OP-ED: Before the pandemic, the economy was going in the right direction

One thing the coronavirus has done for us is to show how we should be running the international economy. Given the complaints about the effects of the pandemic that is, we should be running it the way we were.

The South Asian Network on Economic Modelling (SANEM), for example, has been looking at the rise in extreme poverty in Bangladesh during the recent economic turmoil. 

It has risen, as very few are surprised to note, from 9.4 per cent to 28.5 per cent over the past two years. Poverty itself, of that less extreme kind, from 21.6 per cent to 42 per cent. 

So, clearly, less poverty is associated with the way we were running the economy rather than the current economic state. 

We have also had consistent complaints that women have been harder hit than men. This is common in the US, the UK, and across most economies in fact. 

The why is fairly obvious: women tend to concentrate on the customer-facing services industries and those are the ones hardest hit by the lockdowns. 

But we can also make that same point, that the way we were doing things is better for women than the current methods. 

We can become more precise as well. Just before Covid, the unemployment rate among Black Americans was the lowest it has ever been recorded at.  

True, we have not been accurately measuring that rate -- as opposed to the rate across all races -- all that long but still, a record is a record. Similarly, the American poverty rate was at record lows. 

We can be more general as well. The UK and US unemployment rates were, just before this all started, at generational lows, back to the sort of figures last seen in the late 1960s. 

We do generally think that unemployment is a bad thing, so low rates of it are to be celebrated. 

Of course, that pre-pandemic economy was not perfect, there are flies in every ointment. But, by and large, and by the usual standards, the economy a year ago was about as good as it gets. This was true in most individual countries and across the globe as well. 

The startling growth in Bangladesh -- that 6 per cent to 8 per cent per year for the past decade and more -- and China and Indonesia and so on meant that we really were confident that absolute poverty was going to be eradicated in the coming decades. 

Yes, we have got this interruption but we were, before, going in the right direction.

This is important. Because as a result of the interruption we have many people waving many plans for how we build back better this time.  

We need to be careful, very selective, about which of these ideas we listen to, for they are near all about how we have got to reverse this neo-liberal globalisation, this international capitalism and trade. 

Yet it is exactly that international capitalism and trade which produced that world where things were getting better. 

What, actually, is it that we would like from the economy? 

Well, people generally like getting richer. It is a normal human desire for our children to have it better than we do. So, a world with economic growth, where things are getting better, is one thing we would like. 

We would like, on moral grounds, that poverty is abolished. That was happening. 

Absolute poverty afflicted some 40 per cent of humanity only 50 years ago; last year, the number slipped under 10 per cent. 

We really could see that number becoming, if not zero, at least within a rounding error of it by 2030. We were on the right track.

We can even look at inequality, something that some worry about and others do not -- I do not. 

Global inequality was falling, and swiftly too. For the poorer countries were growing markedly faster than the richer ones. Meaning that the gap between them must, mathematically, be falling. 

Before all this kicked off, we had the bare essentials of what we desired from that international economy: rising standards of living, falling inequality and absolute poverty declining towards extinction. 

Why wouldn't we want that economic system back? 

Which is why we need to look askance at some of these proposals for how the world should operate after the virus. 

For nearly all of them insist that we must build the new world differently -- actually, in opposition to the old system. 

We should reverse globalisation. For example, there are many calls for economic nationalism going on. 

We should, so goes the cry, make more things at home and buy less from foreigners. 

Yet it is exactly that globalisation of production that was producing the beneficial outcomes listed above about poverty, inequality, and so on.

We are certainly being told that governments should do more, that we should all rely upon capitalism and markets less. 

Yet, again, it was those very non-government features of the economy that were producing those gains we were enjoying. 

The world economy was doing rather nicely before this all happened. 

If we -- as we do -- wish to go back to where the economy was doing rather nicely, it is logical enough that we should go back to the way we were doing things. 

Why, after all, would we want to abandon the very things we just proved work?