I want you to meet two Australians. The first lives in Avalon on Sydney’s Northern Beaches, while the other lives in north-west Tasmania.
Their experiences of the coronavirus pandemic couldn’t be more different. That’s worth highlighting in itself, but it also points to a wider story playing out across Australia, and the world.
It’s a story I want to tell here because it’s beginning to shape our future.
Jack and John*
Jack lives in Avalon on Sydney’s Northern Beaches. He writes and helps to produce a weekly financial news and advice publication. He also trades the stock market.
Over the past few months, as the sharemarket has rallied, his personal wealth has climbed, and subscriptions to his publication have increased substantially.
He’s having a “good crisis” as he likes to say.
John, on the other hand, after close to a decade, suffers from a minor disability and simply can’t land a job.
He’s able to claim government subsidies but it’s always a bit of a fight.
John describes the heartache of getting out of bed, putting on a nice shirt, going to an interview, only to be told – pretty well on the spot – you’re “over-qualified” for the role.
He’s not hopeful of picking up full-time work anytime soon.
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Bizarre economic climate
So how is it possible that one man could be riding high, while another is in the pits?
It all relates back to how policy makers deal with an economic crisis. In times past it’s been a process of belt-tightening and austerity. These days, governments and central banks throw everything but the kitchen sink at the economy, and financial markets.
This keeps interest rates at record lows, and money flows into “higher yielding” assets like the sharemarket.
This obviously benefits the top end of town.
On the flip side, because underlying demand remains so weak (because there’s fear about what will happen to the economy), businesses embrace cost cutting.
This leads to workers having less pay, less hours and job insecurity builds.
Those on the “right” side of this are able to get ahead: own their own home and build a nest-egg, while those on the “wrong” side of it face decades of metaphorically spinning their wheels or, worse still, becoming entrenched in poverty.
Black Lives Matter
This latter group feels incredibly disenfranchised.
Clinical psychologist Jodie Lowinger is an expert in anxiety.
She tells me years of economic hardship, followed by the fear of coronavirus, and then the death of George Floyd has led to an explosion of emotion.
Protestors are rightly enraged by a sense of injustice. It’s more than that though. And reporters at the rallies have spoken about the fact that there are several different groups with their own grievances among the broader protest group.
Time for change
All of this speaks to a very deep economic problem.
While Australia has just finished three decades of uninterrupted economic growth, many have not benefited from this.
And while the United States has seen a record stock market boom and an impressive 10-year economic recovery from the global financial crisis, many have not benefited.
Indeed it’s becoming more apparent every year that those who do enjoy the spoils of modern day economic growth are those with access to capital, education and secure employment.
To be clear, this isn’t anyone’s “fault”. However, it is my job, I think, to highlight a broader story that’s playing out here in the hope it sparks a wider discussion.
Why should I care?
Life isn’t fair. We know this. We do have the means though to over-power injustice.
As we move through to the end of the year, if coronavirus remains a threat and social distancing remains in place, government support measures will need to be extended.
In addition to this, as the Grattan Institute’s Brendan Coates has stated publicly, the government and the Reserve Bank need to do everything in their power to ensure the unemployment rates comes down.
Once this is achieved, we can work on making jobs more secure.
The end of the story is ensuring that those who are prepared to work hard have access to meaningful employment… which also allows them to build wealth.
The chasm between those gaining from the coronavirus pandemic and those at risk of losing everything is secure employment and an ability to build a life.
Fix this, and a whole bunch of other problems will fade away too… I suspect.
*Different names used for privacy reasons
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