This is a post by a Guest Author.
Disclaimer: The author’s views are entirely his or her own, and don’t necessarily reflect the opinions of the Consumer Choice Center.
While governments around the world have focussed on pursuing a ‘flatten the curve’ strategy to dealing with the COVID-19 pandemic, they have also had to pursue a simultaneous economic strategy. That economic strategy was an attempt to freeze the economy is place, until the medical strategy had succeeded, and then to unfreeze the economy.
Reasonable people can argue that different choices could have and should have been made. But here we are.
This is the single largest economic intervention in human history. The economic costs that have already been incurred are astronomical. What is going to happen next?
Well, one view is that when government release their populations from lockdown and quarantine that the economy will ‘snap back’. That we’ll go back to work and the economy will simply spring back to life as if we’d all just had a long holiday.
Some of my RMIT University colleagues and I are less optimistic.
We are firm believers in the power of markets to operate and humans to cooperate in the production of value. We have no doubt that entrepreneurs will be willing to experiment, creating new opportunities, business models and consumer goods. But …
The economy that emerges from the COVID-pandemic will be a lot smaller than the economy was just two months ago. Many of the patterns of economic production and cooperation will be broken or destroyed. Many of the entrepreneurial plans that were in place and unfolding are now totally disrupted.
The one thing that has not shrunk, however, is the regulatory state. If the economy was over-regulated and over-burdened by taxation just two months ago, imagine how much more the much smaller post-COVID economy will be over-regulated and overtaxed. Many government have relaxed some regulation and taxation to deal with the pandemic – but so much more needs to be done.
In our new book, Unfreeze: How to Create a High Growth Economy After the Pandemic, my colleagues and I set out why we shouldn’t be optimistic about the economy quickly recovering from the COVID pandemic and what government needs to do to facilitate not just a recovery from the crisis but how to restore our prosperity.
Sinclair Davidson is a professor of economics at RMIT University in Melbourne Australia and an Adjunct Economics Fellow at the Consumer Choice Center.
The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.
The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org