Friday, August 5, 2016

Quarterly Essay 61: Balancing Act: Australia Between Recession and Renewal, by George Megalogenis

Staff review by Chris Saliba

George Megalogenis makes a compelling argument for more government intervention in the economy.

In Balancing Act, respected journalist and author George Megalogenis argues that capitalism is undergoing a crisis at the moment - consider the state of American and European economies over the past decade - and that government is struggling to come to terms with the problem. In Australia, we are in a good position when contrasted against other first world economies, but danger lies ahead. Our politicians are failing to address such basic problems as inequality and underemployment.

For the past thirty years or so, governments have pushed to make the Australian economy as open as possible. There have been winners and losers from this process. Alarmingly, and Megalogenis has the hard data for this, the spoils of globalisation have been taken by business. Workers have lost money and bargaining power, while business has been able to ruthlessly squeeze its employees. These sorts of entrenched inequities are creating a disgruntled electorate. The most striking example of this voter rage is currently seen in the US, where white male incomes have stagnated or reversed over past decades. A recent study showed white males had a higher suicide rate, this most probably linked to their increasingly precarious economic condition. America has one of the most open economies in the world.

The main suggestion that Megalogenis puts forward to cure the imbalances of the open economy is more government intervention. He argues government should go into even more debt to fund much needed infrastructure projects. This would create employment, improve the quality of life (through better public transport, for example) and take some of the harsher corner’s off globalisation.

George Megalogenis has written many words in favour of the open economy during his career, so this is an interesting development in his thought. Carefully argued and illustrated with vivid data examples, Balancing Act warns that we should apply the breaks a little on the globalisation speedway, slow down and start thinking more about social cohesion, rather than getting ahead.

Quarterly Essay 61: Balancing Act: Australia Between Recession and Renewal, by George Megalogenis. Published by Black Inc. ISBN: 9781863958110 RRP: $22.99

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