Pearls and Irritations

What people in other forums are saying about public policy

The pandemic’s progress

The big states: have Victoria’s infections peaked; is NSW heading to a Victorian catastrophe?

It’s too early to be sure about Victoria, but the alarming rate of growth we saw earlier this month appears to be behind us. Both Victoria and New South Wales have high rates of testing (more than 20 000 a day).  In Victoria 13.6 out of every thousand tests over the last week have been positive, compared with a positive rate of 0.7 per thousand in New South Wales.

Because all infections in New South Wales seem to be traceable to the Victorian outbreak, it is probable that, before a few people from Melbourne’s hotspots wandered into New South Wales pubs and clubs, the state had joined other states and territories in eliminating the virus. It’s still possible that it will experience a Victorian-type outbreak. Its daily numbers are around where Victoria’s were in mid-June, and of most concern is their geographical spread, but at least there is no evident growth.

On Schwartz Media’s 7am, Rick Morton describes The moment Australia almost beat coronavirus. By June we had almost certainly eliminated coronavirus in Australia: there were no more cases of the original strain from Wuhan. Genome tracing shows that travellers from Europe were bringing in a new strain but this was contained in hotel quarantine, until the failure in Victoria. Even after that failure Victoria could have stopped the second wave developing had they acted promptly, but the small numbers seemed to have lulled them into a false sense of security. (13 minutes)

Apart from one case in South Australia detected on Thursday and still under investigation, there is no evidence of community transmission in other states and territories.

Hard findings for all of us – two viruses to contend with

We can analyse the Victorian outbreak in terms of specific failures to do with managerial fads – privatisation of government services, use of casual labour without sick leave, and use of labour-hire companies. Covid-19 has brutally exposed what researchers have been trying to tell policymakers for years: these are costly practices that do not serve the public interest.

It also reflects deep social divisions, between those who can abide with restrictions with little personal sacrifice or effort, and those for whom the restrictions carry severe financial and psychological costs.

But news from Victoria that people have not been isolating, have been refusing to be tested, have been giving authorities false phone numbers, have been evading controls – raises basic questions about the sort of society we have become. Where is the solidarity that should hold a nation together facing a dire external threat?

Why are so many workers fearful about taking time off work? Is it all explained by financial disincentives, or is it also because many workplaces are dominated by bully bosses who instil fear among employees?

Why are there companies without strong policies against people coming to work when sick?  Don’t their managers realise that paying a few days’ sick leave to casual staff may be a wise investment? Do they not understand risks faced by the community and to their own businesses? Or don’t they care?

Why are people who claim to speak for “business interests” condemning the Melbourne shutdown? Are they so ill-informed that they don’t see what’s happening in the USA?  Or are they calculating that companies can make a quick profit before society collapses, taking the economy with it?

Why are some social activists calling for thousands of people to come together for a Black Lives Matter protestin Sydney? Are they so deficient in imagination that they cannot think of any way to promote justice other than to have people shouting at one another and undermining government messages about the coronavirus risk? Are they unaware of the discredit they bring to their legitimate cause?

Why are there so many know-it-alls in disadvantaged urban regions who believe, and who tell others, that everything from the public health authorities is based on weird conspiracies?

There is no one explanation for such stupidity and immorality, but what guides all these ways of thinking is a disregard for the public purpose. Those who think this way seem to have internalised the “look after #1” ethic that underpins neoliberalism, and the contempt for learning and science that underpins political populism.

These ways of thinking, spread mainly by the “right”, have been infecting our society for the last 40 years. The fact that most considerate, well-informed people are throwing themselves into the collective effort to eradicate the virus means these ideas have not yet infected all of society: after we deal with Covid-19 our next effort has to be directed to eradicating this underlying virus.

For now, however, because it seems to be impossible to knock good sense into a recalcitrant and inconsiderate minority, there seems to be no practical policy other than one of eliminating the virus, accepting that a dangerous minority cannot be convinced about the need to act responsibly. Policymakers may have to accept that, short of taking severe measures, compliance with directions is unlikely. They should also realise that so long as there is any community transmission in any region, urban or rural, the majority of people with responsible attitudes are going to hunker down and avoid unnecessary economic activity.

Yet we have a prime minister still asserting that “elimination would spell doom for the economy”, as if somehow what’s happening in our big states – and in other states that have had to close borders – is economically desirable and preferable to the comparatively eased economic conditions in New Zealand and most of our states. The only way such a stance could make sense is that Morrison may see a political benefit in the community’s preoccupation with coronavirus as a distraction from his government’s destructive economic policies.

Morrison and Frydenberg assert that elimination involves completely shutting down all external borders, not allowing anyone to enter the country.  That’s a misrepresentation: it’s about having a secure border, with effective quarantine provisions and without special exemptions.

What’s happening in other countries

Perhaps America’s daily infection rate, at 200 per million per day, is peaking.  Perhaps Brazil’s rate is on the way down. What seems to alert the public and local authorities to the need to take action is not a rising infection rate, but a rising death rate, which starts to manifest itself only two to three weeks after infection, as is happening in Florida where Trump has cancelled his rally.

In the EU infection rates are creeping up again in most countries, although with the exception of Bulgaria and Romania they are still at reasonably low levels.

Note that Australia’s curve has now risen to meet Europe’s.  That’s almost entirely about Melbourne: if Melbourne were a country the present rate would be around 70 daily cases per million, around the UK’s peak rate.

One reader has asked about what’s happening in our region.

Just as the Asia-Pacific region is heterogeneous culturally and economically, so too is the quality of data, presented in the table below.

Data from prosperous “developed” countries including Japan, South Korea, Taiwan and Singapore can be regarded as reliable. So too can data from Viet Nam, for example, because incredulous experts, sceptical about their low rates, have been unable to find any manipulation of data.  Singapore stands out for both its high case rate and low death rate.  As explained by Kok Xinghui in the South China Morning Post, infections are mainly among young migrant workers in crowded accommodation, while among native Singaporeans there is very little community transmission. It’s a situation not wholly unlike that in Melbourne where infection has raced through crowded public housing blocks.

What’s happening at sea – the plight of the ancient mariner

While we go through various restrictions to do with Covid-19, we rarely give a thought to those who keep our maritime trade going – who carry our produce to other countries, and who bring us the comforts we take for granted – clothes made in Bangladesh, cars made in Japan, cellphones made in China.

On the ABC’s Saturday Extra Geraldine Doogue interviews Guy Platten, General Secretary of the International Chamber of Shipping, and Helen Joyce, an editor with The Economist –Stranded merchant seamen. It’s about the virus’s imposition on the lives of 500 000 people  trapped on their ships. They’re generally safe on board, but port authorities don’t let them disembark, and travel restrictions mean that they cannot go home at the end of their contracted shifts, nor can their replacements take over.

Vaccine hopes

There has been a great deal of excitement about the vaccine being developed by a team at Oxford University. It is indeed good news, but all it has demonstrated so far is that the vaccine generates strong antibody and T-cell defences, similar to those observed in people with natural Covid-19 infections. It is yet to be subject to large-scale trials to demonstrate its effectiveness in immunising people who are actually exposed to the virus, and it is still to be established how long immunity lasts.

For those with the stomach for the academic style here is the paper published in The Lancet.  In its paywall-free area on the virus The Economist has an article: Trials of a vaccine and new drug raise hope of beating covid-19 summarising the Oxford work and providing other information on therapies.

Information sources

These are on a separate website.

The Australian economy

RBA Governor Philip Lowe on the state of the economy – OK for now

On Tuesday Reserve Bank Governor Philip Lowe delivered an address to the Anika Foundation COVID-19, the Labour Market and Public Sector Balance Sheets. The first part is about employment: hours of work and employment have fallen but not as badly as in other countries and not as badly as originally expected. But don’t expect the unemployment rate to fall any time soon: it could rise as people re-enter the labour force.

Regarding the public sector balance sheet he takes a conventional line against what has come to be known as Modern Monetary Theory – the idea that the central bank should create money to finance the government. He doesn’t dismiss MMT entirely, but he makes it clear “that monetary financing of fiscal policy is not an option under consideration in Australia, nor does it need to be.”  Australia has plenty of capacity to borrow to fund government deficits: in comparison with other countries Australian government debt is quite low.

Alan Kohler comes close to embracing Modern Monetary Theory

Alan Kohler in a news clip – Is the government running out of money? – agrees with the Reserve Bank’s assessment that the government has plenty of wriggle room for a stimulus, and he goes further in explaining how much capacity the government really has. Without using the term “Modern Monetary Theory” (he prefers the traditional Australian term “magic pudding”) he demonstrates how, in an environment of low inflation, monetary and fiscal policy need not be bound by traditional fiscal constraints. In three minutes he covers, with astonishing clarity, the main content of a postgraduate public finance unit.

The Government’s economic and fiscal update

On Thursday the Government produced its Economic and Fiscal Update, July 2020. Its assumptions (P 29) seem to be optimistic and slightly contradictory with one another. International travel (with quarantine) will resume in January; the Victorian restrictions won’t need to be extended; and even though there could be localised virus outbreaks, “such as those occurring in New South Wales”, these will not interfere with programs to lift restrictions. The Government, in its determination not to eliminate the virus, seems to overlook the chilling effect of localised outbreaks, and their capacity to lead to Victorian-type outcomes.

It makes a number of economic forecasts (mostly on P31). For 2019-20 GDP is estimated to have fallen by only 0.25 percent. In calendar year 2020 GDP is forecast to fall by 3.75 per cent, before rising by 2.50 per cent in 2021, but so many assumptions underlie these economic forecasts, and therefore the document’s fiscal forecasts, that the document is best seen as a form of occupational therapy for bewildered Treasury economists. The only reasonably reliable estimate is that the budget’s underlying cash deficit for the financial year just past is around 4 per cent of GDP. That’s shown on the graph below: the fiscal outcome is always hard to get right, even when there aren’t severe bushfires and pandemics – so why does the Coalition make such a fuss about it?

The document’s emphasis on fiscal outcomes confirms that the Coalition still sees economic management mainly in fiscal terms, rather than in terms of attending to the economy’s structural weaknesses.

The budget deficit is the least of our economic problems

On the ABC’s RN Breakfast program is an interview with former Treasurer Ken Henry, on welfare, debt and deficit.  If you get past Fran Kelly’s demands for categorical answers to the future amount and timing of benefits (Henry’s very point is that there is too much uncertainty to allow any policymakers to have firm plans) you will get to his more substantial issues. The problems facing the Australian economy aren’t just about fiscal management as we emerge from the Covid-19 recession. Rather they’re structural, as manifest in our poor productivity which has been declining over many years.  “I’m not sure that people understand the enormity of the challenge” says Henry about our poor productivity and low economic growth. (13 minutes)

He does make one specific statement about “Jobseeker” (the Coalition euphemism for the unemployment benefit). The “Jobseeker” payment, before the government applied a special coronavirus supplement, has been at the same real (CPI inflation-adjusted) level it was in 1994.  It should be set a higher level for good, and not just as a boost in these hard times.

Explainer: The present base unemployment benefit is $283 a week, temporarily boosted by $275 to a level of $558. The Government is dropping the boost to $125, resulting in a temporary rate of $408 before it falls back to the old $283 in January. This temporary rate of $408 is just under the level ($412) the unemployment benefit would be had it been indexed to average earnings rather than CPI for the last 26 years.

Economists: stop worrying about debt

Writing in The Conversation Peter Martin reports on the views of fifty leading economists about government debt: Should the government keep running up debt to get us out of the crisis? Overwhelmingly, economists say yes. The statement ”Governments should provide ongoing fiscal support to boost aggregate demand during the economic crisis and recovery, even if it means a substantial increase in public debt” found 44 agreeing, 3 uncertain, and 3 disagreeing.

Where are the jobs to come from?

Recessions destroy jobs. Even if there is a trouble-free recovery from this recession, not all jobs that were there in February will come back. That’s why job recovery, which seems to be the Morrison Government’s plan, is inadequate.

On Saturday Extra Geraldine Doogue interviews Petr Sedlacek of Oxford University (who is studying the growth of start-ups) and Sam Crosby of the McKell Institute: The Job Creators. If we want to see the growth of jobs, particularly good jobs, we need an innovative culture. Trying to restore jobs won’t do. But the Morrison Government, evidenced in its hostility to universities, is doing nothing to support an innovative culture. Simply making sure that the pubs, hairdressers and car dealers can recover after the recession isn’t going to do anything for our future prosperity.

It takes a deadly virus to boost consumer confidence

That’s one possible (but probably wrong) interpretation of the ABS preliminary data on retailing up to June.  The graph below, copied from the ABS release, suggests a recovery that’s starting to resemble neither a “V” or a “W”, but a Volkswagen trademark.

Is it something to do with the pasta and toilet paper cycle? The ABS offers some tentative explanations.  All we can be sure of is that it will be some time before the ABS resumes publication of trend economic data.

Polls and surveys

What keeps us awake at night – health

JWS Research has published its second True Issues Survey for this year. Respondents are presented with a list of twenty issues and are asked to identify the three that concern them the most. “Hospitals, health care and ageing” remain at the top of responses.  Concern for “the economy and finances” has risen and concern for “the environment and climate change” has fallen since February. People are generally more positive and optimistic about their personal situation than they are about the national economy.

The poll presents a separate set of issues concerning Covid-19, separating out “millennials” (aged 18-34) with fairly predictable results: they know they’re bearing the pain disproportionately.

Bad figures for the Labor Party

A Newspoll released earlier this week shows a 53:47 TPP lead for the Coalition. It resides within the Murdoch paywall, but William Bowe’s Poll Bludger provides a short summary, and the Wikipedia entry Opinion polling for the next Australian federal election presents what looks like an accurate time series for national polls, including this most recent one. By now there seems to be enough survey data to show that Labor has been falling behind the Coalition since March. The trend is explained mainly by a strengthening in the Coalition’s primary vote, which is now around 42 to 44 per cent, up from 41 per cent at last year’s election. Labor’s primary vote is also up, but not as strongly.

William Bowe also reports on an analysis of the Eden-Monaro by-election done by former Labor Senator John Black, showing strong age- and occupation-related effects: “… older areas swung Labor and younger areas swung Liberal. Labor-swinging areas were also low-income … while Liberal-swinging areas were white-collar and with high levels of employment in public administration.”  These swings are opposite to the swings revealed in last year’s election, suggesting that while Labor may be retaining its dwindling and ageing working-class support, it could be losing support among public servants and other professionals. (In the by-election Labor lost support in Queanbeyan where many Commonwealth public servants working in Canberra live.)

Is Australia still the lucky country?

A collaboration between the Museum of Australian Democracy, universities and others has produced a report Political trust and democracy in times of coronavirus, based on surveys on people’s trust and confidence in institutions. The virus, and governments’ reactions to the virus, have resulted in significant shifts in attitudes. It’s rich in findings with strong messages for our policymakers: “stop the partisan spin and bullshit” (our interpretation).

Its critical message, based on analysis of its survey data:

Australia needs to avoid reverting to the old conflict-driven adversarial politics and use its historical adaptive capacity and guile to remain a lucky country. Economic recovery needs to be anchored in a new politics to ensure good outcomes for all Australians. Waiting until 2022 for a federal election to legitimate a Coalition or Labor vision for the future could well be too late.

What else is happening in Australia

We’re living longer but putting on weight

The Australian Institute of Health and Welfare has published its regular report card on the nation’s health: Australia’s Health 2020. The good news: we’re living longer; we have improving cancer survival rates; we have made extraordinary progress in reducing deaths from coronary heart disease. The bad news: the incidence of diabetes is increasing; two -thirds of adults are overweight or obese; we’re far too physically inactive.

The report exposes significant regional and educational disparities in life expectancy and health risk factors. Indigenous Australians are particularly prone to coronary heart disease, stroke, kidney disease and diabetes.

It has confronting data on self-harm and suicide. Every year 0.7 per cent of young women (aged 15-19) are hospitalised for intentional self-harm. Among indigenous Australians death by suicide is almost double the rate of death by suicide among non-indigenous Australians.

The website is hard to navigate – perhaps its design was contracted to Centrelink.  A good place to start is the sub-document Australia’s health 2020 in brief.  The parent site Australia’s health 2020 presents links to all other sub-documents. There is no consolidated document that you can download for bedtime reading.

More on the Kerr letters: the Queen of England was “actively aware and engaged”

On Schwartz Media’s 7am, Saturday Paper journalist Karen Middleton takes us further into the correspondence between Governor-General John Kerr and the Queen of England: A night at the opera: How Whitlam and Kerr fell out . Middleton dispenses with the monarchists’ feeble rationalisation that because the correspondence was with the queen’s private secretary she was somehow not involved. Kerr’s loyalty was to the Queen of England (not to Australia that means), and the Queen of England was “actively aware and engaged” with the process of dismissing the government. (16 minutes)

(You will hear the occasional comment in a deep voice: that’s Malcolm Fraser.)

Clive Palmer not in the news

The mainstream media seems to have paid little attention to a media release by the Australian Securities and Investment Commission: 20-163MR Clive Palmer charged over breaches of directors’ duties and fraud. It’s about the alleged transfer of two amounts – one of $10 million the other of $2 million – “contrary to the purpose for which the funds were being held.” One allegation relating to the $10 million transfer is that “Mr Palmer dishonestly obtained a benefit or advantage for Cosmo Developments Pty Ltd and/or the Palmer United Party (PUP) and others”.

The rest of the world

Who will emerge from the pandemic on top?

It won’t be either the United states or China.  So writes Ruchir Sharma in The Times of India – Who wins, post pandemic? He asks readers to “imagine a major economic power where the coronavirus arrived late but the government acted early. It was ready with tests and contact tracing to ‘flatten the curve’ swiftly and limited its death rate to orders of magnitude lower than that of any other major western industrial nation.”

His answer is that Germany’s political and institutional strengths “make it the large economy most likely to thrive in the post-pandemic world.”  He praises not only the country’s traditional industrial strengths, but also its arrangements, particularly its kurzarbeit system, that allows the pain of economic adjustment to be shared more evenly than in other countries where some lose their livelihood while others are comparatively untouched or even prosper.

Germany has not escaped the pandemic. Its infection rate has been around 2 500 per million population – much higher than Australia’s (500 so far), but much lower than in the US (11 500) and the UK (5 000), and, unlike many other European countries, it is not experiencing a second spike: its daily rate of new infections is around 5 per million population.  (Australia’s is presently 12 and rising.)

A Russian strike on European union

It’s not as gripping as a le Carré novel, but a report of the UK Intelligence and Security Committee of Parliament simply titled “Russia” is a story about cold war interference, not only in UK affairs (which is how Britain’s parochial press sees it), but also in European solidarity. To quote:

The security threat posed by Russia is difficult for the West to manage as, in our view and that of many others, it appears fundamentally nihilistic. Russia seems to see foreign policy as a zero-sum game: any actions it can take which damage the West are fundamentally good for Russia. It is also seemingly fed by paranoia, believing that Western institutions such as NATO and the EU have a far more aggressive posture towards it than they do in reality.

To succeed in splitting Britain from the EU, all that Russia had to do was to give the “leave” campaign a small nudge, offering a little support for nativist far-right groups, including Johnson’s backers in the Conservative Party. The report notes that there are many UK oligarchs with Russian interests who are donating to political parties. It does not go so far as to accuse Johnson of treason, but it provides ample evidence that the UK Government made no effort to examine the extent of Russian political interference, as explained in Kim Sengupta’s article Russia Report: British security services must be aided to protect democratic processespublished in The Independent. (We might recall that in 1914 a UK-Russia alliance was one of the factors precipitating 31 years of European war.)

Mary Trump’s chronicle of a troubled mind in a troubled country

On the ABC Breakfast Program on Wednesday, Fran Kelly interviewed Mary Trump:  The weapon of humiliation: how a “sociopath” formed Donald Trump. As a clinical psychologist Mary Trump looks at how Donald was brought up by his father, and her grandfather, Fred Trump – a bully who drew pleasure from humiliating his children. Donald’s agenda in office has been “to turn the country into a macro version of the dysfunctional Trump family”.  When her uncle was elected President she was “devastated as a citizen and heartbroken as an individual”, because she knew just how unfit he was for office.

She also points out that “he did not come out of nowhere. He’s the logical extension of 40 years of wilful ignorance, a lack of education, racism and misogyny in America”.

Her book is Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man. (We normally provide links to publishers, but because the Simon & Schuster link is down the link is to Amazon.)

America’s Trump and Turkey’s Erdoğan – who’s mimicking whom?

Ece Temelkuran, author of How to Lose a Country: The Seven Steps From Democracy to Dictatorship, has an article in Foreign Affairs: Turkey in the mirror of the United States. It starts with a comparison of the political philosophies and political tactics of Donald Trump and Recep Tayyip Erdoğan – they’re remarkably similar. She goes on to describe the more general political and economic developments faced by all countries that have swung to right-wing populism:

The maddening political developments in the United States and in other countries ruled by right-wing populists are in fact the symptoms of a crumbling system. The post–Cold War liberal order made it seem as though capitalism were a natural state, unquestionable, like the weather. But with growing economic inequality within countries—exacerbated now by the coronavirus pandemic—more and more people are realizing that it cannot go on like this.

On a similar theme The Australia Institute is holding a webinar on Thursday 30 June The war on populism and the fight for democracy, with Thomas Frank. To register with Zoom follow the link.

The little broadcaster that could

It’s never too early to warn children about creeping political authoritarianism. GetUp!’s two-minute video on cuts to the ABC is suitable for ages from 2 to 110 – and for grown-ups as well.

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

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