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Coronavirus brings an awakening for capitalism

Humans occupy the middle earth between the microscopic we cannot see and the cosmos we barely comprehend.

For millennia this led us to attribute our existence to the supernatural and the unseen. Without an understanding of germ theory, plagues were seen as punishment for ungodliness or revenge from a warring neighbour.

In the modern civilised world, it took a scientific understanding of microorganisms to give us the basic hygiene practices which provide the level of health and longevity we enjoy today. We cannot deny we are co-dependent on biology and the environment.

Over this co-dependence humanity has laid a system of globalisation that prioritises increasing consumption of our finite resources. The free market encourages us to buy bigger and more often, in fact it relies on us doing so, and mass transport allows us to transit the globe in hours.

Which explains why a newly mutated virus can rapidly spread around the world and bring the free market to a halt in a matter of weeks.

The Covid-19 pandemic has highlighted the importance of labour compared to capital. Without the movement and supply of labour, capitalism has come to a grinding halt. People can’t work and earn an income, business revenue stops, travel and tourism halts, and the fragility of the infinite growth marketplace is revealed.

With no tangible ending to the pandemic in sight, governments have been forced to put their hands in their pockets to sustain the marketplace.

In Australia we have a good benchmark of large government stimulus packages following the Global Financial Crisis (GFC) of 2009, when $42 Billion was injected into the Australian economy by way of infrastructure building, small business tax breaks and cash payments to citizens.

The GFC was a crisis of demand (hence more money in the system generated demand,) whereas this pandemic is a crisis of supply – no labour, no tourism, no hospitality, crippled health and education services.

With interest rates at record lows and an Australian economy at near recession prior to the pandemic, the federal government has very few stimulus levers to pull. And it can’t magically repair logistics and supply chains suffering from quarantined manpower. But in a time of national crisis, it has to been seen to be doing something, otherwise a hammering at the next election is inevitable – especially after the PR disaster of PM Morrison’s Hawaiian holiday during the bushfire emergency.

In what I think is a surprising move, the federal conservative government has adopted the macroeconomic policies of British economist John Maynard Keynes, who advocated for increased government spending and lower taxes to stimulate demand and pull England out of the Great Depression.

To go ‘Keynesian’ is against the key tenants of the free market ideology of the Liberal Party; the Party having campaigned on its economic credentials of lower taxes, and reducing the ‘debt and deficit’ left by the Labor Party.

The $228 Billion Morrison Government stimulus package deserves scrutiny. As a mixture of payments to welfare recipients, wage subsidies to businesses via the ‘job keeper’ payment to be passed onto employees, plus a further $90 Billion from the Reserve Bank for business lending.

But will businesses borrow to invest in this time of uncertainty? Not likely.

For a government which for so long resisted any increase to the Newstart Allowance as a means of stimulating the economy, it is miraculous they have now opened the coffers to support those who have lost or will lose their jobs. But it is somewhat disconcerting that only those in the privileged position of having on-going employment for more than 12 months will qualify for the more generous ‘job keeper’ payments. In this gig economy, which has been touted as allowing businesses to be agile and adaptive, it means that once again the most disadvantaged will miss out.

Free childcare is welcome and should be a remit of government, pandemic or not.

What of assistance payments to a highly profitable, once government owned corporation, like QANTAS, or a billionaire/foreign owned corporation like Virgin Airlines? What does the taxpayer get for propping up these companies? No government money should be going to any business who hides profit in offshore havens to avoid tax bills, to start. But there is no doubt any deals will be made behind closed doors and remain ‘commercial-in-confidence’.

It also begs the question about the how the government suddenly found hundreds of billions of dollars, when for years the public health and education systems have been calling out for increased funding to care for our human capital, only to be told we can’t afford it.

Smarting from having to abandon his fabricated budget surplus, Morrison is already telegraphing a ‘snapback’ to the government of old once the pandemic is over. It will be a tall order to unwind free childcare but selling his abandonment of neo-liberal principles will be difficult to his usual voters. I predict the word ‘unprecedented’ will continue to be prominent until the next election campaign.

If this pandemic has done one thing, it has brought into sharp focus the worth of front line workers like teachers, nurses, cleaners, aged care staff, hospitality and supermarket staff. Their importance to maintaining a functioning society could not be more evident. Underpaid and undervalued, these workers outshine over-paid CEOs, hedge fund managers, and elite sports people in their dedication when the proverbial hits the fan. Isn’t it time we recognised their worth with appropriate renumeration?

Greg Smart

By his own admission, Greg Smart was born 40 years old and is in training to be a cranky old man. He spends his time avoiding commercial television and bad coffee.