The newer deal for a newer world | Centre for Science and Environment


Sunita Narain

Director General of CSE and publisher of Down To Earth, an environmentalist pushing for changes in policies and  practices and mindsets. More>>

The newer deal for a newer world

After months of downward spiral, the dreaded r-word must be uttered. The world’s major economies are into a recession. Equally recessive is the response of leaders who, after working extremely hard to privatize and deregulate, are falling upon a Keynesian idea, first applied after the 1929 Great Depression in the us, requiring governments to spend huge amounts of public money to bail out the economy. This is what all governments hope to do, once again, in the age of private capital combined with the extraordinary wealth of individual entrepreneurs and excruciating poverty and deprivation among many.

The question is if this old ‘newer deal’ can be reinvented, given fundamental flaws in the economic system now highlighted. It is very clear to some of us (but still not acceptable to the fina-ncial managers of our economies) that the best way to crawl out of the current mess is to change the very nature of our economies. Our economies are built on the principle of consumption. The simple assumption is growth will make people wealthy and they will, in turn, pay for what they want. The more they spend, the greater the overall happiness.

Over time, this simple logic of enabling people to only consume got lost in a labyrinth of economic and fiscal instruments designed to subsidize and advance credit, all to keep consumption-related stimulus going. Thus, as costs of production increased in the first world, because of increased costs of labour or environmental protection, industry moved to the second, third and even fourth world, to get a cheaper deal. This also helped to enjoin the entire world in the frenzy of buy cheap, buy disposable. This model drove banks over the moon, over into the dark side. With climate change stepping up, Earth itself looks all set to follow.

What we forgot was the principle of distribution of income, so that consumption could be afforded, and the habit of paying the true costs, so that over-consumption could be avoided. So our governments can bail out banks and industry, but the fundamentals will remain weak, disjointed. The next disaster will lurk round the corner.

But the crisis is also an opportunity to reinvent. Trillions of dollars of public money can be used to do things differently. This time, public spending has to stimulate not just the economy per se, but help redesign an affordable one. In other words, we need a carefully constructed spending plan to create economies that are equitable and sustainable. To avoid the r-word, this is what must be done.

One: rebuild energy systems, with massive investment in new renewable technologies and in distribution systems which reduce the cost of transmission, reduce losses and make societies more resilient. The principle has to be to bring energy to every household, to ensure every household can afford it. Today, energy-rich societies cause greenhouse gas concentration in the atmosphere, threatening our world. These countries have externalized their environmental costs and have overdrawn from the natural capital of the common atmosphere. The ‘newer deal’ is an opportunity to undo this damage and to build a different energy-secure future for us all.

Two: massively invest and rebuild mobility systems for the newer world. This will mean opting to spend on transport options that are efficient—use less energy to transport more—and affordable to most. In other words, spend on railways, not on airways; on city buses and metros, not on sops for the car industry. This is a tough choice for governments, that have subsidized private mobility for too long because of the power of the private automobile and airline giants—and they, too, are demanding bailouts—and have neglected public transport because there is no obvious votary for this public good. But isn’t this an option that personifies the ‘newer deal’ spirit?

Three: spend on urban environmental infrastructure. On clean drinking water; sewage and garbage disposal; housing for all. This is where governments have to learn, renew their learning, the most: how not to build infrastructure buoyed by the dreams of others, but to build cities which fit the citizen’s purse and mesh with the environment these cities are located in. This will need a large infusion, for here we will need technology that has assimilated the rationality of traditional knowledge, that knows how to optimize local ecology and resources.

Four: most critically for India, we need a review of economic practice where it matters the most—in agriculture and forestry. The bulk of our country, even in the future, will live in rural areas. It is there a bailout will really work, for—understand this—nothing the urban and industrial sectors do, or can do, can match the employment and livelihood potential of a land-based economy. We will have to understand this economy all over again, will have to value it much higher. If we do this, we can work to invest in and so seal its performance as the player of the future.

Such a direction presumes a careful review of our preconceived knowledge of what works. Currently, we believe the only way to improve productivity is to go in for higher amounts of inputs into the land—pesticides, chemical fertilizers or hybrid seeds. We have forgotten this only makes what is grown on the land more expensive; further on, food more unaffordable. We forget small-holder agriculture, extremely unattractive to neo-conservative economists, is actually far more productive if we measure, for starters, how much is produced for the investment made.

The letter ‘r’ exists not only in ‘rural’ but also in ‘future’. We need leaders who will not allow panic and blackmail to rule. We don’t need corporate welfare. We need welfare for people and for the planet.

—Sunita Narain

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