Coronavirus: Learning curve for leaner, meaner generation ahead

There is no precedent for this COVID-19 crisis so we have no idea what’s at the other end.

Customers observe social distancing at a Redfern cafe in Sydney on Thursday. Picture: Getty Images

Economists sometimes talk about “structural breaks”, where some major change renders comparison between before and after meaningless. The coronavirus is the mother of all structural breaks, at least the biggest since World War II.

It will leave an indelible mark on our habits and attitudes for a generation, shifting the pattern of demand away from luxuries and honing the efficiency of supply. It won’t be all bad. Apart from fostering a greater sense of national consciousness, households and businesses will become more resilient.

The financial crisis of 2008 was for most, especially here, a relatively remote and academic event. Life went on as it always had.

The pandemic has drastically affected the structure of our lives in a manner inconceivable a month ago.

“Even though this won’t go on as long, we will see some of that same kind of shift in attitudes and behaviour we saw after the Depression,” demographer Hugh Mackay tells Inquirer.

Already, conversations about gender balance and the climate “crisis” have evaporated and such issues will seem less urgent in the wake of the pandemic. The idea of forcing another 2.5 per cent of workers’ wages into capricious financial markets will be seen as folly. It’s been a reality check for the national conversation, which had drifted almost to the absurd. While the deluge of news about the coronavirus is relentless, at least it is something real.

Households will become more frugal as they learn how cheaply they can live once frivolous expenditures are excised. Spending $350 on a concert ticket will no longer be the norm. Having learned to exercise outside, that $70-a-fortnight gym membership might not seem such a good deal.

A nation making their own lunches and dinners will become far more apprised of grocery prices. “The pandemic will challenge rampant individualism, reminding us we’re all interconnected,” adds Mackay.

So far, the burden of job losses has fallen almost exclusively on workers who, in normal times, we actually need: cafe and retail staff, pilots and taxi drivers, for example.

By contrast white-collar workers, although compelled to work at home, have been insulated. But many of them will start to question the point of their jobs. Shorn of the charade of pointless meetings, it will become clearer who actually does what. Putting in “desk time” to please the boss will no longer be an option.

Businesses will become leaner, and possibly meaner. They’ll question whether acres of commercial real estate are worth the rent. Bosses in large enterprises will question the value of staff who they haven’t seen in weeks, and who have appeared to produce quite little — apart from social media posts with “#WFH”. Workers with little verifiable, individual output should be concerned.

The least affected by the crisis inevitably will be the political class, who have shut the economy down without any risk to their pay and conditions.

Politicians concede privately this is unsustainable politically.

News the upper echelons of the bureaucracy and judiciary will forgo a 2 per cent pay increase in July as a way of sharing the burden is probably not enough to quell the anger that by July will be red-hot. “People will come out of this with a heightened anxiety; they’ll be wounded and cranky,” says Mackay.

Government has never in history tried to shut an economy down; we’ll soon see for how long it is possible in a democracy.

Government might also have to take a blowtorch to wasteful spending, as the debt and interest burden surges.

“During the drought the government was ridiculously employing people to go around in fancy cars and make sure farmers weren’t mistreating their livestock,” says one chairman of a top-20 Australian company.

The billions spent annually by state and federal governments on consultants — for many projects the man in the street would deem either a complete waste of money or something the public sector itself should be doing.

The slump has thrown up a slew of moral questions too. The inevitable confrontation between tenants and landlords over rent, for instance, has no easy answer. What has happened is neither’s fault, yet the loss is real and must be borne. Typically, landlords tend to be older and richer; perhaps they should take most of the hit given people have lost their jobs and businesses in large part to save the elderly.

Respect for the economic system will fray too. When the Reserve Bank starts creating money artificially to buy government bonds, many will question the value of money, and the morality of how it can be handed out to favoured constituencies.

Why not give it to households directly, many will ask, preventing the financial sector clipping the ticket on the way? The notion of a free market in the financial system will become more farcical.

Everyone is for the $189bn in stimulus spending now, assuming it will save jobs. However understandable the political imperative, it might not save many. The two small businesses I have spoken to around where I live — a florist and a hairdresser — have already laid off all their staff. So have large businesses: what then is the point of the extra debt?

The government shouldn’t waste the crisis. Arguments to enhance our energy security will resonate more easily. Demands to make the country reliant totally on solar, wind and batteries — at astronomical cost — won’t appeal as much. This might be the time a nuclear energy program, taking advantage of our rich uranium reserves, becomes politically feasible.

We’re conducting a huge experiment in economics and health policy. The uncertainty hanging over the economy is unprecedented.

Even if our relative performance in managing this disease is along the lines of the Spanish flu 100 years ago, when Australia had the second-lowest death rate in the world, by a large margin, society and the economy will be changed irrevocably on the other side.