Australia – inflation still falling while the RBA governor keeps inventing ruses to keep hiking rates
It's Wednesday and there is a lot going on in the data release sense -…
With yesterday’s detail CPI analysis, I am transferring the news/music blog post that normally appears on a Wednesday to today. This morning, I read the newly published report from the UK-based – Institute for Public Policy Research – Health and prosperity: Introducing the Commission on Health and Prosperity (released April 27, 2022) – which provides a sobering (to say the least) evidence base for how the pandemic has impacted on Britain’s health system and labour market. As more evidence comes out from the experience of the last 2.4 years, I wonder when those who demanded nations learn to live with the virus – by basically denying its existence – will reflect on the folly of their laissez-faire positions.
The IPPR Report is predicated on the conclusion that “Covid-19 has been the most significant health shock in modern history.”
The analysis documents the impacts of Covid on deaths, illness, “record waiting lists”, increased poverty and the “massive rise in unmet physical and mental health needs”.
I know one of the propositions of those against lockdowns was that they would exacerbate mental illness.
But the solution to that problem wasn’t to make everybody sick with Covid. Rather it required a carefully thought out health response, which necessitated significant boosts to NHS funding.
Interestingly, recall that back in 2020, economists were coming out claiming there was a trade-off between protecting lives and health outcomes and economic growth.
Some went further and used so-called ‘value of life’ arithmetic to claim the decisions taken by governments to be cautious in the early days of the pandemic were not sensible because the economic losses vastly outweighed the costs arising from loss of life, particularly because those who were more likely to die were old and were no longer working and producing.
Yes, that is how mainstream economists think, unfortunately.
I wrote about those debates in these blog posts:
1. The coronavirus crisis – a particular type of shock – Part 1 (March 10, 2020).
2. The coronavirus crisis – a particular type of shock – Part 2 (March 11, 2020).
Institute for Public Policy Research Report found that:
… the size of economic decline was related to Covid-19 mortality in 2020.
It is relatively clear that the countries with the highest mortality rates were also those with the highest GDP loss, before the vaccines gave us some, imperfect protection.
And for some nations, such as the UK, Covid “caused the largest fall in economic growth in over 300 years.”
The IPPR Report found that:
… the UK labour market has shed over 1 million workers compared to the pre-pandemic trend – with around 400,000 labour market exits related to a combination of long-term ill health and Covid-19. This would mean £8 billion less economic output in 2022 alone.
The ‘its just a flu’ crowd are in denial when figures like this emerge.
When we focus on shipping and trucking delays – and I note the West is now targetting the Chinese government’s attempts to limit the spread of Omicron as denials of freedoms etc – we ignore that in Britain alone, nearly half a million workers have been sidelined through illness and on-going health concerns arising from Covid.
The Chinese government is sensible in trying to restrict the spread of the disease.
They seem to have understood the consequences of ‘letting it rip’.
This study, published in The Lancet (April 16, 2022) – Estimating excess mortality due to the COVID-19 pandemic: a systematic analysis of COVID-19-related mortality, 2020-21 – is once again exploiting the improved and more comprehensive datasets that are now becoming available as we traverse through the pandemic.
It aimed to “to estimate excess mortality from the COVID-19 pandemic in 191 countries and territories, and 252 subnational units for selected countries, from Jan 1, 2020, to Dec 31, 2021.”
They used various approaches to estimating “expected mortality” and used an “ensemble of these models”. So like a meta analysis.
They defined “excess mortality due to the COVID-19 pandemic”:
… as the net difference between the number of deaths during the pandemic (measured by observed or estimated all-cause mortality) and the number of deaths that would be expected on the basis of past trends in all-cause mortality, is therefore a crucial measure of the true toll of the COVID-19 pandemic.
They also used new methods to ensure their data was as ‘clean’ as possible (for example, “excluded weeks with heat waves”).
This included refining ways of differentiating between the dying with Covid and dying because of it.
They also corrected for the fact that lockdowns and other restrictions also had the effect of decreasing road accident deaths etc and increasing deaths from chronic conditions that could not get adequate treatment because the hospitals were overwhelmed.
They produced this map of their estimated excess mortality.
Australia, New Zealand and China all adopted zero Covid strategies until relatively recent – China is still on that path.
This – Table – gives a breakdown for all the nations in the study.
Some notable results for the Estimated excess mortality rate (per 100 000):
1. Australia -37.6
2. New Zealand -9.3
3. Japan 44.1
4. Canada 60.5
5. US 179.3 (Alabama 293·5; Arkansas 255.5; Louisiana 257·1; Mississippi 329.7; West Virginia 278.4)
6. Western Europe 140 (Belgium 146·6; France 124·2; Germany 120·5; Italy 227·4; Netherlands 140·0; Portugal 202·2; Spain 186.7; Sweden 91.2)
7. UK 126.8 (England 125.8; Northern Ireland 131.8, Scotland 130.6; Wales 135.5)
8. Central Latin America 274·4 (Mexico 325.1)
9. Tropical Latin America 186 (Brazil 186.9)
10. North Africa and Middle East 144.7
11. South Asia 151.7
12. Sub-Saharan Africa 101.6
The study found:
1. “Our estimates of COVID-19 excess mortality suggest the mortality impact from the COVID-19 pandemic has been more devastating than the situation documented by official statistics.”
2. “Although reported COVID-19 deaths between Jan 1, 2020, and Dec 31, 2021, totalled 5·94 million worldwide, we estimate that 18·2 million (95% uncertainty interval 17·1-19·6) people died worldwide because of the COVID-19 pandemic (as measured by excess mortality) over that period.”
3. “The global all-age rate of excess mortality due to the COVID-19 pandemic was 120·3 deaths (113·1-129·3) per 100 000 of the population, and excess mortality rate exceeded 300 deaths per 100 000 of the population in 21 countries. The number of excess deaths due to COVID-19 was largest in the regions of south Asia, north Africa and the Middle East, and eastern Europe.”
The IPPR Report notes that:
Britain experienced 180,000 more deaths than would otherwise have been expected in a two-year period (2020-21) and has seen average life expectancy decrease by a year …
But they also note the increasing evidence in Britain that:
… around 1.7 million people are experiencing long Covid symptoms (based on self-reporting), with two-thirds reporting symptoms that interfere with their daily lives.
The rising incidence of long Covid is a global phenomenon that is now being reported.
I wrote about some of that evidence in this blog post – The rising incidence of Long Covid and its labour market impacts (April 12, 2022).
The IPPR Report lists a number of related problems arising from the pandemic:
Disruption to education … an increase in child poverty … and levels of inequality more broadly are all likely to have consequences for the population’s health. This is now combined with a cost-of-living crisis – which the Resolution Foundation predict will push 1.3 million more into absolute poverty …
Moreover, the pandemic’s impact on access to and outcomes from healthcare for those people facing non-Covid-19 related ill-health is having a substantial impact. NHS elective care waiting lists are at their longest since records began in 2007 … but even this is likely to underestimate unmet need. It has been estimated that, once unmet need is accounted for … around 12 million people were in need of healthcare services in England as of December 2021 …
All this adds up to a massive negative shock to the British economy (and all economies).
So where does that leave us?
According to the IPPR, Covid has:
… exposed and exacerbated the UK’s failing approach to both population health and the economy. On the former, it exposed a status quo of poor health, wide inequality, weak action on the determinants of health, and stretched healthcare capacity. On the latter, it exposed an economy characterised by low growth, low productivity, wide inequality, stagnant pay and insecure working conditions. It would be a disservice to the lost lives and livelihoods to return to this broken status quo. We must build back better.
In other words, the chickens from neoliberalism are coming home to roost more quickly as a result of Covid.
Our health systems and labour markets have been pushed into unworkable states by the fiscal cuts, outsourcing, privatisation, casualisation, wage restraint, etc – all pursued in the name of making us all better off and more free.
The future of our young generation is now severely compromised by these trends, which were justified, in part, by the spurious argument that if we didn’t pursue fiscal surpluses our grandchildren would have to pick up the tab.
That has been one of the most destructive narratives I can think off.
The IPPR Report advocates urgent action – which effectively means we would have to radically abandon the neoliberal approach.
I will leave it to you to study the sorts of action, within the British context, they advocate.
But I was interested to see them hold out Japan as an exemplar of what could be done to improve matters.
They differentiate between “liberal market economies” such as the Anglo nations (US, Canada, Australia, UK, NZ) and the “coordinated market economies” (Western Europe, Japan)
… that coordinated market economies tend to have higher social spending – and that higher social spending is positively correlated with healthy life expectancy among advanced economies.
They hold out Japan as the “nation with the highest healthy life expectancy” as an exemplar and estimate that if the UK followed that example, then its health and economic outcomes would be substantially improved.
This would bring the UK from towards the bottom of the G7, towards the levels seen in the US over the last decade.
My view remains that the public policy challenge in 2020 should have been targetted at eliminating the virus and using fiscal policy to protect incomes, particularly of those with low-pay.
By adopting that approach, the more vulnerable workers would have been less exposed to illness and the now-being revealed long Covid problems, and our health systems would not have been so compromised.
This is what I have been listening to while working this morning.
On Monday, I featured the great – Coleman Hawkins – who is one of the all-time best tenor sax players.
But lurking in his quartet was an ace piano player – Tommy Flanagan – who played in the Coleman Hawkins Quartet between 1961 and 1962.
Tommy Flanagan played with many great bands and artists and you hear him on many records (Kenny Burrell, Ella Fitzgerald, John Coltrane, Sonny Rollins, to name just a few).
This track features his delicate touch while he was with Coleman Hawkins.
It is from Coleman Hawkins 1962 album – Today and Now (Impulse records).
I play this album a lot.
The song is – Love Song from ‘Apache’ – and was composed for the 1954 movie – Apache – which has the unedifying repute for dressing Burt Lancaster up to look like a Native American.
His female playing partner in the movie – and lover – Jean Peters – also played her role as a – Brownface.
I am glad we have left those racist whitewashing days behind us.
The other members of the quartet at that time were:
1. Major Holley – Double bass.
2. Eddie Locke – drums.
The tone that Coleman Hawkins gets on this track is amazing and everything to long for. Those lower register C notes are beautiful.
And Tommy Flanagan’s piano work is the best.
Here is a story about how the track came to be recorded – Coleman Hawkins: Love Song from “Apache”.
That is enough for today!
(c) Copyright 2022 William Mitchell. All Rights Reserved.
This Post Has 15 Comments
What’s amazing but not really that unexpected when you data mine the below the line comment sections of the big 4 newspapers is just how easy it was to convince the population …
1. That a simple increase in national insurance was required to ” pay for” the pandemic.
2. That interest rates needed to rise.
3. That the magic money tree caused the inflation.
4. Government spending now needs to be slashed to seriously reduce both the deficit and debt.
It was a walk in the park to get the population “back on track ” and the belief system of the official laminated framing and narrative. The very first budget after the 2 injections and the booster jab, the population had learned absolutely nothing about government spending and borrowing. Even though the truth was right there in front of their eyes the whole time.
We have had the financial crises and the pandemic that exposed the truth for all to see. Yet, look at how easy it is to lead the majority by the nose to make them believe anything you want them to believe. Who are more than ready to defend the lies of the establishment as if they told the lie themselves.
All it took was for every mainstream media outlet from TV, radio, internet and print to all say the same thing at the same time in a coordinated fashion. That is all it takes and has been for hundreds of years.
Isabella Kaminska left The Financial Times and has set up her own blog. To try and help reconfigure how journalistic information is organised on the internet. Admits herself that she became sceptical of the route the mainstream were taking. She scratches The surface here
The Ministry of Information evolved to become the Central Office of Information, which evolved to become the Behavioral Insights team, better known as the Nudge Unit – a department overseen by the Cabinet Office directly. Simon Ruda, one of the units co-founders, recently had this to say about the Nudge Unit’s role in managing perceptions during the Covid pandemic:
“In my mind, the most egregious and far-reaching mistake made in responding to the pandemic has been the level of fear willingly conveyed on the public. Initially encouraged to boost public compliance, that fear seems to have subsequently driven policy decisions in a worrying feedback loop. Though I don’t think it’s fair to blame behavioural scientists for propagating fear (I suspect that this was more to do with Government communicators and the incentives of news broadcasters), it may be worth reflecting on where we need to draw the line between the choice-maximising nudges of libertarian paternalism, and the creeping acceptance among policy makers that the state should use its heft to influence our lives without the accountability of legislative and parliamentary scrutiny.”
This strategy has borrowed straight from digital marketing. In the first instance it focuses not on suppressing the message but on deflecting it. On burying the news that is suboptimal with carefully crafted copypasta that is more tolerable instead.
That copypasta sometimes exists to highlight the preferential message. Other times it exists to tactically enrage and troll readership for knee-jerk counterresponses that serve a broader objective instead. Those objectives might be to discredit the enemy or to cause a deflective distraction, by sending uncomfortable messaging into a sinkhole.
Other times they aim to create a spam attack that bombardes the public consciousness – often by creating the false impression that a little held view is much more widely held than it is. The strategy clearly involves plants, bots and real-world useful idiots too. Purposeful deepfakes to entrap and discredit or cunningly leaked true info to control the message.
Phase two involves deploying the big guns – censorship and restrictions of messages that do not align with policy.
On censorship it’s worth reminding people that back in the day in the UK, the Ministry of Defence would appeal to newspapers for cooperation on sensitive national security stories under the D-notice system (now called the DSMA committee). In theory, the committee’s recommendations were only supposed to be treated as guidance and the whole thing was voluntary. In practice it was a very comprehensive system of control. Ultimately the mechanism worked via a form of self censorship imparted on journalists from the top down.
This will have been established with social media platforms more broadly today.
All these tactics and more presumably deepfakes, troll armies, digital soldiers, access deals, appeals to self censorship and more. Brendan Bracken was not just the FT’s founder but also the Minister of Information during the war. He was also the man – and the “BB” – who supposedly influenced a chap called Eric Arthur Blair known to us as George Orwell to write a book about a dystopic information state rule by an all powerful despot.
Derek, “a simple increase in national insurance was required to ” pay for” the pandemic” – not correct. The increase in NICs is to fund social care.
To my mind the worst purveyor of economic fiction (much more influential than the FT) is the BBC: Government spokesman says we have to be concerned about interest on debt…
BTW lovely leading letter in the FT on Tuesday from Scarlet Cho, one of Fadhel Kaboub’s undergrads: “Investing in the green economy is best way to fight inflation”.
Whilst here: an opportunity to raise a question at this Resolution Foundation event in London, or join online: “Taking the right path
Where does monetary policy go in a low rate, high inflation, unstable economic environment?”
4 countries achieved negative excess mortality. Their pandemic responses managed to save more lives, generally, than what they lost to COVID.
Australia, New Zealand, Taiwan and Iceland. Being an island nation must have helped.
“eliminating the Virus”? Where did It happen? Have I missed something? Sweden fared quite well without denying the Virus but also without organized lockdowns. China ist in the dolldroms with its zero-Covid strategie. It’s dystopia right away. In my opinion you overstate lockdown criticism as if one couldn’t criticize lockdown policy and take Covid seriously.
In Germany at least there has been a lot of exageration, fact-bending and bad Policy in General. Do you really think the very people who mismanaged the Euro-Crisis became smart with Covid?
Best wishes, Erik
Thanks Bill. been listening to Eddie Harris a lot lately. On a lot of days my favorite sax player.
Dear Erik Jochem (at 2022/04/28 at 5:07 am)
I wrote “the public policy challenge in 2020 should have been targetted at eliminating the virus” rather than stating a fact that the virus was eliminated.
But Australia and New Zealand pursued a zero Covid policy for nearly two years and mostly succeeded and the latest excess mortality data and economic data that I discussed in the blog post demonstrate the benefits of that strategy.
If the rest of the world had have followed the same strategy that we did, then the world would be in a better place now.
https://www.nejm.org/doi/full/10.1056/NEJMp2004361# – still the best article on Covid 2 years on.
The health issues cannot and must not be seen purely from the viewpoint of science without considering sociology and history.
The pandemic places an extreme stress on society which exposes fault lines – those that cope best are societies with trust in each other and in government.
the other salient point is that societies with openness are able to be flexible with their responses – what was correct in 2020 is incorrect in 2022. We have to adapt to the changing circumstances.
The problem with china is not the current zero covid approach – it makes sense only because their abject failure to vaccinate their vulnerable elderly population in the 2 and half years they had given themselves by their effective initial strategies. Of course Sinovac is less effective than MRA vaccines but even if you are willing to spend lives to save face it is still fairly effective with a booster – the problem is that while 88% are double vaccinated that falls to 60% in 80 plus population and the figures are abysmal for boosters in the elderly – why is that in a totalitarian society? Because the elderly have long memories and they know their Government lies and they therefore dont trust advice from Government. Vaccine hesitancy is the opposite here – The elderly vulnerable are the most vaccinated – by and large they have heeded and trusted government advice. The younger population here have need coercion to get the last 20% across the line which is understandable as self interest means the they have less to gain from vaccination. Even so most young people have willing fronted up to be vaccinated.
Dear Jim (at 2022/04/29 at 10:55 am)
Thanks for your comment.
The link you provided is restricted with a log in account.
I deleted it until you can provide a public access link.
actually its a free article
NEJM do that with public interest type articles
just tried on a couple of devices and loaded up fine
but maybe not able to put up on another site
can you check again
it really is a very well written piece
Um, Erik, Sweden did NOT do at all well compared to their neighbours in Norway and Denmark. You were better served never to use them as an exemplar where the pandemic is concerned.
“Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 6.9 percent.” Source google.
Anyone care to comment on this negative quarterly GDP report.
I’ll just point out that inflation should make the number grow with people needing to pay more for what they must buy. But people get less for their money.
Real GDP is corrected for inflation. It’s Nominal GDP that can increase purely through price inflation.
You might want to consider the impact of inflation on the real economy.f
Back when I was a potential economist, one of the things that bothered me was the data- and how accurate it could possibly be. I mean these things that are reported are guesstimates to begin with. They may be useful if you use the same methods to come up with the guesstimate over many years to determine trends. But that assumes nothing else important has suddenly changed. Like maybe there was a pandemic that influenced the economy somehow.
Real GDP is a calculation based on estimates of nominal GDP and some estimate of price changes. If the preliminary estimate you report is that US real GDP shrunk in the first quarter of 2022, I would guess it is an over-estimation of price changes rather than a reduction of actual production.
Henry says consider the impact of inflation on the real economy. I’m not aware that inflation in the range we are experiencing has much effect on the real economy. But Henry usually has a worthwhile point in mind, even if I don’t get it.
No answers for the weekend quiz and it happened to feature the question I have the most disagreement with. I hope everything is okay with Bill and that I will be able to explain why his answer for question 2 is wrong.