Crises may bring
forward positive change. For example, the UK government is cushioning the
economic impact of COVID-19 lockdown by using tools broadly developed as a
result of the great depression – mostly by Keynes and his disciples. Here are
four examples from history:
1. WWI and
Women Working
Little more than
a century ago, women in the UK weren’t allowed to own property, open a bank
account or work in a legal or civil service job. The suffragettes had rightly
been protesting but British society needed a shock to put theory into action.
That massive shock was the first world war.
Between 1914 and
1918 more than a million women joined the workforce to keep the economy going.
They worked in many jobs that were not previously open to them – in factories
and shops, as drivers and even for the police. They did a sterling job, and for
less pay than their male counterparts.
The long – and
still ongoing – process that would recognise women’s skills and talents in the
workforce was accelerated.
2. WWII and
the NHS
Another crisis,
WWII, was the catalyst for the creation of the UK National Health Service
(NHS). Before the NHS, when someone needed to use medical services, they were
expected to pay the hospital or a private doctor. The war effort necessitated
government-supported medical services to become available for everyone.
The national
recovery agenda had the NHS established in 1948. Even though the NHS has gone
through many changes since then, it continues to operate under its founding
principles and is funded from general taxation to provide free healthcare for
all.
3. More people
go to University after recessions
It is well
established that recessions and the lack of jobs may encourage more people to
pursue education, whether undergraduate or postgraduate. Importantly, this
progress is also maintained in subsequent generations – if your parents go to
university, you are more likely to go to university.
A more educated
workforce tends to make an economy more productive, profitable and versatile.
Higher education also has knock-on beneficial effects on a society’s health,
crime rate, election voting and volunteering.
4. Dotcom
Bubble and Creative Destruction
Economic crises
often lead to the abandonment of inefficient or out-of-date structures. New and
healthy entities emerge in their place through what Austrian economist Joseph
Schumpeter called “creative destruction”. The dotcom bubble provides a great
example.
In early 2000,
the Nasdaq stock exchange crashed, ending years of rising share prices of
online companies. Many underperforming firms closed. These were based on the
growth hype around the internet and the favourable credit and tax environment
of the late 1990s. At the same time, the crash accelerated the rise of eBay,
Google, Amazon and other tech companies.
Good news is
currently scarce and overshadowed by death and uncertainty. Yet things may
improve, and hopefully soon. Approved COVID-19 therapies will roll out and many
others will be developed. The only damage that cannot be undone is the loss of
human life and for that we must all do our best to protect our fellow citizens.
In the meantime,
let’s focus on the opportunities for positive change this pandemic has
highlighted. Stronger public health, reduced unnecessary commuting, less pollution
and international pharmaceutical cooperation can improve our world. So too with
less politicking, corruption and increased empathy for the poor. Everyone can
do their bit to turn this pandemic into an opportunity for good.
Reference:
Alexander Tziamalis
& Konstantinos Lagos, Four ways economic crises can change things for the
better https://theconversation.com/
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