Ask a Scientist: What Should a Post-Pandemic Economy Look Like?

May 5, 2020 | 9:40 am
Photo by Nathan WatersNathan Waters
Elliott Negin
Former Contributor

There have been plenty of predictions of late about how quickly the US economy will recover from a pandemic-induced recession that has shut down most business activity and put millions of people out of work. Treasury Secretary Steven Mnuchin recently predicted economic growth will “really bounce back in July, August, and September” due to pent-up consumer demand. Economist Mark Zandi, on the other hand, is considerably less sanguine. He says the economy “will take years to fully recover.”

Predictions about when the economy will rebound, however, miss a bigger point. Without a doubt, the coronavirus pandemic—like all pandemics—will eventually come to an end, but what kind of an economy coming out of it would be best for the country? What lessons will we learn from the pandemic, if any?

Indeed, the pandemic has both highlighted and exacerbated the country’s economic and racial divide. On top of that, when the pandemic recedes, the country will still be faced with a festering, long-term crisis—climate change. Simply going back to business as usual with the climate crisis only getting worse would not only be foolhardy, but also dangerous.

One of UCS’ economists, Climate and Energy Program Policy Director Rachel Cleetus, has been thinking about the kind of economy the United States should build going forward. Below is a transcript of a recent conversation I had with Dr. Cleetus from our respective homes.

EN: At this point, no one knows just how long this pandemic will last and how long we will have to keep businesses, schools, and other institutions shuttered. Once we get beyond the acute stage of this crisis, what do you see as the most important elements of a post-pandemic economy that could help protect people from the potentially worst consequences of climate change?

Dr. Rachel Cleetus is one of UCS’ economists and the policy director of our Climate and Energy Program.

RC: There are a lot of very concerning unknowns right now. As the world continues to reel from the COVID-19 pandemic and the associated economic crisis, it may seem like the climate crisis has to take a backseat for now. Unfortunately, we don’t have the luxury of putting it aside. Climate change and the toll of its impacts continue to mount unabated. Already, this spring we have seen heavy rains and flooding in the Midwest and Southeast parts of the United States. California is in the midst of a megadrought, and could also be in for another fierce wildfire season. Meanwhile, meteorologists are forecasting an above-average Atlantic hurricane season and the National Oceanic and Atmospheric Administration is projecting an approximately 75 percent chance that 2020 will be the hottest year on record.

With the hard work of our frontline medical professionals, scientists, essential workers, and the rest of us who are simply staying home to do our part, we will overcome this public health crisis in due course. Meanwhile millions of people are now unemployed and the numbers are rising by the week. Policymakers’ immediate focus should rightfully be on addressing the public health challenges and providing workers and businesses relief while the economic shutdown continues. So it is deeply troubling to note that tax provisions in the recent Coronavirus Aid, Relief, and Economic Security (CARES) Act overwhelmingly benefited people earning more than $1 million annually.

As we look forward, federal and state policymakers also are tasked with resuscitating the economy. The solutions governments implement must work together holistically to provide people the help they need right now, bring back jobs, and reinvigorate the economy over the long term. While they do this, it would be smarter to boost the renewable energy industry—which is hemorraging jobs—than providing a massive bailout to fossil fuel companies.

At this inflection point in our nation’s history, the question is, will our government use this opportunity to build a clean, climate-resilient economy in a just and equitable way? Or will it default to business-as-usual thinking that reinforces current social inequities and fossil fuel dependence, and threatens our children’s health and economic well-being?

EN: What do you mean exactly when you say our economy needs to be refashioned to be clean, climate-resilient, just, and equitable?

RC: In the wake of an economic downturn, it is a standard remedy for governments to try to jumpstart their economies by injecting money into them and channeling investments into productive, job-creating opportunities, such as building infrastructure. We are already hearing talk about this across the political spectrum. The details matter, however—especially when we consider the other looming crisis, climate change.

One thing we should be seriously thinking about is what kind of infrastructure should we be building now? What else should we be investing in to help climate-proof our economy for the long term? And how do we make sure that the benefits of all of these investments flow to all communities, especially ones that have been marginalized and disenfranchised for so long?

To answer your question, by clean, I mean dramatically ramping up investments in renewable energy and energy efficiency, and “electrifying” buildings, industrial processes, and most modes of transportation, which would cut heat-trapping emissions, generate jobs, and significantly improve public health.

By climate-resilient, I mean making investments that will help prepare communities for and protect them from the climate impacts that are already locked in instead of just picking up the pieces after disasters.

When I say just, I’m referring to the fact that low-income communities, communities of color, and Native American communities that have been disproportionately burdened by our country’s dependence on fossil fuels must be guaranteed direct access to the public health and economic benefits of a transition away from fossil fuels to clean energy.

Finally, any economic renaissance has to be equitable. As the country transitions away from coal and other fossil fuels, we have to treat workers and fossil fuel-dependent communities fairly by protecting retiree pensions and health benefits, providing retraining and job opportunities, and helping them diversify their local economies. They kept our lights on and our cars running for decades and we can’t abandon them.

What’s more, everyone must have access to basic necessities—health care, nutritious food, and safe, affordable housing—because they are the foundation of a thriving society. Without them, we cannot build a just and resilient modern economy.

EN: With so many people staying home because of the pandemic, skies have been clearing up. Los Angeles, the smog capital of the United States, is now experiencing some of the cleanest air of any major city in the world. Carbon emissions, likewise, have dropped. China, the world’s biggest annual carbon emitter, saw a 25 percent decline in February.

Obviously this is not the way we want to address pollution, but we need to keep in mind that air pollution kills 7 million people around the globe every year, according to the World Health Organization, and—as you already pointed out—the impacts of climate change are continuing apace.

RC: That’s right. It is hard not to notice that the air and water are cleaner in many places. Pollution levels are way down, including carbon emissions. There’s no stronger reminder that the world’s dependence on fossil fuels to drive the international economy is the major reason for all this pollution and the harm it inflicts.

However, just as with past recessions, the emissions reductions we are seeing now are likely to be temporary, and they are coming at enormous cost to working people and people who live in poverty around the world. We should not mistake year-to-year or month-to-month fluctuations in carbon emissions that may be caused by short-term economic changes with the long-term, sustained deep reductions in heat-trapping emissions that we need.

Imagine if we could have clean air and water and cut heat-trapping emissions, and have a thriving economy at the same time. The reality is we can! We can if we implement a robust suite of policies to ensure a sustained just and equitable transition to a clean energy economy.

EN: What are some of the other lessons from this crisis?

RC: We will likely continue to see compound risks like the overlap of the COVID-19 pandemic, the economic crisis it triggered, and ongoing climate and extreme-weather related disasters. We’ve got to make sure that local, state, and federal disaster response agencies have the resources they need to respond and help protect people from multiple, simultaneous crises.

The current crises also are laying bare all the fundamental inequities in our society, including racism, the wealth and income gap, unaffordable healthcare, and the lack of access to broadband. Recent studies show that COVID-19 is inflicting a disproportionately deadly toll on African-Americans, for example. We also know that climate change is exacerbating these inequities. We can’t fix the climate crisis—or any other major societal problem—if we don’t build justice and equity into our solutions from the outset.

As with this global pandemic, solutions for climate change have to scale up from the local to the global. Our ability to solve these complex challenges depends on working in cooperation with other countries and multilateral institutions such as the World Health Organization.

If we fail to mount an effective response to the climate challenge, the damage will be tremendous. The US Fourth National Climate Assessment, for example, estimated that unchecked climate change could lead to annual losses in some US economic sectors in excess of $100 billion by the end of the century. UCS research shows that over that same time frame more than $1 trillion of coastal real estate in the contiguous United States is at risk from high-tide flooding exacerbated by sea level rise. Scientists also are warning about the potential risk of unleashing abrupt or irreversible tipping points as global average temperatures continue to rise, creating conditions that are simply incompatible with a thriving economy. For example, the West Antarctic ice sheet or the Greenland ice sheet could collapse—or both could collapse—locking in multi-meter sea level rise over centuries.

With the stakes so high, the choice is clear: We need to build the kind of economy that will not only help deliver us from the current crises but also set us on a path to a more sustainable, just and climate-ready future.