The Canberra Times – Online Opinion
There is probably not much that the Rudd Government can do to restore the health of the Australian economy in the face of the global economic collapse. The financial future is a guessing game, much like predicting the course and outcome of war. The pace and extent of the collapse has all the indicators of developing into a global depression. With this a distinct possibility, it behoves the Government, the Opposition, public servants, advisers, academics and the media to study all aspects of the Great Depression.
The study and analysis of history is not a strong Australian characteristic. History has been used to promote outcomes, prejudice, nationalism and jingoism at the expense of critical examination and understanding.
Last year I quoted Australian economist Dr C.B.Schedvin in relation to the developing recession. His research appears to me to be even more pertinent now. At the time his book Australia and the Great Depression was published in 1970, he was senior lecturer in economic history at the University of Sydney.
Schedvin’s book dropped off our radar in recent years, perhaps because we believed that a second great depression, like a second world war, was not possible. However it is timely to revisit his thesis.
Schedvin argues that, ”deliberate policy measures were comparatively unimportant in influencing the nature of the contraction or the speed of the recovery”. This is something the Government, Treasury and the Reserve Bank might examine.
Schedvin says, ”Contrary to the widely held belief about the high degree of control exercised by policy-forming instrumentalities during the Depression, it appears that policy merely followed the market in most instances.”
And here is the rub: ”… the massive withdrawal from the international economy that was forced during the early 1930s predicated the nature of the recovery process … it was on the basis of import replacement of manufactures that recovery was forged.
”Between mid-1931 and 1935 most aspects of policy retarded the process of recovery … The modicum of unemployment relief expenditure that was sanctioned was not only totally inadequate but was also distorted by an unrealistic insistence that expenditure be confined to ‘reproductive’ works.”