Analysis: the subordination of economic to the collective well-being

​Analyse: subordonner l’économique au bien-être collectif

Photo: Robin Van Lonkhuijsen ANP Agence France-Presse
The pause of the economy has led to a sharp contraction of the voyages, the industrial production and the transportation, feeding in turn the collapse in oil prices.

We are at this difficult arbitration between the imperatives of public health and the economy, and those who recall that at a certain inflection point, the economic shock will grow exponentially and lead to a financial crisis causing a depression. Follow this other dialectic, linked to a next day of a pandemic between the necessary recovery of the economy and reconstruction of public finance to environmental issues urgent. But distinguishing between the imperatives of short, medium and long terms, this health crisis and offers a choice that comes from subordinating the economic to the collective well-being.

On Tuesday, two UN agencies have sounded an alarm that transcends the current crisis. The world needs to combat global warming with the same “determination” that the pandemic COVID-19, said Petteri Taalas, secretary-general of the world meteorological Organization (WMO), recalling that the climate crisis remains the underlying current of shock wave, which is meant to be temporary. “Of course, the COVID-19 has caused a serious crisis in health and economic on the world, but if we don’t fight against the climate change, human well-being, ecosystems and economies could be threatened for centuries “, took over the Agence France-Presse.

The dashboard on the evolution of the coronavirus in Quebec, in Canada and in the world

The WMO is concerned all the more that ” previous economic crises have often been followed by a recovery accompanied by growth in carbon emissions much more strong.”

Another cry from the heart came from the boss of the world food Program, which fears a doubling this year in the number of people pushed into starvation. Certainly, the pandemic comes to explain this passage from the simple to the double. But the number of people suffering severely from hunger in the world had already risen sharply in 2019 ” due to conflicts, climate issues, and economic shocks “, has enumerated the agency.

The pause of the economy has led to a sharp contraction of the voyages, the industrial production and the transportation, feeding in turn the collapse in oil prices. In the end, the UN expects a 6% reduction in global GHG emissions this year, mainly linked to a decrease in the consumption of fossil energy which, however, is temporary. However, this comes with a significant economic cost. “The imperative to reopen the factories and to reduce unemployment will take precedence over the reduction of fossil energy consumption “, says the agency DBRS, Morningstar, in a note published Wednesday.

In the short term, this economic cost and tax of the pandemic will divert the attention of the décarbonation, transition energy and other environmental issues. For its part, the plunge in oil prices is likely to produce during a certain period of time the pernicious effect of removing an incentive to the waiver of the fossil fuels. Moreover, “a return to old habits is to be expected after the brutal shock,” said DBRS, giving the example of China moving now déconfinement.

From the point of view of the rating agency, which focuses on the quality of the credit and the solvency level, the action or inaction on environmental policy will have no immediate impact on the ratings of the sovereign credit. Worse, there is an economic shock to recover and the effects, positive or negative, generated by a change in environmental regulation could hinder short-term the fitness of the economy and public finances.

This is true for the immediate post-containment. For the backdrop, ” the recovery will be the opportunity for governments to move forward on the path of transition and the reduction of risks associated with climate change on the balance sheet of governments.” Beyond the financial risk and the magnitude of the costs, human and economic, caused by the warming, the agency believes that the benefits to what she calls the ecological transition, ” in as much as efforts are adopted and coordinated internationally “.

But here’s the rub.

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