Stimulating the demand side of the economy when society's ability to engage economically is restricted will be partly effective at best, and entirely miss the target at worst.
The Covid-19 pandemic has laid bare many frailties in economies, government systems and business models; and exposed the costs of "progress" borne by society and the environment. Caught flat-footed, and wrestling to get a proper grip on a myriad complex and interrelated issues, policymakers have scrambled for solutions.
While the immediate policy response focused on public health implications, attention soon turned to managing economic fallout and ensuring rapid recovery. Yet, in an environment where rethinking is urged, policy responses have overwhelmingly lacked imagination. The knee-jerk policy reaction has been to labour furiously on getting the world back to work.
Indeed, an emphasis on a "V-shaped" recovery has dominated the discourse, with a fixation to ensure that the recovery is not some other shape, like U, W or, worse still, L. This hair-trigger reaction to restore growth at all cost is particularly evident in the developed world. The US and Japan lead the way, having primed their fiscal pumps by 10% and 7% of gross domestic product (GDP), respectively. To this, we can...