The economic crisis caused by lockdown measures in response to COVID-19 has distorted the Australian economy. The economic costs of lockdowns have not been equally shared across the country: the private sector has declined while the public sector has expanded, job losses have been concentrated among younger Australians, small businesses have disproportionately suffered, and the jobs that have been restored since May have tended to be part-time while full-time jobs have failed to recover.
In response to the public health threat posed by the COVID-19 pandemic, the Australian Commonwealth and state governments decided to implement a range of lockdown measures. Two economists from the Australian National University, Rabee Tourky and Rohan Pitchford, established the concept of ‘hibernating’ the economy, whereby economic activity is slowed as much as possible, businesses close, and people stay home from work, in an effort to reduce the chances of spreading COVID-19. The concept of hibernating the economy was quickly adopted by the Commonwealth government.
But the economy is not a machine that can be turned off and on with the flick of a switch. The concept of hibernating or freezing the economy was always a nonsensical idea that would fail to preserve the pre-lockdown economy.
This paper outlines five key pieces of evidence that lockdowns, rather than freezing the economy in place, have disfigured it.