Problem is we’re not borrowing from the future, but taking from it

Today in The Australian

As the deficits being incurred by Australian governments continue to spiral, the claim that we are “borrowing from the future” has become increasingly widespread.

About Henry Ergas

Henry Ergas AO is a columnist for The Australian. From 2009 to 2015 he was Senior Economic Adviser to Deloitte Australia and from 2009 to 2017 was Professor of Infrastructure Economics at the University of Wollongong’s SMART Infrastructure Facility. He joined SMART and Deloitte after working as a consultant economist at NECG, CRA International and Concept Economics. Prior to that, he was an economist at the OECD in Paris from the late 1970s until the early 1990s. At the OECD, he headed the Secretary-General’s Task Force on Structural Adjustment (1984-1987), which concentrated on improving the efficiency of government policies in a wide range of areas, and was subsequently Counsellor for Structural Policy in the Economics Department. He has taught at a range of universities, undertaken a number of government inquiries and served as a Lay Member of the New Zealand High Court. In 2016, he was made an Officer in the Order of Australia.
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6 Responses to Problem is we’re not borrowing from the future, but taking from it

  1. Herodotus

    From the story below, looks like the government/s have been “borrowing from the future” to pay huge amounts to Fair Work personnel, some of whom just aren’t old enough to justify such a plush appointment.
    Can ICAC or somebody have a look at the appointment system?
    Obviously the MSM aren’t interested.

  2. OldOzzie

    How bad is covid really? (A Swedish doctor’s perspective)

    Ok, I want to preface this article by stating that it is entirely anecdotal and based on my experience working as a doctor in the emergency room of one of the big hospitals in Stockholm, Sweden, and of living as a citizen in Sweden. As many people know, Sweden is perhaps the country that has taken the most relaxed attitude of any towards the covid pandemic. Unlike other countries, Sweden never went in to complete lockdown. Non-essential businesses have remained open, people have continued to go to cafés and restaurants, children have remained in school, and very few people have bothered with face masks in public.

    Covid hit Stockholm like a storm in mid-March. One day I was seeing people with appendicitis and kidney stones, the usual things you see in the emergency room. The next day all those patients were gone and the only thing coming in to the hospital was covid. Practically everyone who was tested had covid, regardless of what the presenting symtom was. People came in with a nose bleed and they had covid. They came in with stomach pain and they had covid.

    Then, after a few months, all the covid patients disappeared. It is now four months since the start of the pandemic, and I haven’t seen a single covid patient in over a month. When I do test someone because they have a cough or a fever, the test invariably comes back negative. At the peak three months back, a hundred people were dying a day of covid in Sweden, a country with a population of ten million. We are now down to around five people dying per day in the whole country, and that number continues to drop. Since people generally die around three weeks after infection, that means virtually no-one is getting infected any more. If we assume around 0.5 percent of those infected die (which I think is very generous, more on that later), then that means that three weeks back 1,000 people were getting infected per day in the whole country, which works out to a daily risk per person of getting infected of 1 in 10,000, which is miniscule. And remember, the risk of dying is at the very most 1 in 200 if you actually do get infected. And that was three weeks ago. Basically, covid is in all practical senses over and done with in Sweden. After four months.

    In total covid has killed under 6,000 people in a country of ten million. A country with an annual death rate of around 100,000 people. Considering that 70% of those who have died of covid are over 80 years old, quite a few of those 6,000 would have died this year anyway. That makes covid a mere blip in terms of its effect on mortality.

    That is why it is nonsensical to compare covid to other major pandemics, like the 1918 pandemic that killed tens of millions of people. Covid will never even come close to those numbers. And yet many countries have shut down their entire economies, stopped children going to school, and made large portions of their population unemployed in order to deal with this disease.

    Sweden ripped the metaphorical band-aid off quickly and got the epidemic over and done with in a short amount of time, while the rest of the world has chosen to try to peel the band-aid off slowly. At present that means Sweden has one of the highest total death rates in the world. But covid is over in Sweden. People have gone back to their normal lives and barely anyone is getting infected any more. I am willing to bet that the countries that have shut down completely will see rates spike when they open up. If that is the case, then there won’t have been any point in shutting down in the first place, because all those countries are going to end up with the same number of dead at the end of the day anyway. Shutting down completely in order to decrease the total number of deaths only makes sense if you are willing to stay shut down until a vaccine is available. That could take years. No country is willing to wait that long.

  3. duncanm

    Spot the country that didn’t lock down at all

    No, neither can I

  4. John A

    duncanm #3542372, posted on August 10, 2020 at 9:17 am

    Spot the country that didn’t lock down at all

    No, neither can I

    So lockdown is an irrelevant variable for the question “how to respond to covid?”

  5. Cold-Hands

    Open up our country – sign the open letter

    Text of the open letter to Australian Heads of Govt. (let’s see if this works).

    To: The National Cabinet

    Dear Prime Minister, State Premiers, Territory Chief Ministers,

    We, the undersigned, believe that you should relax COVID-19 restrictions as soon as possible. We take this position for the following reasons.

    Exposure to COVID-19 is only temporarily avoidable

    COVID-19 is in the community. It cannot be wished away. A successful, widely available vaccine is months away from existence, if it ever exists. We note that the original SARS (SARS-CoV) infection, also due to a coronavirus, does not yet have a vaccine. However, it now appears that humans do develop resistance to COVID-19.

    Any policy that rests on COVID-19 being eliminated from the community by continuous lockdowns is doomed to fail in the likely absence of a vaccine. Even if a vaccine is eventually found, it is not desirable to lock down the community, for reasons that we explain below.[1]

    While there is a risk to life from COVID-19, it cannot be completely avoided, and the cost to fully avoid it exceeds the benefits by a huge factor.

    As the country opens up to more interaction, we expect that infections will rise again. Counteracting these via another lockdown will be problematic.
    More damage is being caused by the lockdowns than prevented

    While lockdowns limit the number of deaths from COVID-19, they also increase deaths from other causes and cause widespread misery. To analyse the COVID effect it is necessary to understand it as shortening life. But the lockdowns and the panic have also had a cost in shortening life for others:

    – The lockdown will decrease national income by denying work to the most productive and this will have a measurable effect on the length of the average lifespan equivalent to thousands of casualties from COVID, because it mainly effects the elderly who suffer from comorbidities while the decrease in income will affect younger Australians.[2]

    – Thousands of lives per month due to disrupted normal health services. This includes cancer deaths that would have been prevented with normal services, inoculations that were cancelled or postponed, and cancelled and postponed hospital operations. In the UK the UCL has estimated an increase in cancer deaths over the next 12 months of 20%. Using Australia’s rate of cancer fatalities of 50,000 per annum, that would translate to a shortening of 10,000 lives here[3].

    – Thousands of future suicides by the unemployed and others whose lives have been ruined (the AMA estimates 750 to 1500 per annum[4],[5]).

    Besides these direct life costs, there is also significant misery that has reduced the quality of life: the abused who are locked up with their abusers; the elder generations who are separated from their own families and friends; widespread loneliness; delayed IVF services; the misery of the unemployed; and disrupted education for a whole generation of Australian children.

    If one values this widespread misery in terms of its effect on the wellbeing of the sufferers, the lockdowns cost hundreds of thousands of years of life per month, equivalent to tens of thousands of deaths from COVID-19.[6]

    On the other side of the equation, how many lives are saved by lockdowns? No one can know for sure, but we note that no country in the world has had more recorded per-capita deaths than what would translate to 20,000 victims in Australia (0.1% of the population). Sweden, which has kept open borders and allows the vulnerable to make their own decisions regarding the risks they are prepared to take, has had about 4,400 recorded deaths, having reach peak death rates weeks ago. Since their population is about half of ours, their per-capita death toll would translate to about 10,000 deaths in Australia the same as the increase in the next twelve months in cancer deaths, but affecting people with less life expectancy on average than the cancer patients[7].
    How we measure and respond to epidemics has to change

    COVID-19 was originally thought to be more dangerous than it has proved to be. Early official government estimates for Australia suggested 150,000 people would die earlier than otherwise because of COVID, while as of June 1 it was 103 deaths[8]. With a new virus, a lack of data is a problem, but so are models that are not robust and transparent. Decisions have been made that are opaque and not subject to normal democratic scrutiny. Goalposts appear to have been changed, but this re-direction, and the reasons behind it, have not been adequately shared with the community.

    We need to change the way that decisions about how the community responds to transmissible diseases are made.

    We recommend that the following changes be made to how decisions are made. This is not a conclusive list, but as the situation is dynamic, it is offered as a guide which can be refined over time.

    * No forecasting model can be used where the program code is not publicly available for analysis and download;
    * A cost-benefit analysis, including lives saved versus lives lost, both directly and consequentially, based on the best available information, must be completed before any action is taken;
    *Weekly or daily non-epidemic death figures should be posted as well as deaths from the epidemic;
    *The types of people who must be part of the advisory group to government should be specified in writing, and be more inclusive than what we appear to have at the moment;
    *No directive or regulation restricting individual rights can be promulgated without approval by Parliament within a one-month window.

    Yours faithfully

    Hon Campbell Newman AO
    Hon Ian McFarlane
    Professor Paul Frijters
    Professor Gigi Foster
    Professor Peter Swan AO
    Professor Augusto Zimmerman
    Professor James Allan
    Professor Chris Doucouliagos
    Professor David Feldman
    Emeritus Professor Gabriel Moens
    Emeritus Professor Allan Layton
    Professor Benno Torgler
    Professor Timothy Olds
    Associate Professor Terry Gygar
    Associate Professor William Coleman
    Associate Professor James Doran
    Associate Professor Aydogan Ulker
    Dr Tony Beatton
    Graham Young Australian Institute for Progress
    Brian Marlow Australian Taxpayers Alliance
    Ron Manners AO Mannkal Economic Education Foundation
    Trevor St Baker AO
    Stuart Ballantyne
    Bob Day AO
    David Leyonhjelm
    Jacqueline Anderton
    Peter Hunt AM
    Tania de Jong AM
    Dr Guy Campbell
    Charles Kovess

    [references linked]

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  6. Squirrel

    There’s always the interesting possibility that, if the restrictions last long enough for sittings of federal parliament to be seriously disrupted, many people will start thinking radical thoughts about how the Canberra-centric system of government works.

    The last big war gave us massively increased control of revenues in Canberra – this “war” could be the catalyst for unwinding serious chunks of that, and getting back to something closer to the original federation arrangements with Canberra running the things which truly do need to be done collectively by the states and territories, and much of the duplicating bureaucracy removed in other areas.

    Even in cases where it is decided that more recently acquired central powers and functions should be retained, the reasons for the relevant bureaucracy to be retained in a city which truly is an economic and political Bubble will have been weakened by the experience of an extended period of ministers and advisors working remotely with those officials.

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