Stimulus for the sake of stimulus? A missed opportunity
12 months ago today, I was looking forward to a year that was going to be full of adventure and travel and no concerns about where my next roll of toilet paper was coming from.
Fast forward 12 months and our world was turned upside down by a then little known virus called COVID-19.
In hindsight and with comparisons against the rest of the world (currently as is stands) Australia will be seen as a leader from not only its fight against the corona virus itself, but also from an economic perspective.
John Meynard Keynes’ seminal piece of work “The General Theory of Employment Interest and Money”, was published back in 1936 and remained the basis of a lot of economic theory and subsequently many government practices to this day. Essentially during times of economic turmoil, the Government of the day steps in by spending money and saves the day. Keep in mind that this was written after the Spanish flu and the great depression had taken its toll on the world economies.
What fascinates me here is that german hell-bent on saving face after the punitive measures of the treaty of Versaille had already implemented such economic measures.
- Autobahn commenced September 1933
- Volkwagen (an entire city was built for this factory called Stadt des KdF-Wagens bei Fallersleben)
- Radio production and distribution (The Volksempfänger)
Are just a few examples of stimulus spending by the Nazis pre-war. This stimulus spending enabled Hitler to challenge the rest of the world to war.
I must stress I am not a nazi sympathiser but more fascinated how Hitler and his cronies could come to such economic strength to challenge the world. War historians and economists may pick holes in my theory, but my fundamental point is that when the Nazis implemented a stimulus package they did it with purpose, all be it a very evil and sinister purpose of global domination.
Imagine a stimulus with a positive purpose.
A golden opportunity to reinvent our economy has gone begging.
Our stimulus packages appear to have been a stimulus for the sake of stimulus. Imagine having the ultimate long term goal rather than simply keeping our economy alive.
Imagine a phone call to Elon musk saying “Elon; we have a proposition for you. We are going to build a world-class electric car manufacturing plant, and our goal is to become a major player in the Asian market for electric vehicles. We’ll tip in XYZ billions if you can match it and you can then run this company.”
Or “Elon, Scomo here, I was wondering if you would be interested in partnering up to build solar panels and batteries here in Australia”.
It doesn’t have to be Elon Musk either; it can be any one of a number of green entrepreneurs. Talk to Simon Hay at Galaxy resources. Let’s see what we can do here in Australia with our proximity to the Asian manufacturing markets with Lithium processing here in Australia rather than in Europe and or China?
With a one in a hundred-year mega spend, unfortunately, we have missed a generational opportunity to reshape the future of Australia.