We all have pictures and voices in our minds from the last few weeks. For me, the most persistent image is of the migrant workers forced to leave Delhi after lockdown was imposed and walk hundreds of miles back to their home towns, often with no money and nothing to eat. The voice I most often hear is the Spanish employee’s as he told the BBC how he and other staff had been sent a letter by the Scottish hotel where they worked telling them they had lost their jobs and their accommodation overnight.
There is a multitude of shocking examples of the human and economic costs of this crisis. They have reminded us of some very important truths. That global problems demand more than national responses. That, despite modern technology, we are profoundly vulnerable. That society as we know it, and “business as usual” can erode extremely fast.
Being reminded so forcefully of how fragile human life is, and how unprepared we are for global emergencies on this scale is painful. But it also means there is likely to be a greater sense of urgency, and a willingness to take real action to address the social and environmental challenges which we face, in the aftermath.
Unsurprisingly, the opportunities which this crisis provides, to “build back better”, to create a more resilient society that would withstand global shocks like the one we face more effectively, have resulted in much wishful thinking and compelling visions of a post-crisis Utopia. A dose of realism needs to be injected.
Everyone understands that, if your shack blows down in a strong wind, it is desirable to build a new shack that is stronger. Increasing resilience to future shocks in the recovery process or, at the very least, not re-creating or exacerbating pre-disaster vulnerabilities, is an obvious goal. Academic research shows, however, that although “build back better” is an engaging and attractive slogan, few recovery programmes have lived up to its promise. Whether in public housing replacement in the wake of Cyclone Sidr in Bangladesh in 2007, or reconstruction in Sri Lanka after the 2004 tsunami, attempts to “build back better” after a disaster have been littered with good intentions which have failed to deliver.
But there are some exceptions. When William Beveridge proposed a National Health Service in 1942, he did not call it “building back better”. But the concept was the same. Despite being in the middle of a world war, and possibly the most destructive human and economic crisis the world has ever faced, Beveridge planned for the long term, coming up with proposals that set the stage for the establishment of the NHS in 1948, providing healthcare for all in the UK. It doesn’t take much imagination to see how much worse a situation we would be in today without his ambitious and forward thinking.
Financial resilience is inextricably linked to social resilience. The fact that the global banking sector has been, so far, able to weather the financial shock of coronavirus is a more recent example of building back better. In an ideal world, the financial system would be providing more emergency funding to those most in need. But if the banks had not been forced by regulators to increase their capital buffers after the financial crisis of 2008, they would now be fighting for their own survival, rather than that of the many individuals and businesses they are helping to see through coronavirus. As former Bank of England governor Mark Carney has said, rather than the financial sector being the core of the problem, as it was just over a decade ago, now “it is part of the solution”.
The lessons from build back better attempts in the past are clear. Doing it with any hope of success requires concrete policy responses, rather than airy aspirations. It requires careful planning. And it requires long-term thinking.
On the planning side, one lesson is the importance that community, and a sense of community, play. We have all experienced this in our daily lives. Whether it is a geographical community – the residents of the Exmoor village where my 85-year-old mother lives bringing her shopping and checking that she is okay, or a virtual community – the ubiquitous screenshots of teams of workers or friends laughing together as they play a quiz, we have all experienced the relevance of community during lockdown.
Designing policies for the recovery must also be based in listening to communities. In Christchurch, New Zealand, the blueprint for rebuilding after the Canterbury earthquakes in 2011 was based on a “Share an Idea” campaign, an intensive public consultation that generated more than 100,000 ideas for how the city could be rebuilt better.
Build back better also requires big and ambitious thinking, such as Beveridge showed when he designed the NHS. One area crying out for such thinking is how we manage our money. Investors have traditionally only focused on delivering positive financial performance, but creating a world in which we all want to live is at least as important to wealth accumulation as optimising returns. Preventing disasters costs less than living through them.
It must be clear to all investors that it is part of their duty to invest in ways that reduce the likelihood of systemic disasters, including climate change, social unrest, inadequate healthcare provision, economic collapse and international conflict. Regulators must make it clear to pension scheme trustees, for example, that as fiduciaries of our money, investing for a more resilient future is integral to their responsibilities. Markets where businesses were rewarded for delivering that future would be a hugely important mechanism for ensuring we prepare for shocks better than we have done in the past.
In the face of disaster, societies are more willing to come to a consensus on the need to take bold action. Even though it feels as if we are in the eye of the storm, planning for that bold action when the storm is over will be too late.