It is not only generosity that the government should be showing during this crisis, says Professor Esther-Mirjam Sent. “Many companies, from small-scale to large-scale business owners, have no financial buffer. Let’s use the current funding to make agreements that can be put into effect after the crisis.”Economic assistance from the government for everybody from the self-employed worker right up to large corporations like KLM has been widely endorsed. As the emergency is so acute, immediate action must be taken. The first billion-euro package of measures will apply for a period of three months. According to Minister of Finance Wopke Hoekstra, this package of measures can be extended twice if need be. Praise all round.Esther-Mirjam Sent, Professor of Economic Theory and Policy at Radboud University, believes that there is nothing wrong with such a display of decisiveness. But could the structural economic flaws that have partly motivated this billion-euro incentive also be addressed?Sent: “Despite the financial crisis of 2008, our economy is still focused on the short term, and on the economic value for shareholders. It should be pointed out that many companies are without a sufficient financial buffer. Most people do not even have a financial safety net. This is the well-known disadvantage of unrestrained market forces: it provides short-term gains while ignoring the long-term perspective and vulnerability in such a crisis. This disadvantage is now reinforcing the intensity of the economic crisis.”What do you advocate?“That current funding is used for making agreements that can be put into effect after the crisis. It is all very well to support the self-employed, but let us make an immediate agreement to organise a general financial safety net for them. It is only right that we are saving KLM-Air France, but there should be a clause that states that they will need to save themselves next time and that they must not fire anyone who is in a vulnerable position directly. And if the government wants to facilitate the pharmaceutical industry in developing vaccines, let this be the start of a series of public-private partnerships that benefit not only the industry itself but us all.”It sounds as if you think that the Netherlands’ austere approach towards Italy and Spain should also apply to our own financial rescue package.“I can fully understand the Netherlands’ hesitancy. Italy has run up a massive national debt and is consequently in no position to help itself. As a result, we have offered support, out of solidarity, out of clear self-interest, knowing that it is thanks to the southern states that we are able to benefit from the cheap euro, but such actions cannot be carried out without conditions. There are indeed parallels with the approach that is being taken in the Netherlands. If the hospitality sector is justifiably supported, could we also establish some guidelines on the position of flexible workers and seasonal workers in this sector, or should the government and, by extension, the taxpayer, always have to take the burden in such a crisis?”Increasing taxes as a logical course of actionSent, who is also a Labour Party representative in the Dutch Senate, explains that both people and society suffer from ‘disaster myopia’. When a crisis takes place at a distance - think of the first reports that came out of Wuhan - we consequently underestimate the possibility that it could happen to us. When we find ourselves in the middle of the crisis, we overreact and we can no longer think straight. Economic revival is obviously essential, but which economy will be revived?You advocate economic reforms, even though an economic revival is needed in the near future.“Reform is always a painful process. This is something that we recently saw during the discussions on the home mortgage interest deduction and the pension system. But there is a greater willingness to reform in difficult economic situations. This is an abomination to economists, because we believe that reform is something that should be implemented when all is going well. The reality of politics, however, is that the urgency of a situation like the current crisis is needed, otherwise we are reluctant to introduce such a process.”How does economic reform compare to the reappraisal of ‘the vital professions’ in the public sector?“It is inconceivable that if we were to take a look in the public coffers in the near future and see that they were almost empty, that we would start making cutbacks in the healthcare and education sectors. The logical course of action is to increase taxes. This is something that frightens politicians, but right now there is ample scope for allowing the business sector to make an adequate contribution to tax revenues. In the Netherlands, wealth tax is relatively low compared to wealth inequality. And there is scope for imposing a higher tax on higher incomes.”Encouraging mutual solidaritySent believes that the government should now be revising its behaviour from the last few decades. It should no longer be focusing its attention on the expenditure side of the economy, but should instead be looking at the revenues. Its thoughts and actions should no longer be based on distrust. It should become the type of government that encourages its citizens to do the right thing, that sets the example instead of trying to prevent things from going wrong. Esther-Mirjam Sent refers to the economic rescue package and the confidence that it conveys, including the polite request to companies that they should refrain from taking advantage of the package. The government could also identify with its citizens in a different way.“Take the student loan. The whole idea was that the loan would be an investment in someone’s future and that at some point they would easily be able to repay the money. However, the outcome has shown that this concept generated a great deal of stress and a lot of uncertainty and it has instilled students with the notion that it is a concept that only concerns them individually. It has allowed them to believe that they are studying for their own personal gain. And that is the perspective that the government is passing on to young people.”What is the alternative?“As a government, you could say ‘We will pay this for you now’ and when you do actually start earning a lot of money later on, you will start paying a relatively higher tax. It would be like a kind of academic tax. And it is not this specific example that I am concerned about here, but the idea that a government can either encourage mutual solidarity or, conversely, encourage a focus on self-interest.”As citizens, the vast majority of us seem to have opted for the latter in the past few decades.“I doubt that. The former policy focused on Gross Domestic Product (GDP), but we now have a broader concept of prosperity. For example, we have incorporated sustainable development goals. This means that there is also a focus on climate, literacy, and social inequality. This is more complex than GDP, but it does show the development towards an economy in which the quality of life is paramount rather than the economic interest itself.”Aiming the headlights a little higherThe current crisis has revealed the ‘flaws’ in the current economy. And it is precisely this crisis that has provided us with the opportunity to review the foundations of that economy. Sent is not entirely optimistic about our ability to actually achieve this.“We do know that stress is of no help at all when it comes to learning. What is more, self-fulfilling prophecies are a risk. Take the stockpiling of toilet paper rolls. If you think that supplies of toilet paper rolls are running low and you behave accordingly, then they will become scarce, and you will think that you were right. What we also know about behaviour during crises is that people overestimate themselves. Many of us believe that we will not contract the coronavirus, or we think that keeping one and a half meters away from people is obviously okay, but if everyone else is doing it, then there is no need for me to do it too. Our psychological reflexes are not always the right ones when it comes to learning.”It does not look like we are heading towards a new economy.Sent bursts out laughing. She then says: “I am optimistic. Because there is now a sense of urgency, there is also the realisation that this is a situation that cannot be repeated. That is why the headlights now have to be aimed a little higher. What do we want in the long term, how can we emerge from this situation and be stronger than we were, while being better able to withstand the next crisis? Before you know it, the momentum is gone. That is what Barack Obama’s Chief of Staff Rahm Emmanuel meant when he said ‘Never let a serious crisis go to waste’. Too few good intentions have been accomplished since the 2008 financial crisis. The worst thing we could say right now is ‘We will deal with the crisis first, and tackle the rest later’. Now is the time to act.”Esther-Mirjam Sent is Professor of Economic Theory and Policy at Radboud University. She represents the Labour Party in the Senate of the Netherlands, where she is chairperson of the Standing Senate Committee on Social Affairs and Employment (SZW).This article previously appeared on the Sociale Vraagstukken website. Photo: Gerd Altmann via Pixabay.