OPINION | Virus puts economics in back seat
More fundamental questions must be asked. People, quite reasonably are drafting wishlists for a post-Covid world – such as action on climate, energy, tax, water, industrial relations and so on – but that risks a return to politics as usual.
Rather we should be asking: what sort of economy do we want; what is the economy for; what role should government play and who should decide how government acts?
This week Treasurer Josh Frydenberg listed costs to the economy from the pandemic, as if the economy was an end in itself – that its size and perpetual growth determine how good a society is. Premiers expressed hope for the various industries that had been hit hard.
Again, this risks a return to economics as usual. But the pandemic and lockdown should realign our thinking. Not all “industries” are the same, no matter what amount of money they “return” to the “economy”.
The poker-machine “industry” is a case in point. No-one has played a poker machine since the lockdown began. Our experience in the pandemic should make us ask, would it matter if no-one ever played them again and the poker-machine “industry” and its contribution to the economy were forever gone.
Surely, we would be better off, not worse off, in this slightly smaller economy without a poker-machine industry.
The car-smash repair industry is another case. Wouldn’t we all be much better off if we all drove in such a way that this industry shrank to near nothing and the economy was slightly smaller.
Similarly with employment. All those jobs making, selling and renting CDs and videos are gone. Extensive music and movie libraries can fit on a hard drive or be streamed. And we are better off.
The incandescent light globe industry used to make lots of money for the economy. A slightly smaller economy making cheaper LED globes which use less electricity makes for a smaller economy, but a better life.
Critically, we put all the economic statistics – particularly economic growth – into perspective. They should be eclipsed by a better measure of human and environmental well-being. Are they getting better, or worse?
The Australian Bureau of Statistics had such a measure, called Measuring Australia’s Progress, but it fell foul of the Abbott Government’s 2014 Budget cuts before it had been fully developed and before people had a chance to see its superiority over the GDP measure.
Presumably, when axing the MAP the Government thought that a greater contribution to GDP and jobs by, say, higher output by the tobacco, gambling and cotton industries marked progress irrespective of what unpaid human and environmental damage they did.
If you make GDP growth (especially in the short-term) the dominant measure of progress, governments then direct their policy to that measure and ignore other more important measures of well-being. And they are even more likely to do that if they are supported financially by large corporate interests whose sole aim is to maximise profits and share-holder return.
Further, governments backed that way have the resources to persuade voters with propaganda and half-truths that their interests also lie in economic growth policies, even when they do not.
But Covid will change much of this.
First, governments should not assume a bounce back to normal even if they lift restrictions. Governments can lift restrictions, but they cannot force people out. British and US data shows that many people isolated themselves before they were legally required to. Similarly, they may choose to avoid risky situations, such as restaurants, public transport, shopping for luxuries and so on, even if they are legally allowed to.
That will result in a dampened economy with a different shape until a vaccine or effective therapy is found.
Second, when people come out of lockdown, their in-lockdown experience will affect their future economic behaviour. For example, successful online meetings will result in organisations saving travel and site costs for in-person meetings. Similarly, with business will save office-space costs now they have experienced having more employees successfully working from home.
Third, many people have now experienced how the small-government, casualised-workforce, just-in-time, trickle down models have resulted in existential insecurity. So, they might start demanding a different sort of post-Covid economy.
Fourth, people have seen governments (of both complexions) act on solid public-service advice and evidence in the broad community interest unfettered by the wishes of big corporate donors who are largely responsible for the economic-growth-obsessed earlier models.
If the Covid experience results in the removal of corporate influence on government, by banning donations from them and by making public all government-industry lobbying, everything else will follow.
The acid questions, which electoral research shows influences voting patterns more than anything else, will remain “am I better off under this government” and “will I be better off under a new government”, but after the Covid experience the meaning of “better off” will change. No longer will it be purely monetary. Resilience and security will be factors.
Avoiding further crises or at least coping with them better will be higher priorities. Things like a further pandemic, climate change, cyber security, water security, over-population, species extinction, pollution, and natural-resource depletion will assume much greater importance. After all, if they are not addressed, having more money in the bank in the immediate term will not amount to much.
Crispin Hull is a current columnist and former Editor of the Canberra Times.
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