Pearls and Irritations

What people in other forums are saying about public policy

The pandemic’s progress

Victoria and New South Wales

Cases are coming down in Victoria, but they’re not plunging to zero.

Nor should we expect them to. When governments have to use blunt measures to restrict mixing and mobility, they’re relying on keeping the reproduction factor (R) below 1. In rough terms it took all of August – a month – to get the number of new cases from 700 to 70 a day; it will probably take to the end of September to get the number down from 70 to 7. That’s how exponential decay works.

Victoria’s decision to extend its strong restrictions is described in detail in an article in The Conversation  by Laxman Bablani and Driss Ait Ouakrim. : “Slow and steady” exit from lockdown as Victorian government sets sights on “COVID-normal” Christmas.

The Grattan Institute’s Stephen Duckett gives it big tick: Victoria is going for zero. NSW should emulate it. He writes:

Overall, Victoria’s roadmap is good. It identifies the right goal (zero active cases), it provides explicit criteria for when restrictions might be lifted (but unfortunately not as clear and simple as they could be), and each of the steps involves mostly appropriate restrictions.

But from other quarters Victoria’s decision to extend its tough restrictions has unleashed a torrent of criticism, complaint and condemnation. These fall into three distinct types.

First, there is technical criticism of the model the state used. All models involve a certain number of assumptions, and there will always be arguments about them.  Similarly there are criticisms of the state’s contact-tracing (including a revelation that contact-tracers were still communicating with doctors by fax machine). There is criticism of Victoria’s poor performance in comparison with New South Wales in relation to keeping the virus away from people in aged care. Such criticism is generally useful.

Second, there are complaints from businesspeople, mainly in industries catering for discretionary consumption such as cafes and hairdressers, that the lockdowns are hurting, and that Victoria should ease up as numbers come down.

Many businesses certainly are hurting, but even if the government were to open up early, there is the risk of another outbreak and the need for yet another round of harsh restrictions – the “yo-yo” effect as many describe it. Even more basically, it’s not just government restrictions keeping people out of cafes and hairdressers. It’s people’s fear. So long as there is a flow of cases, even if it is statistically small, most people will behave with an overabundance of caution. As behavioural economists know, people don’t necessarily take a rational approach to risk.

There is a salutary lesson in the story of Sydney’s Thai Rock Restaurant.  One case of coronavirus was traceable to someone who had lunch there. After deep cleaning it was probably one of the cleanest eating places in Sydney. But 90 per cent of customers deserted it – that’s over-sensitive risk aversion at work. It’s the same bias that makes us over-estimate the risk of shark attacks and airplane crashes.  And in the case of the current epidemic, this bias is probably functional, because if people overestimate their individual risk but underestimate the consequences of an outbreak, the two errors cancel out.

When cases keep popping up in a city, apart from a risk-tolerant minority, people aren’t going out to spend because they don’t feel safe. The idea that we can somehow optimise the imagined balance between health and economic outcomes by allowing some manageable flow of community transmission, is deeply flawed on two counts, because it overlooks the risk of the virus breaking out of control, and because it disregards economic research on how people perceive risk. But spokespeople for small business, and Liberal Party politicians, keep calling for authorities to “open up” prematurely. An understanding of economics has never been one of the Liberal Party’s strong points.

Third, Morrison and his henchmen can never resist having a go at a Labor premier. To the Liberal Party, politics is not about a contest of ideas or administrative competence. It’s about keeping Labor out of office, and regular condemnation of Andrews serves that purpose.

That brings us back to New South Wales. All praise to their contact-tracing. But why do they keep living on the edge of a precipice? Why don’t they take a few extra steps and go for elimination of community transfer? Is it that Berejiklian and her colleagues are terrified that they might embarrass Morrison by accidentally eliminating the virus?

Europe and America

Last week we looked at countries in our region, where infection rates are generally low.  The figure below shows infection rates in the EU, the UK, and the USA. It is notable that the infection rate in the USA has fallen, while in Europe it is steadily rising. (The bumps are to do with some very lumpy reporting by Spain.)

 Within Europe it’s a mixed story. France has had a rapidly climbing infection rate – now at about 110 new cases per day per million, which is where the US has fallen to – while neighbouring Germany has a rate of only about 15 new cases per day per million.  Spain’s rate is around 200 new cases per day per million, which is the same as America’s peak.  The UK has had a recent sharp increase in new cases – unsurprisingly a couple of weeks after their government was urging them to go out and enjoy themselves.

These are national figures. As in Australia, outbreaks of Covid-19 are concentrated – in European countries, holiday destinations seem to be particularly vulnerable.

Sources

Sources of generally reliable information on Covid-19 are on a separate web page

Australia’s fragile economy

The tax cuts we don’t have to have

The economy needs a fiscal stimulus, but not by bringing forward the Coalition’s tax cuts. Writing in Inside Story – If stimulus is the question, the government’s tax cuts aren’t the answer –  Adam Triggs outlines four reasons why the government should not proceed with them:

• fiscally we need a temporary stimulus, but tax cuts are permanent, and we need a strong tax base to cope with growing demands on the public sector;
• these tax cuts would favour the already well-off, most of whom have been lightly touched by Covid-19, and they do little or nothing for those who have been hit hardest by the pandemic because they have no taxable income;
• because they favour the well-off, who tend to save rather than consume, they would provide only a weak stimulus to consumption;
• they would exacerbate our present structural weakness of a high-debt, low-investment, low-growth economy.

The Australia Institute has a short but analytically-rich article Early tax cuts as stimulus, focusing on equity aspects of the cuts.  In both Stages 2 and 3 of the cuts there is zero benefit for the poorest 20 percent: almost all the benefits accrue to the top 20 per cent.

Writing in The Guardian, Greg Jericho points out that Australia needs public investment during the Covid recession, not tax cuts. If firms aren’t investing and individuals aren’t spending, “bringing forward the tax cuts is ludicrous”.  To get the economy moving again the only reliable source of demand is public investment.

A way out

The CSIRO will soon be launching a report COVID-19: Recovery and resilience.  They will hold a public briefing on Wednesday 16 September, 1500 to 1545, for which you can register. The briefing will cover:

• insights on Australia’s COVID-19 recovery opportunities;
• the key growth sectors identified to benefit from science and technology investment;
• the role of science and technology and how businesses can create economic value;
• the role of deployment-ready technologies for job creation.

 America’s election

“Losers” and “suckers”

By now we are well aware of Trump’s contempt for the country’s war dead. The essence of the article in The Atlantic – Trump: Americans who died in war are “‘losers” and “suckers” – is well covered in our media.

In our current fluid media environment some Australians may not fully appreciate the significance of this article appearing in The Atlantic. It’s an old and conservative monthly, founded in 1857, whose mission statement was signed by Ralph Waldo Emerson, Herman Melville, Harriet Beecher Stowe, and Nathaniel Hawthorne.

It’s too easy to dismiss this article a just another “opinion”, or as partisan gossip – a perspective reinforced by statements such as that by the ABC’s Fran Kelly who said in an interview on Monday that “The Atlantic could be considered as a left-leaning magazine”. It’s a sad reflection of the ABC’s drift to moral relativism when one of its most respected journalists considers the magazine of the Boston establishment to be “left leaning”.

Also, we should remember that the article was penned by Editor-in-Chief Jeffrey Goldberg, who has a well-established reputation as a journalist. We can only speculate on his sources, but they are likely to be high-ranking military officers who would naturally be disgusted by Trump’s contempt for war sacrifice, but whose codes of behavior preclude them from allowing their names to be associated with what could be seen as partisan statements.

What if it’s a tight count?

Last week, in Pearls and Irritations, Richard Butler outlined some of the ways Trump could manipulate the election result – US: Grand theft election.  A reader has drawn our attention to a CNN article What happens if we don’t know who our president is on Election Day? by Ross Garber of Tulane Law School. For example there is the possibility that in crucial states a large number of postal votes, or some dispute in the counting, could hold up counting. Such a dragged-out process could allow the count to be declared at a point when it is favourable to Trump. This is essentially what happened in 2000, when the US Supreme Court upheld Florida’s Supreme Court decision to halt a recount, handing the election to George W Bush.  Garber also draws our attention to other cases of disputed presidential elections.

Australian politics

Inside the Liberal Party

You may believe that the Liberal Party is run by a bunch of rich old blokes who plot their policy moves in the Melbourne Club. Or that it is a grass-roots party of the bourgeoisie from our leafy suburbs.

If so, you will find those images quickly displaced by the hard grot of reality in a 60 Minutes program “Dirty Games” about how a well-organised far-right faction of the Liberal Party – the same faction that knocked off Malcolm Turnbull – is trying to take over the Victorian branch of the party, with connivance of at least two sitting members – Michael Sukkar and Kevin Andrews.  The 26-minute program, made available through the Centre for Public Integrity, is about the faction’s already well-publicized branch stacking and their use of taxpayer-funded electorate officers to work as factional recruiters – which Geoffrey Watson SC suggests is “prima facie evidence of criminal offences”.  He goes on to say “I very much doubt that Mr Sukkar can or should remain a minister of the crown”.

There are no new factual revelations on the program, but it does take us backstage into the ugly workings of the Liberal Party, and it shows how a small handful of people can manipulate the party’s policies.

The crumbling Coalition

The National Party, having so often sided with the mining industry against the interests of farmers, is desperately trying to re-establish its credibility among rural communities. But it has a strange way of doing so – by threatening to wreck the coalition in New South Wales.

Hopefully this latest incident will bring forth some serious consideration about the future of Liberal-National Party coalition (and amalgamation) deals – deals that have brought us bad public policies in areas where environmental values have been disregarded, particularly water management and climate change. (Contributions to Pearls and Irritations welcome.)

Antony Green has been quick off the mark with a history of National-Liberal Party policy conflicts at federal and state levels. He also has some counterintuitive observations about the fortunes of the National Party in New South Wales, where it holds a mixture of urbanising coastal seats and more remote rural seats west of the Divide.

How did koalas get involved?  It’s about land clearing, an issue that’s been simmering for years. We might remember the extreme passion that saw a farmer murder a New South Wales environmental officer in 2014.

As struggling farmers confront the burdens of unfair markets and climate change, clearing land is a way of keeping their businesses going for another year or two. (That’s not to mention well-connected agri-businesses that do deals to clear large swathes of native vegetation.) Writing in The Guardian a year ago, Anne Davies forecast that land clearing in New South Wales would spark cabinet tensions. And earlier this year the Nature Conservation Council warned that land clearing in New South Wales was soaring under weakened state laws.  We can be sure that whatever is happening to koalas – the quintessential “charismatic species” – is but a small part of the environmental cost of land clearing.

The conflict will simmer on so long as farmers are struggling, so long as there is loss of farmland to urban expansion, and so long as there is a substantial group of farmers who do not understand that property rights to rural land are conditional and limited.

Japan and Germany

Shinzo Abe’s economic struggle in an ageing, rich country

Shinzo Abe’s economic priorities were to restore economic growth, to bring inflation up to target, and to reduce government debt.  But over the seven years of his last term in office the country’s economic growth and inflation have been close to zero, and government debt remains at around 150 per cent of GDP – all before the pandemic hit this year.

Writing in Project Syndicate – Retiring Abenomics – Daniel Gros does not sheet all the blame to Shinzo Abe for failing to live up to his promises. Rather, he sees the problem in terms of Japan’s basic economic and demographic structure – “an ageing society with excess savings and abundant capital”. He sees Japan’s experience as a preview of the future for other prosperous, ageing “developed” countries.

The Economist has a more generous assessment of Abe –  Abe Shinzo’s legacy is more impressive than his muted exit suggests, but its praise is confined to his role in raising Japan’s profile in foreign affairs, including his work in saving the Trans-Pacific Partnership, and for reforms in corporate governance. (Remember that if you register with The Economist, you can read up to three articles a week.)

Readers of Pearls and Irritations will have seen a recent re-post from John Menadue: What a post-war contrast – Germany and Japan; Angela Merkel and Shinzo Abe. He points out that to cover for his domestic failures, Shinzo Abe has been placating his country’s ultra-nationalist right, antagonising both China and Korea. Who can forget Shinzo Abe’s visit to the Yasukuni Shrine in 2013, and regular visits by senior members of his administration over recent years?

Menadue attributes Japan’s postwar ongoing tradition of far-right nationalism to  America’s “soft” occupation in 1945, which didn’t purge the country’s far right, and left the Emperor on his throne. This was in strong contrast to America’s comparatively hard occupation of Germany, which gave strong support to progressive liberally-inclined movements.

Germany – notes from a grown-up country

A Pearls and Irritations reader who has been enjoying a winter in Melbourne without football, has sent a link to a review of John Kampfner’s book Why the Germans do it better: notes from a grown-up country, in the British magazine The Week. How is it that Germany, with its high wage structure, has managed to sustain a large and globally competitive manufacturing industry? Why do Germans have the knack of electing good governments? The reviewer attributes Germany’s success to its postwar culture – “their tireless self-questioning – a consequence of their Nazi past, which has given them an acute awareness of democracy’s fragility and a tendency to prize ‘unassuming competence over flashy charisma’”.

Getting along with China

Peter Greste on harassing journalists –  “Nobody wins out of this”

On the ABC’s The World, Peter Greste talks with Beverly O’Connor about China’s crackdown on Australian journalists – particularly the intimidation of Birtles and Smith and the detention of Cheng Lei. While the expulsion and detention are aimed at Australia, they also have implications for all journalists in China. “Nobody wins out of this”, he explains. (6 minutes).

Bob Carr on the Australian journalists (and on Julian Assange)

On the ABC’s Breakfast program, Bob Carr discusses the context of China’s crackdown on Australian journalists.  Without offering any excuses for China’s authoritarian behavior, he points out that the Coalition Government has been gauche in its dealings with China. It has allowed itself to be seen as taking its cues from Washington, rather than acting as an independent nation with its own interests. It’s as if we are seeking “a pat on the head” from the Trump administration when we legitimately criticise China, and we have gone out of our way to be unnecessarily offensive.

In the last minute of this twelve-minute interview he comments on our government’s failure to use its credit with Washington to assert the interests of Julian Assange. The grounds on which we have legitimately criticized China for its intervention in Hong Kong – its extraterritorial extension of powers – are the same as those we should be criticising the USA for because of its bullying of Assange. (12 minutes)

Kevin Rudd on the broader context

In a 16-minute interview on ABC News, Kevin Rudd outlines what he knows about the intimidation and detention. He explains the situation in terms of the deteriorated US-China relationship, power shifts and domestic politics within China, and the Coalition’s tendency to “pull out the megaphone” when there is a conflict with China, playing to domestic politics, rather than working through quiet diplomacy.

China isn’t the USSR

Writing in Foreign Affairs Elbridge Colby and Robert Kaplan call for a more mature American response to rising Chinese authoritarianism and nationalism – The ideology delusion: America’s competition with China is not about doctrine. If Americans – liberal and conservative – see their conflict with China in terms of a competition of ideologies, as it did in the Soviet-era Cold War, it will overlook the more serious issue of China’s desire to achieve economic and security hegemony over East Asia. Many countries in the region want to ensure that China does not dominate the region. “These states come in a variety of shades, ranging from Australia and Japan to India and Vietnam. All of them, regardless of their domestic political arrangements, share an interest in preserving their autonomy from domineering Chinese influence.”

(Elbridge and Kaplan tend to see America as leading cooperation between Asian nations – a point with which many readers will disagree. But that assumption does not detract from their more general point about China’s interests.)

Polls

Essential – a swagful of polls with one encouraging surprise

Essential’s two weekly poll is mainly concerned with Covid-19 issues, and it includes monthly leadership and preferred prime minister ratings.

On Covid-19 issues, people generally believe that the aged care sector, particularly the privatized part of the sector, has performed poorly.  When asked “who is most responsible for the recent Covid-19 outbreaks and spread of the virus within aged care facilities?”, 31 per cent blamed the federal government, 28 per cent the state government, and 41 per cent the aged care providers.

Since late May, Essential has been asking a question: “How would you rate your state government’s response to the Covid-19 outbreak?”. The responses over this period are plotted in the graph below.  It is notable, but hardly surprising, that people’s assessment of the Victorian Government fell sharply in July, when case numbers rose and the government tried (unsuccessfully) to lockdown areas by postcode.  But there was no significant additional fall in approval in August when the present Stage 4 restrictions started, nor has there been any further fall in approval as it became evident that Stage 4 would probably have to be extended. And Victoria’s approval, at 50 per cent, is not all that far below that of New South Wales, which stands at 57 per cent.  South Australia and Western Australia, which seem to have eliminated community transmission, have ratings of 74 per cent and 87 per cent respectively.

These findings would be consistent with a community attitude that gives governments approval or otherwise on the basis of the absence or presence of community transmission, rather than on a scale related to the amount of transmission.

On political leadership, Essential has run its monthly questions on approval for Albanese and Morrison and preferred prime minister. Labor hopefuls may notice some improvement in these figures, but it’s a bit early for them to break out the sparkling and to sing the Internationale.  We’ll see what the polls show next month.

The most revealing finding in the Essential survey relates to a question “It has been proposed that the Medicare levy could be increased from 2% to 2.65% to fund improvements to the aged care sector. To what extent would you support or oppose this increase?”.  If we were to believe the Coalition’s assumption that Australians categorically oppose higher taxes, we would be surprised by the results: 36 percent of respondents support the idea, 32 per cent oppose, and 32 per cent are indifferent. Older people are more supportive of the proposal, and there is a little partisan difference.

These findings align with frequently-replicated research. People generally support higher taxes if they are confident that they will be spent on needed public goods and services.  They are not enthusiastic about giving governments more money to splurge on sports facilities in marginal seats, over-priced submarines, consultancies and contracts awarded to well-connected mates of the ruling party, and subsidies to gas producers and well-off schools.

Roy Morgan – Victorians getting weary of restrictions, but still support them

Roy Morgan has published a poll of Victorians, showing that people still support restrictions – even the curfew gets support with 61 per cent opposed to it being ended – but support for restrictions has been falling.

One notable revelation relates to partisan differences.  Coalition supporters are much more in favour of lifting restrictions than Labor, Green and other supporters.

Australians neglected in dangerous places

London, UK

In one of Europe’s offshore islands, in a country with a justice system not entirely separated from its political system, an Australian has been held in custody for a non-violent crime with limited access to legal support, while he faces an extradition application to the US for the crime of practising journalism.

As Mark Feldstein of the University of Maryland points out, this is the first case of the US using its Espionage Act for journalistic activities – US conspiracy charges against WikiLeaks founder Julian Assange politically motivated in Computer Weekly.

On Tuesday morning barrister Jennifer Robinson, who has represented Assange for many years is interviewedon the ABC’s Breakfast program. She explains that Assange’s conduct “is precisely the same act that journalists engage in every day of the week”.  The charges set a dangerous precedent, because they criminalise public interest journalism. She describes how a whole set of new accusations have been laid at the last minute, and points out that the judge has refused to allow a deferral to give Assange and his lawyers time to consider this new material. She says that “his ability to properly defend himself, in a case in which the United States continuously changes and moves the goal posts, is fundamentally undermined”. (11 minutes)

Writing in the Canberra Times, Tony Nagy and Greg Barnes warn that if Assange is sent to the US, it will endanger journalists everywhere. They are dismayed that “the silence on the plight of Assange – both in the broader media and amongst the political spectrum – is deafening”.

You can find much more about the case on the Assange Campaign website.

North-east Syria

On the ABC’s Breakfast program Mat Tinkler, deputy chief executive of Save the Children Australia, confirms that 5 women and 14 children, all Australians, have been removed from the al-Hawl refugee camp in north-east Syria, presumably by Kurdish forces. They have probably been moved to a place that’s safer and with better health care, but we cannot be sure.  Tinkler points out that, in spite of Covid-19, other countries –  UK, Germany, France, Denmark –  have responded to Kurdish requests to repatriate their people that the Kurds offer to help in the process.  The best our Government is doing is to say they are “monitoring” the situation.

Government debt

Macroeconomics 1 in five minutes

The Economist has a short YouTube video The Economist Essentials: Public Debt.  Without going so far as to endorse “modern monetary theory” (that would be a bit too far for The Economist’s readers) it puts the case for more government borrowing, explains how governments borrow, and points to times when governments have accumulated huge debts. So long as GDP rises, governments can handle debt – just as a company can carry more debt as it grows.  (The video’s explanation of the co-existence of low interest rates, low inflation and low investment is a little deficient – surely extreme disparities in wealth have something to do with it.)

The Smithsonian online

Visit the Smithsonian National Portrait Gallery.

You can see up to 3 800 works of art in the Smithsonian National Portrait Gallery without having to pass through an American airport or fly on an American airline.

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

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