No Prime Minister, there is no Santa Clause... and yes, it is a race

Australians, as PM Morrison and federal health minister Hunt often remind us, are fortunate. As an island nation cut off from others by two major oceans, we have been spared the worst effects of the current global pandemic. Our contagion and death rates are low by international standards, a statistic that our political leaders would like us to focus on. This hasn’t stopped whole cities and states from being locked down from time to time. As I write, Melbourne where I live is in its fourth lockdown. This should give our leaders pause to pull back on the self-congratulatory backslapping. But it hasn’t done so to date. The more the criticism bites, the less they reflect and the more they deflect.

Morrison and Hunt have downplayed the urgent need to get us all vaccinated. We are told that ‘it’s not a race’, that we have the luxury of choice, of waiting to see. In part this stance is an arse-covering exercise, a response to manifest failures in the federal government’s handling of the vaccination rollout and quarantine arrangements for returning Australians from abroad. It is also yet another demonstration of the vacuum in leadership that has characterised the Morrison government over the past two years. A wait and see complacency looms over Canberra like a locust plague. I wrote in my last post (‘A man without qualities’, 12th April) that Morrison is an empty vessel that simply responds to the pressures of the moment. That he has no long-term strategy for fighting the pandemic therefore comes as no surprise. But it does cause immense consternation and frustration among those, especially in the health sector, who see the urgent need to get on top of Covid now, before it really runs away. The urgency has been dialled up in recent days by discovery that the virus is mutating to ever-more contagious variants, here as well as globally. It is definitely a race. And the virus is winning. Santa is not about to deliver the gift of recovery to the old normal in the lucky country.

Morrison and Hunt have been behind the curve from the outset. They failed to oversee the efforts of government officials to secure adequate supplies of all the vaccines developed. The result of bureaucratic attempts to ‘nickel and dime’ American suppliers pushed us back to the end of the queue and left us over-dependent on the Astra Zeneca vaccine that proved to stoke vaccine hesitancy when a rare side effect was detected. The vaccine under local development was jettisoned, probably too early, reinforcing supply problems. 

But it is the sad story of bungling the rollout that really hurts. Every bold promise and milestone has misfired. The priority vaccination of the elderly in nursing homes and their carers has been a monumental failure, while the neglect of disabled people living in group houses is a national disgrace. There is no strategy or capacity to reach the elderly and disabled in their homes. All this in spite of repeated calls by public health professionals to protect the most vulnerable now.

What the current crisis in Victoria underscores is the unfit-for-purpose nature of tourist hotels as quarantine stations. The calls for the federal government to carry out its constitutional responsibilities in this field are becoming louder and more insistent. Again, Morrison has been dragged unwillingly to support the Victorian government’s decision to build a new quarantine facility near Melbourne’s main airport and perhaps another near its second airport. It’s clear that such facilities are necessary in every state and territory across the nation. This virus is nowhere near beaten. It may fight its corner for several more years to come. If Australia wishes to open its national border and re-join the world anytime soon, the government must get quarantine right. We also need to be better prepared for the next pandemic. We failed to heed the warning ten years ago when SARs arrived. We risk following down the same dead end now.

Morrison’s prime modus operandi is to fall back on blame-shifting – to the states, the opposition, the media, and anyone else who comes to mind – until the true nature of the festering problems forces him to crab-walk towards a partial solution, one designed to take the immediate heat off himself and hand-ball it onto someone else.

Control of infectious diseases is a classic example of what economists call ‘a public good’, something that has to be supplied to everyone or no one. Since hotel quarantine leaks like a sieve, it only takes one to slip through to spark a potential breakout and lockdown. Relying on private quarantine services or a quasi-market approach has proven a failure. Private providers have an incentive to cut costs by hiring untrained people and under-supervising them. The public cost of regulating and overseeing private contractors inevitably costs more than government controlling the whole process. Governments, especially conservative ones, prefer the private route because it distances them from failures and provides another party to blame. It also sits well with the prevailing conservative ideology of leaving it to the market.

There is another sense in which controlling pandemics is a public good. Knowledge that we are all in this together encourages the better angels of our nature to step up. My having the jab makes a contribution to your health as well as mine and, critically, places a moral imperative on you to also get jabbed. Of course, it’s unwise to rely simply on the collective moral force of mutual jabbery. There is a strong individual incentive to ‘free ride’. Selfish motives linger, especially when the messages from our leaders are sotto voce and mixed. Vaccine hesitancy has prospered in Australia thanks to the unhurried, complacent pronouncements of Morrison and his ministers.

This is a deliberate strategy from a minority government desperate to court the hard right vote of ‘sovereign citizens’ that is drifting further right towards the lunatic fringe inhabited by Pauline Hanson’s One Nation Party, while keeping inside the tent, renegade members of the Liberal and National parties. The government hides behind the rhetoric of choice (to get the jab or not) when common sense and most public health advice supports mandatory vaccination, especially for health workers and carers. At the very least, policies that ‘nudge’ people towards the vaccination hubs by inducements and punishments needs to be seriously pursued, as is occurring elsewhere in the world. Instead, we are fed a diet of ideological double-speak.

Hold the champagne.

The truth still hasn’t penetrated that sustainable economic and social life will not return until herd immunity is achieved.  The nation will remain locked behind its moat until then. The recent signs that the Australian economy is recovering strongly may be misleading. Yes, growth over the past year has returned the economy to pre-Covid levels. But the great unknown is: how sustainable is the recovery to business and jobs in the longer term? The recovery has happened quicker than originally forecast for a series of quite special and possibly fleeting reasons.

First, private consumption rebounded thanks to pent-up demand, a temporary surge. Second, Australia’s export markets stayed buoyant, in spite of selective barriers thrown up by our major trading partner China, whose industries continued to play boom prices for our iron ore. Third, consumer demand is likely to be dampened as the uneven nature of recovery unwinds. Increasing inequality of wealth and stagnant real wages among lower income workers will see to that, especially when the RBA starts to lift interest rates and the bringing forward of private investment thanks to government inducements phases out. Finally, the Morrison government propped up the incomes of employers and workers, at last working in concord with the Reserve Bank of Australia’s expansionary monetary policy. They belatedly dusted off the Keynesian playbook that they had so castigated the previous Labor government for deploying to fight the global financial crisis. But the government removed the income support payments precisely at the point statistics on the economy ceased. We haven’t yet caught up with what is happening in the new austere environment of reduced government spending and won’t get any clear idea for months. By then the virus may have come back. Where are the strategic investments driving future productivity growth? Trickle down has never work, as Paul Krugman repeatedly points out in his New York Times columns? The Frydenberg Budget looks anaemic compared to the broad suite of economic policies being pushed through by the Biden Administration in the teeth of furious opposition by the POT (Party of Trump).

In broader terms, what this current pandemic has demonstrated is the nature of ‘radical uncertainty’. Following Keynes, we may say that the future is uncertain in the sense that we have no basis whatsoever for knowing the interest rate and price of copper ‘twenty years hence’ or ‘the position of wealth holders in the social system’ in 2070.

This time last year we did not know that we would have a suite of vaccinations rolling out today or that the virus would be mutating and still rampaging around the world. Likewise, we don’t have any basis for casting probabilities about when the next pandemic will strike, nor what its effects and longevity will be. In such a state of radical uncertainty, the prudential motive suggests being better prepared next time.

Recent experience in my country gives one no confidence that the lessons will be learnt, and appropriate policies put in place in time. Groundhog day may yet be our collective fate.

PS Keynes’ approach to what John Kaye and Mervyn King in their book call Radical Uncertainty, can be found in the article he (Keynes) published the year after The General Theory (‘The general theory of employment’, Quarterly Journal of Economics, Feb. 1937). For a good critical treatment of Keynes’ analysis of uncertainty see, Robert Skidelsky, Keynes, Return of the Master (Allen Lane, 2009, ch. 4).