It’s a Nation, Not Just an Economy

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Recession? What recession? Image by www.pixabay.com

It’s traditional to write about economics and economists at this time of year, the end of the financial year in most jurisdictions. Publishers like to ask economists to offer their predictions for the year. The cruel editors then go back a year later and mark their score cards.

Forecasts are all very well in ‘normal’ times, but few had forecast a deadly global pandemic that (so far) would infect 10.5 million people and kill 511,000. Even in Australia, where the progress of the virus has been carefully monitored, we have had 7,832 infections and 104 deaths. The long-term effect on economies – ours and every other country’s – is yet to be seen.

Trying to forecast economic trends for the next year or two has  been rendered difficult by the ongoing effects of COVID-19. Nevertheless, economists will try, because they are (in my experience) optimistic people. Before we go to our panel of experts (he said, sounding like David Speers on Sunday morning), let’s recap what the politicians are saying.

Prime Minister Scott Morrison recently promised to lift economic growth by “more than one percentage point above trend” (an average 4% per year), to 2025.

Economists from 16 universities in seven states came to a less ebullient conclusion, forecasting annual GDP growth averaging 2.4% over the next four years, “tailing off over time”.

22 economists were polled by The Conversation, an independent alliance of journalist and academics, and delivered their forecasts for the next four years.

The headline view is a weak recovery, getting weaker as time goes by, amid declining living standards. The panel expects weak economic growth in all but one of the next five years. The panel comprises macro-economists, economic modellers, former Treasury, IMF, OECD, Reserve Bank of Australia (RBA),. financial market economists and a former member of the RBA board.

The panel included well-known doomsayer Steve Keen, who writes for Crikey and other publications. Keen was the economist who in January forecast a 75% probability of a recession.

The ANU’s Crawford School of Public Policy Visiting fellow Peter Martin wrote an 18-page report on the survey, warning that the results imply living standards 5% lower than what the PM expects. Moreover, the panel expects unemployment to peak at 10% and to be still above 7% by the end of 2021. Wages are unlikely to grow beyond 0.9% in 2020, lower than the rate of inflation (expected to be 1.2%).

I’m frankly surprised The Conversation found 22 economists prepared to forecast the future, particularly as it seems a second wave of COVID-19 is upon us. One economist withdrew from the panel before the poll saying, “It’s a mug’s game now”. Another who did participate said forecasting had been reduced to “guessing”, in the context of an unprecedented event.

The panel more or less agreed on expectations for incomes and production. They expect those figures to shrink when the June quarter figures are released, confirming that Australia is in a recession. The panel forecast an average 4.5% decline in GDP for 2020.

So what’s the good news?

The Government’s budget deficit will be easily financed, with the 10-year borrowing cost at 0.9% and the panel forecasting 1.4% per year thereafter and not expected to rise until late 2021.

The RBA has made a commitment to buy as many bonds as needed to keep the figure low. For this reason alone, Australia has maintained its AAA credit rating.

Mining investment is expected to continue its recovery in 2020 into 2021, after huge falls between 2014 and 2019, the latter attributed to the collapse in infrastructure projects and large LNG plants being completed.

It might be bread and circuses, but don’t forget the Federal Government is unleashing a second round of stimulus payments on July 10. Those eligible received the first payment between March and April. Stimulus payments include $750 for eligible pensioners, seniors, carers, student payment recipients and concession card holders.

Two stimulus payments totalling $1,500 might not seem like much but in terms of people with no disposable income, it is an absolute windfall.

A homeless person could spend his or her $750 on a swag or a Himalayan standard sleeping bag, fleecy pants and jacket, thick socks, underwear and a cheap pre-paid phone. They might even have money left over for smokes. If you are employed but have no disposable income, you might be tempted to yield to those ‘sale ends tomorrow’ exhortations to buy a smart TV, laptop, tablet or mobile phone.

Whether you are unemployed and poor or the working poor, the main problem is a lack of disposable income. The Conversation’s panel expects disposable income to fall on average 4.5% for the year to December 2020. Most also expect household spending to decline in calendar 2020 (by 4.3% on average).

Gloomy as this picture may be, it redresses the balance between reality and the daily ‘spin’ from State and Federal governments.

In his 1964 book, A Lucky Country, Donald Horne said Australia was “a lucky country run by second-rate people”. By that he meant that Australia was lucky to be blessed with natural resources and agricultural wealth, despite its second-rate political and economic system. Decades later, it seems, more Australians agree with Horne’s harsh assessment, which has been a set text in universities since it was published.

A 2018 survey showed that 40.56% of Australians have lost faith in the notion of democracy since 2007.  Successions of administrations – Rudd, Gillard, Abbott, Gillard, Turnbull and Morrison – have evidently lost a lot of the people somewhere along the line. The Guardian mentioned this survey in a story about politicians billing taxpayers for doubtful travel expenses.

Trust and Democracy in Australia shows a majority of Australians have lost faith in democracy, from a high of 86.5% trusting in 2007 to 40.56% in 2018. As The Guardian’s Christopher Knaus and William Summers comment in their article on travel rorts, “On current trends, that would leave fewer than 10% of Australians trusting politicians and political institutions by 2025”.

We who live in this vast, under-populated democracy should be grateful for what we have. The sun is still shining, the water is potable, it’s a mild winter thus far; the supermarkets have replenished their shelves; the footy is back and life continues relatively untrammelled. (Ed: Broncos fans may not agree).

All up, Australia is a considerably better place to be than the favelas of Rio De Janeiro, the slums of Kolkata or Mexico City or even one of Donald Trump’s Republican States that thought the coronavirus was ‘fake nooz’.

Even in the UK, our far away traditional Motherland, last month’s relaxing of the COVID19 lockdown appears to have led to the emergence of 10 new hotspots across England. This unhappily coincides with news that the level of public debt has surpassed the UK economy for the first time since the 1960s.

If you are still feeling besieged, spare a thought for migrants forced out of Yemen at gunpoint by the Iran-backed Houthi militia that controls most of northern Yemen. The militia has expelled thousands of migrants since March, blaming them for spreading the coronavirus. According to a report in the New York Times this week, they were dumped in the desert without food or water.

Compare that to young Queenslanders complaining about not being allowed to dance at their local nightclub.

It’s all about perspective

(The Democracy 2025 report is available for download here):

FOMM back pages (despite the headline, this is about economics)

Censorship, guns and the right to arm bears

 

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This image is classified (S) for satire under FOMM’s censorship guidelines

I was idly wondering if I should have a go at George Christensen for pulling that silly, anti-greenies gun stunt at the firing range but self censorship kicked in. What if he knows where I live? I blanched. The process known in journalism school as ‘self censorship by osmosis’ still kicks in, even 18 years down the track.

You may have assumed I was about to jump into the very deep pool of acrimonious discourse about mass shootings, guns and gun control. Actually, no, there are enough rabid views out there from one side and the other. Perhaps you will have seen Greens Senator Sarah Hanson-Young’s repost of the kind of vile trolling one can attract by advocating for the environment (if not, don’t bother looking it up – Ed.)

Instead, I thought we should look at a worrisome instance of censorship; where a respected economic analyst/journalist had an article taken down by the national broadcaster, the ABC. Emma Alberice’s reasoned piece about corporate tax cuts was removed by ABC management, reportedly after complaints from on high about its alleged lack of impartiality. Alberice’s article argues there is no case for a corporate tax cut when one in five of Australia’s top companies don’t pay any tax.

After public criticism, the ABC deflected cries of ‘censorship’ saying removing the analysis and an accompanying news story were ‘entirely due to concerns about Ms Alberici’s compliance with ABC editorial policies that differentiate analysis from opinion’.

The analysis has since been scrutinised by experts and given the seal of approval. It has even been re-posted at a public affairs website owned by the eminent Australian, John Menadue, AO. You may recall Menadue. He started his working life as private secretary to Gough Whitlam (1960-67), before forging a career in the private sector then returning to public service in the mid-1970s. He has since led a distinguished career in both public and private life, most notably as an Australian diplomat.

Mr Denmore, one of Australia’s more incisive commentators on media and economics, wrote this in Alberici’s defence:

Mr Denmore (the pseuydonym of a former finance journalist), sees this issue as plain old-fashioned censorship.

He concludes that Alberice was merely offering insights, which have got the nod from some serious-headed economists, as ‘uncomfortable truths’, which those in high government office and boardrooms found too confronting.

Now, a week later, the ABC has reinstated* Emma Alberici’s analysis, albeit with some passages removed. As former ABC journalist Quentin Dempster reported in The New Daily, the author and her lawyers negotiated an agreed form of words for the reposted analysis.

The removal of Alberici’s original analysis coincided with a planned US visit by a high-level delegation of Australian business and government leaders.  The latest advocate of global  of ‘trickle-down economics’,+ President Donald Trump, will meet with PM Malcolm Turnbull today. No doubt Mal will be taking notes on the US president’s ‘open for business’ approach of slashing corporate tax rates from 35% to 21%. Australia’s more modest proposal, which is currently blocked in the Senate, is to reduce the corporate tax rate from 30% to 25%, over a decade.

+A term attributed to American comedian Will Rogers, who used the term derisively, as did later opponents of President Reagan’s ‘Reaganomics’.

The nation’s top business leaders, under the umbrella of the Business Council of Australia, will also meet with US governors and top-level US company executives. Australian State Premiers, including Queensland’s Annastasia Palaszczuk, will also attend.

Business Council head Jennifer Westacott told the Sydney Morning Herald she feels that Australian business is “in the weeds of politics” and

“Meanwhile in the US they’re getting on with it.”

Westacott and Council members support the Australian corporate tax cut proposal as the only policy that can deliver jobs and growth.

Opposition leader Bill Shorten is taking the hard line – a corporate tax cut cannot help ordinary people, at a time when companies are using tax havens and keeping wages low. Shadow Treasurer Chris Bowen admits there is a case for company tax cuts, but said the LNP’s plan is unaffordable when the budget is in deficit.

The attempt to gag debate on this subject is, however, more worrying than the toadying going on in Washington. Australia ranks 19th in an international survey of countries judged on press freedoms. Reporters without Borders (RSF) maintains the list of 180 countries, many of whom oppress the media in far more serious ways than plain old censorship.

Australian media freedoms pursued by stealth

At first glance, 19th from 180 sounds good, but Australia has some issues, not the least of which is concentration of media ownership. The risk of self censorship is high, given the lack of job opportunities elsewhere. The 2017 survey notes that new laws in 2015 provide for prison sentences for whistleblowers who disclose information about defence matters, conditions in refugee centres or operations by the Australian Security Intelligence Organization.

I sometimes fret about a FOMM I wrote before these laws were introduced – an eyewitness account of US Marine movements after a chance encounter at a Northern Territory roadhouse.

“Aw shucks, we all just stopped to use the latrine, Ma’am.”

There’s more: a new telecommunications law has opened the door for surveillance of the metadata of journalists’ communications. Federal police raids on Labor Party parliamentarians in 2016 violated the confidentiality of sources. The Reporters without Borders report says the latter showed that authorities were “more concerned about silencing the messengers than addressing the issues of concern to the public that had been raised by their revelations”.

Meanwhile, a new draft national security bill seeks to restrict foreign interference in politics and national security. It contains secrecy and espionage provisions that could result in journalists being sent to prison for five years just for being in possession of sensitive information.

Daniel Bastard, the head of RSF’s Asia-Pacific desk, called the draft bill “oppressive and ill-conceived”.

“If this bill were passed, journalists receiving sensitive information they had not sought would automatically be in violation of the law. If this law had existed in the United States in 1974, the Watergate scandal would never have come to light.”

The free-wheeling nature of social media ensures that dissenting discourse does not stay banned for very long, though often exposed to a much smaller audience.

You may censor me, but never my T-shirts

I suppose now you want me to explain the relevance of the Right to Arm Bears T-shirt, eh? This now threadbare item was bought from a tourist shop on the Canadian side of Niagara Falls in 2010. I have been trying to find and purchase a replacement online. The manufacturer (Gildan) has similar T-shirts but none as fetching as the grumpy-looking bears wearing hunting jackets.

Wearing a shirt that makes a political point, however ironically, is an individual’s right in a free country to express an opinion. In my case it succinctly states my position on American gun laws, just as another T-shirt bought from a stall at Woodford, depicting a full-masted, 17th century sailboat (”Boat People”) says a lot about my attitude to refugees. Perhaps I should replace it with a Save the ABC shirt. Seems like the ABC needs all the friends it can find.

*Read Emma Alberici’s revised analysis here:

More on press freedom.

Government buyback could solve power crisis

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Wilpena Pound solar/diesel power station SA Photo by Bob Wilson

“If you’ve got money in your pocket and a switch on the wall, we’ll keep your dirty lights on.” So goes a song by American alt-country singers Darryl Scott and Tim O’Brien about coal mining and power generation.

Their album Memories and Moments includes a version of John Prine’s Paradise, which remains the definitive song about the downsides of coal mining.

That seemed a noteworthy way to introduce the potentially dry topic of energy, be it coal-fired, hydro, nuclear or solar/wind power. Continue reading “Government buyback could solve power crisis”