Where does economic catastrophe fit within the concept of a disaster being any situation that may or does so overwhelm a group or community that it is unable to respond or cope without direct external assistance? Squarely in the middle. It is no less a disaster for individuals to lose their jobs and hence their livelihoods through some larger economic calamity than it is to lose them through the destructive forces of nature.
Catastrophic business loss is part of a natural disaster. In Aceh, the 2004 tsunami destroyed not just homes but also large scale economic infrastructure like roads and telecommunications as well as small, medium and large businesses. Local markets were wiped away. Agricultural land was ruined by seawater. Fish and shrimp ponds were silted over with sand and debris.
Of all the things we did in Aceh, rebuilding business was arguably one area in which we could have done a lot better. While we cleaned up the fish ponds, delivered new boats to fishermen, built new markets, trained and certified people in various construction skills and trained forest rangers to protect the Leuser ecosystem, we did far too little to help the medium sized businesses to get back on their feet.
Somehow, rebuilding actual businesses doesn’t seem to rate as highly as it could and should in a post-disaster recovery program. Cash for work substitutes to an extent and does help to get the economy moving again, but it’s only a partial substitute for a more robust economic recovery.
This is an area requiring far more concentrated and coherent policy initiatives to both ease the pain of disaster and quicken the recovery process overall, as opposed to the physical rebuilding alone.
There is nothing quite so catastrophic as losing your job and not being able to find another. Much else also collapses, not least your ability to feed yourself and keep a roof over your head; so much else goes too, including self esteem, self confidence and self initiative as the spiral of impoverishment risks taking hold.
The extent of any disaster is only a matter of scale. It can involve one person or a million. The collapse of Australian industry as GMH, Toyota and Alcoa announce their impending closures is less a failure of industry policy and more one of failed disaster preparedness.
Businesses fail. It happens. Tectonic shifts in policy, finance, technology and general market forces make it seriously difficult to ride the huge cyclical waves of economic forces let alone survive and prosper in business over time. There are far more things out of your control in business than there ever are within it.
Those employed in government have no idea of the challenges. Their safety cushions are enormous.
In the private sector, there are few safety cushions, certainly far fewer than most individuals can afford. Far too many involved in or dependent on private business live on the edge, their ability to cope with economic catastrophe thin at best. This includes not just the workers. The owners and managers of capital can be equally exposed, sometimes more so given that many business owners are mortgaged to the hilt to fund their business operations—something I have done myself and continue to do.
This situation presents a particular challenge to government. It can’t and shouldn’t prop up business. It gets it wrong and is taken for a ride almost every time it tries. But it is the job of government to create the enabling frameworks through which business operates; and, through its deeper pockets, government can help business cope with sudden shocks such as the GFC.
But what is the right model and what are the options? I understand the German Government paid industry to retain staff during the GFC on the basis that this was less disruptive than unemployment, cheaper than paying unemployment benefits, and provided the opportunity to retain and train staff so industry would be ready and running when the crisis ended. But where are the studies on such things. Who is consolidating them, turning them into policy recommendations to government? There’s work to be done here, right now, but I don’t see anyone who’s bringing it all together.
This is the third article in a series entitled The Disaster Blogs.
PHOTO CREDIT: Manufacturing rally, 16 December 2013, Mark Phillips/ACTU