Never waste a good crisis

The Scottish government has a committee, the Scottish Advisory group on Economic recovery “to provide independent expert advice on supporting the sectors and regions of Scotland’s economy to recover from the impact of Covid-19”. I was asked to contribute to the consultation which took place last week (closing date 31 May)

Gathering together my responses, paraphrasing the questions, and adding a list of references :

Q: What will be the shape and form of the recovery from the crisis and what will be the implications for the future growth and structure of the economy?

What are the opportunities to boost private consumption to stimulate the recovery ?

Which aspects of regulation might be relaxed to stimulate growth ?

A: View from Silicon Valley : The construction business is back in full swing. Large companies (Facebook, Google, Cisco, Microsoft) have moved smoothly to Working from Home and are going to continue doing that. Their user conferences and most other conferences have changed to being remote only. Sectors of the economy which have been impacted most severely, which have laid off most people, are non-essential retail stores, followed by restaurants.

There’s an opportunity for a dramatic re-think of the concept of the ‘working week’, following on from WFH and the income support which has happened. 4 day weeks, enabling more businesses to be open every day, with support for scheduling so that people can usually spend their days off with family and friends, would enable more people to have flexibility in their lives between paid and volunteer work.

Trying to stimulate growth in take out food and non-essential retail would be a mistake, although income support for the employees is critical. There are opportunities for employment in essential retail, which needs more people and hours to maintain distancing and cleanliness.

Q: What are the medium- to long-term consequences of the lockdown on businesses, including loss of employees, debt overhang, loss of markets, reduced investment and unemployment?

A: The medium to long term consequences can be very positive; there has been a forced acceleration of companies retraining their teams to work in a distributed, remote, highly digital world. Doing this well and early can be a competitive advantage; Scottish companies could offer remote teams who deliver work all over the world without having to travel there.

Q: What can be done now to ensure the transition to a wellbeing-oriented, inclusive economy on a transition to net zero ?

How can the wellbeing of the people of Scotland flourish and what are the environmental implications of the crisis?

A: Three big things : infrastructure investment in Internet communications; enabling conversion of office and retail space to insulated residential accommodation with room for WFH; rethink transport policies to encourage electric bicycle and economical small scale delivery and pickup for physical goods going to consumers.

Provision of fibre for broadband network has been a political minefield and remains inadequate for WFH over much of the country. Private only provision has not been effective. Cellular networks are not an adequate substitute. Sweden’s strategy, for “market-driven development, completed by public efforts” is worth emulating.

There’s a proposal for the creation of a National Investment Authority (NIA) by Cornell University law professors Saule Omarova and Robert C. Hockett, worth considering for the Scottish Investment Bank.

WFH, made possible by improved communication infrastructure, reduces commuting costs, which reduces pollution and energy use as well as saving time and frustration. Every effort should be made to encourage this to continue. This implies that office space should be able to be converted into residential accommodation. The collapse in non-essential retail is an opportunity to take advantage of those existing buildings, particularly in small towns where the high street has been hollowed out, to convert them for residential use, with requirements in building codes for insulation and heat pumps.

Continuing the reduction in vehicle traffic which happened in the lockdown while enabling people to have freedom of movement requires a system scale re-think. Encouraging cycling, particularly e-bike use (as in the Netherlands and Germany) for personal transport and local deliveries, would contribute to well-being.

References :