An Inclusive & Creative Economy is Equitable
2020 will be a year to remember…or at least it should be. As many of us want to move past the moments of 2020, history and the circumstances of 2020, should stick with us and move us towards a better future in the most ideal of circumstances.
A global pandemic; economic justice, and Black Lives Matter protests; record swings in the stock market propped up by record-low interest rates; and, all amid the insanity of the election cycle still not fully realized until our new President is sworn in. Moreover, entire economic lockdowns and frighteningly high unemployment and business closures will have a lasting impact long after the pandemic is passed.
Related to the economy, we saw a recovery in the third quarter of 2020, expanding by 33.1%, although not enough to offset earlier losses from the initial closures, including the 5% decline in real GDP at an annual rate in the first quarter.
The March recession ended 128 months of expansion, the longest in U.S. history, and quarterly GDP had never experienced a drop greater than 10% since record-keeping began in 1947. And in April, the unemployment rate skyrocketed to 14.7% as companies furloughed workers. It remained in the double digits until August when it steadily declined. In the week ending December 12, though, claims rose sharply to 853,000, marking the largest increase in claims filed since mid-September.
For an economy to function at its best, it needs to be equitable, dynamic, and resilient.
With all of this in 2020, it’s hard to escape the simple fact that the economy is a significant factor in daily life. Millions of Americans have continued to struggle and are unable to fully participate in the various opportunities many of their fellow citizens have access to every day. And if we are being honest, many are fearful and have lost both trust in the system and hope for a better tomorrow for themselves and their families. For an economy to function at its best, it needs to be equitable, dynamic, and resilient. It is not just creating stability for some people but creating stability so that every person is free from worry about financial roadblocks or unforeseen issues. Therefore, for an economy to be a thriving economy, it must be an inclusive economy and when a system prioritizes people it will be more inclusive and creative.
We are facing a moral crisis in our economy with greater isolation and accelerating inequality. Poverty persists and economic mobility remains limited for many people. All, while there is increased sentiment that more and more people do not have a fair chance to succeed and that vulnerable groups, are excluded from the jobs, schools, and opportunities they need to move up – leaving them stuck in poverty for years or even for generations.
We are facing a moral crisis in our economy.
However, I doubt many of us want our communities to function in this way. We generally do not imagine communities deficient in opportunity. Instead, we desire to live in a society in which we care for one another. A society that fosters a sense of trust, belonging, and safety. A society where we have an individual and a collective sense that we can, as part of that community, influence our surroundings and our very future. Moreover, we do not simply imagine a community with just the basics present but a community that allows us to thrive. In this community, there is an investment in human knowledge and learning; where social trust, empathy, and solidarity are present; where beauty and creativity define a place and inspires us; where there is both natural and physical health; and where the economy is thriving through growth and innovation.
An equitable economy means there are more opportunities available to enable upward mobility for more people. All segments of society, especially the poor or socially disadvantaged groups, are able to take advantage of these opportunities. Inequality is declining, rather than increasing. And people have equal access to a more solid economic foundation.
An equitable economy means there are more opportunities available to enable upward mobility for more people.
Too many people have virtually no access to the economy. Of those who do have access, many face limitations on their ability to participate fully (they lack the economic autonomy to make decisions for themselves and freely move within the system). “This is more than economic inequality—it’s economic exclusion.” It is time we focus on expanding opportunities and limiting exploitation so that everyone wins, together.
That is why in our work at Access Ventures, whether it’s our direct initiatives, investments, or broader managed assets, we pursue people, companies, and funds aligned with this mission to improve equality and increase economic prosperity (agency). We look closely at things like geographic, gender, and racial equity in our managers and investments (i.e. things that support ownership) as well as things like income mobility and the creation and increase of wealth for under-represented people. Next week, I’ll explore a bit more at what a more dynamic economy looks like as we seek to further define our collective efforts at Access Ventures.