What have reformers learned from COVID-19?

The ABC has run a few articles recently telling how people have adapted to living and working during the coronavirus pandemic, including looking after children, flexible working arrangements, adopting simpler living arrangements, and offering home deliveries. Just today the Chief Medical Officer expressed hope that we might stop coming to work while ill even with ordinary flus and the like. Perhaps not all of these things will last—even the best results reported by restaurants taking up home deliveries don’t make up for the loss of dine-in business—but seeing people adapt to the new circumstances has been one of the more positive aspects of the pandemic for me.

Meanwhile, politicians, economists, and business leaders seem to be either hoping for a “snap back” to business-as-usual, or campaigning for the same sorts of things that they’ve been campaigning for for as long as I can remember. The ABC’s review of tax options has the Treasurer congratulating himself for legislating tax cuts before anyone had ever heard of coronavirus; business still calling for lower taxes on business; economists still calling for stamp duty to be replaced by a land tax; other economists still calling for an increase in the goods and services tax; and Ken Henry and others still drawing attention to the report that Henry wrote ten years ago but whose recommendations were never implemented.

Developing a new tax or industrial relations system is undoubtedly more complex than, say, taking up gardening or setting up a home office. For a start, the latter are things that individuals can do more or less by themselves with limited impact on anyone else, while the former impacts millions of people in ways that are not always predictable. And maybe returning to business-as-usual is a reasonable enough default position given that Australia was doing well on most measures before the pandemic, even if one accepts that some creative destruction might be in order over time.

One of the more insightful observations that I read about reform was one that people tend to use the word as short-hand for “stuff that I like” without having to explain what it is or why they like it. Articles like the review of tax options linked above are full of assertions that things could be so much better if we would just “reform” whatever system would-be reformers see to be a problem; but this reform incorporates all manner of assumptions and preferences with far from universal support. Indeed, the differences of opinion between the economists interviewed by the ABC suggest that the opening assertion that “many say major tax reform is urgently needed to assist the recovery” tells us essentially nothing about what actual changes might be required or useful.

I suspect that if the need for whatever reforms one is proposing really was so clear and obvious, said reforms would probably have been made a long time ago. To be fair, I’m also reminded of Machiavelli’s advice that those who benefit under the current system will fight tooth and nail to keep it while those who might benefit from a reformed system tend to offer only uncertain support. But maybe reformers can take at least a little bit of heart from all those new gardeners, bakers, and teleworkers: we can change for the better if we want to.

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