Jun 20, 2020

What people in other forums are saying about public policy

The OZ economy – Jobs, Jobs, Jobs

Underemployment shoots up

Because of reasonably prompt action to contain the coronavirus, and the masking effect of  “Jobkeeper” keeping 3.3 million people off the unemployment list, early dire predictions of a ten per cent or higher unemployment rate have not been realised. The monthly ABS Labour Force publication showed a May unemployment rate of 7.1 per cent, up from 6.4 per cent in April and 5.2 per cent in March, before any substantial action to combat the pandemic. The fall in full-time employment since March has been 325 000 persons, but the far bigger change has been in part-time employment which, from a much smaller base, has fallen by 510 000.  Of that 510 000, 304 000 or 60 per cent are women.

Many part-time workers would prefer to be working more hours but cannot do so. These are classified as the “underemployed”, and the sum of the “unemployed” plus the “underemployed” comprise the “underutilised”. These rates are shown in the graph below. Note the steep jump in underemployment: it’s much steeper than the jump in unemployment. Note, too, that there hasn’t really been an improvement in the labour market since the GFC in 2008. While the unemployment rate is well below that of the 1991 recession (the one we had to have) and the 1983 recession (the “Volker shock”), labour force underutilisation is now at a record level.

This is one manifestation of basic problems facing the Australian economy: it’s not just about recovering from a sharp recession; it’s also about established structural weaknesses.

Where the recession is hitting – women and young people – but it’s OK for bankers

The ABS has released a special survey, based on payroll data, of the spatial, industry and gender composition of job losses.  Its spatial data is presented in a neat interactive map – you may note that job losses seem to have been greatest in traditional working-class regions within our large cities. The industry composition of employment loss confirms what we know about job losses since March: “accommodation and food services” down 29 per cent, “arts and recreation” down 26 per cent. But we can be comforted to know that there has been a small rise in employment in the “financial and insurance services” industry.

The Guardian’s Greg Jericho (or some dedicated intern) has used data in the same survey to show what has been happening to jobs week-by-week in an easy-to-use interactive chart showing job losses and gains by age cohort. The good news is that since the last week in April there has been some growth in jobs for all but the oldest (>70) cohort. It’s not strong growth, but it’s positive. Hence his title The worst may be over for Australian job losses – but recovery has a long way to go. Young people have suffered the worst job losses, but they are enjoying some modest recovery.

Will the Coalition’s debt obsession condemn Australia to years of misery?

For a little while, as the reality of a recession sank into our minds, it appeared that the Morrison Government may have learned some basic macroeconomics and understood that the economy needed a strong fiscal stimulus for an extended period. Neither households nor businesses are going to pull the economy out of a recession; that task is up to government.  And when interest rates are low, and there is a huge backlog of economically beneficial public projects and programs seeking finance, governments should borrow at those low rates to fund those ventures.

But, as Ross Gittins points out— Economy’s need may run second to Morrison’s spending hang-ups – Morrison and his colleagues still seem to be spooked by a fear of debt. Morrison is already talking about a supposed need to find budgetary savings.  Gittins warns about the cost of this obsession:

… ask yourself this: what do you think your kids would prefer to inherit? A bit more public debt or an economy that’s been deeply recessed for a decade, with stagnant living standards, little opportunity to get ahead and stories about how much better things were in their parents’ day.

A former Liberal leader on Morrison’s economics

John Hewson has an article in the Canberra Times: How long can Morrison deny the undeniable?. It is mainly about the Coalition’s ongoing failure to take climate change seriously, and failure to use a post-recession recovery as an opportunity to make a transition to an economy based on our ample access to renewable energy. It is also about Morrison’s dismally constrained capacity to consider the possibility of any economic transformation:

Morrison is clearly focused within the “Canberra Bubble”, mostly taking his much lauded “Quiet Australians” for granted. His short-term political game is grossly irresponsible, selling out our national interest, and stealing from future generations, to whom he will happily leave the increasingly difficult task of cleaning up his mess, probably in the context of lower living standards.

Why retailing won’t “snap back”

Writing in The Conversation, the Grattan Institute’s John Daley explains why Retail won’t snap back. He gives three reasons:

  • we have been reasonably conditioned to be fearful of going to places where people congregate in crowds, such as shopping malls – that’s a consequence of pursuing a policy of suppressing the virus rather than eliminating it;
  • we have had time to form new habits, particularly use of on-line shopping, and we may decide that we don’t have to spend so much on clothes and eating out, particularly if we keep on working from home;
  • more generally, there is a global recession, and we’re not immune – even those who do not lose income become more cautious and tighten their belts in a recession.

Even before the coronavirus, the retail industry was struggling; the coronavirus measures accelerated the process.

Housing – could a fall in house prices be a benefit from Covid-19?

The ABS has released its regular survey of residential property price indexes for the March quarter. Because it is based on the date of exchange of contracts, rather than auction date, it would show little effect of the Covid-19 situation.

It reveals that property prices continued to rise to the end of March, particularly in Sydney and Melbourne (1.9 per cent and 2.1 per cent respectively). The figure below, derived from the same ABS data, shows housing price rises over a longer (34 year) period, identifying the policy interventions that have contributed to housing unaffordability. Note that in 2008 and 2009, when it was reasonably assumed we would elect a government committed to making housing more affordable, real house prices fell in our biggest cities, but once the Coalition was re-elected prices resumed their upward march.  Note too that the data from which the graph is generated is for established houses: apartment prices have been rising, but not so steeply.

Will the epidemic put an end to this madness that has seen housing transform from a means of shelter to an instrument of financial speculation, or will panic-induced low interest rates keep the bubble inflating?

The pandemic’s progress

From a global perspective, the virus is raging: 8 million are now confirmed as infected, and if its current rate of spread is maintained (13 per cent a week), 200 million will be infected by the end of the year, or half the world’s population by this time next year. And that’s just based on officially recorded cases.

But there is no single world pattern – while it spreads through the Americas, Africa and South Asia, most countries in East Asia and the Pacific have quarantined themselves and European countries are on a path towards suppressing the virus.

Country curves

The curves below – an update from last week’s – show very different patterns in different countries. In Australia, and in many other Asian countries, the rate of new infection is at a level where outbreaks can be suppressed, providing simple public health measures are maintained. The EU countries collectively are heading to that level.

The rate in the UK is falling, but it’s still high, while in the USA there has been no reduction in the infection rate for the past month.  These are countries where, in the interests of helping “the economy”, the misery of living with the disease raging has gone on for a long time. And then there is Brazil, which is the worst of central and south American countries where there are few measures to contain the virus. Far from confronting the problem, Brazil’s Bolsonaro goes so far as to suppress information on cases and deaths, claiming it to be just another mild flu.

The excuse offered by the governments in these poorer countries in the Americas is that they cannot afford to take strong measures. But much poorer countries in Asia have managed. Vietnam, for example, with per-capita income half of Brazil’s, has managed to contain the virus to a trickle, with only seven new cases in the last two weeks.

There is press speculation about a “second wave” as public health measures are relaxed and as people become complacent. That is a typical pattern in a pandemic, but those subsequent waves are generally more attenuated as people learn and as public policy becomes more responsive.  For example Korea could be said to be now experiencing its third wave, but as the graph below shows, each wave has been milder.  There is also talk of a “second wave” in the USA, prompted by, among other factors, Trump’s plans to hold massive rallies around the country, and ongoing mass protests, but any such upturn would really be a continuation of the country’s present wave as it moves across the country.

Australia – problems in Victoria

Australian states have been on a policy path of eliminating the virus, but we’re finding it hard to get there. In the most populous states the measures are still about suppression (accepting the virus is still lurking but suppressing outbreaks), while aiming for elimination (no community spread) or eradication (no virus in the country).

Norman Swan explains the differences on Coronacast. He suggests that New Zealand is close to eradication, but so long as a country does not have a 100 per cent sealed border, eradication is not achievable. After 21 days without any new cases, and with no active cases, New Zealand was claiming it had achieved eradication, but laxity in quarantining at least two infected people returning from Britain has demonstrated the difficulty in achieving eradication. He sees elimination as achievable, suggesting that our smaller states may have effectively arrived at that point. But there is some community spread in New South Wales and Victoria, which have to rely on suppression.

Victoria appears to be experiencing something of a second wave, with infections related to schools, staff in hotels where returnees are quarantined, and a number of cases for which contacts cannot be identified.  Three of Victoria’s cases have been among people who attended the “Black Lives Matter” protests.

The differences between “suppression”, “elimination” and “eradication” may appear to be semantic, but in terms of public policy they are significant. If elimination or eradication can be achieved, then much of life can be returned to pre-Covid-19 conditions, with safe internal air travel, large gatherings at sporting fixtures and demonstrations, and less apprehension in the community about going to closed places such as shopping malls.

What’s wrong in Sweden?

Out of the EU’s 27 000 new coronavirus cases last week, 7 000 have been in Sweden, one of the few “developed” countries where cases are rising strongly. Most commentators have put Sweden’s poor performance down to a culture of laissez faire Nordic liberalism, and a faith that as Europe’s supposedly most socially-conscious and grown-up people, Swedes would surely do the right thing by society. Writing in Social EuropeSweden, the pandemic and precarious working conditions – Lisa Pelling of the Stockholm-based Arena Idé, goes into some detail about the specific causes of Sweden’s high case rate. One reason so many older people in nursing homes have contracted the virus relates to the way the sector is organised – privatised, fragmented, and with underpaid staff on precarious hourly contracts and without access to protective equipment.

The coronavirus and starvation

Until recently there has been good progress on reducing extreme poverty and its manifestations in hunger and malnutrition. With the disruptions of international conflict progress has stalled, however. Because the coronavirus has added the problem of broken food chains, the situation will almost certainly worsen. Writing in Foreign Affairs, David Beasley Executive Director of the UN World Food Program, warns that “the pandemic could lead to famine in as many as 35 countries, including Afghanistan, the Central African Republic, and Haiti”.  The looming hunger pandemic: coronavirus threatens to push millions into starvation.

Information sources

These are the same sources as we have been presenting.

The WHO daily situation report;

Our Department of Health Coronavirus (COVID-19) current situation and case numbers;

Our Department of Health Coronavirus (COVID-19) health alert;

A group of volunteers’ daily-updated site Coronavirus (COVID-19) in Australia;

The ABC’s daily-updated site Charting the COVID-19 spread in Australia;

The Johns Hopkins University Coronavirus Resource Center;

Norman Swan’s Coronacast;

The Economist paywall-free Coronavirus hub;

The coronavirus update from the Harvard Gazette;

The ABC’s The one Covid-19 number to watch, tracking the reproduction factor (R)

The ABS program of special statistical releases.

The Scientific American The Coronavirus Outbreak covering scientific aspects of the virus.

The ABC’s Digital Story Innovation Team set of graphs Charting recovery after the coronavirus crisis.

For those who find it hard to follow technical concepts around viruses and vaccines. the ABC has a neat explanatory animated explanation – The Virus and the Vaccine.

Polls and surveys

Essential – as we ease off on Covid-19, our attention turns to other issues

The coronavirus still dominates the Essential poll.  We’re slowly becoming a little less concerned about the epidemic.

The same poll shows little change in our approval of the ways our governments are handling the virus.  They all get high marks.

This week Essential asks what we think of the “Black Lives Matter” protests. We don’t approve of them: 84 per cent of us believe that “protesters gathering in large numbers during the Covid-19 puts the entire community at risk”. Even 78 per cent of those aged 18-34 agree with that statement. That doesn’t mean we don’t support the cause: 62 per cent of us believe that “protesters are justified in their demands for authorities to address the issue of Indigenous deaths in custody”, while a similar proportion (61 per cent) understand that “the situation in America is very different to Australia and has no relevance”. We simply think that the conventional street march is a dopey and dangerous way to protest when there’s a pandemic.

There is a series of questions on government funding for the child-care sector and “Jobseeker”.  By a small majority we do not approve of the government’s early withdrawal of support for child-care, and are concerned that the government will remove “Jobseeker” support earlier than promised. There are reasonably strong (and predictable) partisan differences in responses on these questions.

And there is a set of questions on unions. In short, we approve of unions: 74 per cent of us believe that they “provide essential services to their members to ensure they are paid appropriately and have safe working environments”.  But many of us believe they are “too politically biased” (62 per cent), “add an unnecessary layer of bureaucracy for business” (49 per cent), and “are corrupt” (47 per cent).

Essential has been asking the question “Overall, would workers be better-off or worse-off if unions in Australia were stronger?” off and on for a number of years. Eight years ago, in 2012, 39 per cent of us responded “worse off”: that response has fallen to 24 per cent, but only 50 per cent respond “better off”.  Again, there are predictable partisan differences.

It seems that we understand and approve of unions, but we think that the unions currently operating in Australia could lift their game. Also our support for unionism has risen as real wage growth has essentially stalled in recent years.

Eden-Monaro – take your pick

William Bowe’s Poll Bludger reports on three polls for the Eden-Monaro by-election, with three outcomes:

  • a poll reported on that impeccable source of professional journalism, Sky News, has the Liberals comfortably ahead, with a combined Liberal and National primary vote of 50 per cent;
  • a poll conducted by the Australia Institute has Labor leading 53-47 TPP;
  • a uComms robopoll conducted for the Australian Forest Products Association gives Labor a 52-48 TPP lead.

All these polls pre-date the branch-stacking incident in Victorian Labor. Will that influence the result? Surely, for anyone living in New South Wales news of corruption in a state branch of the party would hardly be a surprise.

The seat has a Melbourne Cup list of starters – 14 in all, making for difficult polling. The usual suspects (Liberal, Labor, National, Greens, Liberal Democrats and the Shooters, Fishers and Farmers); three independents, and five others with rather long party names. You can find more about the candidates on the AEC website, which, for most of them, provides links to their own websites.

Even after the bushfires, Australians are among the world’s leading climate change deniers

Caroline Fisher and Sora Park of the University of Canberra, writing in The Conversation, find that the number of climate deniers in Australia is more than double the global average. They are drawing on the 2020 Digital News Report, which surveyed people in 40 countries about how they inform themselves through news media, whether they trust those media, and whether the media they use contributes to misinformation. That report found that the proportion of climate deniers in Australia is among the highest across the countries surveyed. Those who get their news from commercial AM radio and from the Murdoch media are far more likely to deny the importance of climate change than those who get their news from less biased sources.

US Politics

Has the Biden-Sanders political distance closed?

Less than four months ago, when Joe Biden surprisingly overtook Bernie Sanders in the Democrat primaries, the consensus was that the Democrats had made a clear choice between a left-oriented policy agenda and a cautious “centrist” strategy focussed on removing Trump from office.

Then two things happened.

There was the coronavirus, with 120 000 dead (now surpassing the 1914-18 War), and the unleashing of pent-up frustration over the lack of progress in achieving racial equality in the 56 years since President Johnson signed the Civil Rights Act in 1964.

Writing in the New York Review of BooksBiden’s journey left – Michael Tomasky describes how Biden has become “a different man”:

Now, with unemployment nearing 15 percent and calls for change from protesters becoming more urgent—and with the crisis starkly laying bare the economic precarity in which so many Americans were living even before the virus hit—he sees himself in the mold of Franklin Roosevelt, a leader who would rise to the vast challenge history has thrust upon him and introduce sweeping change.

The Sanders and Biden camps have come together, not only to defeat Trump, but also to develop a set of policies to address America’s structural shortcomings:

Biden might now be willing to depart from the economic principles that have governed policy-making in this country over the last forty years: the so-called neoliberal principles of free markets, little government intervention or investment, wariness about deficits, and more.

The article goes on to analyse the numbers in the November contest. They’re not looking good for Trump, but there is also a vote for 33 Senators. Can the Democrats secure a Senate majority?

A former Republican Secretary of State supports Biden

Retired four-star general and former Secretary of State in the Bush Administration Colin Powell recounts on CNN his views on the Trump administration. He strongly supports the stance taken by serving military officers who stood up against Trump’s attempt to draw the military into his re-election campaign, but his focus is on foreign and immigration policies, where the Trump Administration has failed on both counts: Colin Powell explains why Trump shouldn’t be re-elected. (16 minutes)

Other conflicts

What’s happening on the India-China border?

Press reports on the clash between Indian and Chinese soldiers read like a description of a bar-room brawl that’s gone fatally out of control. Writing in The Conversation, Ian Hall, of Griffith University, takes us through the history of conflicts along the India-China border.  It’s not simply a dispute about the border – border disputes with China have been simmering since 1962. Rather, Ian Hall explains, it’s about a raft of economic conflicts between the countries and their competing attempts to yield influence in the region: China and India’s deadly Himalayan clash is a big test for Modi. And a big concern for the world.

Will Netanyahu annex the Left Bank?

In January the Israeli Government agreed to the so-called “Trump Peace Plan”, developed by Trump’s son-in-law, Jared Kushner, in consultation with Israel’s government. A key element of the plan involves Israel annexing more than 30 per cent of the West Bank. Netanyahu has announced July 1 as the date for its implementation.

Last Saturday on the ABC’s Saturday Extra Geraldine Doogue Interviewed Anshel Pfeffer of the Israeli Newspaper Haaretz and Palestinian journalist Daoud Kuttab – Is Netanyahu serious about annexation?, discussing the politics of the plan. The Trump Plan has given Netanyahu a chance to burnish his credentials with Israel’s hard right, but because it is so one-sided, and because it dismisses hopes for a two-state solution, it promises to result in a strong reaction from Palestinian people in Israel and it threatens to scuttle Israel’s peace agreement with Jordan. The consensus of that discussion was that Netanyahu is in no hurry to go through with it.  (16 minutes)

Those with cooler heads know that the plan, with its threats of conflict, is not in Israel’s interests, which explains Netanyahu’s reluctance. But as Trudy Rubin reports in the Seattle Times, the Trump administration is pushing hard on Israel to go ahead – Trump’s support for Israeli annexation in West Bank will endanger the Jewish state. The reason:

The answer is domestic politics in the White House, which ignores the likely consequences to Israel in order to please Trump’s evangelical base. Inside Israel, too, Prime Minister Benjamin Netanyahu’s annexation urge is focused on securing support from right-wing settlers rather than the security of the Jewish state.

Australian politics

Porter abides by the KGB rule book

We associate secret trials with authoritarian regimes, such as the old Soviet Union: they don’t happen in democracies, do they? And whatever the alleged crime, we don’t put a lawyer on trial for helping his or her client prepare a reasonable defence, do we?

But Attorney-General Christian Porter has used his powers under anti-terror legislation to charge former ACT Attorney-General Bernard Collaery with undisclosed national security offences, in a trial to be conducted in secret.

The ABC’s 730 Report last Tuesday sheds a little light in its segment on the secret “witness K“ trial. The program is largely about Porter’s vindictiveness in destroying Collaery’s law practice and threatening him with jail, as punishment for embarrassing the government by exposing its malfeasance. As Adam Harvey puts it, Collaery’s sin is “to reveal that Australia bugged East Timor’s government offices in 2004 to gain advantage in crucial oil and gas negotiations worth billions of dollars”. In the session former NSW Supreme Court Judge Anthony Whealy, Law Council of Australia President Pauline Wright, and former defence force chief Chris Barrie all speak up in Collaery’s defence.

Branch stacking – Labor gets caught

While the National and Liberal Parties abide by the highest standards of transparency and ethical government, with all disputes settled by reliance on evidence, reason and standards of good public policy, the Labor Party is run by two warring factions, one determined to wreck the economy and the other seeking to get its mates into high office.

If that is the case, why is the Coalition so opposed to establishing a National Integrity Commission?

Prompted by revelations of branch-stacking in the Victorian branch of the Labor Party, The Centre for Public Integrity has issued a short press release, re-asserting its call for a National Integrity Commission.

And isn’t it strange that while the media are covering this conflict in the Labor Party, we’re not hearing much of the stoush in the Queensland LNP Opposition, where the party president is trying to undermine the party leader, just five months before the election.

How fossil-fuel companies manipulate the rules

We generally think of political influence as it operates at a high level – multi-million dollar donations and deals between corporate bosses and ministers – but it’s also informative to look at how these work out practically, for example in carefully-crafted regulations favouring particular interest groups.

Writing in The Conversation, Daniel Cass of the University of Sydney describes one such deal that allows the fossil-fuel giants to extort high profits from consumers while locking lower-cost renewable companies out of the market. It has to do with the time period over which prices in the wholesale market are set, a longer time period generally favouring established “base load” companies. Those companies have been able to thwart a reform that has been on the table for three years and which, in allowing for a shorter settlement period, would give more access to renewable suppliers.


 “Too many jerks in the discipline” – Dani Rodrik on economists

That’s one of the comments made by Dani Rodrik on economists: Economics’ race (and other) problems.  He points out that economics is “clubby”, and hierarchical. On peer-pressure he writes:

Reputation hangs on your publications, and if you are doing well there relative to your peer group – which could be the profession as a whole or simply your own department – you can get away with a lot of awful personal behavior.

Does this mean he’s criticising the sacred tradition of peer-review? It appears he is. Academics know how the system works and they know its weaknesses: in various ways established methods of peer review tend to reinforce compliance and confirmation of established wisdom, rather than challenges to that wisdom. As Thomas Kuhn pointed out such conservatism can impede desirable progress.

What is work?

Just a few months ago the economic mantra was about the fiscal balance. Now it’s “jobs, jobs, jobs”. On the Institute for New Economic Thinking website, Nancy Folbre, of the University of Massachusetts, has a three-minute animation What is work, pointing out that economists have some strange ways of valuing work, overlooking and undervaluing much of what we do.

The Empire strikes back

Tasmanian Midlands – the finest of British engineering.

Older Australians will remember the days when the only imported cars available on the market were notoriously unreliable products imported under a system of British Preferential Tariffs.

The Coalition seems to have some nostalgia for those days, because Trade Minister Simon Birmingham has enthusiastically leapt at the opportunity to do a free trade deal with the UK as Boris Johnson scrapes through the ashes of the Empire to find anyone who can rescue Britain from its suicidally idiotic Brexit.  (Mini Minors, Land Rovers and Jaguars still feature on Australia’s lemon list of unreliable vehicles.)

Friday’s cyber attack

While security agencies are still searching for the source of Friday’s cyber-attacks on Australia, one investigative journalist has uncovered the means by which the virus was able to spread so quickly.

Saturday’s Good Reading and Listening is compiled by Ian McAuley

Watch out tomorrow, Sunday, for Peter Sainsbury’s Sunday environment round up.

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