David and Helen talk to the economist Diane Coyle about the long-term consequences of lockdown, for the economy, for society and for our well-being. How can we measure the costs? Who are likely to be the biggest losers? And what will it mean for how we structure our economies in future? Plus we discuss what will happen if we pull back from global supply chain and we ask whether inflation is on its way.

Talking Points: 

The crisis is revealing weaknesses in the global economy.

• Previous events flagged vulnerabilities of global supply chains but not to this extent. 
• And none of this seemed to be common knowledge in political circles. 
• It has also further revealed existing inequalities.

Will we have the data that allows us to track how we are doing as we come out of it? 

• Even collecting the normal data will be difficult. For example, is an employee on furlough employed or unemployed? 
• The Office of Budget Responsibility said that GDP might fall by a third, a generation of economic growth gone. 
• Diane is resistant to the idea that there is a tradeoff between health and the economy. We should focus on what this will do to people’s lifetime opportunities.

Research indicates that there is a scarring effect for people entering the economy in moments of crisis. 

• The young will likely be the biggest losers here.
• What can policy do to mitigate this?

How should policymakers respond if the economy does come roaring back?

• You might look to parallels such as the Weimar period. Or the financial crisis.
• One of the striking things after ‘07/’08 was how little changed.
• The mistake would be to carry on as before.

If globalization was an age in which consumer interests prevailed, this is going to be an age in which producer interests prevail.

• This may allow for a different long-term economic approach to a number of issues over which there have been significant political issues in the last few decades. 
• Will we come out of this crisis with a better way to value things like care? 

After the lockdown, will people go back to spending money? 

• Or will they think they need to increase their savings in the event of a future crisis? 
• What does productivity mean in an economy where ⅘ of activity is services?
• There’s no real way to go back to the way things were—and there are already signs of change.

Mentioned in this Episode: 

• The Vasco Carvalho study on Spain
• Social capital and the Covid response

Further Learning: 

• The Talking Politics Guide to Economic Well-being with Diane
• Diane on What’s Wrong with GDP
• Diane’s work on measuring well-being
• The Talking Politics Guide To… the 1970s

And as ever, recommended reading curated by our friends at the LRB can be found here: