24 Apr Winning the post-virus war
James Morrow – The Daily Telegraph – Friday 24 April 2020
The road map to Australia’s post-virus economic recovery may be found in the most deadly and destructive event of the previous century.
As Liberal senator James Paterson noted in yesterday’s The Australian, Australia and other nations have replicated economic and social interventions introduced during that period.
“In size and scale, and in their departure from policy orthodoxy, they are comparable to the measures introduced across the Western world during World War II,” Paterson wrote.
“As during WWII, government spending has skyrocketed, much of which will be funded by debt. Our stay-at-home orders are akin to wartime curfews. Supermarket rationing of essential goods is reminiscent of wartime restrictions.”
But while Western nations all introduced economic interventions during wartime, their postwar strategies varied.
The US quickly relaxed controls and subsequently unleased a massive period of growth.
In the UK, by contrast, the post-war Labour government led by Clement Atlee not only maintained war-era restrictions but additionally slowed the economy by nationalising industries and building an incentive-inhibiting welfare state. By the mid-1950s the US was an absolute economic powerhouse.
In Britain, meat rationing wasn’t scrapped until 1954 – 14 years after it had been legislated and nearly a decade after World War II was over.
Should any doubt remain as to the restorative effects of a deregulated post-crisis economy, consider Germany.
Not much remained of the place after Allied troops finished mopping up Hitler’s final holdouts. Manufacturing facilities were mostly erased.
Moreover, Germany not only had a broken economy. It had a broken people, further demoralised in 1949 by the formation of communist East Germany.
West Germany’s answer to its economic peril, as Paterson reminds us, was to announce “the end of price controls and rationing directives” in 1948.
“West Germany boomed,” Paterson wrote. “Between 1950 and 1960, average annual real per-capita GDP grew by 8.8 per cent. This was double the growth of France and four times that of Britain.”
Australia will soon be poised to choose its post-coronavirus path – either inhibition or liberation. Let history be our guide.