The last few years have been truly tumultuous. Drought was followed by fire and then covid and floods. Internationally, growing tensions with China were followed by the Ukraine War. The global rules based order established after the Second World War has progressively broken down. The integrated globalised trading and financial system that helped drive world economic growth lifting millions out of poverty has been fractured by the combination of covid restrictions with political and economic tensions including sanctions. The economic policy framework that emerged during the 1970s in many countries including Australia with its emphasis on freer trade, reduced government, deregulation and privatisation has been swept away as governments responded to global changes and to the need to respond at domestic level to the damage done by the covid epidemic and associated restrictions. And now we have the apparent re-emergence of 1970s style stagflation, the phenomenon that helped destroy the old concept of the welfare state.
In all this, Australia has been relatively lucky as it was during the Global Financial Crisis and for somewhat similar reasons. China's wolf diplomacy with its restrictions on Australian trade has had limited economic impact in part because other markets emerged, more because China itself has continued large scale purchases of iron ore. While our education exports have been badly hit by covid restrictions and by clumsy government policy responses, these losses have been offset by booming energy sales including coal. Our primary products have benefited from higher prices and from increased output as the big dry ended. While some shortages have emerged in supermarkets, while rising food prices have placed strains on household budgets, Australia has been insulated from the food shortages appearing in some other parts of the world. While sometimes clumsy, Australian Government(s) policy responses have been generally effective in managing the rolling crises.
As a policy analyst, I find it difficult to determine the relative longer term importance of the changes that have been taking place. Like many Australians, I am a little shell-shocked by the pace of change,
Each crisis has had different interacting elements that were seen as important at the time but were then somewhat overtaken by subsequent events. China, the drought, fires, covid, floods and the war in Ukraine were all dramatic events attracting saturation hour by hour, even minute by minute, coverage before being overtaken by the next drama. And then below the main headlines other important events were occurring that were effectively swamped, ignored. In all this, I think that we can say that a new world is emerging although the details are still unclear.
