Second-guessing the economy

Many commentators refer to the Global Financial Crisis and the unemployment rate peak of 6.7% in September 2012 as a reference for how high the rate might go in the next few months.

There are two earlier periods which we will probably surpass.

"... in September 1933 almost 80 000 men were registered as unemployed or were working in subsidised employment; that figure—at about 12 percent of the work-force—does not include boys or men who did not register because they were not eligible for relief."

Then after the eighties recession unemployment reached 11.1% in March 1992.

There is an entire industry, tourism, which accounts for one in 12 workers or 8% of the workforce which has died for the mean time. There are thousands of retail workers who won't resume because spending power won't allow it. Many small businesses will survive but with a straitened structure and fewer employees. The tertiary education sector which relied so heavily on overseas students will struggle. Media is shedding badly. Forestry stalled. Etc.

In December 2019 unemployment sat at 4%.

The rate is measured by surveying a sample of the population continuously (while refreshing that sample.) The next figure due for report is the end of the March quarter. That will only provide a preliminary number.

Apparently Grant Robertson has been promising up- to- date data on benefit numbers, also not due to be released until late April. Maybe we will see something today. Paul Goldsmith has rightly been putting the pressure on.

Expect increases across all benefits but obviously and especially on the Jobseeker benefit.

I will make a prediction with all the confidence that I try to pick the score in an All Black match at the TAB.

At end of March 2020 an unemployment rate of 8 percent rising to over 12 by the end of the June quarter.

A rise in Jobseeker numbers from 147,000 to over 200,000 at the end of March rising to over 300,000 by the end of the June quarter.

Watch also for the Sole Parent Support Benefit to climb as couples decide they are either psychologically and/or financially better off 'separated'. And the Supported Living Benefit to climb - but to a lesser degree - as people with psychiatric and psychological conditions increase, and elective surgery is delayed.

These numbers are very conservative.

1/ Some made redundant will have earning parents and partners which will mean they cannot qualify for a benefit. Families can and will absorb albeit their discretionary dollar will vanish.
2/ The wage-subsidies will also suppress numbers temporarily.
3/ New Zealanders will take up the jobs that can't be filled by overseas workers
4/ And we have one major difference between now and the Depression , and even the early nineties. Credit availability.

It is nevertheless entirely reasonable to expect that half a million people will be on benefits by mid winter. The thought chills me. I'd love to be proved wrong.

Update: Report from the Epidemic Response Committee. A tad over 1 in 25 applications granted? Must be a typo. (Since checked with reporter and it was a typo.) But even 25,000 in one week is one hell of a lot of applications.

Sepuloni said that as of the end of March, there had been an 8.2 percent increase on a year ago in people receiving the main benefit, and revealed a 15 percent increase in people receiving Jobseeker support. 

But Sepuloni clarified that the data only goes up to 27 March, so it doesn't cover the entire March period, and Upston said because of that, it doesn't even reflect the scale of the crisis. 

"What's been happening since 27 March?"

Sepuloni replied, "You can expect an increase, that's for sure."

She said last week MSD received 250,000 benefit applications, but siad some of them were duplicates and some applications may not be eligible, so it's not an accurate reflection of how many people have been approved since 27 March. 

Last week, 10,700 benefits were granted, the majority of which were Jobseeker benefits.

We are not all in this together

The feminization of society isn't  the overlay of feminist values. No. It's the overlay of natural feminine tendencies. Don't tell me they don't exist. Most females become mothers. They are biologically designed to nurture. To bond through touch and soft murmurs. To provide their bodies to their babies (and lovers) as cushions and warmth. They placate, they adjudicate. They practice kindness with reasonable ease because that is at the core of the jigsaw puzzle piece they are.

Mine is a traditional but organic view of what a women is. She is not less than a man. And she is not more.

Now we get state-sponsored kindness shoved down our throats ad nauseum. It's unnatural. And it isn't what everyone can or should be expected to show.

Each of us has their own very personal ways of contributing not necessarily recognized as conventional kindness.

Right now some of those ways have been stolen from us. A man shows his care by providing what his family needs to function. That's his demonstration of commitment. He may not particularly like what he has to do to 'bring home the bacon' but there is some reward in the knowledge he keeps the family going and together.

Yes, this is my own overlay - hopelessly old-fashioned given so many parents both work; sometimes only the mother works and the father does most of the daytime parenting.

But I speak here about the essence of what still lies at the core of the male/female differences. And always will.

The new mental health campaign in the middle of the Covid 19 lock up is terribly nice in its messaging but it is going to make as much sense to a redundant male as Arabic on the back of a bus. Worse, it'll piss him off.

He didn't get sacked because he did something wrong. He lost his job, his source of self-esteem because the government shut down the economy.

Now the head of that government is telling him to 'wave to people and say Hi', that 'You are not alone'.

Cut off from the very people who would normally laugh off this smothering feminization of society he's never felt more alone.

Thank you Adrian Orr

Apart from my musings about Winston's end, this too made me smile. More, it made me laugh out loud:

"Support each other, think beyond just the next six months, and visualise the role you can and will play in the vibrant, refreshed, sustainable, inclusive New Zealand economy.
He para i te huarahi ki tua – To carve a path forward into the future."

 PC pap on steroids.

What can't be seen right now

RNZ reports Ashley Bloomfield said today the number of new Covid 19 cases appears to be leveling off now.

If we come out of the lock down with just one death we will be told, and we will be tempted to think, that the lock down was a roaring success.


But if  unemployment has shot up to around 12 percent

If the country's debt has gone from around 20 to 35 percent

If GDP has shrunk by 30 percent

If harm from domestic violence, gambling, and binge drinking has increased

If the suicide rate climbs

If rates of death from cancers rises


Is that a roaring success?

Yes, some of the negative picture I have painted would have happened anyway as a result of what other countries did. But our own actions compounded the harm.

The End of Winston

As I mow the lawns listening to the racing coming in from Caulfield and Randwick and eight other Australian venues; and as I reflect on the millions of speculation dollars flowing across the Tasman into the Aussie industry as our racecourses lay dormant,  I am slightly warmed by the prospect of the end of Winston, at last.

His industry backers now have no reason to fund him.The Deputy Prime Minister, the great Saviour of the racing industry, couldn't persuade the PM to do what the Australians managed. He is redundant.

Finally waking up

This is a pretty good analysis of what is happening and published as the major opinion piece in today's Dompost.

New Zealand's so-called universal healthcare system is actually rationed healthcare. The government gives it a certain amount of money each year and district health boards ration the care in various ways based on how sick people are, or through waiting lists. Pharmac – the  state's drug buyer – is the same. If the cost-benefit ratio for a drug isn't high enough, it isn't funded and people die.
These decisions are made all the time – the difference is that these are not acute cases happening all at once, but around the country, all the time. Unless waiting lists get particularly long for some procedures, no-one seems to mind too much. The point is not that we should not care that people die, but that we should have some perspective.

"We can't survive without business"

And a very sad column from Listener writer Joanne Black on the demise of the Listener in particular, a great New Zealand institution. She concludes, "I remain more afraid of the economic fallout of New Zealand's response to Covid-19 than I am of the virus itself."

At the mercy of governments

Governments around the world are making the rules up as they go along.  Their commands are arbitrary and inconsistent.

The latest 'lock-down' to be announced:

All Tasmanians will need to stay at home for the next four weeks under new requirements from the state government to fight coronavirus spread... Gutwein said order would be in place for a month from Tuesday and reviewed over that time. Premier Peter Gutwein said people would need to be at home unless they were going to work, school, getting exercise or essential supplies, or providing or receiving medical or compassionate care.

Remember that? Going to work?

Questions

Each morning I wake up and the questions start immediately.

1/ Is hysteria even more contagious than covid-19?

2/ Why have people who didn't trust the government's policy response to climate change science (not settled) trusted their response to coronavirus? Eg Peter Williams.

3/ Is this the end of globalization?

4/ Will we return to the days of a command economy where we do a whole lot of stuff that we can never do efficiently and pay for the folly of it?

5/ Why is the Prime Minister on peak time telly talking about the price of cauliflowers?

6/ How is the world going to respond to the next virus?

7/ When a retrospective cost/benefit analysis is conducted into the lock-down will all of the people who died from other conditions or diseases because they couldn't get necessary treatment be included?

8/ Will New Zealand's obsession with retirement homes and voluntary mass segregation of the elderly turn out to be a godsend?

9/ With fewer than 20 hospitalized cases, is the unprecedented stress being reported by staff mainly about trying to keep out family members of non-covid cases and their response?

10/ What is the plan?

Two more voices in the wilderness

Donald S. Siegel is foundation professor and director at the School of Public Affairs, Arizona State University (Donald.Siegel.1@asu.edu). Robert M. Sauer is professor of economics at Royal Holloway, University of London (Robert.Sauer@rhul.ac.uk).

"...we call on all business owners and citizens who care about economic liberty and personal freedom to rise up and demand that politicians lift all bans on commerce. Let us get back to work!"

More

Sir Bob calls the lockdown "madness"

Read his brief column here.

I mused as I walked along the beach this morning in thick fog (unable to see the ferries and aeroplanes that aren't there) that pre-Covid19 the world was hysterical about climate change with increasing calls being made for population reduction policies. Now the panic is to save lives at ANY cost.

More 'informed' skepticism

Another alternative view for you. A NZ epidemiologist who doesn't equivocate . He concludes:

"It is important that the public health response matches the threat posed to our health. It is important we keep abreast of developments, such as tests of immunity, so that we can return to normality quickly.
We don't want to squash a flea with a sledgehammer and bring the house down. I believe that other countries, such as Sweden, are steering a more sensible course through this turbulent time."

In a similar vein, I watched most of this yesterday. More rates than you can shake a stick at. The friend who sent it to me, an economist, wrote:

The arithmetic is accurate.
As a benchmark, it's estimated the "Spanish flu" virus of 1918 infected up to one-third of the total global population, and on average killed up to 5% of those it infected (i.e. up to about 2% of the total global population), over the course of several years.  See  https://en.wikipedia.org/wiki/Spanish_flu
Without a miracle and instant mass vaccine (not likely to arrive), the coronavirus pandemic will end when the global population has developed sufficient "herd immunity", and not until then.  It seems unlikely that any particular national population can isolate itself from that reality for long. So we certainly are incurring vast economic and social cost for an uncertain benefit (if any).
And if your immune system doesn't save you, it's unlikely any "health system" will.…
Off to the gym!

"PETER HITCHENS: ... this Great Panic is foolish, yet our freedom is still broken and our economy crippled"

An alternative view for you. I was alerted to a Daily Mail column by Peter Hitchens on the Mike Hosking show.

Excerpt:

"Now, if you want a scientist who does not support Government policy, the most impressive of these is Prof Sucharit Bhakdi. If you desire experts, he is one.

He is an infectious medicine specialist, one of the most highly cited medical research scientists in Germany. He was head of the Institute for Medical Microbiology at the Johannes Gutenberg University of Mainz, one of Germany’s most distinguished seats of learning.

In a recent interview he had many uncomplimentary things to say about the shutdown policy being pursued by so many countries (there is a link on my blog to the interview, and a transcription).

But perhaps the most powerful was his reply to the suggestion that the closedown of society would save lives. He argued the contrary, saying this policy was ‘grotesque, absurd and very dangerous’.

He warned: ‘Our elderly citizens have every right to make efforts not to belong to the 2,200 [in Germany] who daily embark on their last journey. Social contacts and social events, theatre and music, travel and holiday recreation, sports and hobbies all help to prolong their stay on Earth. The life expectancy of millions is being shortened.’

He also gave this warning: ‘The horrifying impact on the world economy threatens the existence of countless people.

‘The consequences for medical care are profound. Already services to patients who are in need are reduced, operations cancelled, practices empty, hospital personnel dwindling.

‘All this will impact profoundly on our whole society.

‘I can only say that all these measures are leading to self-destruction and collective suicide because of nothing but a spook.’"

Coronavirus and multi-generational households

Italy and Spain are experiencing high numbers of deaths particularly because they have high levels of multi-generational households. It is more common for the elderly live with the young.

In NZ there is limited publicly available data about multi-generational families.

The graph below has been constructed by people who probably paid for it:

Based on that trend New Zealand now has around a quarter million individuals living in three or more generation extended family households.

US versus NZ unemployment benefits

According to RNZ:

The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the coronavirus pandemic brought the country to a sudden halt.

That's less than 1 percent of the US population.

Source

The total number of people claiming benefits in all programs for the week ending March 7 was 2,006,363, a decrease of 80,856 from the previous week. There were 2,039,322 persons claiming benefits in all programs in the comparable week in 2019. 

In New Zealand, before the pandemic, there were 147,000 jobseekers claiming benefits - 3% of our population.

Yes there are all sorts of barriers to even claiming an unemployment benefit in the US, and over 3 million new claims in a week is extraordinary but some context is always useful and interesting.

We won't know here until later in April how our numbers are faring (unless a non-normal announcement is made). And then the numbers on Jobseeker will have to be set alongside the numbers on wage subsidies to provide a real measure of compensated 'unemployment'.

What we do know is that MSD is struggling to deal with the level of inquiry and application from individuals. People are reporting wait times of over two hours which is impossible to accommodate for some mobile phone users.

Arbitrary and unjustified closure of businesses

A small community.

A smallish supermarket, a dairy, a butcher, a green grocer and a bottle store.

Now only the first two have state permission to continue to trade.

The butcher and green grocer have existed under the same owners for a long time. They know their clients - many elderly - very well. They deliver to them. They chat, are on first name basis. They have occupied their premises long-term and serve a community function beyond their brief. They provide an essential service.

In the time they have traded, the supermarket has changed hands 3 or 4 times. The current owners do not know the community to the same extent.

Under Covid 19 Level 4 powers, all of the trading ability has been stolen from 3 and gifted to 2.

Why?

With two open, people will continue to come to the village and shop. The supermarket will require more staff  increasing potential exposure between staff and customer, thereby nullifying the decrease in potential exposure between butcher, greengrocer and customer. The supermarket presents far more opportunity to touch produce and surfaces than the butcher and greengrocer where you ask for what you want.

This is another authoritarian ruling that is ill-founded and illogical.

(And I can't find a link but it seemed that Katherine Rich from the Food and Grocery Council was today hinting that the supermarkets may soon be able to supply liquor for delivery. A full hand.)

Coronavirus edicts

1/ Don't 'panic' buy, or stock up.

Better to go frequently to the supermarket for what you need so as to ... minimise contact?

MORE CONTACT

2/ Don't take your families in people-carriers to one of the many New Zealand beaches or reserves where it is eminently possible to find a quiet spot to hang out with your 'bubble' humans and animals privately.

Please stay home within the confines of your compressed, crowded house.

MOST POLICE TIME IS SPENT ON FAMILY VIOLENCE CALL OUTS

3/ Do not indulge in any truly solitary pursuits like hunting or fishing from your dinghy because you may have a mishap and require emergency services like the police.

They won't be available because they will be employed at checkpoints making sure that you don't go on any solitary pursuits

... or distracted by family violence call outs.


Before you go off at me for not 'getting with the programme', I am following directions unfailingly. Most people are at this stage.

But as pressure builds, illogical and inconsistent edicts will bring this endeavour down very quickly.

Australia doubles benefit rates

Australia will double benefit rates to deal with coronavirus:

Source

People newly made redundant will have financial commitments well beyond the prior Newstart Allowance (but wasn't that always the case for individuals before this crisis?)

To meet these needs, and as a result, everybody on a benefit pre-March 20 has it doubled. 

It's only for 6 months ...

BUT what will the reaction be when benefits are halved??

Stuff from a small town in New Zealand

From the hinterland, the back blocks of rural heartland, one of my favourite commentators and artists Mark Wahlberg has started a blog Inside Pahiatua looking Out. We aren't overly blessed with views directly from and about small towns in New Zealand. Especially not of this nature. Linking to it in 'blogs I read'.

It is desirable to close the margin between benefit and employment income

Oh wait. Did I get that right?

Here's a quote I used recently when opposing the linking of benefits to wage inflation:

 "...it is desirable to create a margin between being dependent on a benefit and being in employment....
The Labour Party isn’t the party that says living on a benefit is a preferred lifestyle. Its position has always been that the benefit system is a safety net for those who are unavoidably unable to participate in employment. From its history, the Labour Party has always been about people in employment."
Michael Cullen, 2008

Yes NZ is facing an economic crisis. But I fear government response will make it worse.

Wage subsidies come with the proviso that the employer pays the employee a minimum of 80 percent of his existing wages. So the employee will be taking a 20 percent cut in income.

At the same time the beneficiary will be getting an 11-17 percent increase in the Jobseeker rate (plus any annual increase for wage inflation and the winter energy payment).

Lifting benefits when wages are heading south seems particularly foolhardy. I am seriously worried that we may see a repeat of the early nineties when benefit dependency reached 16 percent and large numbers of  unemployed never worked again with many migrating to sickness and invalid benefits.

God forbid.