KUALA LUMPUR and SYDNEY, Nov 13 2019 (IPS) –
Almost nine decades ago, newly elected US President Franklin Roosevelt
introduced the New
Deal in 1933 in response to the Great Depression. The New Deal consisted of
a number of mutually supportive initiatives, of which the most prominent were:
a public works programme financed by budget deficits; a new social contract to
improve living standards for all working families, including creation of the US
social security system; and financial regulation to protect citizens’ assets
and channel financial resources into productive investments.
The New Deal was effectively a fiscal stimulus
for recovery, employment, development and environment goals. The Citizens Conservation Corps (CCC) created two million jobs
in environmental projects for young Americans aged 18-25 years when the US
population was 125 million.
The best known public works project was the Tennessee
Valley Authority (TVA), an integrated regional development programme for an
underdeveloped region. It built infrastructure to generate hydroelectric energy
to sustain industrial and agricultural growth in the US Southwest.
Thus, the New Deal helped ensure US economic
recovery, but also successfully addressed unsustainable practices that had
caused widespread ecological, social and economic crises in environmentally
fragile regions, and helped usher in a new era of economic growth and expanding
prosperity, especially in poorer regions.
Today, the world is in protracted economic
slowdown. This crisis needs a similarly bold response, as the United Nations urged following the 2008-2009 financial
crisis. But its New Deal was to be more global and sustainable. Public works
programmes should move countries to more sustainable development pathways to
achieve the United Nations 2030 Agenda for the Sustainable Development
First, it has to involve international
solidarity, following decades of globalization, and inequalities among and
within countries. Second, it has to be sustainable — economically, socially and
ecologically. We face profound environmental crises, with global warming the
greatest new threat with unprecedented ramifications.
While much attention has recently focused on
climate change, sustainability is also threatened by air and water pollution,
natural resource degradation, loss of forests and biodiversity, as well as
socio-political instability due to growing inequalities, repression and
A New Deal for our times should have key
elements similar to Roosevelt’s, namely public works programmes and measures to
encourage productive investments for output and job recovery, social protection
and prudent financial regulation.
Most developing countries are vulnerable to the global financial system. While varied, they are generally
less resilient and more susceptible to market volatility,
often forced to pursue pro-cyclical macroeconomic policies, exacerbating
economic instability and undermining long-term growth.
This New Deal should support counter-cyclical
responses in three main ways. First, national stimulus packages in both
developed and developing countries to revive and ‘green’ national economies.
Second, international policy coordination to ensure that developed countries’
stimulus packages not only create good jobs in the North, but also have strong
developmental impacts in the South.
Third, greater financial support for
developing countries, as long promised, especially for development and climate
change. The North should also enable the South to more effectively mobilize domestic resources, especially through taxation,
and stemming illicit outflows of funds.
In light of the slowing world economy, and dim
prospects for imminent recovery, resources are needed to strengthen social
protection to contain poverty and hunger. Hundreds of millions in developing
countries are at risk due to lower incomes, declining export earnings and other
A strong fiscal response should make long-term
investments to accelerate ecologically sustainable and socially inclusive
growth. Front-loading massive, multilaterally cross-subsidised public
investments in developing countries in renewable energy and sustainable
smallholder food agriculture should induce complementary private investments as
spontaneous market forces alone will not generate the investments needed.
The Global Green New Deal (GGND) should
include mutually beneficial collaborative initiatives between governments of
rich and poor countries. Reforms of the international financial and trading
systems should support sustainable development for all.
There was a glimmer of hope for such a bold
coordinated multilateral initiative at the 2009 London Summit of G20, but cooperation and progress
have been disappointing since, e.g., little meaningful progress on its Global
Jobs Pact. With the mid-2010 G20 Toronto Summit U-turn, fiscal austerity became the new normal.
Meanwhile, creeping protectionism all around
set recovery back further. Growing precariousness and declining living
standards, blamed on imports and immigrants, have fuelled the ethno-populist
backlash against Others, with multilateralism as collateral damage.
Green New Deal urgent
of an ambitious GGND has risen as most countries drift further off track in achieving Agenda 2030. After almost a decade of stagnation, countries must prioritize
recovery, but not at the expense of others. Stimulus packages must lay the
foundation for sustainable development.
Policy coordination among major economies
should minimize adverse spill-over effects, especially on developing countries,
which have become more vulnerable than ever, after decades of economic
liberalization and globalization. Socially useful public works could contribute
to climate adaptation and mitigation, and improve public goods provision.
To be sure, many other complementary
interventions are needed. But such investments and government spending require
significantly improved public finances. While revenue generation requires
greater national incomes, tax collection can be greatly enhanced through fairer international tax cooperation.
Clearly, the agenda for a new New Deal
requires not only bold new national developmental initiatives, but also far
better and more equitable multilateral cooperation, through improvement of the
inclusive multilateral United Nations system.
(*) Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Anis Chowdhury was born in Chittagong, Bangladesh. He was schooled at the Government M.E. School; Chittagong Collegiate School; and Chittagong Government College. Anis obtained Honours and Masters degrees in Economics from Jahangirnagar University (Bangladesh) in 1976 and 1978 respectively, and M.A (1980) and Ph.D. (1983) degrees from the University of Manitoba (Canada).