Will the penny ever drop that recovering from Covid19 shutdowns will take a lot longer than governments admit?

We don't know how effective the new vaccines will be, though experience with flu vaccines suggests that the vaccine may be only partially effective, may need reformulating over time, and not everyone will agree to be vaccinated and later re-vaccinated.

"It is likely individuals will need two doses of a vaccine and this may need to be repeated every year," says JP Morgan analyst David Mackie. "With a global population of 7.8 billion, this would require 4.7 billion individuals to be vaccinated with two doses each, separated by three to four weeks."

For the pandemic to be stopped, Covid 19 has to run out of susceptible hosts. Public-health authorities generally estimate that around 60 per cent to 70 per cent of the population need to develop an immune response to the virus to achieve herd-immunity. Besides issues with virus effectiveness, I can foresee resistance to being vaccinated, especially amongst younger persons and amongst the "anti-vaxxer" community, so that this target may not be reached.

All the evidence points to Covid 19 (like the flu) being around indefinitely. The WHO's Dr Michael Ryan states that "In our current situation, it is very unlikely that we can eradicate or eliminate this virus.....We've seen countries that have managed to get to zero or almost zero and then re-import virus from outside, so there's always a risk".

While some overseas countries may largely achieve herd immunity through extensive Covid infection, this is unlikely to happen here. Countries like Australia and New Zealand need to be more careful about freeing-up international travel than countries that have suffered high levels of infection.

The good news is that the medical profession is getting better at treating Covid so that there has not been a second wave of deaths commensurate with second waves of infections worldwide. Donald Trump's apparent rapid recovery may be further evidence of this.

Despite some disquiet amongst conservative journalists, there has been almost no serious political or public opposition (at either Commonwealth or state level) to either the continuing restrictions/lockdowns imposed or to the public sector "spendathon". This situation was initially caused by extremely alarming early modelling of the likely spread of the virus.

Given that such alarmism has been proved unfounded, it is surprising that the political tune has not changed much in this country. The main economic problem is now proving to be the shutdowns, not the virus itself. The Morrison government is now seen to be acting more like a socialist government than a conservative one because of its unrestrained spending, and this is a cultural change that will be difficult to reverse.

There have been calls that "this is the time to go Keynesian on steroids". In my view this notion is folly because, while stimulus can work for businesses allowed to trade, no amount of stimulus can revive industries that have been closed due to distancing restrictions, lockdowns or restrictions on travel.

The current combination of lockdowns, massive public spending, and super-low interest rates is causing perverse two-tier outcomes. On the one hand many businesses severely affected by shutdown will eventually close, and their proprietors will lose much of their wealth. At the other extreme many other businesses and individuals will make substantial windfall gains due to the tens of billions in grants and tax cuts being thrown around with only limited targeting. Low interest rates are boosting asset prices to the benefit of the better-off, while the public sector is experiencing growth through the worst of the Covid recession. All this is happening while the overall economy goes backwards.

While current low interest rates are helping, and governments will try to keep them low for a long time, there is no guarantee that this can last forever. A big rise in interest rates would be a disaster for the governments of deeply indebted countries, and for individuals with high debts. The economic suffering experienced by countries like Greece, Zimbabwe, Venezuela, and Argentina is a cautionary reminder of the dangers of reckless spending and loose monetary policy. What is currently happening is that a huge number of countries are now effectively living beyond their means (using high levels of public sector borrowing to finance current consumption) so that stagflation is a real long term risk, and sovereign debt for some countries is becoming riskier.

Internationally many governments may struggle to fill gashes to gross domestic product, with growth stuck in low gear, an ongoing health crisis, and chronic joblessness. The world is facing "a very uncertain outlook", and any rebound in GDP may well not be matched in the job market.

I believe that Australia will live to regret the severity and duration of the lockdowns and restrictions it has imposed. Australia essentially copied the lockdowns of other countries (starting with China, Europe, and many American states), which was a mistake never corrected. The examples of Japan, Taiwan, South Korea and Sweden all demonstrate that lockdowns have not been essential to averting disaster.

Huge amounts of money have been wasted (and continue to be wasted) for little benefit. Worst of all, all semblance of financial rectitude seems to have evaporated from public sector economic management in this country. Additionally, excessive concern with Covid has led to a loss of focus on serious chronic diseases, and to delays in providing routine surgeries and treatments.

It will be our younger generations who will inherit our substantial and growing public debts with nothing tangible to show for them.