and major political changes. Nearly 400 years later, major geopolitical changes seem to be leading to very similar results, and environmental “green swans” can even strengthen and accelerate all of these trends.
Published on 18 March 2022
New hypes might use some “retro” policies
Aveek Bhattacharya is perfectly right in raising the issue of future public sector reforms where the “retro” policies of the past might be of some worth (FT, Opinion, 18 February 2022). In the present decade, the risk of stagflation, falling productivity, new black and green swans, new wars and many other factors will trigger public sector reforms in order to counterbalance the damages caused by the old/new patterns of the 2020s. There are really three avenues for future reforms. Firstly, we should ensure that service delivery is evidence-based, readopting the mantra of “what works”. Secondly, we can bet big on new technologies, like innovations in robotics, AI, nanotechnology and communications. Thirdly, public services should be more human and individualized. All of these three paths should be followed at the same time. To reform our public sectors, however, we need the same standards for all three solutions. We must measure everything; we need mandatory evaluations and we have to initiate widespread knowledge-sharing. Public sector reforms might be able to help private sectors to survive the dramas of the 2020s.
Published on 11 March 2022
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