The Financial Express


21st century 'New Deals': Upping the ante, quashing the deluge

Imtiaz A. Hussain | Published: September 09, 2019 21:11:53 | Updated: September 09, 2019 21:16:11

The construction of the metrorail from Uttara to Motijheel is under way in full swing. —Photo: bdnews24.com/ Abdullah Al Momin The construction of the metrorail from Uttara to Motijheel is under way in full swing. —Photo: bdnews24.com/ Abdullah Al Momin

One particular mix of the current global political economy demands far greater policy-making attention than it has received, particularly since it predicts a sunnier forecast than the gathering clouds we now see. That mix is how the looming economic deterioration has been coexisting, precarious though that may be, with the largest number of less-developed countries (LDCs) aspiring to permanently break the poverty barrier and launch tangible upward mobility. That 'deterioration' has been triggered by such shocking policy actions as the US-China tariff-war, leaving in its shadow such other costly trade skirmishes as across the Atlantic, on whose eastern flank the Brexit showdown only worsened with Boris Johnson entering the picture. That 'upward' mobility also finds a combination of the global production networks spreading to many more in the LDC bloc, and large sources of external funding being channelled into infrastructural development where no such investment had hitherto taken place, with China's Belt Road Initiative (BRI) playing a pivotal role.

A similar predicament imposed itself upon a dumbfounded global comity almost a century ago. In fact, ninety-years ago, almost to the date, when the stock markets crashed, opening the deepest and longest depression, in living memory, from October 1929, governments the world over had to search deep into their souls to come up with a solution. Almost all of these solutions, if not all, had one central springboard: dig deeper, this time into their pockets, through governmental intervention, that too after decades of marauding private investors and traders had filled their sacks. Already a globally well-known economist, John Maynard Keynes, played his finest innings paving the governmental pathway to reviving the economy. Of all the governmental pathways paved, the one to catch wider attention and bequeath a longer shadow was the US New Deal, the first legislation Franklin D. Roosevelt got through with his '100-days plan', upon entering the White House in March 1933.

What the First New Deal (1933-4) did was to open up vast areas of infrastructural build-ups as a means to supply jobs to a virtually hopelessly lost adult population. When asked for renting a room, hotel managers anecdotally inquired, to sordidly depict the times, whether this was "to sleep or to jump" (in a suicidal act). In the final analysis, those constructing projects proved to be the dividing line between traditional society, when a significant population proportion lived off the farms, with agricultural products accounting for a larger proportion of the gross domestic product (GDP): agriculture provided one-fifth of the US workforce in the 1930s and accounted for 7.7 per cent of GDP, as opposed to 2.0 per cent and 0.7 per cent respectively, today. Under such institutions as the Public Works Administration and the Works Progress Administration, those projects produced the skyscrapers we take for granted, irrigation sluices and dams, and opened the gates for the more lavish inter-state highways (from the 1950s).

The Second New Deal (from 1935) cultivated far more governmentally-determined jobs. For over half a century, it legitimised governmental intervention, one medium whereby numerous services were made available to the needy public (though open to all), such as Social Security Administration, and brought agriculture under complete governmental control (through the Agricultural Adjustment Administration, Commodity Credit Corporation, and the like). These, in turn, ramped up government costs, so much so that the very public benefiting from them also began to unwittingly wince against high-spending interventionist governmental political parties in democratic elections. Whether these parties have shifted to the centre on the political spectrum, or been taken over by neo-liberal tendencies and mindset, the underlying recognition of potential state bankruptcy began to haunt the very capacity of the state to maintain those now-graying infrastructures. Not only do they need renewable, but new arenas have also cropped up demanding non-physical infrastructures, such as in information, health, and so forth, elevating the intellectual domain needing growing attention.

An independent and coincidental development has been the internationalisation of infrastructural development. Hitherto funded out of national coffers for domestic purposes, infrastructures now serve external purposes and playgrounds, and their fulcrum has also shifted from the United States (not only as the New Deal home-base, but also the World Bank playground), with China playing a far more robust global role than any single country has thus far, and far exceeding the World Bank engagements. So much has this last difference been accented that both 'models', the Washington epicentre and the Belt and Road Initiative (BRI) approaches, seem to be competing more than collaborating, with the rest of the world gleefully lapping up the spillovers.

Yet it is to prevent, perhaps preempt, any such collisions between the growing LDC infrastructural plunge and the sinking global economic parameters that attention must target, and with it, either restructuring old infrastructures (physical) or building new infrastructures (intellectual). The key differences this time for a new 'New Deal' campaign are to adjust to the neo-liberal setting, with corporate power playing a greater role than in the past, and the private sector picking up more of the tab than in the past; and grasping how infrastructural nature and needs have changed so dramatically.

Even the International Labour Organisation (ILO) has reordered its approach given these new demands. Its Global Commission on the Future of Work made three recent proposals: to match the key current needs of sustaining economic growth and promoting social inclusion: both private and public investment must play a part; both the government and unions need to work together to adjust old principles to new circumstances, particularly technological; and both private and public investment must prioritise labour-intensive projects.

They should easily get a head-start, since there is plenty to do. According to the Business and Sustainable Development Commission, the UN Sustainable Development Goals (SDGs) open up a plethora of opportunities to feed the new ILO mandates. It estimates over $12 trillion will be needed to come to terms with demands, along four fronts: food and agriculture; metropolitans; energy and raw materials; and health and well-being (Guy Rider and Richard Samans, "3 ways countries can boost social inclusion and economic growth," World Economic Forum, Newsletter, June 17, 2019).

One can see how infrastructural attention has shifted from the physical to other arenas, even without eliminating the physical from the equation. We also see how production goals can no longer be pursued singularly without the consumption component demanding at least as much attention. If the previous undertone was to meet present needs without reference to any limits, the concurrent one, under the overused 'sustainable' label, is also proving meaningful since it recognises the 'finite' nature of 'inputs', and thereby of 'outputs', and targets the 'future' more than the 'present'.

Bangladesh has lots to learn from these shifts. Its mammoth megaprojects have began to fill in some gaping developmental holes, with such physical priorities as ports, highways, railways, and bridges, among others. The next step is to start finessing the intellectual infrastructures, making education more fluid, supplying more accessible hospitals and health-care, and building the desperate need of the time, to digitalise society before society gets swallowed by numbers, or drown under the information deluge.

Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.


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