The Conversation, 12 January 2022:
Australians are getting a stark reminder about how value is actually created in an economy, and how supply chains truly work.
Ask chief executives where value comes from and they will credit their own smart decisions that inflate shareholder wealth. Ask logistics experts how supply chains work and they will wax eloquent about ports, terminals and trucks. Politicians, meanwhile, highlight nebulous intangibles like “investor confidence” – enhanced, presumably, by their own steady hands on the tiller.
The reality of value-added production and supply is much more human than all of this. It is people who are the driving force behind production, distribution and supply.
Labour – human beings getting out of bed and going to work, using their brains and brawn to produce actual goods and services – is the only thing that adds value to the “free gifts” we harvest from nature. It’s the only thing that puts food on supermarket shelves, cares for sick people and teaches our children.
Even the technology used to enhance workers’ productivity – or sometimes even replace them – is ultimately the culmination of other human beings doing their jobs. The glorious complexity of the whole economy boils down to human beings, using raw materials extracted and tools built by other human beings, working to produce goods and services.
A narrow, distorted economic lens
The economy doesn’t work if people can’t work. So the first economic priority during a pandemic must be to keep people healthy enough to keep working, producing, delivering and buying.
That some political and business leaders have, from the outset of COVID-19, consistently downplayed the economic costs of mass illness, reflects a narrow, distorted economic lens. We’re now seeing the result – one of the worst public policy failures in Australia’s history.
The Omicron variant is tearing through Australia’s workforce, from health care and child care, to agriculture and manufacturing, to transportation and logistics, to emergency services.
The result is an unprecedented, and preventable, economic catastrophe. This catastrophe was visited upon us by leaders – NSW Premier Dom Perrotet and Prime Minister Scott Morrison in particular – on the grounds they were protecting the economy. Like a Mafia kingpin extorting money, this is the kind of “protection” that can kill you…...
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There is a question now hanging over Morrison & Frydenberg's 2022-23 Budget, geared as it is to fulfill the Coalition's yet to be revealed election promises rather than buttressing the nation against the adverse economic winds blowing through countless CBDs around the country.
An estimated 50 per cent of the national workforce are currently absent from their employment on any given day due to COVID-19 - either workers have contracted the virus, are home looking after a dependent family member/s who is ill with it, have become a "close contact" and are isolating because of it, or their place of employment has temporarily closed due to lack of customers who are afraid of catching it.
It's not just a question of how far household consumption is likely to fall as this situation continues through at least another six weeks.
Note: as an example, two previous Household Final Consumption Expenditure falls during the pandemic have been 12.2% June Qtr 2020 & 4.8% September Qtr 2021. Periods in which infection growth intensified.
Neither is it all about the financial pain being felt by small businesses after every Coalition public policy error compounds economic distress at community level, sweeping away hope and income.
It is also about how much will the inevitable loss of production and productivity carve off the value bottom line of states and territories' State Domestic Product (SDP) and what impact that has on Australia's Gross Domestic Product (GDP) or the level of eyewatering public debt government has to service.
Does the Australian economy have the resilience to withstand a full year of SARS-CoV-2 running unchecked in the general population due to the Coalition's political policy of 'living with COVID'?
