At the end of George Megalogenis’s discourse on the woes of Australian politics, he encapsulates the equal mixture of ambition, anxiety and ambivalence in Australia’s current mood: “The only thing weighing us down,” he quips, “is the chip on our shoulder.” It’s a wonderful line and a lovely Australian piss-take on America’s nation-defining axiom, ‘‘The only thing we have to fear is fear itself.”

Franklin Roosevelt spoke those words to a shaken nation on his first day as president of the United States: 4 March 1933. In the preceding four years, the US economy had shrunk by one-third. More than 20 million Americans were unemployed and those who did have jobs struggled to survive on wages that were barely above starvation levels. Contemporary observers worried that “capitalism itself was at the point of dissolution.” A friend of Roosevelt’s warned him that if he succeeded he would be remembered as the greatest president, but if he failed, as the worst. ‘‘If I fail,’’ he replied, ‘‘I shall be the last.’’

Today Australia, and much of the world, is mired in the long shadow of another economic malaise. The global financial crisis was not comparable to the Great Depression, and latter-day parallels should not be overdone. But allowing for differences in scale, there are similarities in the challenges of both eras. 

Most obviously, the global economy is again in a protracted period of slow growth. What began in the United States has spread to Europe and is now dragging down emerging markets. Australia, which many hoped had escaped the crisis, may just have been waiting its turn.

Megalogenis surveys the landscape and concludes that our “version of capitalism … is broken.” This motivates his essay’s first argument: that we need to chart a new course because our policy frameworks are no longer fit for purpose. He is right and proved so by nearly a decade of anaemic global growth.

Megalogenis’s second argument is that the answers to our predicament lie outside the mainstream Australian reform discourse. Again, he’s spot-on. Australia’s reform discourse is dominated by business councils, economic journalists and the commentariat of retired public servants who cut their teeth in the Hawke–Keating era of liberalisation, which remains their north star. Deregulation, privatisation, workplace flexibility and tax cuts are the four walls of their economic worldview. But as Hyman Minsky said, “Those who long for the lost reform era must recognise that ‘economies evolve and so, too, must economic policy.’”

Megalogenis astutely observes that Keating’s liberalisation agenda worked to solve the challenges of the 1980s but isn’t fit for purpose anymore because the economy is so different now. New challenges – digital disruption, automation of jobs, financial stability, inequality – need new solutions.

Megalogenis believes the alternative to Keating’s open globalism is to throw back further in time. He believes that what is needed is more akin to the “post-war reconstruction of Curtin, Chifley and Menzies.” He would like to see more investment in “physical infrastructure, education and innovation” and more done to address inequality.

All these are sensible propositions, but we should be looking forward rather than back to find the new economic model we need. Hawke and Keating built a policy edifice to address the defining challenge of their time: globalisation. Now another generation needs to build a response to a new challenge: the digitisation of the economy.

We need a policy framework that grapples with 21st-century economic challenges, such as:

1. How do we maintain hard-won workplace protections in an economy increasingly dominated by freelancers? (How do you make sure Uber drivers have sick leave?)

2. Is it okay for some companies to own huge amounts of personal consumption, health, financial and even genetic information? (Should personal data be private or perhaps a public good for the benefit of all?)

3. What is the role for small peripheral economies like Australia when so much economic activity is becoming dominated by global networked digital oligopolies? (Netflix, for example, had, until recently, nearly a million Australian customers, but almost no local employees.)

4. How do we go about taxing multinational companies in a digital economy where there is no “local production” and transfer pricing can approach 100 per cent?

5. How can we use digital technologies to reconceive public services? (Are huge productivity gains in health and education potentially within reach?)

Technological progress has made citizens more informed and globally connected than ever before. This has implications for economic policy and the role of government. We have to “rethink the state” once again in the context of a digital economy.

When FDR assumed the presidency, the US was crying out for a new direction that had been denied them under his predecessor, President Herbert Hoover, whose free-market ideology taught him to eschew government intervention to help the poor and revive the economy. Hoover’s intransigence made him a figure of derision. The shantytowns of unemployed in the cities became known as “Hoovervilles” and the newspapers their residents used to stave off the cold were known as “Hoover blankets.”

Roosevelt immediately promised “action, and action now.” He shut the nation’s banks the day after his inauguration. During the next hundred days, he delivered what historian Arthur Schlesinger Jr called “a presidential barrage of ideas and programs unlike anything known to American history.” He attracted a new generation of reformers to Washington (“men with long hair and women with short hair,” according to contemporary wags).

Australia’s political situation calls for a similar response to our present malaise. Rarely in our history have we been less confident of our collective purpose, our environmental wellbeing and our economic security. We have no idea what sort of world we will be leaving our children to inherit. We need fresh ideas because we can no longer delude ourselves that the answers to new problems lie in the past.

Andrew Charlton is the author of Ozonomics and Fair Trade for All (with Joseph Stiglitz) and two Quarterly Essays, Man-Made World (which won the 2012 John Button Prize) and Dragon’s Tail. From 2008 to 2010 he was senior economic adviser to Prime Minister Kevin Rudd. He is a director of the strategic advisory business AlphaBeta.

Jim Chalmers is a federal Labor MP. He has been director of the Chifley Research Centre, chief of staff to the deputy prime minister and treasurer, senior adviser to state and federal Labor leaders, and Labor’s national research manager. His book Glory Daze was published in 2013.