An economic insight into the coronavirus crisis and the upcoming climate change crisis

An outline on the State’s role in R&D investments, covid-related recovery funds and climate change as the future reason to lock ourselves up.

I grew up un in Italy where all around me people where often dissatisfied with the government, always criticising it. I often wandered why at my friends’ school the ceiling fell regularly and why there weren’t funds to make sure that it didn’t happen. At first I thought it was a problem only in Italy but I later found out that a friend that grew up in the USA had the same problem: they had a map signalling where it was safe to go and where pipes were likely to fall from the ceiling.

When I thought of innovation I always thought that it was mostly private sector driven and never thought that the public sector did much investing on technologies. I learned more about this by reading Mariana Mazzucato’s book: Entrepreneurial State. In which she backs up with examples just how much of a key role the State has played in funding research in the United States for the development of Internet and vital component parts of the first iPhone to name a few.

She outlined that actually it is the that State in the past has taken the most risky decisions in funding research early on that no one was thinking about at the time, looking ahead and not always getting it right but even with a couple investments turning out right changing our lives drastically. Mazzucato explained how private investors are usually more reluctant in taking big risks but that when the State takes them first it is very likely for the private sector to follow.

This idea that the State is crowding out private investors that most of us believe isn’t accurate at all. We should encourage the State to look further into the future and take risky decisions, that will bring mistakes, but also amazing wins. If those risky investments won’t ever get made we won’t learn from them and understand how to make them more successful. Change must be State driven and we must change the way we perceive and think of the State to do that. Important to remember is the fact that we must be open to failure since it is inevitable.

I decided to look for more recent content published by Mazzucato to understand what her views on the coronavirus crisis are and what recovery should look like to her.

We really have to treat this with the same level of emergency, urgency, empathy and solidarity as we would with a war. - Mariana Mazzucato

She was very intentional in stressing just how important it is that we must be objective in structuring recovery funds. Mentioning the possibility we have of making sure that this recovery will be turned into an opportunity for investment, innovation and for new types of collaborations around all problems covid is confronting us with. The option of intentionally building back better is what we are being confronted with now and we must make the best out if: encouraging businesses to go more sustainable being one of the main things we should focus on.

Undoubtably we have learned the importance of health systems: global health systems. Under pressure, as we have seen in Italy, new creative solutions were developed. I don’t think anyone would have ever thought of turning a snorkelling mask into a ventilator one if we hadn’t been in these particular circumstances.(you can read more about it here)

Something she also mentioned is that we are likely to reach a similarly devastating crisis due to global warming. A case scenario she brought up was the following: if we were to pursue our destructive lifestyle one day suddenly all the population would have to stop eating meat, would have to stay locked sat home and would have to stop travelling by plane or car. As we have witnessed, if we were to be in that emergency state it is almost certain that many inventions would quickly develop and those we already have will be deployed and put to use worldwide.

However we have the choice to learn from this pandemic and bring change before it is too late. Before we have no other choice that lock ourselves at home.

Staring now, by forming proper partnerships between the public and the private sector. Starting now, from building back better intentionally for a better future. Starting now by objectively structuring recovery funds.