By Joe Montero
It hasn’t sunk in yet how serious the social and economic impact from the Covbid-19 outbreak will be. But it will. There is no way to escape it.
A concerted effort to mitigate the harm and protect the vulnerable is a necessity. Many have commented about the rise in poverty in recent times. As bad as its been, this is nothing compared with what’s coming around the corner. Just about every household will feel the effect.
At the head of it, is a massive rise in the level of unemployment. With workplaces shut down, and this is not likely to be for only a few weeks, the number out of work and proper wages is going to soar. The official unemployment rate between 5 and 6 percent, depending on the media source, is set to at least triple. Remember that the real rate of those out of work is double this. The scale is on a par with the Great Depression, which began in 1929, and lasted till the Second World War.
The scale by which the economy is going to grind to a halt will have long lasting effects.
This is in the context of an already low esteem for politicians and the political system. Rising anger will further undermine their credibility. Add to this an increased difficulty in accessing food and other essentials, combined with rising prices. And this doesn’t count the direct human impact of the disease itself.
Include the impact of a global downturn and the other pressures pulling down the economy before Covid-19, and the stage is set for a major rise in social and political instability. These other problems relate to how we make things, developments in the financial system, the debt crisis and the faltering purchasing power of society. And there is the rise of an unsustainable economy caisuing a climate crisis and jeopardising our capacity to survive.
If this scenario comes to pass, how we cope as a society, is going to depend on how we approach the challenge as a society from now on. There is a clear dividing line.
On one side is to ratchet up the defence of the major corporations, on the argument that they are a decisive part of the economy, create jobs and are just too big to let go broke. The other, is to put the emphasis on the rest of society. Both can’t be done. To give to the one is to take from the other.
The real question is, how can the damage be minimised?
Firstly, let’s look at the business sector. The starting point is that the needs of the population are met as best as possible. The truth is that many businesses will go to the wall. They don’t have the resources to last an extended shut down, and it is important that smaller and medium sized operations are helped as much as possible.
Those that do have the resources to withstand the storm should not be subsidised. More than this. They should be compelled to contribute towards the interests of the rest of society, by paying more tax. If this is done and the corporate tax avoidance industry ended once and for all, it will provide much of the money is needed to protect the rest of society.
The Morrison government’s package and last week’s Reserve Bank interest cut of 2.5percent are too small to have any real impact.
Even now, the Centrelink system is not coping. It is going to cope far less, as the numbers seeking help rise steeply. The best way to handle this, is to bring in a national basic guaranteed income for all. It would streamline the process and make life easier for the millions affected. It would prevent destitution, which would be a further blow to the economy and its chances of bouncing back.
This could be made a lot easier to implement, if those in trouble are provided with a moratorium on rent. One in three households are rented. Landlords in real risk of going under could be helped with a government subsidy. Public housing tenants should be relieved of paying rent. This will go a long way to help those who are most vulnerable.
Similarly, those finding themselves out of work can have the interest on their debts cancelled for as long as necessary, Banks and other institutions providing mortgages should have to cancel mortgage payments for those finding themselves out of work. Charges for household utility usage should also be stopped. This includes internet access, which is also going to be an important means of communication to access services and put the isolated in contact with others. Add to this the mandatory payment of 80 percent of wages by the bigger employers to those stood down, this These benefits would contribute to realising a liveable income.
Is all this necessary? Just think about it. The alternative is horrendous and could even lead to a more serious collapse of society as we know it.
Another lesson from history is that a downturn of this scale can easily lead to war. Last time it became a new source for profit, soaked up unemployment, created the conditions for growth through reconstruction, and the high level of war and post war profitability led to the rise of the global financial system multinational corporation.
But look at the price paid, in tens of millions dead and the extent of the suffering that will never be able to be calculated and monopolies controlling just about all aspects of life. Do we and the world want to repeat this?
There are further implications. How are we’re going to run our society and economy, in the wake of the failure of the status quo?
Once again, there are two choices. The option of focusing on assistance to big business and the fallout that this will generate means for going down the road of rapidly escalating authoritarianism, aimed at forcing people to comply with the dictates of the market. Do we really want this?
The other is to choose the path of cooperation and start building the institutions and social organisation, which will generate the capacity work together for our common good, make sure no-one misses out, and individual needs as well as our collective needs are met.
We are heading towards a crossroad where a decision must be made about which turn we are going to take.
If the Australian and state government and society turn down a road at odds with the interests of society, society will have to finds ways to go on without them.