Dog Days. Why going back to 2019 won't work

Professor Ross Garnaut AC delivered six webinars in this RESET series. More information on the series is available here.

On Wednesday 27 May, Professor Garnaut delivered webinar #2, Dog Days. Why going back to 2019 won't work.

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Lecture two discussed the Dog Days for the democratic capitalist countries that have intensified following the Global Financial Crisis. The Dog Days came later for Australia, after the bursting of the China resources boom in 2013. It laid out the problems that preceded the pandemic, and explained why post-pandemic problems cannot be solved simply by returning to the past.

Global economic development in the early twenty first century showed promise of delivering to people all over the world something like the living standards of the developed capitalist countries - “the maturation of global development”.

In the first seven years of the new century this was accompanied by reasonably strong growth in average output and employment in the developed capitalist countries. Pressures on ordinary citizens’ employment and incomes from trade with rapidly expanding developing economies—and in areas of the economy affected by rapid introduction of information technology and other productivity-raising innovations - were managed in the context of generally high employment and rapid growth in average incomes.

This lecture explored how these pressures, combined with tepid growth and then, after the GFC stagnation and decline, in ordinary households’ living standards, have encouraged retreat from open trade in all advanced economies. This has greatly damaged prospects for rising living standards in the developed and developing worlds. The Dog Days lecture outlined the structural weaknesses that have kept Australia in economic Dog Days since 2013, including the accumulating problems of interpersonal and inter-generational equity, and the consequences in failing to face up to challenges in climate change and the energy transition.