ECONOMY IN TRIAGE
Could policy leaders decide the priority order of treatment for parts of the economy injured or disabled by pandemic restrictions? My proposal draws informally on Keynesian, Classical Monetary and Modern Monetary theories. I reject Laissez Faire theory because governments have already begun large expenditure commitments. I have attempted to derive priorities by screening out activities that could be helped by governments to bring happiness of various kinds: hedonistic, eudaimonic, psychological and spiritual to the various stakeholders employees, customers, suppliers and investors.
I will not identify my analysis with particular local, state or federal government jurisdictions in any country. I live in Australia, but I describe below phenomena that have been prepared from thought rather than by social research and they could be enumerated in many locations.
Because of their multiplier effect, outputs that are inputs to employment-intensive follow-up activities should have priority e.g. trucks not cars.
Infrastructure projects that cause most sustainable employment should be preferred e.g. construction of public park amenities, not National Broadband Network fibre optics installation.
Public funding should support the greatest good of the greatest number, like public transport, not narrow interests, such as subsidisation of airlines. Haemorrhaging of public funds to support unsustainable industries should cease.
Developments requiring sustainable skilled employment are more desirable than casual unskilled labouring.
Funding of arts, entertainment and education should recognise their potential for multiplier effects in stimulating development in other sectors.
Diversity of outputs is desirable to reduce currency inflation effects on industries struggling with falling prices for their exports and increasing costs of imports e.g. farms, due to buoyant foreign exchange rates from high growth sectors e.g. minerals (Gregory Effect).
Priority should go to primary industry supplying secondary and tertiary industry, when it conserves and sustains scarce natural resources.
Value-adding by secondary processing of products e.g. minerals, could have priority where efficient use is made of natural resources e.g. water, land.
Development of the tertiary sector should prefer industries with a high multiplier effect e.g. tourism, education, health. Activities that generate little sustainable employment, for example coal quarrying for export and retirement apartment construction, could be less attractive.
The priorities above are controversial. The task of calling help for some parts of the economy and denigrating others will be contested from personal experience and interest. I have made these calls to draw attention to the parlous state of government treatment of the economic pandemic. I want to register my disapproval for profligate government spending by highlighting some likely consequences.
For further ideas see my writing on growth, development, government, Covid-19 at https://martinknox.com