By the end of March, the present economic crisis was already historically unprecedented. Never before had governments across the world shut economies down to impose a quarantine on the healthy and sick alike, and never before had central banks turned themselves into, as one investor quipped about the Federal Reserve, the “lender of all resorts”.
This economic emergency has also inverted the relationship between energy costs and falling production. Since the Second World War recessions in Western economies have generally come after a surge in oil prices. This one has arrived after they declined in the first months of this year, and following nearly six years of prices better suited to consumers than producers.
As millions of jobs were lost in the United States and the cost of extending furlough schemes mounted in Europe, by June it seemed the decisions made to put the world economy into storage might be catastrophic mistakes. National lockdowns that began without a stated end-point presumed not only that economies could wait for the pandemic to abate, but that they could be paused for an unknown length of time and the odds would still be stacked in favour of a rapid V-shaped recovery.
It is quite possible that governments did not really understand the judgement they were making because the risk of healthcare services collapsing overwhelmed all other considerations. But once, after a month or so of lockdown, their aim appeared to drift nearer to eliminating the virus than containing it, they doubled down on this judgement as if central bank monetary alchemy would be a sufficient recovery strategy. Asked in his interview with the Financial Times in April whether there was a “maximum number of months after which the lockdown becomes intolerable for the economy”, Emmanuel Macron replied, “I don’t know, and I must be able to answer ‘I don’t know’.”
Now it is evident that autumn will come without definitive progress on a vaccine and no prospects at all of a V-shaped recovery. Fearful of this reality, Boris Johnson’s government has moved into economic panic mode, telling people who have been working at home that the risk of economic disaster must prevail over the fear of getting ill. But this is the same terrible predicament that has existed from the start, and acting for months as if it were not so has only exacerbated the problem.
Lockdown was for too long allowed to be an existential space. Some people may be desperate to get back to their old lives but many palpably are not. The British economy – perhaps more than any other given London’s outsized role – depends on habitual daily movement.
Had the government told people to break their habits for a few weeks, they probably would not have lost them. But, given longer, the potential costs of movement became ever more likely to press hard into people’s consciousness.
Whatever the experiment in accelerated digitalisation over the past six months has proved about home working on its own merits, employment in the economy as we know it depends on plenty of unnecessary movement and some degree of pretence. This state of affairs could not be unravelled without unravelling much else too. Commuting may not be essential, but hundreds of thousands are employed and a great volume of commercial property debt is serviceable because large numbers of people endure it. That movement-based economic activity also supports much of cities’ cultural life.
There has been a paradox at work for the last decade. A wide awareness that economic and ecological problems run very deep has co-existed with a political assumption that almost any problem could be fixed with more credit, more political will, more concern for inequality, more technology.
But the times are now more dangerous than this kind of matter-of-faith optimism allows. We know the political risks that high unemployment has historically wrought, although since Britain was spared it after the 2008 crash, we may have forgotten.
Nobody, however, knows what a large unemployment shock looks like when monetary policy is already set to an extraordinarily accommodative stance; society’s employed are divided between those who must work in person and those who refuse to; a young generation is already underemployed in relation to their aspirations and largely shut out of home ownership; and a disruptive energy revolution is under way. And this is before considering that the bilateral Sino-American relationship around which the world economy has pivoted for nearly two decades is breaking down, the United Kingdom is threatened by Scottish secession, and the present chances for reaching a post-Brexit agreement with the European Union to avoid reverting to World Trade Organisation-based trading are unpropitious.
We need to learn quickly what dangers lie ahead. If zoonotic diseases that spread across the globe by air travel come to be considered a permanent risk, the world economy as it has functioned since the era of cheap flights may be unrecoverable. In the lacuna, the scope for transformative economic action, including in the ways we work and the place of work in our individual lives, may seem enormous. But that temptation is an illusion: in opting for rapid change to make things better we cannot know that what we are doing won’t make them much worse.
For the time being, the employment imperative must be to accept what we already know, however unpalatable it seems: that physically moving ourselves around the country is an economic necessity.
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