Covid is changing how we build economies… and that could be great news.
I know we’re still knee deep in this Corona business, but I’m starting to think about what things look like on the other side of this.
And I kind of think that globalisation, as we know it, is toast. It’s gone. It’s making way for something new altogether.
And the Australian economy is going to become an entirely different beast.
Take the export side of things for example.
A couple of weeks ago I said I was pretty chill on China. China had just slapped a ban on Aussie barley imports, but I wasn’t joining the chicken-littles in the media who had said we had just shot ourselves in the foot.
At the time, I told people to relax. Commodities are ‘fungible’ – if you don’t sell it to one country, you just sell it to another. It’s only a problem if total global commodity demand falls, and China chucking a hissy fit isn’t going to do that.
And what happened?
Well, a week after the ban, all the barley that was on its way to China is now on its way to somewhere else:
Australian barley on its way to China has been diverted mid route to Japan and the United Arab Emirates following China’s decision to impose punitive trade tariffs on the grain.
Four ships carrying Australian barley have changed course or cargo after rising trade tensions led to China — Australia’s biggest barley buyer — enforcing an 80 per cent tariff on the grain, costing regional communities at least $500m.
Grain exporters, including Australia’s biggest, Perth-based CBH, have been in talks with Japan, Vietnam, Saudi Arabia and other countries to sell barley originally destined for China.
While new sales can take weeks to arrange, ships loaded with barley have changed course immediately.
So, for the record, I’m still chill.
And Covid is causing a shake-up in how much vulnerability we’re willing to accept in our supply chains.
Facemaks have become the emblem of this issue.
Facemasks are cheap. They cost almost nothing to make.
And like a lot of cheap things, we didn’t value them. We didn’t think about them. We just assumed that they would always be there.
And then they weren’t.
Covid had disrupted the global supply chains we relied on, and we ran dangerously close to running out.
We suddenly realised that we were vulnerable. We relied on other countries for facemasks, medicine and other essential medical supplies.
And in the middle of a health crisis, we couldn’t protect our doctors and nurses because we couldn’t source a 75 cent face mask.
It looks like we’ve dodged the bullet now, but that we have been an incredibly stupid and humiliating way for a great nation to become undone.
So there’s a new conversation happening. How do we tap the benefits that global trade can provide, without building ridiculous vulnerabilities into the system?
There’s a real chance that government industry policy could be radically different at the end of all this.
You’re already hearing it in relation to our gutted manufacturing sector.
So post-Covid, it’s going to be a very different economy.
An over-reliance on China is going to be replaced with a new-found passion for self-sufficiency.
And personally, I think that might be the best thing that could have happened.