Charles Ives, an American composer, wrote a haunting piece of music in 1908 called “The Unanswered Question”. He was influenced by the writers Ralph Waldo Emerson and Henry Davis Thoreau when composing this piece. Now regarded as the leading composer of American art music in the 20th century, his music was unfashionable for most of his life.
I recently listened to this piece as part of the Berlin Philharmonic performance of “An American in Berlin”, available online via their digital concert hall. It is highly recommended.
There are many unanswered questions in life – in an existential sense, a personal sense and in business. Particularly around Covid-19. An American in the White House has many unanswered questions to contemplate on this issue in particular, as do the Chinese re Wuhan.
In Australia and NZ, our version is more about the shape of commercial life post-Covid-19.
Businesses face an uncertain environment and many challenges when deciding how to manage through coming months and possibly years. Some sectors have powered through C-19. Others have been decimated.
How quickly will our economies recover? We think there is no certain answer. The speed of recovery
is inter-dependent upon global factors, local economic conditions, the attitudes of business managers and the sentiment of consumers – none of which is predictable.
Australia and NZ benefit enormously from tourism and international students, and of course from trade with the rest of the world. When and how international air travel will open up is uncertain. Whether and when people will be willing to travel is another. Minimising further waves of C-19 is the challenge. We think governments should open up outbound international travel quickly and leave it to the destination countries to manage C-19 issues, just as we should do for incoming passengers through quarantining incoming passengers, unless they are immune from C-19.
Like the rest of the world, public debt in Australia has increased enormously. How and when to repay that? There are broadly three options. Tax businesses and people is the first, but there is no appetite for that and anyway that led to the Great Depression in the 1930s. Inflate our way out to devalue debt, but that’s a blunt instrument and inequitable. The third option is to grow our way out, through stronger economic growth.
That requires Federal and State economies attuned to innovation and growth.
The last time Australian politicians had the fortitude to implement micro-economic reform to stimulate productivity and free us of red tape was in the early 1990s. Decades of political cowardice has passed since then. The good years of wealth were frittered away in unproductive handouts to political classes in order to win elections. Now we have a real dilemma. Unless we reform, growth will be slow or sluggish. We could end up with zombie economies. Do our politicians, Federal and State, have what it takes to make bold and wise decisions for the good of the whole economy, even if there will be losers as a result? Having hidden behind medicos throughout C-19, will they now step up without cover to enunciate measures to make our economies grow and increase labour productivity, a pre-requisite for wage growth.
Any economic recovery requires consumers to grow in confidence and spend money. And it requires business people to take risks and invest. None of that is predictable, much less guaranteed, even as we come out of C-19.
Politicians have scared some people witless about C-19. They won’t be coming out from under their beds for a long time. Maybe not until a vaccine arrives – if it ever does. Politicians have also effectively traded off less deaths now from C-19 for less productivity and more deaths later from isolation (especially in aged-care facilities), business closures, unemployment, mounting debt and a loss of hope.
Australia looks like having less than 150 deaths from C-19 in the first wave of infection but 1,500 additional deaths from C-19 linked suicides each of the next five years, plus increased anxiey and other mental illness. Politicans won’t talk about the trade-offs they have made but businesses need to be aware of these factors, which may show up in weaker demand and employees who will be less productive or in need of mental health support.
Let’s hope a vaccine is found quickly and governments everywhere find the resolve to restructure their economies for faster growth to pay down the massive debts from C-19.
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