Economic experts are looking with concern at the apparent lack of stimulus or economic measures beyond September in Australia, which could echo the mistakes from the Great Depression and plunge the nation’s economy into a long-lasting and severe recession.
Former deputy prime minister Wayne Swan has acknowledged the current government’s current stimulus packages as being effecting in shoring up the nation’s economy for the short-term, but with no apparent plans from the federal government beyond September, we could see a repeat of the mistakes make during the last Great Depression, where policies embraced the change from requisite stimulus policies to austerity far too readily.
“And it seems to me that we're about to repeat the mistake that was made after the Great Depression when people flipped the switch from stimulus to austerity too early and the world suffered a very deep and prolonged recession.” -Wayne Swan
Wayne Swan also suggested instead of relying on a mainly bailout mentality, the government should be implementing stimulus through investment, infrastructure and energy as well.
Nobel Prize laureate Professor Joseph Stiglitz has further commented on the mechanics of an economic recovery, suggesting that people should not expect a sharp V-Shaped bounce-back of global sentiment regarding asset prices, but rather something more akin to a bathtub at best. A long, flat period with an eventual upturn if governments across the globe play their cards right.
There is also a sizable segment of economists that predict a two-wave W-Shaped recovery, with many governments across the world sending people back to both work and social events far too soon in an attempt to prop up their flagging economy in the short term.
The parallel concern at this W-Shaped upturn is that the last part of the W might not ever emerge. There is concern amongst leading economists that the bailouts seen are, in a frighteningly uniform way, concerned only with favouring corporations that have been shown to have paid next-to-nothing or indeed zero tax in Australia.
With the increasingly deleterious conditions seen by the average working Australians with regards to ever-worsening employment prospects, bailing out companies to the tune of billions of dollars could be seen by many as an ill-targeted stimulus policy.