It's Wednesday and we have discussion on a few topics today. The first relates to…
Neoliberal myopia strikes again
It is Wednesday, so just a few snippets and some music. My main comment today is on the report released yesterday (December 15, 2020) by the national body Infrastructure Australia. The report – Infrastructure beyond COVID-19: A national study on the impacts of the pandemic on Australia – once again demonstrates the way in which mainstream macroeconomics, which has restricted government investment in essential instrastructure over the last three decades or so, has created poor outcomes and has failed to prepare the nation for the future. This sort of myopia just repeats itself across all nations. Hopefully, the fiscal response to the pandemic, even though in many countries it has been inadequate, is demonstrating that the mainstream approach is deeply flawed and provides no guidance for the way policy should be conducted into the future.
Neoliberal myopia strikes again
Yesterday (December 15, 2020), the national body Infrastructure Australia released an important report – Infrastructure beyond COVID-19: A national study on the impacts of the pandemic on Australia.
The Report’s findings once again demonstrates the way in which mainstream macroeconomics, which has restricted government investment in essential instrastructure over the last three decades or so, has created poor outcomes and has failed to prepare the nation for the future.
The largest national infrastructure project that Australia has embarked on for decades – the National Broadband Network (NBN) – is a object lesson in how not to conduct government policy when nation building.
I have written about this topic before:
1. The neo-liberal infestation – Australia’s broadband fiasco gets worse (August 2, 2017).
2. Australia’s crawling Internet speed signifies wider fiscal failure (September 9, 2015).
3. Public infrastructure does not have to earn commercial returns (December 20, 2010).
4. Free public broadband is required (April 20, 2009).
5. Australia’s broadband disaster has lessons for a Green New Deal strategy (August 6, 2019).
For international readers, the NBN refers to the development of a fibre-based national broadband network to replace the archaic, slow network that exists now based on dated technology (copper wire).
It was touted as offering high-speed broadband access to all Australians whereas at present many regional areas do not have any access.
We were told that the NBN would be a grand nation building piece of infrastructure that would ensure Australia was at the forefront of network technology for decades to come.
The promise from the previous Labor government was that there would be optic fibre to the home (premises) to replace the old copper wire telephone system that the Internet is reliant on in Australia.
What we were told and what has emerged are two vastly different things.
While the network was promised to deliver 100Mbps connectivity (download) tp 93 per cent of users under Labor’s plan, users now report that the speeds they are getting in the evening are worse, in many cases, than what they were able to get under the previous ADSL network, which the fibre NBN network replaced.
Why?
Because when the conservatives took federal office in September 2013, they announced they did not have enough “money” and that the NBN that was being constructed was a ‘Rolls Royce’ that we did not need.
So they scaled down the ambition and only connected optic fibre to hubs in streets (mostly) and maintained the old copper wire system, which was badly degraded and constantly unreliable.
And because of the hybrid technology required, the construction costs have risen alarmingly and the timelines have been pushed out.
It was a disastrous example of austerity inflicting higher costs when it was meant to be cutting costs.
Many people are also arguing that the compromised NBN network is already being superseded in performance by the pending 5G Wireless offerings from the major telecommunications companies.
So the ‘Rolls Royce’ might become a ‘white elephant’.
The Infrastructure Australia report describes and analyses how Australians have changed behaviour during the COVID lockdowns and how these changes have impacted on the existing infrastructure – Transport, Social, Telecommunications, Energy, Water, and Waste.
The Report devotes a chapter to ‘Telecommunications and Digital’.
It says that:
As the COVID-19 pandemic spread, Australian governments took early action, introducing travel bans, lockdowns, and border controls and supporting domestic supply chains. Communities adopted social distancing and moved to working from home. While these early measures successfully contained national case numbers, they prompted profound changes to the way people moved, consumed, and worked, changing patterns of infrastructure use.
A major change was the “shift from physical to virtual services at a rate that was previously considered impossible, with students accessing online learning, city and remote patients accessing mental health care through telehealth, and online shopping growth in remote areas matching cities.”
Some of us are definitely Zoomed-out!
The summary result is that while network and telecommunications use has skyrocketed and diversified:
NBN network congestion grew to an average 60 minutes per week per service in March 2020 with increased levels of customer complaint … Higher internet usage was evident both during work hours and in the early evenings as more people stayed home
The network congestion led to considerably more outages and access issues.
The previous commercial model imposed by the government on the public company whereby NBN Co had to recoup the costs of the investment through user pays charges through the profit-seeking internet service provider retailers has resulted in very high Internet connectivity charges.
So, going into the pandemic, while “11.8 million Australian locations (i.e. homes and businesses) are able to connect to the NBN network but only 7.8 million locations (i.e. homes and businesses) are now connected to a plan as of October 2020.”
For many the cost of connection is beyond their financial capacity – such is the level that is being charged.
This has led to massive issues about digital/information poverty.
The Report says that:
The Australian Digital Inclusion Index (ADII) measures digital inclusion
– affordability remains the key barrier to digital inclusion and is likely to be exacerbated by COVID-19 related economic slowdown
– approximately 800,000 (20%) of the 4 million primary and secondary students in Australia are from households with the lowest income bracket (under $35,000). These households record an ADII score of 52.9, 10.1 points lower than the national average (63)
– COVID-19 may have further impacted disadvantaged individuals where public services were unavailable (e.g. internet at local libraries) during lockdowns
The lockdowns and increased use of the NBN have further increased strain on household budgets, such that there is now “a widening affordability gap between the lowest-income and highest-income segments”.
Segments are people by the way!
The other problem is that the system is not technically robust (given the compromised design) and the COVID-19-induced demand increases have caused “frequent dropouts or low speeds” to be worse than before.
So overall – a classic example of austerity compromising the quality and scope of essential public infrastructure.
Music – How Long
This is what I have been listening to while working this morning.
Today’s song is – How Long – which was originally released by the British group – Ace – in 1975.
I actually like the 1993 Aswad/Yazz – version – of this song the best.
But the following version is also pretty cool and is performed by the person who wrote the song in the first place – Paul Carrack – which gives it extra credibility.
He has a long CV in the music industry and has played with some great bands and musicians.
You can hear his keyboard playing on a lot of very popular albums as he built a career as a session player in studios in the UK.
Apparently, he wrote the song because the bass player in the band was working with another band (a rival) without telling his bandmates what he was doing.
When exposed, the bass player apparently rejoined the band.
Band politics. Ever present and usually go beyond the classic ‘musical differences’ excuse.
Pressure Drop live stream – Friday, December 18, 2020
My band – Pressure Drop – has not been able to play since March 2020, due to the COVID-19 lockdown and related restrictions.
Now that more than 5 people from different families are once again allowed to be together in Melbourne, we will be streaming a live concert via YouTube starting at 20:30 from a studio in Melbourne.
The stream will go live at 20:00 Friday. Click then or go to our YouTube Channel.
Times:
1. Melbourne 20:00 Friday
2. Tokyo 18:00 Friday
3. Helsinki 11:00 Friday
4. London 9:00 Friday
5. New York 4:00 Friday (too early sorry)
6. San Francisco 1:00 Friday (too early sorry).
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.
There are countries in this planet that have a telecomunications market 100% privatized.
The pre-history of telecomunications was fully supported by state-owned companies, when there were networks to build from the ground up and only the states were able to fund such an infrastructure.
Latter it became profittable and the “all-efficient” private companies asked for privatization and it was handed out to them.
Then, along came the GFC and many once-good campanies, went bankrrupt.
So they were sold for a song to vulture companies and things became worst.
Small countries may have now 2 ou 3 private firms operating in the telecommunications market.
A meeting in an hotel and everything comes their way.
As for upgrading infrastructure, the only way to get it is for the State to pay.
They don’t mind to build it, as long as it can be profittable enough in the short-run.
Nobody thinks of investment to profit on the long-run, which is the core of the management function of businesses in the first place.
We can call it parasitic behavior.
How long is a gem of a song. I like the sound of the 1974 original most of all.
Oh well, along with faster networks, comes online gamers who eat up much of the new bandwidth ; especially in the evenings. Then cable owners start pressuring everyone to pay more for upgraded packages or face non-linearly increasing charges for occasional data overuse , and get chastised for interfering with the pleasures of the gamers.
Reading two articles in Rupert Murdoch’s December 12 – 13 Weekend Australian clarifies where the Australian oligarchy, it’s propagandists and political agents are heading economically and politically in a post Covid-19 pandemic world. Expect a doubling down of neoliberalism because of the greatly increased federal government ‘debt burden’.
The first article – ‘How we slayed the threat of coronavirus’ by Paul Kelly is a totally hypocritical glowing endorsement of Treasurer Josh Frydenberg’s and Prime Minister Scott Morrison’s handling of the economic aspects of the pandemic in Australia. The article is however useful as it provides details on the machinations, decision process, who did what and the sequence of events.
https://www.theaustralian.com.au/inquirer/how-we-slayed-the-threat-of-coronavirus/news-story/15154f75f89e2b3bedc153cb23d2ad2d
I suspect our Bill Mitchell’s conversations at the time with the Prime Minister and his office was also a decisive factor in the federal government’s decision to temporarily ignore their past hypocrisy and reckless stupidity of aiming for federal budget surpluses and even deeper spending austerity pre pandemic, and once the pandemic hit to save the rich and enough of the wage earning ‘underclass’ to keep the markets in the black.
Keynesian fiscal stimulus is endorsed for these narrow circumstances especially the generous JobKeeper part which went to the business owning class to ensure jobs were maintained. Even the doubling of the previous unemployment benefit in the form of JobSeeker was endorsed presumably as many new ‘undeserving’ unemployed now required support. The article however goes on to infer the Morrison government erred to far in favour of stimulus even though unemployment is expected to peak at 7.5% and as always underemployment and increasingly precarious employment is ignored.
As long as the proceeds of Keynesian fiscal stimulus overwhelmingly goes to the business owning class and the speculative/rent seeking gold mines of share market appreciation and real estate appreciation continue inflating, than all is well in the minds of the Murdoch media, the oligarchy and their agents in the ruling LNP federal government.
[Excerpts]
“The economic response of $257bn off the budget, equivalent to 13 per cent of GDP, revealed the deepest and broadest commitment in Liberal Party history to put a floor under much of the nation’s social and economic life – a decision that defines the Morrison government.”
“On display has been the nation’s belief in a social contract – tangible though never precisely defined – a philosophy represented by the ideas as diverse as compulsory voting and an inclusive Medicare but given a fresh interpretation by the wage subsidy innovation of JobKeeper, the centrepiece of the crisis response authorised by Scott Morrison and Josh Frydenberg.”
“Critical to the response has been the conceptual outlook of the official family, notably the Treasury under Steven Kennedy with financial system support from Reserve Bank governor Philip Lowe. But 2020 constitutes a turning point in Liberal history not just because it went full throttle Keynesian but because it embraced a wage subsidy with two separate but closely tied aims – to maintain the social order, and sustain the economic lifelines when fighting COVID-19.”
“Last April, Treasury told Frydenberg the unemployment rate could have peaked at 15 per cent without the JobKeeper intervention. That rate today is 7 per cent, with Treasury estimating it will peak below 8 per cent, more likely around 7.5 per cent, a degree of relief almost inconceivable nine months ago when the pandemic looked its bleakest.”
“Former ANZ chief economist and UTS professor Warren Hogan told Inquirer: “Two features stand out for me. One is the speed with which they adapted to the evolving economic and health threat. The pace at which they kept moving was breathtaking. I’ve never seen anything like it. The other element was co-ordination – between the financial regulators, including the RBA, and the government, and between the regulators, the banks and the RBA. It was a level of co-ordination we haven’t seen before.””
“This goes to the shared outlook of Morrison, Frydenberg and Treasury. It was a social and economic response that superseded the previously justified budget surplus goal. The $550-a-fortnight JobSeeker supplement almost doubled the existing unemployment benefit and sat next to the $1500-a-fortnight JobKeeper payment to support job retention and keep the link between employers and employees, at a likely full cost of $101bn.”
“This year’s budget documented the story: a 2020-21 budget deficit of 11 per cent of GDP and total deficits across the next four years of $480bn. Hogan asked: “Where to from here? It looks like they may have overdone the stimulus, I think by a quantum of 20 to 25 per cent in terms of the JobKeeper program, but that was the side they were intending to err on.””
“Reflecting on this situation, Hogan said: “I believe that without the bank loan repayment deferrals and without JobKeeper, the unemployment rate would have easily surpassed 12 per cent. In my view, economists underestimated how effective those policies would prove to be.””
“But this is also related to Hogan’s assessment that when the dust settles, the judgement will be the government overspent by about a fifth in its fiscal support.”
“The Australian story during 2020 has been response and resilience. But there is a troubling conclusion – it is politically easier to offer huge fiscal support during a deep recession than it is to drive unpopular, productivity-enhancing reforms during a time of prosperity. The ludicrous hysteria surrounding the government’s IR reform package this week is a warning sign about the possible return of old politics.”
“In 2021, the test for Morrison and Frydenberg will be their capacity to remove the life supports and shift towards reforms based on enterprise and productivity, the question being: will they have the courage, or have they been seduced by the politics of cash handouts, emergency relief and debt tolerance?”
“We await the next chapter.”
………….
The second article – ”Aussie Squad’ may be Labor’s worst nightmare’ by Janet Albrechtsen is about hopes for a new guard of four relatively young Liberal MP’s to invigorate the Liberal (neoliberal) brand especially amongst younger voters.
https://www.theaustralian.com.au/inquirer/how-we-slayed-the-threat-of-coronavirus/news-story/15154f75f89e2b3bedc153cb23d2ad2d
James Paterson especially is aiming to drive the agenda of doubling down on federal government austerity and government downsizing following the large increase in the federal government’s debt. This federal Senator who has the top Liberal Party Senate spot for Victoria is aware of MMT but he has clearly been assigned and trained for an ideological agenda from the beginning of his stellar political career.
Paterson and his ideological allies have it easy as they can exploit public ignorance about governmental financing and our partisan neoliberal mass media to use the lie of the federal government’s debt to further their hard right – free market – small government – wealth redistribution to the rich ideology.
Truth can be easily overwhelmed in such an unequal fight and Australia could be burdened with another one, two or more terms of the Morrison led LNP government and one that has a bigger ‘false’ argument for further entrenching the neoliberal agenda.
The progressive side must lift it’s game to better educate the electorate, especially those more self obsessed swinging voters about the truth of governmental finances, of macroeconomics and that full employment is always attainable even during economic downturns.
[Excerpts]
“These relatively young Liberals – James Paterson (33), Andrew Bragg (36), Tim Wilson (40) and Jason Falinski (50) – are on a mission to revive the Liberal brand. Their aim is to build a wider constituency for the Liberal Party, especially among younger Australians, just as Labor is losing theirs.
“Paterson chairs the parliamentary committee that oversees the administration and finances of government agencies, and the parliamentary joint committee that covers private sector corporations and financial services. Wilson chairs the standing committee on economics, Bragg heads up the select committee on financial technology and Falinski chairs the standing committee on tax and revenue.”
“All of them will rightly covet the future frontbench. But no one should underestimate what can be done from the back rows either. Former prime minister John Howard, whose own long record on economic reform hardly needs repeating, tells Inquirer that during the evolution of policy during Fraser years, “We were stimulated and set in the right direction by Liberal backbenchers such as John Hyde and Murray Sainsbury (who) challenged some of the economic orthodoxy of the time.””
“To be sure, the appetite for economic reform changes. Forty years ago a documentary series called Free to Choose turned a balding economist into a TV celebrity. Each of Milton Friedman’s 10 hour-long episodes attracted an average audience of three million American viewers in 1980. The series went global and was followed by a bestseller companion book.”
“The Squad understands that economic reform in the 21st century is different, more micro than macro, but is convinced that the outcomes will transform lives for current and future generations.”
“Unlike many parliamentary plodders who are frightened of joining the public contest of ideas, the detailed policy work from this group of four Liberal modernisers is matched by their sharp advocacy skills. They write books, file articles, contribute to think tanks, appear on TV and radio, produce YouTube videos and are busy on social media.”
“Since arriving in parliament in early 2016, Paterson’s focus has been to convince Australians that reducing debt delivers fairness for future generations. He tells Inquirer his focus has only sharpened after increasing government spending during COVID.”
“”I thought at the time that heading towards half a trillion dollars of debt was bad. Now we are well on our way to $2 trillion in debt. So it’s now incredibly serious. I feel a particular obligation as a young member of parliament to be a voice on issues of intergenerational debt because my generation and the ones below us don’t really know what is going hit us.””
“Paterson ruffled feathers within the Turnbull government by advocating in his maiden speech for the reintroduction of a commonwealth debt ceiling. Governments don’t like limits. But Paterson says default settings are important. “If we believe in parliamentary oversight, not executive fiat, then governments should have to make the case for increasing debt beyond a ceiling.””
“Paterson’s related focus is the dignity of work. He points to two moral imperatives to get people into jobs.”
“”In some ways, the pay cheque that you collect is the least important thing about work,” he says. “It’s the dignity and self-worth that comes from turning up to a job and having obligations to others. We know from previous recessions that the longer it takes for people to get a job, the less likely they are ever to work again.””
“Second, Paterson says, if fewer people are in jobs, a smaller group of Australians will shoulder the burden to pay off debt and fund services that we have come to expect in a First World country.”
There is a lot that is nice in that performance but that snare drum is definitely in the pocket. I’ve noticed the drummer (do we know who he is?) has two snares, a very Caribbean thing to do, maybe inspired by Cuban Timbales. Lovely drum arrangement, he doubles the speed on the hi hat towards the end, plays quavers on the pulse, very tasty. The kit is nicely recorded too, good sound engineers. Thanks.
@Andreas Bimba
Thursday, December 17, 2020 at 13:27
Nice news round up and commentary on the current situations (economic and political in Australia).
My take is that things have not changed much despite “all” that happened to date, but there is still hope if we can “double down” on educating the pubic how government finances really work.
Thank you!
But like people like to say… it is a long and winding road…
@ Andreas Bimba
@ vorapot
Fascinating!
It strikes me that there are intriguing parallels between today’s situation and that obtaining during the first two years after the Great Depression. Hoover (who before the crash had been a popular president) was widely seen to have inexcusably failed to cope with the crisis – which (like the current pandemic) was unprecedented in both its nature and scale. Hoover’s position was not unlike that of both of the main Australian parties as you describe it, except that he – in common with all conservative opinion of his time – was adamantly opposed to direct government intervention whereas they – in common with even conservative opinion of our own very different time – have embraced it albeit as a palliative, through gritted teeth. Even Roosevelt (as I understand it) looked with considerable – understandable – consternation initially at the prospect of going diametrically against the accepted “sound money” wisdom of his own day, being as he was a master “machine politician”, but once having decided to accept the counsel of his closest advisers he took the plunge and brazened it out. (Although he did backtrack as soon as he felt able to do so, causing a serious recession as a result, before the onset of a war economy rescued him from any longer-term consequences of that folly).
Another politician. of a very different ilk, was having at much the same time very similar ideas to Roosevelt’s advisors. He was a minister in the 1929-31 British Labour government under Ramsay MacDonald and his name was Sir Oswald Mosley. He put forward the “Mosley Memorandum”, which
“called for high tariffs to protect British industries from international finance, for state nationalisation of main industries, and for a programme of public works to solve unemployment. Furthermore, within the memorandum, it laid out the foundations of the corporate state which intended to combine businesses, workers and the Government into one body as a way to ‘Obliterate class conflict and make the British economy healthy again'”.
It was totally rubbished by all his government colleagues (one of the “what-ifs” of history, not unlike Benn’s “altenative economic strategy” memorandum which Prime Minister Harold Wilson disagreed-with while refusing to read it).
(Mosley in disgust resigned and instead became leader of the British fascists, but that’s another story).
It seems we are in a not dissimilar interregnum at the present time, standing on the cusp between going forward on a radically different path – upwards – or careering downwards into the abyss of a renewed obsession with “sound finance” with everything that that will entail.
Thanks Vorapot, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender.
Too bad that The Australian’s headline writers haven’t yet mastered the rudiments of English grammar. The past tense of the verb “to slay” is “slew”.
Thanks robertH, it appears that as long as the greedy banks and financiers are out of the equation such as when the hard left or nationalist right are running things then economies can start delivering for the common man and woman. The duopoly parties supposedly aim to represent the majority centre of politics but have all been effectively captured by the greedy oligarchy in the neoliberal era but probably always were captured to varying degrees.
The rich have just used the federal deficit to save themselves and their investments from the pandemic but have also ensured little or none is ‘wasted’ on the common wage earner and now are demanding more structural reform and government austerity in the form of less spending on services for the common wage earner to pay off the increased debt. Government austerity also raises unemployment and household debt levels.
All part of the grand plan that Milton Friedman helped define to enrich the rich at the expense of the many. Parasites that are now severely weakening and killing the host.
Senator Paterson has been a disciple of the free market right including those from the US – from his Wikipedia page:
“Paterson worked as a special adviser for Senator Mitch Fifield, and for several months as an intern for U.S. congressman Lincoln Díaz-Balart. [Cuban American Republican] He then worked as a writer for the Victorian Employers’ Chamber of Commerce and Industry (VECCI) before joining the Institute of Public Affairs (IPA) as editor of the IPA Review publication. In the IPA, Paterson was promoted to director of communications and development, before being promoted to deputy executive director in September 2014.
This ‘new guard’ of the ‘free market’ right are mercifully fairly lightweight in their talents and logic as are the Murdoch media and the rest of the oligarchies media but they have the money and still have considerable reach and an almost total MSM monopoly while the state owned ABC is systematically emasculated and the alternative media is not viewed by most and has much ‘free market right’ aligned crap as well.
The ALP will probably return to past practices and aim to be more fiscally responsible than the ‘free market’ LNP or just maybe they will have learnt something by now and instead will concentrate on nation building, while the MSM no doubt switches to full attack mode on the ALP for not reducing the federal debt and the ALP then stumbles and panics as public opinion yet again is seen to turn against them.
The wilfully ignorant time and time again vote for this farce and will demand the very policies that will destroy them.
The total cock-up of the NBN since the current government took power really should be a salutary lesson to governments everywhere about how not to handle critical national infrastructure. The previous Labor government was at least still committed to a sensible rollout plan, even if they were planning to sell it off later on – that would have given us proper infrastructure, and given the ever-growing backlash against privatisation the selling off may never have happened. What we have now is basically unsalable, so whatever plans the government may have for it, privatisation is unlikely to proceed.
I will just note that whatever might be promised about 5G and other wireless systems, they’re just not capable of competing with even a decent fibre deployment (let alone a really well done deployment) – they don’t scale up, since each new endpoint is contending for the same shared broadcast spectrum. Lots of improvements have been made in how finely that spectrum can be chopped up and shared between endpoints, but there are hard limits to what can be done. This means that wireless technology is /always/ going to be limited by it’s shared broadcast medium, and ultimately it /must/ be backed up by fixed line infrastructure of some sort. The only question is where the fixed line infrastructure terminates: is it at the street corner (the original fixed wireless deployment model used by the NBN), at the mobile phone tower (the way a lot of our current system is deployed), or is it at people’s homes (as per the FttP model).