The Age of Uncertainty — Pre to Post COVID19
Introduction
We think COVID19 entered Australia in late January 2020. At first it was like the Phoney War along the border between Germany and France during late 1939 and early 1940. It was a bit surreal. We had the toilet paper and sanitiser hoarding but otherwise we took few precautionary actions. The balmy late summer and early autumn weather saw over-crowded beaches. Sporting events were promoted as good for our spirit. We let hundreds of infected people enter the country via sea and air and there was little political direction.
March arrived and the numbers of COVID19 cases ramped up and a grimmer image began to hit our TV and phone screens. Governments became more directional and decisive. Our borders were closed, initially to selected countries, and then to the whole world. Soon we were being ordered to stay home and the rules on movement became stricter. At the same time, a significant proportion of the service industry was shut down. Long queues formed outside Centrelink[1] offices as around half the working population was laid off. We saw new phrases enter the lexicon — flattening the curve, social distancing, self-isolation, job seeker and job keeper. Some A$300 billion was poured into the economy and suddenly small government became big government.
As we looked across the seas we saw the devastation that COVID19 was capable of. Thousands were and are dying in Europe and the United States. By mid April (as this goes to posting), the confirmed cases approached two million and deaths 120,000. Australia’s chief medical officer suggested that the actual cases of infection could well be 5 to 10 times the confirmed cases. China and Korea appeared to have contained the spread of the virus. Now, the United States is the epicentre of the pandemic. We haven’t begun to see what might happen in India, the Middle East, Africa and Latin America.
The virus continues its march but there are signs that here in Australia it is being brought under control. We have, at long last and albeit from a slow start, began to fully appreciate its power. I must include myself as guilty on this score.
Amongst all this observation of the here and now, there is, increasingly, a more reflection mood. The reflection is about the changes this pandemic may bring society. My long time French friend Denis emailed me:
Depuis plusieurs années j’avais l’impression qu’autour de nous, tout s’accélérait. Maintenant, c’est l’inverse, la société hiberne.
He, like others, is observing an out-of-control contemporary world now stopped in its tracks by COVID19. What we were, coming into the pandemic and what we might be, coming out of it is the theme of this essay.
In pursuit of a reference point — the Golden Age
Understanding the structure of history — how the jigsaw fits together — is crucial to making sense of any period. None have done this better than Eric Hobsbawm. He wrote four major world histories[2] covering the two centuries of modern world history. In his last work, Age of Extremes, he identifies the period post-WWII up to the 1980s as the Golden Age. This is the era that precedes our contemporary era, from the 1980s until now. To quote Hobsbawm:
Most human beings are like historians: they only recognise the nature of their experience in retrospect………….. Yet it was not until the great boom was over, in the disturbed seventies, waiting for the traumatic eighties, that observers — mainly, to begin with, economists — began to realize that the world, particularly the world of developed capitalism, had passed through an altogether exceptional phase of history; perhaps a unique one. They looked for names to describe it: the ‘thirty glorious years’ of the French (les trent glorieuses); the quarter-century Golden Age of the Anglo-Americans. The gold glowed more brightly against the dull or dark background of the subsequent decades of crisis
There were a number of reasons for why it was a Golden Age. The most obvious reason was that there was considerable catch up or recovery from the destruction of WWII. There was also a strong imperative to bolster Japan and Western Europe as protection from a resurgent Soviet Union.
Hobsbawm points to longer-term characteristics that meant that the Golden Age was the launching pad for the world we know today. Essentially it encompassed the reshaping of capitalist enterprise:
There was a substantial restructuring and reform of capitalism and a quite spectacular advance in the globalization and internationalization of the world economy.
Whilst economic growth was a significant feature of the Golden Age, its most compelling feature was the stability provided by the low level of income and wealth inequality. More spectacular growth was to follow but this was the halcyon period for social equality and opportunity for all. Again Hobsbawm:
Essentially it was a sort of marriage between economic liberalism and social democracy ……..
Perhaps the best demonstration of how favourable this period was if you grew up during it (as I did) is the work of Thomas Piketty[3] on income and wealth inequality. As shown below for the United States (and mimicked in most countries), the Golden Age or the Thirty Glorious years was exactly synchronous with the lowest income (and wealth) inequality in more than one hundred years.
All good things do come to an end. With the Vietnam War and the oil crises of the 1970’s, inflation became a chronic problem. In Australia, major recessions occurred in 1982/83 and 1991/91. From the 1980s onward, neoliberalism was offered and adopted by governments as a solution to the problems post the Golden Age. With this and the rise of China as the “go to” manufacturing centre par excellence, the pace of life began to accelerate and we became more prosperous but less certain.
As the Piketty graph shows, the problem with this new neoliberal world was that it was increasingly less equal. For the young and the poor limits began to appear. Notwithstanding this, and it is often overlooked, the seeds for these problems were sown back in the 1960s. The Golden Age was the foundation for all that followed.
After 1980, we entered a new age, the Age of Uncertainty. It is an era where our knowledge base has outstripped our capability to respond. How else can we explain the tardy response to climate change.
What then are the components of this Age of Uncertainty?
The Rate of Change
I have written[4] about the rate of change in society over the last few decades. This was specifically in terms of three important and related factors — population, immigration and greenhouse gas (GHG) emissions.
Population growth exploded after World War II, increasing from 2.5 billion to now just short of 8 billion. This is an increase of 220% in just 75 years.
GHG emissions have increased at an even greater rate during the same period, increasing by some 900%. This massive growth reflects both population growth and the per capita increase in energy use.
For immigrants the story is the same. Whilst the end of World War II saw millions of displaced people seeking to take up residence in new lands, the number of displaced persons is now several times the immediate post war period and those simply wanting to move are many more than this.
These are just three of many elements of the expansion of our society since the middle of the 20th Century. This growth raises the question of limits to the capacity of our earth to continue to sustain our ravenous desires. The rate of growth is simply too much, too quickly. We must recognise there are limits.
Yes, there are limits
Climate change is one big and obvious limit but there are many others. Our relationships with the natural and indigenous worlds are ones of conquest and sanitisation. We are obsessed with control when our focus should be balance and diversity.
Some do argue that there are no limits and reject the suggestion that there are limits as a Malthusian myth. They argue that all that is required if we perceive a limit is to apply technology and knowledge to “lift the bar”. So, we then, like a steeple chaser, step the bar and scramble on. Those with the expertise and knowledge are shouting no! We must appreciate that the benefits of our brilliance are increasingly matched or exceeded by the associated costs.
The COVID19 epidemic is just one example of the consequence of unbridled growth. We are paying a heavy price for ignoring the risks. SARS, Ebola, MERS and now COVID19 are the result of humans pushing ever more into the world of nature with the attendant risk of virus transfer from animals to humans. These are viruses for which we have no immunity.
Summer and the violent bushfires are gone but let’s not forget climate change. Like viruses, if we continue to ignore climate change we will pay a heavy price and that price will be orders of magnitude greater than any virus. To the political leaders of today we need to say again and again and again that the consequences of climate change are emerging, are measurable and they are increasingly a reality. It is pleasing to see how much our politicians have listened to and been guided by the medical specialists in dealing with COVID19 but this only makes it more frustrating that they have not listened to and heeded the warnings of climate scientists.
The rise of neoliberalism
Neoliberalism is a critical element of the world of today. The espousing of the ideas of Milton Friedman and Friedrich Hayek for minimalist government and regulation became the driving force of the Ronald Reagan presidency and the government of Margaret Thatcher. In Australia, the Hawke-Keating Labor government led the charge lifting monetary constraints and lowering tariffs. The Howard government followed with taxation reduction and labour deregulation. For forty years, neoliberal ideas have dominated policy development and legislation in most of the developed democracies and have been a constant through governments of both the left and right. This is especially so in the English speaking countries.
Runaway internationalism — tax avoidance and dependence
Speaking ill of international interaction is a bit like killing Bambi. So, it is better I turn to Hobsbawm[5] for why we need to be concerned:
Three aspects of this transnationalization were particularly obvious: transnational firms (often known as ‘multinationals’), the new international division of labour and the rise of offshore finance. The last of these was not only one of the earliest forms of transnationalism to develop, but also the one which demonstrates most vividly the way in which the capitalist economy escaped from national, or any other, control.
The term ‘offshore’ entered civilian public vocabulary some time in the 1960s to describe the practice of registering the legal seat of businesses in some, usually tiny and fiscally generous territory which permitted entrepreneurs to avoid the taxes and other constraints imposed on them by their own country.
What surprises me most about the above is that it was written almost thirty years ago about something that started thirty years before and we are today watching exposés of it on television as if it was brand new.
The second element of internationalism that is today’s hot topic is excessive dependence of overseas supplies. There are stories of government agencies attempting to source ventilators from unreliable sources that would make a good basis for a crime or spy thriller. I have written[6] about the excessive reliance of Australia and in particular Melbourne on immigration and international students. I have referred to a potential ponzi situation. It looks like we have arrived there and that is terrifying.
Income and wealth inequality
Inequality began to increase in most countries in the 1980s. This has resulted in an increasing concentration of wealth within the hands of the “super rich”, a decline of wealth within the middle class and further deterioration of the position of the poor.
This trend is captured in the following graph for the United States[7]. In the United States the concentration of income and wealth has become extreme (10% of the population have almost 50% of the income and 1% of the population have 20% of the income — for wealth it is even more extreme.). Throughout the world, the trend towards greater inequality is similar. In Australia, between 1980 and 2015, there was a doubling of the share of national income in the hands of the top 1% of the population (from 5% to 10%).
Whilst neoliberalism ideology has driven labour deregulation and the decline in secure permanent employment it is not, directly at least, responsible for income and wealth inequality. We caused it. We cannot blame a political and economic ideology. It is our responsibility. Governments that we elected created policies such as negative gearing, capital gains tax reduction, flattening of the progressive system and a range of facilities; in turn these policies have allowed the rich to minimise by extreme measure their contribution to the national account and to accumulate more wealth. As Hobsbawm pointed out international tax havens were created decades before neoliberalism became de rigueur political and economic philosophy.
At a more personal level we are inclined to attribute all the responsibility for a person’s circumstances solely to the individual. If we are successful it is because we have worked hard and applied ourselves. If we are not successful it is because we have been indolent and parasitic. I am reminded of a certain Australian Government Treasurer who talked about lifters and leaners. Curiously, our society is increasingly intolerant of the poor and otherwise disadvantaged and increasingly tolerant of the excesses of the extremely wealthy and the celebrity classes including sporting heros[8].
At an economic level, increasing wealth inequality is resulting in a lowering of society function or effectiveness. Put simply, as more and more wealth comes under the control of fewer and fewer people there is less opportunity for the best, brightest and bravest to strut their stuff. We do not achieve an optimum functioning of society by depriving the majority of population the opportunities that are increasingly only possible if there is access to money. This is the tragedy of neoliberalism. It was intended to unencumber our productivity and creativity but governments have thwarted this noble intent by introducing fees for service and by flattening the income tax brackets, reducing overall taxes and increasing tax subsidies, all of which disproportionally favour the rich.
On the 6th April from New York came a chilling reminder of how unequal the United States is. On this day the number of deaths from the COVID19 pandemic was a record 730 people in New York State. On this very same day, the Dow Jones industrial average increased by a record 7% plus. There could be no greater contrast between what was happening on Wall Street and at Elmhurst Hospital Queens[9]. Queens is home to some of the most vulnerable of people in America — African-Americans and newly arrived immigrants without medical insurance. Wall Street Manhattan and Elmhurst Hospital Queens, symbols of the extremes of American wealth distribution and access to community benefits, are just a 45-minute subway ride apart. It is also being reported that across the United States, African-American males are disproportionately succumbing to COVID19.
This uncertain world
What then is our world at the point when COVID19 arrived on our shores? It is not a particularly content world. It is a world dominated by consumerism and an obsession with wealth creation and retention. This is to the detriment of cultural, intellectual and social attainment. It is a world of self-promotion, of alienation and social division all fed by the income and wealth disparities. Employment is much less secure with increasing levels of casual, part-time and contract conditions. Wages levels are static whilst company profits continue to grow. Governments are withdrawing from a role as provider of anything but a basic safety net. Taxation is becoming a dirty word. Home ownership is becoming unattainable or an entry into a lifetime of debt. Climate change looms as “the issue of our times”. It is the issue that distresses our youth so much because they know they will have to pick up the pieces.
Of all these issues, inequality is the most destructive and polarising and at the core of many other social problems[10]. If we successfully deal with inequality much of the rest would recede as issues.
The Age of Uncertainty is problematic because it is retarding the ability of individuals and communities to prosper. Many of us have doubts and insecurities fuelled, ironically, by a perception of great individual freedom. Unfortunately that freedom is not available for all or even most and we are frustrated. The traditional supports of family and community have been stripped away and we must deal with it as best we can, largely left to our own devices. Ironically this has happened at time when our capacity to communicate has grown exponentially. The problem is that this world is not a good one for listening and for soothing. Rather, it is a world where achievement and highlights are trumpeted and failures or the mundane suppressed. It is a world of much unease attributable to the uncertainty. The social researcher Hugh McKay[11] sums all this up well:
Dig a little deeper and you’ll find that some of the anxiety afflicting so many of us springs from uneasiness about the direction society is heading. Many people worry about Australia’s failure to take dramatic action to combat and mitigate the effects of climate change, about our harsh treatment of asylum seekers, or cuts to overseas aid and our protracted military adventures in far-flung places. Many also worry about the income inequality that has produced a gap between rich and poor Australians not seen for 80 years or more, with greater numbers than ever before at the top and bottom of the economic heap and our once-famous economic middle class shrinking. We know that poverty has bad consequences for health, including mental health and we also know that serious inequality, left unaddressed, builds frustration, resentment, anger and — potentially — violence into the social system and doesn’t history tell us that inequality is a breeding ground for revolution?
Life beyond COVID19
As we begin to achieve success in containing COVID19, the Fourth Estate is beginning to move from a surgical analysis of the impact of COVID19 on our daily lives to consideration of what life might be like after the virus is reasonably contained.
The Australian Coalition Government, a government dedicated to minimising taxes and spending, has been forced by COVID19 to spend massively to ensure businesses continue to employ people and to ensure there is not a massive collapse of the economy. A Job Keeper subsidy is being provided and Newstart (the unemployment benefit) has been doubled and renamed Job Seeker. Child-care is now effectively free for parents and there are other “one-off” benefits to low-income groups. All these measures are intended to last for six months or more depending on progress of bringing the pandemic under control.
These measures are, by default, effective policy to redress the increase in inequality that has occurred since 1980. They are major social policy changes that have come from a conservative government that until the arrival of COVID19 was strongly against such intervention. Whilst it is the declared intention of the Government to ultimately retract all these benefits, it is likely to find this difficult to achieve. The population is being given a whiff of what a fair and just society looks like and they will not like a return to a more parsimonious and elitist past. That is one battle for the future.
The revenue side of the ledger will also be a battleground. Here the questions will be the appropriate taxation levels for various income levels and tax reductions or subsidies for property investment. There needs to be a debate about a fair taxation system. Tax minimisation is not legally evasion but it is an evasion of community responsibility.
Will the Australian economy recover in orderly fashion? Many eyes will be on the over priced property market, the second highest household debt (after Switzerland) in the world and the level of unemployment that has, in an instant, risen to over 10%. I have written two essays principally dealing with the property market. It is complex, but our stratospheric property prices can be explained. However, the elephant in the room has always been unemployment. Now unemployment is rising so will mortgage foreclosures. The banks are not likely to extend the stay on repayments beyond the current six months. It is not alarmist to say that Australia is on the threshold of a major collapse of the housing market unless there is a rapid return to normality. However the future normal may be very different to the old normal particularly in terms of immigration, tourism and education. All three are major export income sources and sustain the property market.
We are inclined to think that we live in a unique bubble but we do not. Worldwide the same issues are coming to the fore.
However, it is not all bad. Australians now know they are better than they might have perceived. This nation, that honours the scallywag and the irreverent, is by and large behaving itself. My sons chastise my liberal interpretation of the rules (no details will be provided) and they are right.
In our isolation we are learning or relearning how to live without a clutter of activity. Some families are rediscovering how to occupy themselves more simply[12]. We are rediscovering what is true connectedness. We are learning to judge the difference between the essential and the non-essential and what matters and what doesn’t matter.
We understand much better the value of those in the front line of this pandemic — the medical professionals, the hospital cleaners, orderlies and security people, the police, the teachers, the supermarket staff and others who continue to serve the public without discrimination and who brave the risks of engagement. It is possible we are becoming more compassionate of those who have lost their jobs. We are no longer punishing them with a benefit on which it is impossible to live with dignity. Perhaps, we now understand why childcare is so important in a world where both parents must work. Maybe we are even considering how important early childhood learning really is to the quality of our people because it is our people not our possessions that are important.
There are two possible scenarios for a post-COVID19 world. The first is a continuation of a social structure heavily weighted to the rich, a neoliberal world laced with opportunistic popularism. It will be an unhappy society and eventually it will be marked in historical terms as an extension of the Age of Uncertainty. The other scenario is that we embark on a new Golden Age that values contribution rather than wealth.
Perhaps this nasty little parasitic ball of fat[13] will yield some benefit after all. We must make sure it does.
A progressive journalist/commentator[14] recently issued a plea:
Progressives need to start forcefully making their own arguments about the meaning of the crisis. They need to offer a response that emphasises social solidarity, equity, justice and peace. Otherwise we may exchange neoliberalism for something even worse.
This is my response to his plea.
Endnotes
[1] The name for the Australian social and human services department outlet network responsible for unemployment and other social services benefit distribution and management.
[2]Eric Hobsbawm, The Age of Revolution (1789–1848), The Age of Capital (1848–1875), The Age of Empire (1875–1914) and Age of Extremes (1914–1991).
[3] Thomas Piketty, Capital in the Twenty-First Century, Belknap Press of Harvard University Press, 2014. Figure 1.1 — The top decile share of national income.
[4] Bernie O’Kane, The big three — population, immigration and greenhouse gases, Dec 2019.
[5] Eric Hobsbawm, The Age of Extremes, The Short Twentieth Century 1914–1994, Abacus, 1994. (Chap 9, The Golden Years, IV).
[6] Bernie O’Kane, Marvelous or Ponzi Melbourne — the phenomenal growth of Melbourne in the 21st Century. 2 Oct 2019.
[7] The World Inequality Report, 2018 — https://wir2018.wid.world/part-2.html, Fig E2.
[8] Why is it that our footballers are often referred to as legends but our great scientists, engineers, educators, artists, etc are not?
[9] The Guardian reporter Jessica Glenza is currently reporting daily on conditions in New York. In a podcast under the title Full Story, coronavirus updates, she explains the situation in Queens and at Elmhurst Hospital.
[10] These links are explored in depth by J Stiglitz and R Wilkinson and K Pickett
[11] Hugh McKay, Australia Reimagined 2018
[12] We are told the Prime Minister’s young daughters are enjoying jigsaw puzzles. A friend received a photo of his son’s family dressed formally for Easter lunch.
[13] The COVID19 virus
[14] Jason Wilson, The Guardian, How the right is responding to the coronavirus: denial, realism or dangerous contrarianism, 7 April 2020.