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Thus Spake Mungo: another week, another dollar or billion

The consensus is in: the economy rules, okay? Finally, what remains of the national cabinet is essentially united.

Restrictions are not to be reimposed any further, and those still in place will be removed as quickly as possible. The latest slogan is that we cannot turn the economy on and off like a tap. Well, we can of course, but we won’t. The price would be too high.

There may be some tweaking, but it will be with the primary aim of enhancing commerce, not public health. Although, fortunately, many enterprises have recognised that keeping people alive and out of hospital makes pretty good business sense.

And the situation is indeed dire. According to the latest estimates, by the middle of next year the deficit will have hit $230 billion, with net debt climbing to $610 billion – 31 per cent of GDP, both easily unenviable post-war records.

Those figures are horrendous. But perhaps the most worrying factor is the collapse of confidence. The Westpac survey revealed a drop of six per cent in June alone, with worse to come. If hope is being abandoned, we are in for a long and painful road before recovery is even on the horizon.

Many of the commentariat urging the need to break the shackles and get back to the new normal, are undermining the very foundations required to give it a fighting chance

And for this reason alone, it is perplexing, to say the least, that many of the commentariat urging the need to break the shackles and get back to the new normal, are undermining the very foundations required to give it a fighting chance. The relentless slagging of Victoria’s Premier, Daniel Andrews, and his handling of the crisis is ensuring that confidence will only be further eroded.

It looks almost like conscious sabotage – not just to the economy, but to the government that the mainstream media generally supports. And the marketer in Scott Morrison realises this, which is why he has not joined in the chorus of denigration. He knows that even if he can live without Andrews, he cannot live without Victoria, given that the garden state contains almost a quarter of the national economy.

However, he either cannot or will not restrain his media cheer squad, particularly the zealots of the Murdoch press. For The Australian, the crusade against Andrews has become yet another of its holy wars – the man must be exterminated, and only when he is dead and buried can normal politics be resumed.

Like much of the language of economics, it is no more than jargon for the bleeding obvious: don’t throw good money after bad

So in another effort to give respectability to naked self-interest, our national daily proffered a shill from the Liberal Party’s PR firm, Barton Deakin, to spruik a fringe economic theory he calls ‘the sunk-cost fallacy.’ Like much of the language of economics, it is no more than jargon for the bleeding obvious: don’t throw good money after bad.

The author of this weighty thesis, one David Alexander, relates the cliché to COVID-19 by suggesting that the strategy of suppression has failed and therefore a different tactic is needed – presumably the ‘let it rip’ approach, favoured by countries like Sweden with its huge infection and death count.

So why spend any more hard-earned revenue? And there would be a bonus: most of the deaths would be the old and frail, unproductive recipients of welfare. Think of the extra dosh we could save. A bit tough on the victims and their nearest and dearest, perhaps, but toughen up, cupcakes. Think of the profits.

However Alexander is himself embracing a fallacy, because the suppression strategy of the past did not fail. Mass testing, quarantine, lockdown, hygiene, social distancing and border closures succeeded in shutting down the first wave of the virus: the curve was well and truly flattened, to the point where most restrictions were lifted.

Now the second wave is upon us and the clusters are emerging. But there is every reason to suppose that repeating the same harsh dose would be equally successful

Now the second wave is upon us and the clusters are emerging. But there is every reason to suppose that repeating the same harsh dose would be equally successful. And yes, there would be – will be – a price; no such thing as a free lunch.

But on any rational cost-benefit analysis, it would be a price worth paying if it would take us back to where we were a few short weeks ago, when salvation beckoned. Which brings us back to the vital need for confidence – for reassurance – that all the governments involved know what they are doing.

And once again, last week provided a useful example. The COVIDSafe app, the telephone device sold to the public as a necessary tool to combat the virus, has widely been derided as a dud. As many of us suspected at the time, it has failed to trace any of those actually infected with the virus.

At the time, Morrison declared it absolutely vital – 10 million Australians, 40 per cent of the population needed to download it before restrictions could be lifted. In fact he had to walk away from that ultimatum before reaching the goal. But the figure did reach 6.65 million (one in four of those owning mobile telephones), not a bad result, and one that proved that if the authorities acted swiftly and decisively the public would respond.

And from that point of view it was a success – confidence was boosted, the essential ingredient in working our way out of the panic in the pandemic. This is the model Morrison and the premiers must follow – do not be distracted by voodoo magic solutions and the obsessions of media mercenaries, keep focused on what the public will believe and accept.

Now the second wave is upon us and the clusters are emerging. But there is every reason to suppose that repeating the same harsh dose would be equally successful

Announcing JobTrainer is a useful start, and this week our Panglossian treasurer Josh Frydenberg will tell us how we are to get through the fraught days until the October budget. And you can bet he will put the best possible spin on it – no gloom and doom, just silver linings, rose-coloured glasses and rainbows all the way.

Our leaders have obviously concluded that the punters will not wear another prolonged and arduous lockdown, which fits with their own desire to make economic recovery their main target. Now they must concentrate on explaining it, cajoling, and reassuring the masses that they have a plan, they know what they are doing, and that it will work.

Of course, it may not; as someone has mentioned, these are unprecedented times. But at least we will not die wondering. Coronavirus remains the biggest danger, but uncertainty comes up a good second.


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17 responses to “Thus Spake Mungo: another week, another dollar or billion”

  1. Emily Stewart says:

    The consensus in the government is that the rules of the economy balances the books but the final say belongs to the treasurer Josh Frydenburg this coming Thursday. The national cabinet will stand behind the treasurer and that’s final. Tap, tap, tap. Who is that tapping?

  2. Lyanne Jones says:

    Where does Mungo get his information re: “the ‘let it rip’ approach, favoured by countries like Sweden with its huge infection and death count”?
    This detailed analysis of Sweden’s approach finds much value in the Swedish approach: https://www.nationalreview.com/2020/05/coronavirus-crisis-sweden-refused-lockdown-other-countries-following/
    Quote: With a death rate significantly lower than that of France, Spain, the U.K., Belgium, Italy, and other European Union countries, Swedes can enjoy the spring without panic or fears of reigniting a new epidemic as they go about their day in a largely normal fashion.
    Dr. Mike Ryan, the executive director of the World Health Organization’s Emergencies Program, says: “I think if we are to reach a new normal, I think in many ways Sweden represents a future model — if we wish to get back to a society in which we don’t have lockdowns.” Unquote.
    While the clamour of the media is for more restrictions, as the WHO executive director Dr Mike Ryan alludes, the Swedish approach balances the ill effects of longterm economic hardship on every aspect of life, including health and comes up with an equitable solution that doesn’t fill the hospital beds.

  3. So we now target the economic recovery as number 1 &
    the ill & aged [uncertainty] as 2. The ‘don’t throw good
    money around after bad’ almost translates into what
    looks & sounds like ‘the killing fields’. I guess we could
    try singing a song for the Treasurer… ‘for he’s a jolly
    good fellow’ on Thursday. I’ll be counting ‘coup’ for
    sure by then.

  4. Barrow says:

    Stefanie you are relentless when you refer the future of our kids regarding Global warming???
    Now this is REAL Stefanie not just some hypothetical computer modeling propaganda.. future generations will be paying for this debt and that is a fact ,not just some fairytale.. you see Governments labor – Greens or the Coalition are answerable to the Taxpayer’s Stefanie and it would be taxpayer’s expectations that they responsible
    Fiscally.. this current governments approval ratings ATM are through the roof .. and for good reason.. stop being so negative ,, and maybe for once give some credit to the government in these
    Trying times … cant believe it !!

  5. Ken says:

    Weeeerl !
    Yep, confidence is the name of the game !
    I personally, have had people commenting on how well Mr Morrison has handled the pandemic !!!!?????? This is inspite of the idiotic CMO Murphy (chief medical officer),who I suspect is another is a member of the congregation , issuing platitudes and hypocrisy in the nature of, masks are unnecessary, children aren’t affected ,14 days is long enough to incubate , temperature checks have any validity ( when some spreaders have NO symptoms ) and the idiotic notion that 1.5 meters is anything but symbolic in prevention of contagion .
    Due to the misinformation and platitudes, we are about to experience the fate of those countries who have prioritised the market above our lives and ongoing threat to all we hold dear.
    The world has shifted and we will never know ‘normal’ again. It will take time before the obvious seeps through to government, that the economy is irrelevant when you family is dropping around you.
    In the mean-time the government is in control and a vaccination is minutes away and………………………..DON”T PANIC !
    Cheers G”)

  6. Liz L says:

    The article you mention Lyanne is interesting but dated May 3 when Sweden was championed by those denouncing overreaction and fear mongering. Ten plus weeks is a long time in a pandemic it seems.

    From my reading about Sweden it currently sits at 7 th on the league ladder of deaths per 100k of population, just below Italy and Spain, a little further below the UK ( also a bit hung-ho) but above the US. It is way out of whack with other Scandinavian countries – coronavirus.jhu.edu

    Sweden’s chief epidemiologist, Anders Tegnell, has reportedly acknowledged that the country has had too many deaths from Covid-19 and should have done more to curb the spread of the virus.

    On June 3 the Guardian reported: ‘Norway and Denmark announced last week that they were dropping mutual border controls but would provisionally exclude Sweden from a Nordic “travel bubble” because of its much higher coronavirus infection rate’. Not an ideal outcome on the economic front.

  7. lindy stacker says:

    HELLO ! SWEDEN’S DEATH RATE HAS RISEN SIGNIFICANTLY & ISN’T SLOWING DOWN.THIS MEANS THEY HAVEN’T EVEN ENTERED THE 2nd PHASE.Their is no other way to beat Covid except with elimination or it Will beat us. NZ is a perfect & undeniable example of going hard & fast sooner the better. Their economy is recovering fast & their is no uncertainty now in relation to spending.Other countries have reaped the SAME benefits as NZ, including Sth Korea/Phillipines/Singapore/ Hong Kong.Listen to the epidemiologists they are extremely concerned currently over a ‘suppression strategy’ that clearly isn’t working.SCOMO is largely interested in profit , so whilst he is saying it’s time to come out from under the Doona HE & HIS PARTY ARE HIDING UNDER IT & REFUSING TO RE OPEN PARLIAMENT. Obviously protests aren’t acceptable ( no surprise here) to the LNP but the footie & opening up pubs is acceptable .

  8. Joachim says:

    Lyanne, “….equitable solution….” This is an interesting thought. I’m not sure what is equitable about the elderly ( the most severely impacted directly by Covid ) being sacrificed either through acceptable ( to whom exactly ) level of deaths or being locked away indoors so as not to be exposed to Covid. Is this how we now value the elderly members of society? It seems that “the let it rip” is more about going back to how it was pre-Covid and any collateral damage ( ie resulting deaths as Covid remains very active ) is just the price that must be paid as the economic priority now rides over the public health priority.

  9. Toenails says:

    Yes Sweden did ‘let it rip’ and has suffered the consequences – 6,000 deaths with population of 10m – imagine if proportionately Aust ‘let it rip’ then had 15,000 deaths instead of 120

  10. Ray Armstrong says:

    Sick and tired (Billy Thorpe) of Liberals sprouting the hoary old “future generations will be paying for this debt” nursery rhyme. It doesn’t work like this. Economists like Ross Gittins, Alan Kohler, Professor Bill Mitchell, Steven Koukoualis and heaps of others have exposed the lie. Governments rarely repay debt. What they mainly do is roll it over while they wait for the economy to outgrow it, with help from inflation.
    The government did this during the two world wars. Professor Bill Mitchell professor of Economics at the University of Newcastle holds a similar view. He and other economists state that if it is the government is the one creating the currency then it doesn’t have to record it as in debt. The government really doesn’t owe anybody anything. The media paint any sort of debt as some approaching catastrophe. America, Britain, Japan are often described as strong economies yet the USA for example has a debt of $25 trillion and life just goes on regardless as the Donald brags about ‘our strong economy’ for example. Here in Australia, where we have a manic obsession with debt and the 2nd lowest debt in the world under Rudd during the Global Financial Crisis, we continuously flagellate ourselves into a frenzy over it. Labor has lost elections over debt when in comparison with the rest of the world it was at record lows and we even had a AAA credit rating from all of the world’s rating agencies. During elections in other countries with 20 times our debt, it is never mentioned!
    https://www.abc.net.au/news/2020-07-20/is-the-government-running-out-of-money/12472078?section=business&nw=0

  11. You can’t believe anything that is believable… Barrow.
    You don’t / won’t listen / to the fire-fighters who put
    their lives on the line to save all ages when our
    ‘leader lectures’ the warnings out there from the very
    people who are hurting due to the loss of listening.
    You’ll not allow common sense a place where it
    justly belongs – the life & lively-hood of the planet.
    It’s a waste of time – your batting the breeze – just to
    show you think you can when the world’s in dire
    straits. You reckon science stinks. It’s okay each day
    the land gets poisoned, isn’t it? It’s thumbs-up to
    frack this land when we know what fracking does
    since the end results are all around the world –
    kids & grown ups get cancers that can’t be treated.
    It’s allowed, according to your beliefs, that the
    farmers lose their poisoned lands because our
    government chooses $$$$ over our drinking
    water. People do have a right to fight for their
    country. The war I speak of is ‘within’ the rights
    of humankind. The pandemic now joins Climate
    problems that no-one’s going to solve due to a
    pretend government’s deliberate mish-mash.

  12. Ray is correct. Go check it out. And – I am
    a Billy Thorpe person too. I sang his stuff
    years ago.

  13. Joachim says:

    Yo Barrow old son, the government’s approval rating through the roof for good reason you say. Incompetence deserves its rewards, yes…….Sports Rorts, RoboRobberyDebt, ‘Bushfire Catastrophe Response, Climate Emergency, Millions of Aussies left behind or discriminated in the Covid response. I know, your ScoNO doing a kickass job on important affairs.

  14. Barrow says:

    Seriously Joachim where do you reside?? Are you even in this country? This country is the best in the world , best social system, where is better ATM Joachim? Best medical system? Where is better Joachim? This government is traveling just fine
    Contrary to you endless complaints!!!!!!!
    Incidentally how are the opposition performing ATM ?
    Corrupt labor in Victoria and Mr Andrews abject failures …. get with the program Joachim!! Election
    Held now it would be a overwhelming win for the Coalition… apply for a Activist- reporter role with
    The Guardian they have vacancies, you would be a ideal fit … imagine having a Albo – Brandt team
    Running the country now , belt & road , 100% renewables, socialist Marxists, no thanks !!

  15. Joachim says:

    Yo Barrow my man. Australia, ‘The Lucky Country’, eh. I know, it hard for you to take off your ‘ScoNO The Great’ blinkers. Sure we lucky that we don’t have say, a tRump, a Boofhead Boris or a Joker Jair in charge of affairs. But then again we have our ProMo ScoNO. Comparing Australia with the rest of the world is all well and good. On the ‘surface we may look good by comparison with some overseas jurisdictions but that doesn’t mean things are just fine and dandy in Australia. Don’t compare us with overseas and get then puff out the chest with an inflated feeling of superiority. Compare us with what we REALLY should be. If Sports Rorts, RoboRobberyDebt, Discrimination with Covid assistance, etc, are your yardstick for “the best in the world” then good luck with that old son but I’m not having it. Barrow my man, I can only offer this advice to you, Never let a good marketing campaign by ScottyfromMarketing camouflage the reality. Start thinking for yourself old son, you might just find it a liberating experience.

  16. Yo Joachim. Don’t fools rush in where angels have
    enough sense not to tread. There’s nothing smart
    about an upstart. Have a good day…

  17. George Lewin says:

    The response above from Lyanne Jones shows how easy it is to get misinformation from the Web. In seeking to defend Sweden’s decision to “let her rip” wrt the coronavirus, she cites an article from National Review saying Sweden’s mortality rate is lower than its neighbours, and that life in Sweden has continued pretty much as before without the devastating lockdowns and economic carnage faced by the neighbouring countries.

    In fact, the very opposite is true. Sweden now has up to ten times the rate of death of its neighbours, and equal or worse economic contraction. The article is dated 3rd May, and clearly is informed by data from March and April.

    An article I read recently said the Swedish Government was now regretting their earlier strategy and contemplating lockdowns as in most other sensible countries.

    The Web is a wonderful thing with amazing amounts of information, but you need to be careful and thoughtful in what you accept as true now.

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