Beyond the Cycle
A storm seems to be brewing on both sides of the Atlantic, with sharp falls in stock markets, data revealing a slowdown in German and Chinese economies, and soaring debt costs in emerging markets. These red lights suggest that a recession is lurking around the corner, but will its effects be as devastating as they were in 2008?
While analysts suggest that peaks and slumps are common in business cycles, the 2019 economic slump has largely been triggered by the U.S.- China trade war and the threat of a no-deal Brexit. But is there legitimacy to President Trump’s trade tariffs? We take a step back and rethink economic growth beyond business cycles and trade agreements.
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The first way is to rethink growth itself, and to try to think of new metrics of prosperity that include factors that are harder to quantify. Here's our editor Kyrill Hartog's short profile on economist Pavan Sukhdev, who has been called "nature's banker". Sukhdev thinks there is a way out of the growth trap, namely by acknowledging that resources are finite. Sukhdev’s idea was to put a quantitative value on natural conservation. This means putting a price on rainfall and wind, taking into account their quantitative and qualitative aspects, and measuring the value of natural elements to local communities. In other words: rethinking the entire value chain of any given product or service, from start to finish.
For our previous issue on migration and free movement, “Uprooted,” Branko Milanovic, a former World Bank economist and author of several books on economic inequality, thinks policymakers should focus our efforts on establishing pro-middle class policies that give higher returns to small investors, and to reduce the loopholes and special treatment that large investors get. We interviewed Milanovic in Amsterdam last year.
One idea that has the potential to completely change the way we think of growth, prosperity and value is the Universal Basic Income. For our latest issue, Astrid Landon finds out if there is any credibility to the idea of a Europe-wide UBI. With countries across Europe continuing to struggle with high unemployment and low social standards, the idea of "free money" is enjoying a comeback and could possibly help bridge economic and social inequalities. But is it technically and politically feasible in today's fractured Europe?
While an economic downturn in 2019 appears inevitable, Sukhdev’s vision of an economy of ecology, or Thomas More’s century-old idea of a guaranteed minimum income could serve as building blocks to alternative economic models that can steer us towards are safer, happier and less volatile economic future.
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