COVID-19 Economic Hibernation
What a difference a week makes!
When dealing with a pandemic that spreads geometrically and kills indiscriminately a global response is required where everyone simply stops and stays at home. All the usual policy prescriptions simply do not work, but that does not mean there are no good options available.
A week ago I wrote how we can avoid catastrophic economic loss and widespread loss of life.
A key takeaway was that we must put our economy into hibernation.
It seems the Government is beginning to understand and is considering how to do it.
The Federal Government is considering a radical suite of measures to effectively put the economy into hibernation, allowing businesses to emerge after the coronavirus crisis, and resume and rehire without crippling debts.
Government thinking seem be taking seriously ideas I advocated. For example,
Banks, lenders and landlords would all be asked to wear some of the pain, waiving all overheads including rents and mortgage repayments for at least the next six months.
However, there are myriad challenges as Laura Tingle points out
Morrison's coronavirus 'hibernation plan' needs work to stop economic collapse.
The challenge lies in how we ensure equity when executing our response. While maintaining "livelihood support" for people directly affected, it's vital we maintain trust in leadership and faith in the outcome for the economy as a whole. Finance Minister Mathias Cormann expressed the right sentiment when he called on all Australians to pull together:
The key here is to come up with a fair and equitable way to spread the pain, so that everyone has the best possible opportunity to be there on the other side.
There are some serious flaws in the policy response to date. For example, allowing superannuation to be raided at this time of crisis serves only to make the crisis worse. While the pandemic itself remains the growing and immediate threat, as the PM says, we need to ensure our policy responses do not result in the collapse of our economy making things even worse. To this I would add that we must address the key failures of the neoliberal model that got us here in the first place.
Time to think outside the box.