The Great Reset is a new initiative from the World Economic Forum and HRH the Prince of Wales to guide decision-makers on the path to a more resilient, sustainable world beyond coronavirus.
The economic fallout from COVID-19 dominates risk perceptions, but there is a unique opportunity to reshape the global economy.
Greenpeace International’s Jennifer Morgan, IMF chief economist Gita Gopinath and ITUC head Sharan Burrow discuss how they perceive a reset.
There won’t be many among the 7.7 billion people on Earth who haven’t been affected in some way by COVID-19.
From sickness and the death of loved ones to work shortages and school closures, the pandemic’s ramifications have touched every part of society – and thrown inequalities into sharp relief.
As lockdowns are starting to ease, governments and organizations across the globe are turning their attention to the recovery process – and the opportunity it provides to rebuild in a different way. One that makes the world better for everyone and addresses the other great crisis of our time: climate change.
Predicted effects of coronavirus on the world.
With the economic fallout from COVID-19 dominating risk perceptions, this is a rare window of opportunity to shape a more sustainable, resilient world. And starting today [3 June], the World Economic Forum is working with HRH The Prince of Wales on an initiative coined Great Reset, to guide decision-makers on the rocky path ahead.
Leading up to the Forum’s Annual Meeting 2021, which will be devoted to the Great Reset, a series of virtual Great Reset Dialogues will take place every other Wednesday – bringing together global stakeholders from all sectors to discuss the way forward.
Here, three key experts from the Forum’s podcast series, World Vs Virus, envision a world beyond coronavirus.
Jennifer Morgan on the Green Reset
Jennifer Morgan, Executive Director of Greenpeace International.
COVID-19 gives us the chance to step back and rethink the world we would like to live in, says Jennifer Morgan, Executive Director of Greenpeace International.
“We set up a new world order after World War II. We’re now in a different world than we were then. We need to ask, what can we be doing differently? The World Economic Forum has a big responsibility in that as well – to be pushing the reset button and looking at how to create well-being for people and for the Earth.”
Morgan is positive about the potential for a more joined-up approach to rebuilding greener economies, such as the European Green Deal, with collaboration between governments, companies and the youth movement.
“Companies have learned from the past and should take the opportunity to create a more circular zero-carbon economy for profit and for people.
“Government funds need to be invested in people for long-term jobs. We have an opportunity to shift coal miners who have been working in those types of jobs into other ones over time. It can’t be an either/or. We need to be thinking about these things together.”
What the world has learned from responding to the pandemic, with unity and speed, can be applied to tackling the climate crisis, too, Morgan argues.
“When we listen to the science and we understand what’s at stake, and we have clarity on what we need to do, we can address these crises. We know what the problem is. We know the people who are being impacted by it. We know what the solutions are.
“I think the key is to put the health of people and the planet first. That’s what’s happening on COVID-19, but it has not yet happened on climate change in many cases, because the fossil fuel interests and the large industrial farming interests want to keep things the way they are. And what we’re learning from this pandemic is it is possible to switch it.”
Gita Gopinath on the Economic Reset
Gita Gopinath, Chief Economist at IMF.
The nature of the COVID-19 crisis and the speed and scale of job losses makes it “glaringly” different from the 2008 financial crisis, so the solutions will need to be distinct, argues Gita Gopinath, the International Monetary Fund’s (IMF) chief economist.
In the short-term, government spending on health will be the top priority to mitigate not only the health problem, but also to “ensure a sound recovery once we come out of this health crisis”.
More spending will mean more debt, so for countries already experiencing debt distress, concessional financing and debt service relief have been approved by the IMF, Gopinath says, and “more will be needed in the coming years”.
While for other countries, liquidity facilities will be needed to avoid a debt crisis.
In the longer term, ongoing low interest rates “will help advanced economies especially to rollover their debts at very low rates”.
“Once we start to see a recovery in growth, that should help bring down the debt levels. For other countries, especially the poorer nations, I think that debt restructurings, debt relief, will have to continue to be done.”
There’s no one-size-fits-all approach, but countries will need to raise revenue, which may mean a form of solidarity tax.
“Countries will have to find ways of raising revenues and progressive taxation could be one form of it. Solidarity tax may be needed in some countries. It varies across countries, but this will be an issue countries will have to deal with because it will be one of the big legacies of this crisis.”
Public sector
The public sector will have a bigger role to play in future, she says, as traditionally happens in such crises.
“I believe it’s very important for countries to recognize there are essential services that need to be provided in terms of healthcare, education, good governance and a social safety that cannot be compromised on.”
The crisis has also made the need for global cooperation “abundantly clear” says Gopinath.
“This is a virus that doesn’t respect borders: it crosses borders. And as long as it is in full strength in any part of the world, it’s affecting everybody else. So it requires global cooperation to deal with it.”
Greener future
Like Morgan, Gopinath believes the COVID-19 crisis is a wake-up call that we need to shift to a greener economy, when countries are in a position to begin public spending.
“But how do we get to a more planet-friendly way of doing economic activity? What’s needed is to ramp up production of alternative forms of energy. And second, to have infrastructure that’s much more climate-friendly. In both these measures, the public sector can play a very big role.
“Once you have those in place – alternatives to energy and greener, physical infrastructure – then you can obviously put on top of that carbon pricing, too, so companies and firms internalize the impact of their activities on the climate.”
Sharan Burrow on the Work Reset
Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC) .
“I can see how we could use this opportunity to design a better world,” says Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), “but we need both national and multilateral institutions to make it work.
“Solidarity and sharing and deciding on how you protect people – both within nations and globally – is absolutely critical at the moment.”
A survey by the ITUC found only one in five (21%) of its 86 member countries provides sick leave for all or some workers, so the reset requires social dialogue to ensure workers are protected.
“We must ensure this design is inclusive of universal social protection. The world could fund it right now – and yet 70% of the world’s population has no social protection. It must be respectful of public services rather than simply trying to profit from them.
“So public support for people and, of course, of the social dialogue that makes it possible for us to get the balance right, are crucial. If you’ve got workers, employers and civil society at the table with governments at all levels, then you can design the kind of future that takes into account the right priorities for people, for the planet and, of course, for stable economies.”
People and planet
While short-term measures such as income support are vital now, post-reconstruction policy frameworks are needed in the medium- to long-term, says Burrow. And these have to deal with both people and the planet.
“We need to design policies to align with investment in people and the environment. But above all, the longer-term perspective is about rebalancing economies.
“What we don’t want is an unbalanced economy where you can’t get essentials like healthcare products and food because they’re produced in one group of countries and not in a balanced fashion around the world. We have to look at how to build a better economy alongside the convergent crisis of the environment – which is not going to go away.”
In short, we need to shift our economic focus away from profit, says Burrow.
“We want an end to the profit-at-all-costs mentality, because if we don’t build an economic future within a sustainable framework in which we are respectful of our planetary boundaries, and the need to change our energy and technology systems, then we will not have a living planet for human beings.”
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