What Went Wrong in 2008?

I was born in 1998. The world is currently suffering the second major financial crisis of my lifetime, and the language I hear in headlines rings with a sinister familiarity. “Worst on record”, “unprecedented decline”, “millions unemployed”.

Two seismic shocks have ripped through the global economy in the last twelve years, decimating entire industries and wreaking havoc with the lives of billions of people. The mind tends to draw comparisons, so let’s have a look at the two.

The Great Recession

Unchecked avarice and excessive risk-taking by banks, taking advantage of lax regulation to increase subprime lending to people who couldn’t afford repayments, caused the unsustainable growth of the US housing bubble throughout the 2000s. Eventually the bubble burst, resulting in a sharp drop in house prices, widespread mortgage delinquencies and, in September 2008, the collapse of Lehman Brothers. This sparked an international banking crisis and the most severe recession since the 1930s.

The dominos that fell following these events were numerous and far-reaching. The European debt crisis, the Icelandic financial crisis, austerity measures across the Western world, the growth of populism, the continued pursuit of cheap fossil fuels. These were harsh years for many people to endure.

President Obama pointed out that “Food stamp recipients didn’t cause the financial crisis, recklessness on Wall Street did”. However, only one Wall Street banker went to prison and recipients of food stamps were the target of crippling austerity policies. It’s easy to see where many of the political headaches we face today originated - the establishment was seen to favour corporate interests above those of ordinary people. The politics of division triumphed in the aftermath of the crash.

“The decade of fire and floods”

In an increasingly connected, globalised society, no country escaped the shockwaves sent out by one of the biggest corporate failures in history. However, the crash did not impact major growth countries like China and India as severely as the US and Europe. This is one reason that, unlike with previous economic crises, the Great Recession did not see reduced CO2 emissions for several years following. Emissions in China continued to grow substantially throughout this period, and the rest of the world soon returned to the upwards trend which will result in heating of between 4°C and 6°C by the end of the century.

"Many saw the financial crisis as an opportunity to move the global economy away from persistent and high emissions growth, but … the opportunity was not exploited," Dr Glen Peters, Centre for International Climate and Environmental Research

Because of the failure to exploit this opportunity, the past decade has been the hottest on record. Extreme weather has battered vulnerable people across the planet, Arctic sea ice is at record lows, sea levels are rising and thawing permafrost is releasing significant quantities of methane into the atmosphere.

The ripples of the financial crash of 2008 have been felt throughout the last decade, remarkable not only for their initial magnitude, but the persistence of their effects. But what will happen this time?

The Intentional Recession

This time, the recession was premeditated. Faced with a mysterious but deadly respiratory virus, the shutdown of the global economy was orchestrated by governments around the world as an alternative to watching millions of people die.

In 2008, unregulated greed caused economic ruin. In 2020, economic ruin was embraced as the cost of saving lives. Shops were closed, cars and planes lay motionless, factories were stopped. The world is witnessing a health emergency and human tragedy on a vast scale and the general consensus is that the economy can be repaired later, but we need to do everything we can now to prevent as many people as possible dying from coronavirus (for debate on this topic, see this article).

But cast an eye to the future, and you will see that we are at a juncture. Experts have said that the world has just six months to avert a climate crisis (IEA, 2020). Governments at this very moment are discussing economic stimulus packages to help their economies rebuild from this intentional recession, and they too will find themselves at a juncture. They could restore the unsustainable high-carbon economies of before, or they could drive structural change, prioritising green development and delivering increased prosperity in a low-carbon world.

We need to do things differently this time

Assessments after the 2008 financial crash found that, in the US, clean public transport infrastructure projects delivered almost double the amount of job-hours, compared to highways and roads. This is one example of the many benefits of a green recovery, where government stimulus results in job creation and a reduction in air pollution which helps to safeguard the 4.2 million people who die annually from its effects (WHO).

This time, major priorities should include a focus on green transport, rethinking and redesigning infrastructure and buildings, implementing clean power systems and supporting nature. We cannot survive another flawed recovery and we won’t get another chance to protect the wellbeing of our planet for future generations. From the ashes of lives and livelihoods lost, we must build a better, more resilient world. We’ve seen that things need to be done differently from last time, and our green recovery campaign is working to achieve this.

“We are the first generation to feel the effect of climate change and the last generation who can do something about it." - President Barack Obama. (I wanted to avoid having two Obama quotes in one article, but for some reason I couldn’t find anything suitable from the 45th President).

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