Predicting the speed and strength of the United States' recovery from the current recession is extremely difficult. But what is clear is that policymakers must boost incentives to work in normal times when jobs are plentiful, while strengthening the safety net for when they are not and for those who are unable to work.
STANFORD – Like most of the world, the United States is attempting to overcome both the COVID-19 pandemic and a deep recession caused by the resulting government-ordered shutdown. At annual rates, the US economy shrank by 5% in the first quarter of 2020, and in the second quarter just ending, it could contract by 40% – the steepest decline since the Great Depression.
Moreover, tens of millions of workers have lost their jobs, causing the unemployment rate to soar to a post-Great Depression high of 14.7% in April. And although 70% of those laid off say they expect to be recalled to their jobs, not all will be, because many firms will fold, relocate, or reorganize.
True, the initial reopening of the economy has led to a sharp rebound that is projected to continue in the third quarter. Employment rose by 2.5 million in May, while high-frequency data from credit cards and mobility tracking for May and June show sizable bounce backs from April lows, with activity in a few sectors approaching or even exceeding year-earlier levels.
But the rebound varies by sector and region. Although Big Tech, home-improvement suppliers, and retail sales of alcoholic beverages have flourished, travel and leisure have collapsed and will take much longer to recover. And restaurants with drive-through service have fared much better than those able to serve only indoors.
Most forecasters therefore predict that the early “V-shaped” recovery will slow over the next few quarters, and instead come to resemble the Nike swoosh. But this plausible baseline forecast is subject to greater than normal uncertainty.
For starters, the shutdown of non-essential businesses in response to the pandemic led to a demand-side shock as well. So far, trillions of dollars in business grants and loans, cash payments to households, and unemployment insurance with federal bonus payments (enabling two-thirds of eligible workers to receive benefits that exceed their lost earnings) have provided a cushion to help the economy recover. The US Federal Reserve has pledged to keep its target interest rate until the economy returns to full employment, and it continues to expand the scope of its asset purchases. And a fourth fiscal package expected next month should focus on reopening the economy, including by limiting firms’ legal liability and redirecting bonus payments to encourage employees to return to work.
How quickly the US recovers from its public-health and economic crises will also depend on how well other countries handle them, and vice versa. The World Bank expects 93% of countries to slide into recession in 2020, the highest share ever.
Although the recent spikes in new COVID-19 cases and hospitalizations in the US appear manageable for now, given adequate provision of hospital beds and equipment, a significant worsening could trigger new shutdowns or stall further reopening. That would slow the recovery, resulting in economic despair and related health and social problems for many Americans.
Moreover, America’s twin crises have revealed longer-term problems, starting with the country’s inadequate stockpiles of medical supplies. California, for example, never maintained the supplies then-Governor Arnold Schwarzenegger built up to combat the 2002-03 SARS epidemic, and had to repair hundreds of defective ventilators. And state governments’ antiquated computer systems for processing unemployment claims and dispensing benefits buckled under the pandemic-induced strain.
In addition, the COVID-19 shock has shown that too many individuals and firms lack the financial margin to weather even a few months of lost income or revenue. It has also both highlighted and worsened racial disparities in health, income, and vulnerability to economic and health shocks.
These crises elicited massive, rapid, and unprecedented interventionist responses. But government responses enacted under exigent circumstances must control costs better and restore private incentives in the longer term, because history shows that, once launched, public programs and interventions seldom end.
The economic and health recoveries also heavily depend on the actions of businesses, citizens, and schools, including whether they adhere to recommended precautions such as social distancing, frequent hand washing, and wearing face masks. It remains to be seen whether firms can survive with restrictions on employees and customers, and whether the accelerated digital transformation will be a net plus. The other danger, of course, is a large second wave of the virus that overwhelms hospitals and scares away employees, students, and customers.
One bright spot has been the rapid pace of adaptive innovation. Most US schools quickly continued teaching online following the shutdown, while telemedicine has boomed, helped by the relaxation of government pay restrictions and rules prohibiting inter-state medical consultations. And medical researchers quickly refocused on COVID-19 testing, therapeutics, and vaccines: human trials have started for several promising vaccines, and new tests may be deployed before winter. For the first time, vaccine production capacity will be ramped up simultaneously with testing, so that any safe and effective vaccine that emerges will become available far more quickly.Sign up for our weekly newsletter, PS on Sunday
But the longer-term problems revealed by the pandemic and the recession will not disappear when these crises end. True, before COVID-19 struck, things finally had started looking up for lower-income workers. Minority unemployment was at an all-time low, and wages were rising most rapidly at the bottom of the pay scale. But while strong economic growth will be needed to ensure that these trends resume, there are pockets of people who have been left behind.
To address this requires reinvigorating policies to broaden school choice, bring private jobs and capital to depressed areas, and ensure better job training (including more apprenticeships and job matching), as well as taking a new approach to overlapping means-tested anti-poverty programs. US welfare recipients face extremely high implicit marginal tax rates in terms of the benefits they lose if they work, with many standing to earn less if they worked than if they remained on the several overlapping programs.
It is extremely difficult to predict the speed and strength of the US economic recovery with any certainty. What is clear, however, is that we must boost incentives to work in normal times when jobs are plentiful, while strengthening the safety net for when they are not and for those who are unable to work.
It’s been decades since the Democrats settled on a presidential nominee as weak as former Vice President Joe Biden. He’s not popular in his own party. In Tuesday’s Kentucky presidential primary, for example, he only won about 60 percent of the vote—and he’s already clinched the nomination.
Party leaders should be worried about this. It’s not as though the only Democrats to show up in the Bluegrass State on Tuesday were the fringes and the freaks. The suddenly competitive race between former congressional candidate Amy McGrath and State Senator Charles Booker for the nomination to go against Senate Majority Leader Mitch McConnell (R-KY) in the fall brought out Democrats of all stripes all over the state. Much of the party faithful, it’s clear, just doesn’t like the idea of a Biden presidency.
If things were any worse, the talk of replacing him at the top of the ticket might be at a fever pitch by now. Instead, while he hides in his basement—and perhaps because he does—Biden is ahead in every national poll, just about every poll in just about every swing state and is preferred by most voters to Donald Trump on every issue except the handling of the economy. And even if the polls are suspect, as Trump’s team and many Republicans say they are, the Democrats must be pleased with the sentiments those polls reveal.
For all intents and purposes, it is a strange election indeed. Which makes the decision to play the “Obama card” so early in the process curious.Ads by scrollerads.com
Obama is the big gun. He’s Mr. Charisma. He’s the face of the Democratic Party everybody loves. Usually, you’d hold someone like him back for the fall election and then work him nearly to death, sending him to every targeted state, time and again, on the party’s behalf. If Hillary Clinton had been able to do that with husband Bill in 2016, she might have won, but—for reasons already discussed ad nauseam—Republicans like Roger Stone kept him pretty much on the sidelines. Yet rather than hold Obama in reserve to move the voters they need to win late in the election, the Biden people rolled him out earlier in order to raise money.
It makes some sense. Biden may be leading the polls, but he’s trailed way behind Trump in fundraising. That, oddly enough, may end up being what makes the difference in November. The free campaign being waged by the pundits, political reporters and news channels on Biden’s behalf have made the election a referendum on Trump.
That’s a hard race for anyone to win, let alone the current president—especially given the cynical nature of most American voters. No contemporary politician except possibly Ronald Reagan—who won 49 of 50 states in 1984—could run against his own record and win. No one is that good. No one is that beloved. Even Barack Obama, unlike Bill Clinton, got fewer votes running for re-election than he did in 2008.
If it were up to the people who establish the national campaign narratives on the newspapers and TV screens, the campaign would remain a referendum on Trump. But they can’t control that. The president needs to change the conversation and make the election a choice between competing visions of what America should be—and force voters to make that choice.
Team Trump can do it. It has more money in the bank than any of his predecessors, money that’s being used to establish communication channels all over social media. The campaign is even doing original programming to counter what’s airing on the networks. It’s a great leap forward, and Biden alone can’t raise the money to match. So in that sense, playing the Obama card now makes sense. The former vice president’s campaign needs the kind of money only someone of the former president’s stature can raise right now.
It may also be that Obama, while of great value to candidates down-ballot in the general election, won’t be able to help Biden on the stump much at all. The former president will always overshadow the would-be future president at every joint appearance. Appearing on his own, he’s a constant reminder to every Democrat and independent of how charisma- and vision-challenged Biden actually is.
Keeping Biden in the basement may not have been intended as a strategy, at first. It may have just been a response to the COVID-19 lockdowns. But now it looks like a blessing in disguise. The voters, at least right now, are showing a decisive preference for the candidate they can’t see over the one they can. It’s not clear if that is sustainable, but the Democrats will try to keep it going for as long as they can. Unfortunately for the down-ballot races, that may mean keeping Obama under wraps, too. They can’t risk giving Trump anything to play off other than himself.
Column: How a microbe will decide the 2020 election
On March 18, at a press conference flanked by high-ranking officials, President Trump described himself as a “wartime president” fighting an “invisible enemy” known as the coronavirus. The president, it seemed, was beginning to reckon with the extent of the economic, epidemiological, social, and psychological damage the pandemic would cause, and to act appropriately. “We must sacrifice together,” Trump said, “because we are all in this together, and we will come through together.”
An anxious populace welcomed the appearance of a strong leader at a time of national emergency. The president’s job approval ratings rose in the following weeks, reaching a high of 47 percent in the Real Clear Politics average on April 1. The gap between Trump and former vice president Joe Biden narrowed to five points.
How long ago that seems. Some 122,000 deaths and tens of millions of lost jobs later, and in the middle of a cultural revolution sparked by the viral video of George Floyd’s death at the hands of Minneapolis police, President Trump finds himself backed into a corner. The rhetoric of a wartime presidency is gone. His coronavirus task force is barely visible. In a symbol of declining levels of support among white voters critical to his reelection, attendance at the Keep America Great rally in Tulsa failed to live up to expectations raised by Trump’s own campaign. The president’s job approval rating has fallen to the low 40s. Biden’s lead has widened to 10 points.
There is no shaking the coronavirus. It is the ever-present backdrop against which our national nervous breakdown is taking place. The good news is that deaths have declined to fewer than 1,000 per day. But that number is still higher than the casualties reported by other liberal democracies in Asia and in Europe, and it may rise in the coming weeks. Sclerotic bureaucracies, poor decision-making, and ill communication at every level of government wasted the opportunity to suppress the virus through relentless testing, contact tracing, and quarantine.
By the time testing ramped up to the point where it could become the centerpiece of a suppression strategy, Americans had grown tired of lockdowns enforced throughout the country without regard to local conditions and to basic freedoms, and weary of a public health establishment whose pronouncements—New York good, Florida bad; protests good, yeshivas bad—seemed driven by partisanship and ideology.
The virus exposed racial, ethnic, and class cleavages that inflamed elite opinion and increased demands for social justice. And the economic devastation left an environment permeated by anxiety and filled with bored and unemployed people, some of whom felt as if they had no stake in the system and no reason not to smash things. The civil unrest of the past month has analogues in earlier pandemics. Local, state, and federal leaders met the disorder with the same woolly-headedness, indecision, posturing, and lack of compassion that they have applied to this one.
Trump has tried to reinvigorate his candidacy by resuming a normal schedule. Recently, in addition to Oklahoma, he has traveled to Arizona and Wisconsin, but at each stop he has run up against the agent of his electoral distress: the plague.
The arena wasn’t full in Tulsa because of a justified fear, on the part of some who otherwise would have attended, of participating in a large gathering in an enclosed space. During his monologue the president remarked, as case numbers rose in 29 states, that he had told his team to “slow the testing down please.” The content of his speech to a youth group inside a Phoenix megachurch had to compete with questions over how widely face masks were distributed among the crowd. As the president traveled to Green Bay for a town hall with Sean Hannity, Texas governor Greg Abbott paused his state’s reopening and halted elective procedures at hospitals in four counties.ADVERTISING
The spread of the virus results in panic, and the panic results in economic losses, social isolation, and polarized media and culture primed for incitement. That is why 80 percent of registered voters say the country is out of control, why 68 percent say the country is on the wrong track.
What the coronavirus has done is rob President Trump of his ability to control events. The president has a knack for putting his human opponents on their toes, for establishing facts on the ground that are difficult to contest. But the coronavirus doesn’t read Tweets, doesn’t watch television, and doesn’t go away if ignored. It has to be defeated, or endured. America prides itself on having a government of, by, and for the people. But here, today, the virus rules.
President Donald Trump has so much on his plate right now, it’s difficult to see how he prioritizes the actions he must take for the country’s good. There’s so much going on in so many different areas it’s hard to recall any president in recent memory having to face so much at any one time at any one time.
All presidents must deal with crises. How they lead is part of the way we judge their fitness for office. And there are a lot of folks who say his leadership lately has been lacking as the nation deals with the novel coronavirus.
That’s remarkably ungenerous. The president mobilized the federal government and private industry to respond in ways not seen in decades. It’s impossible to be certain but is nonetheless highly likely the interventions he led produced faster testing on a broader scale, more ventilators than needed, and helped keep the spread of COVID-19 under control.
We may never know. All the models produced by the so-called public health experts working in the smart institutions were way off, even when early-stage interventions are accounted for. Meanwhile, as the result of actions taken by many of the nation’s governors, mostly in blue states, the U.S. economy tanked, a record number of jobs were lost in a single month, and Congress spent so much money on relief that might not even have been necessary it will take at least a decade of above-average economic growth to recover.
For the immediate future, President Trump would be both politically smart and doing the best thing for the country if he focused on measures to get the economy open and off its back. Businesses need to reopen. Lockdowns, if they are needed again (if a still-at-this-point hypothetical second wave hits), need to be localized, targeted, and well thought out. People need to get back to work, pay down their debt, and start saving again.
Several steps can be taken to help bring about the V-shaped recovery most everyone is hoping for. There are lots of positive indicators in the economy that its possible. Every policy decision from now until at least the end of summer ought to be taken specifically to enhance the possibility that will occur.
Just as the president was right to postpone tax filings and payments from April 15 to July at the height of the crisis, he would be right to have Secretary of the Treasury Steve Mnuchin tell the U.S. Internal Revenue Service to postpone the payment of those taxes until sometime in 2021.
The economy has just started showing signs of life. Taking $1 trillion out of it – which is what it would be if all the federal personal and corporate income taxes, estimated payments for the self-employed, federal excise taxes, the taxes paid by job-creating small businesses, and the outstanding balance due on returns from prior years – would almost assuredly plunge it back into a recession and push the recovery off by months.
The National Bureau of Economic Research says the recession caused by the lockdowns resulting from the coronavirus panic started in February. The NBER – and they’re the ones who get to make the decision – called it steep but short-lived. July 2020 should be a month of recovery because of strong, perhaps stronger than normal, economic activity. But that only happens if people are engaged in productive activity, buying and selling goods and services in the marketplace rather than sending Uncle Sam back a good chunk of the so-called stimulus.
Several prominent economists have endorsed this idea as being curative. Influential political groups including the National Taxpayers Union and Americans for Tax Reform have also signed on. The president and Secretary Mnuchin have it within their power to make this happen. They should order it be done with all dispatch. Certainty is important as businesses plan what to do next, whether to hire or fire, whether to stay open or close, and whether to expand. Knowing that the taxes due would not have to be paid until sometime early next year gives them that much more time to use their available cash to put people back to work. Making America Great and Keeping America Great can only be accomplished if America is working.
Critics say law will exacerbate $54 billion deficit, economic downturn
California Democrats allocated $20 million in a recently passed budget to enforce a controversial labor law that some experts say has hampered the state’s economy and pandemic response.
The budget, which passed the Democrat-controlled state legislature on a party-line vote, provides $20 million to enforce Assembly Bill 5 (AB5), a law that limits employers’ ability to classify workers as independent contractors. The money is divvied up between three state agencies—the Department of Justice, Department of Industrial Relations, and Employment Development Department—to conduct audits, carry out prosecutions, and levy fines and penalties on employers. Republican assemblyman Kevin Kiley said that ramped up enforcement will only hurt businesses struggling in the wake of statewide shutdown orders tied to the coronavirus.
“That’s what the money is for, specifically—to go after small businesses and independent contractors at a time when they’re struggling more than they ever have before,” Kiley told the Washington Free Beacon.
The budget provision comes as the state faces an impending $54 billion fiscal deficit. Democratic governor Gavin Newsom revised his initial $222 billion budget proposal in May, saying that he would fund only the “most essential priorities.” The $20 million allocated to enforce AB5 survived the chopping block in the $143 billion budget passed by the assembly and state senate. Newsom, who did not respond to a request for comment, slashed education funding and said that first responders would be “the first ones to be laid off.”
The budget proposal sparked criticism from House Minority Leader Kevin McCarthy (R., Calif.), who said that the proposal will hurt his constituents. He called the multimillion-dollar allocation for enforcement “disappointing, but not at all surprising.” He criticized state leaders for misplacing their priorities and refusing to adapt to the economic challenges brought on by the pandemic.
“Gig economy workers have felt the ramifications of this legislation for months now, and the coronavirus pandemic has only made securing work that much more difficult,” he told the Free Beacon. “California’s independent contractors deserve a government that can adapt to unanticipated challenges, not one that exacerbates problems by continuing to pursue a half-baked idea.”
Democratic leadership in the state assembly and senate did not respond to requests for comment.
Newsom in April rebuffed calls from state and federal legislators, small business owners, and more than 150 economists to suspend AB5, touting the law as an example of the state’s national leadership. Under AB5, employers must meet strict requirements in order to classify their workers as independent contractors. Its 2019 passage led to widespread layoffs as businesses struggled to afford the increase in legally imposed labor costs. Experts argue that the law has made it nearly impossible for unemployed workers to take on temporary jobs from home, further exacerbating the economic downturn caused by the pandemic. More than 5.4 million Californians have filed for unemployment—more than the population of 28 states.
“You’d think at a time when we shut down small businesses for months, we’d be doing everything we can to help them out,” Kiley said. “It’s a failure to understand the need of the moment, which is to propel economic recovery, to help small businesses get back on their feet, to promote workers.”
Reallocating the $20 million set aside to enforce AB5 would hardly alleviate the state’s budget shortage—the Los Angeles Police Department alone has spent $40 million in overtime pay for officers handling ongoing Black Lives Matter protests. But according to Pacific Research Institute fellow Kerry Jackson, Newsom’s refusal to suspend AB5 has contributed greatly to the fiscal crisis, and stricter enforcement will only exacerbate the problem.
“The pandemic lockdown dried up tax revenues because so many jobs were lost. Some of the lost revenues could have been made up if those who’d been laid off had been able to work as independent contractors,” Jackson told the Free Beacon. “But the law made it illegal for them to work. So no work, no income tax revenues.”
While Monday’s budget is unlikely to be signed by Newsom in its current form, the governor’s own budget proposal also includes $20 million to enforce AB5, meaning the money is unlikely to be cut. Kiley said that Democrats’ unwillingness to budge on the law reflected the power of special interest groups in the state—AB5 was written by the AFL-CIO, the country’s largest federation of labor unions.
“Unfortunately, so far there hasn’t been any movement towards doing away with the $20 million or redirecting it somewhere else,” Kiley said. “It shows how influential these special interests are, that the governor and the legislature will not budge, no matter how strong the arguments are for doing things differently.”
Newsom has until June 30 to sign the budget into law.
In his final attempt to torpedo Pennsylvania’s Mariner East II Pipeline, now-former Chester County District Attorney Thomas Hogan filed criminal charges last month against security contractors hired to secure pipeline construction sites. Sadly, the accusations are merely another publicity stunt in the DA’s crusade to upend the permitted project rather than an honest effort to serve the public. Pennsylvanians deserve better than this kind of gamesmanship that puts political agendas ahead of residents’ welfare.
The charges accuse several security personnel employed by Mariner East of paying state constables to provide security for the pipeline during construction. The constables’ authority, Mr. Hogan alleges, was used as a “weapon” to “intimidate citizens.” But the facts of the situation tell a different story—one that when coupled with the DA’s record of claims against the Mariner East point a finger back at Mr. Hogan for politicizing his public office.
It’s not uncommon for businesses of all industries to employ private security. That’s especially true for energy developers and operators, who regularly hire personnel to not only protect their investments, but also to ensure individuals are not inadvertently injured by equipment or ongoing construction around infrastructure sites.
Long before the Mariner East developers contracted the security personnel now under scrutiny, they consulted local law enforcement about the possibility of using state constables. Those authorities raised no concerns. And it’s hard to imagine why they would.
Pipelines have become targets for environmental extremists, and reports of sabotage and other criminal activities against energy infrastructure have grown in recent years. In fact, one disgruntled Central Pennsylvania landowner even lured bears to pipeline work sites, set fires near equipment, and harassed workers in an unlawful attempt to halt the pipeline. Another group admitted to sabotaging equipment in Southeast Pennsylvania. It’s a sad reality that pipeline operators often need extra security to prevent senseless attacks, and based on past criminal activity, it’s necessary for the Mariner East builders to take additional precautions.
It’s also important to understand the function of Pennsylvania’s constables. Like a sheriff, a constable is an elected or appointed position in the executive branch of government. Primarily, they serve at the direction of the courts to issue summons and warrants and the like, but they are fully empowered to enforce both criminal and civil laws.
Unlike most law enforcement officials, constables do not receive a set salary. They are compensated by assignment at rates established by state law. As public peace officers, constables are employed by a third party—never directly, as a security guard would be. In that way, Mariner East’s situation is not unusual: The developer hired a private contractor to secure the construction sites. The contractor then enlisted the support of state constables.
John-Walter Weiser and Philip Intrieri, the president and the solicitor of the Commonwealth Constable Association, respectively, recently called out the absurdity of the Chester County DA’s claims. “It is frankly offensive to accuse a constable of ‘selling his badge,’ when he is only operating under a fee-driven system he did not create, and which is intended to save our tax dollars,” Weiser and Intrieri wrote last month. “Filing felony charges of law when that law is unclear is a grievous abuse of power.”
It’s impossible to reconcile the precautions taken to add extra security around the Mariner East Pipeline with the charges now being leveled. Instead, the evidence points to a pattern of abuse of public office to wage an ideological campaign against midstream energy infrastructure. Mr. Hogan has criticized Mariner East of environmental crimes and has promised that other charges are “coming down the line.” In his statement announcing the most recent allegations, Mr. Hogan goes so far as to accuse Governor Wolf of being “asleep at the wheel.” All this was said and done as Mr. Hogan was leaving office.
The DA’s attacks against the Mariner East Pipeline seem to peel back the true motives behind these latest charges—which are to derail energy infrastructure deployment in Pennsylvania. But these accusations are too serious for residents to accept as politics as usual. As Hogan’s successor Deborah Ryan takes office, it is critical that Pennsylvanians are afforded an open debate about the Commonwealth’s energy security—not policy by litigation that, apparently, will readily sacrifice those who find themselves on the wrong side of the agenda of those in power.
Project chairman: 'We have certainly hit a snag with all the difficulties of the coronavirus.'
By D Magazine•
Construction for a high-speed train that will zip between Dallas and Houston at more than 200 miles per hour is still in the works. But with costs estimating almost $20 billion more than initially planned, Texas Central might need the help of stimulus money.
In a recent letter to Texas State Sen. Robert Nichols, Texas Central’s Chairman (and an investor), Drayton McLane, Jr. said the project is seeking funds outside of private equity, saying, “we have certainly hit a snag with all the difficulties of the coronavirus.” The letter was obtained by the Dallas Business Journal.
The company laid off 28 employees in March, and the Global Financial Markets hit a low, too, leaving its upcoming recovery—or lack thereof— to determine the verdict: Will the train need a stimulus fund?
Aside from exploring funding from government loan vehicles—including Railroad Rehabilitation & Improvement Financing and Transportation Infrastructure Finance and Innovation Act—Texas Central may tap into government loans. According to Texas Central CEO Carlos Aguilar, the company has not applied for funding through the CARES Act.
“We feel that between Japanese government funding and the monies we hope to receive from President Trump’s infrastructure stimulus through the Department of Transportation, along with private equity that the project still has a great opportunity, is viable and can be construction-ready this year,” McLane added in his letter.
The project will create an estimated $36 billion in economic benefits statewide over the next 25 years, according to a news release. Texas Central anticipated it also would create 10,000 direct jobs per year during peak construction and 1,500 permanent jobs when fully operational.
Early on, Texas Central said the bullet train would be privately funded—an idea that has drawn skepticism since inception, along with its ability to be profitable.
In 2017, Peter Simek wrote a D Magazine article titled Has the Texas Central Bullet Train Gone Off the Rails? In it, he points to Travis Korson, a senior fellow with Frontiers of Freedom, a conservative Washington think tank, who didn’t believe then that the numbers made sense and that its growing budget and inflated ridership projects suggest the privately funded rail project may not be profitable. (Click here to read it)
At the time, proposed construction costs had ballooned from $10 billion to $16 billion. Currently, on Texas Central’s website, it says the system will cost more than $12 billion to construct.
In response to recent news about the potential need for stimulus money, State Representative Ben Leman, District 13, issued the following statement:
“We also were told the project would be privately financed, yet now it is revealed Texas Central is seeking taxpayer stimulus money to build it. To publicly promote to the media, to elected officials, and worst of all to the citizens of Texas the cost of the project as $20 billion when they know it to be more than $30 billion and that the project would be privately financed while they ‘hope to receive from President Trump’s infrastructure stimulus through the Department of Transportation’ to build it just reveals their true character and intentions about this project”
Aguilar told the DBJ that the $30 billion figure was “a conservative estimate of ‘all in’ numbers.”
The train’s still on the tracks toward its construction, though, as the company hit a breakthrough in an essential legal ruling just one month ago: The Thirteenth Court of Appeals ruled Texas Central and its subsidiary Integrated Texas Logistics as legal railroads.
The decision reversed a previous one made in the 87th district of Leon County. Designating the project as a legal railroad is almost as powerful as what happens next. All railroads have the right of eminent domain, which means that Texas Central can acquire all the land it needs. Project opponents are appealing the decision to the Texas Supreme Court.
In response, Aquilar said the “decision confirms our status as an operating railroad and allows us to continue moving forward with our permitting process and all of our other design, engineering, and land acquisition efforts.”
A barber who had been cutting hair for more than 50 years never set out to make a stand. He just wanted to pay his bills.
When Winerd “Les” Jenkins first became a barber, Neil Armstrong hadn’t yet set foot on the moon. For over five decades, Jenkins has made a living with his scissors and razor. For the past decade, he’s worked his craft from a storefront in Inwood, West Virginia. At Les’ Place Traditional Barber Shop, you can get a regular men’s haircut for $16 and a shave for $14—but come prepared to pay the old-fashioned way: in cash.
His insistence on “cash only” isn’t the only thing that’s old-school about Jenkins. He lives with his wife of 52 years on a small farm, where the couple raises rescued animals. He believes in paying his bills on time. He doesn’t use the internet, email, or text messaging. And he’s skeptical that his profession can become illegal overnight merely on the governor’s say-so.
This combination of old-fashioned values led to the soft-spoken barber’s arrest this spring. His story shows how governments’ uncoordinated coronavirus response has caught working Americans in its crossfire—and how the apparatus of occupational licensing has functioned as the state’s enforcement mechanism to shut down small business.
When Les Jenkins first heard about the Wuhan coronavirus, his first concern wasn’t for his own livelihood but that of his wife, Sue. She is medically fragile, on oxygen after an illness left her with Chronic obstructive pulmonary disease (COPD) several years ago. “I thought long and hard about whether I should risk taking the virus home to her,” Jenkins told me. “But this is my only real source of income.”
Even before the state of West Virginia began issuing mandates to contain the virus, Jenkins was already putting his own protection measures in place for Sue’s sake. He wore a mask and gloves, sanitized tools and surfaces, and changed clothes upon coming home every evening.
On March 19, West Virginia Gov. Jim Justice ordered all hair salons and barbershops to close. Most salon owners got the message through the media. The West Virginia Board of Barbers and Cosmetologists (WVBBC) published guidelines on its website but didn’t proactively contact its license-holders.
“The West Virginia Board of Barbers never sent me any written instructions, never called, never sent an inspector to tell me to close,” Jenkins said. “The fellow who works with me saw it on the internet and told me about it.”
Jenkins initially complied with the order, using the time off to make renovations to his store. “After about three weeks, money started getting pretty tight,” Jenkins told me. At his local bank, he was turned down for a Paycheck Protection Program loan, due to operating an all-cash business. He called Workforce West Virginia to apply for pandemic-related unemployment assistance. “The unemployment office told me that in order to get assistance, I had to provide evidence that I’d been ordered to close.”
On April 10, to get the documentation needed for unemployment, Jenkins wrote to the WVBBC, requesting a signed letter to confirm the governor’s closure order. He never received a reply.
By the time two more weeks had gone by with no income, Jenkins was in real fear of losing his home, farm, and business. “I’m 72 years old,” he told me. “What else am I going to do if not this? Who’s going to hire me?”
On Wednesday, April 22, Jenkins quietly opened his shop and cut hair for seven customers—all walk-ins, including several police officers. It would be his only day in operation. The next morning a WVBBC inspector came to the door. “I’ve known her for years, and we talked for a little while about her family,” Jenkins said. “Everything was cordial.”
The inspector told Jenkins the WVBBC had received a complaint the prior week from another local hairstylist, contending that Jenkins was open for business during the shutdown. Jenkins denied seeing customers at the time of the complaint—he was in his shop making renovations—but he admitted to being open the previous day.
He told the WVBBC inspector that he would be willing to close his shop if she would provide him with a copy of the governor’s closure order, signed for verification. The inspector returned to her car. “I assumed she was going to get the letter I had asked for,” Jenkins recalls. Instead, she was calling the sheriff. Two deputies promptly arrived.
After some back-and-forth between the sheriff’s deputies, the state inspector, and the barber, things came to an impasse. “Mr. Jenkins stated that so long as [the inspector] provided him with a copy of the governor’s order with her signature, in writing, he would agree to close his shop,” the sheriff’s deputy wrote in his arrest report. Although the inspector did print a copy of the governor’s order, she refused to sign it, saying that “she was instructed not to provide her signature on the documentation.”
After noting that Jenkins didn’t believe an unsigned document was sufficient, the deputy concluded: “Mr. Jenkins then asked if he may lock up his shop before being placed under arrest, and this deputy allowed him to do so.” Jenkins told me that “no one involved raised their voice or said anything detrimental. Everyone was cordial, professional, and polite.” Nothing in the officer’s report contradicts this characterization.
Jenkins spent three hours in a holding cell before being charged with obstructing an officer and released on a $500 recognizance bond. The misdemeanor charge carries a possible sentence of $50-$500 in fines, and up to a year in jail. Jenkins also worries about potential punitive actions from the WVBBC, which could include fines, suspension, or revocation of his license.
Today, Jenkins is working again, making up for lost time after six weeks without an income. He never did succeed in obtaining any government financial assistance. “I don’t know if I would have qualified for unemployment,” he told me. “But they wouldn’t even give me the opportunity to try. One bureaucracy dealing with another doesn’t work.”
It’s unclear why the unemployment office told Jenkins he needed to prove he’d been ordered to close his business. Workforce West Virginia did not respond to a request for comment. However, in interviews, other self-employed West Virginians attested to a disorganized, confused, and delayed response in receiving pandemic-related unemployment assistance. The Workforce West Virginia website currently contains a notice that its “systems are experiencing intermittent disruptions and temporary outages” due to overwhelming demand.
It’s still less clear why the state licensing board was unwilling to issue a signed letter at Jenkins’ request. The WVBBC proved far more interested in catching Jenkins breaking the governor’s order than it was in helping him abide by it. Rather than simply provide a document to help one of its barbers obtain assistance from another state agency, the bureaucrats at the WVBBC preferred to see the 72-year-old business owner leave his shop in the back of a police car.
The WVBBC—which did not respond to multiple requests for comment—is just one of an entrenched network of state occupational licensing boards in West Virginia. Last year, the Cardinal Institute for West Virginia Policy released a study comparing the state to two of its wealthier neighbors, Ohio and Pennsylvania. Not only does West Virginia have the most licensing boards of the three, but it also has generally higher fees and more onerous licensing requirements.
Garrett Ballengee, executive director of the Cardinal Institute, doesn’t believe an entity like the WVBBC even needs to exist. He notes that while approximately 5 percent of occupations required licenses in the 1950s, today that number stands at higher than 25 percent. “It’s a protectionist racket,” he says. “If we’re going to have an entity like this for barbers and hairdressers, it should provide voluntary certification or consultative services. It certainly shouldn’t be an extension of the legal system, which it clearly is.”
Indeed, in many states, occupational licensing boards have been a key enforcement mechanism for governors’ shutdowns of small businesses. For instance, Michigan’s own shutdown-defying barber has already had his license suspended. Fortunately, under the direction of President Trump, the federal government has been working to relax the regulatory burden on businesses and restart the national economy. State governments should follow this lead. The last thing small business owners need is to be worried about heavy-handed bureaucrats looking to set examples.
As for Jenkins, he has now hired an attorney from his own pocket, helped out by a few donations from the community. “I don’t want to go to jail for a year,” he told me. “I don’t want to lose my barber license. They’ve got the power over me; they’ve got lawyers funded by the state. I never set out to make a statement or a stand. I just wanted to pay my bills.”
Congress spent too much money trying to keep the economy afloat during what looks to be the increasingly ill-advised coronavirus lockdown. The effort to flatten the curve to keep hospitals from being overwhelmed quickly transformed into something more that is only now, and mostly in the so-called red states, easing up.
To cushion the blow, the House and Senate passed, and President Donald Trump signed legislation distributing trillions of dollars, many of which had little, if anything, to do with COVID relief. One of the most objectionable, one that distorted the labor market badly, was the provision guaranteeing a “temporary” $600 weekly bonus on top of regular unemployment payments for workers state government decided needed to stay home in the interest of public safety.
For more than a few of them, that bonus lifted their unemployment income above what they’d been making on the job. Stories about the difficulties involved in getting these people to come back to work are already legion and will continue to be so, especially as House Speaker Nancy Pelosi and the Democrats have made the extension of unemployment benefits and bonuses a priority for the next round of relief.
If there’s a more stupid idea out there, it’s hard to find. Paying people to stay home is about as silly as paying farmers not to grow anything—yet that was a hallmark of U.S. agricultural policy starting with the Great Depression and continuing through to the Clinton years, when Newt Gingrich’s Contract with America Congress put a stop to it. At least for a while.
Unfortunately, foolish ideas abound among legislators, even well-meaning ones like former House Ways and Means Committee Chairman Kevin Brady. The Texas Republican, who is now the committee’s ranking member, is proposing a $1,200 back-to-work bonus to get the economy moving again.
His plan, which he’s calling the Reopening America by Supporting Workers and Businesses Act of 2020, would cost less than some of the items on Pelosi’s wish list, but that may be the only thing about it that’s virtuous. Brady says he’s “trying to help Main Street businesses rebuild their workforce by turning unemployment benefits” into an incentive for workers to return to the job.
He says that will accelerate the economic recovery. Call me doubtful. As Nobel Prize–winning economist Milton Friedman and others have consistently argued, the money that comes out of the private economy does not produce as much growth as the money that never leaves it. The Brady plan is a circular exercise, with the government taking money from the earnings of workers and businesses through taxes and then giving it back to them as a “re-employment benefit.
Outside Washington, the argument that the answer to the problems created by subsidizing unemployment lies in a program to subsidize re-employment would be met with silent stares—justifiably so. Letting the bonus expire, as it will do under current law, would be a good fix in the short-term, but politicians need greater guts than many of the current crowd seem to have to oppose the extension of unemployment benefits when so many of them have filed for them since mid-March.
The difference between now and what is usually the case, however, is that in the main jobs are there for the taking. The unemployment we’re currently experiencing results from the COVID lockdown, not a business downturn that occurred for any of the usual reasons. Bolder, braver initiatives are called for.
One that’s one the table, which some in the White House like but the bean counters at Treasury hate, is a partial payroll tax holiday running from March 1 (when the lockdown started to approach peak levels) and the end of the calendar year. All in, including the deductions for Medicare and Medicaid along with what’s taken out for Social Security, that gives business owners a little over 15 percent of wages up to $137,000 out of which they can incentivize workers returning to work on broad terms and still have something left to help cushion them from the economic blow the lockdown caused.
The arguments against this plan are few and come mostly from the usual suspects. Some say it would jeopardize the health of Social Security, but as the so-called “trust fund” is mostly an accounting fiction, most of the money comes from general revenue. Others argue it would add precipitously to the deficit, which may be but not by more than what Brady, Pelosi or anyone else is proposing. Most of the politicians who hate it do so because it means they’re not in the position to ride to the rescue by passing out relief. That’s a silly reason to reject a good idea. Help the country. Do the payroll tax holiday legislation. Then go home.
Legislation would boost public-private partnership, cut regulations
The United States is falling behind China when it comes to emerging technologies such as artificial intelligence and quantum computing, according to Rep. Cathy McMorris Rodgers (R., Wash.), who told the Washington Free Beaconshe is working on a package of legislative measures that would boost public-private partnerships to ensure the United States does not lose its competitive edge in these markets.
As China invests $1.4 trillion over the next five years to dominate the field of cutting-edge technologies, the United States must create its own plan to foster innovation in this area, McMorris Rodgers said. Her plan, which is garnering support among House Republicans, would increase federal research into new technologies and remove much of the bureaucratic red tape currently restraining the private sector. While the United States cannot compete by throwing money at the problem, it can eliminate many of the restrictions that have prevented the federal government from partnering with private tech startups already making inroads into these technologies.
“We will never outspend them, we will never out-subsidize these industries like the Chinese government plans to do,” McMorris Rodgers, a member of the House Energy and Commerce Committee, told the Free Beacon.
Instead, Republicans aim to level the playing field with an unprecedented legislative package comprised of 15 bills that would force the federal government to identify the areas where it is lagging behind China and work with the private sector to spur growth. This includes beefing up American investments into A.I., facial recognition technology, blockchains, quantum computing, and unmanned delivery services—all areas where China is outpacing the United States due to massive investments.
The legislative package is one of the largest and most comprehensive currently circulating on Capitol Hill. It is part of a larger push by Republican members in the House and Senate to combat China’s massive investment in cutting edge tech at a time when the world is becoming increasingly dependent on the communist regime.
The private sector has become more attractive to the federal government as bloated budgets and bureaucratic regulations slow its foray into a range of fields. These types of partnerships proved successful during the weekend when the United States launched its first man-based mission into space in nearly a decade. NASA partnered with tech billionaire Elon Musk’s SpaceX to make that mission a reality.
Some Democrats, however, have already balked at the GOP plan, citing concerns about privacy and the potential for civil rights abuses by government authorities. They maintain that these technologies could be used for unethical purposes—much in the way China has used them to solidify its police state and spy on dissidents. If the GOP does not find a way to compromise with its colleagues in the Democrat-controlled House, the bills could be dead on arrival.
Nine of the bills included in the GOP package identify new fields of research where the federal government can help spur private-sector innovation. They include A.I., 3D printing, facial recognition technology, and other new technologies still in development. All of the bills would require the Federal Trade Commission and Commerce Department to identify roadblocks preventing innovation in these fields and then create a plan to reduce bureaucratic challenges, such as restrictions on interstate commerce.
Another set of bills seeks to create protections for sensitive U.S. data to ensure the Chinese government does not intercept them, which comes on the heels of reports about China’s efforts to steal sensitive U.S. research and infiltrate the American academic system.
Other legislative efforts would require the federal government to assess its partnerships with tech startups and other smaller private businesses focusing on fields of interest.
McMorris Rodgers said the coronavirus pandemic has exacerbated concerns about China’s influence on the global stage, exposing the United States’ weaknesses and vulnerabilities.
Republican lawmakers also want the United States to directly combat China’s weaponization of new technologies that allow it to promote misinformation. One of the bills in the legislative package directs the Federal Trade Commission to determine how A.I. can be used to combat propaganda, such as deepfakes—videos altered to make it appear as if people are saying and doing things they are not.
The future of the United States Postal Service isn’t really in President Trump’s hands, despite what his critics are saying. The service is hemorrhaging money.
The COVID-19 crisis has imposed demands on the USPS that may be unprecedented. And Congress may eventually need to provide some emergency assistance for it to survive. But its future course will be charted by others. The one person who really counts is Louis Dejoy, the North Carolina businessman whom Trump recently named (and whom the postal Board of Governors unanimously approved) to be the next postmaster general.
Critics have derided Dejoy as nothing but an influential GOP fundraiser and Trump supporter named to the job to carry the president’s water. That’s unfair. He’s a successful entrepreneur who, in 1983, started a company, New Breed Logistics, that brought him into collaboration with the Postal Service as well as Boeing, Disney, and other well-known U.S. companies needing supply chain logistics, program management, and transportation support.
After New Breed was acquired by Connecticut-based XPO Logistics for more than $600 million, Dejoy became CEO of its supply chain business and, after he retired in 2015, a member of the board of the parent company. Clearly, he knows a thing or two about shipping, packaging, and the other functions that are the core business of the U.S. Postal Service.
He’s only the fifth person from outside the Postal Service chosen to lead it since 1971 when it was spun-off as a quasi-private corporation. His experience in private business should be a tremendous asset in helping right a ship afloat on a sea of red ink.
Hopefully, he will be of independent mind and push back against Trump’s instant call to triple, quadruple, or quintuple the price the Postal Service charges to ship packages. It’s one of few parts of the USPS that makes any money — according to some estimates, it now accounts for over $8 billion in net annual revenue — because it competes effectively with private shippers.
Trump’s plan to charge more to get more would work if the package service functioned like first-class mail, over which the Postal Service has a monopoly. It doesn’t, so raising package delivery prices will not work as he hopes. The environment is highly competitive, meaning one vendor’s price increases will generally drive customers to other vendors who do the same thing, but cheaper.
What the president wants will add to the Postal Service’s operating debt, not pay it down. As an experienced, successful businessman, Dejoy should be able to comprehend this easily. The question is whether he can resist the political pressure coming from 1600 Pennsylvania Ave. once he takes over on June 15.
None of this is an argument against postal reform. The USPS is in bad trouble, has been for years, and can’t make up its debt just by raising the price of stamps. Serious changes are needed, the kind which postmasters general coming from inside the service probably reject instinctively. If Congress is to give the Postal Service the money House Speaker Nancy Pelosi and others say is needed to see it through the end of the year, reform is in order. Handing over a blank check without insisting things be done differently would just be putting off the inevitable.
Postal reform legislation is unlikely in the middle of the COVID-19 crisis, but there are steps Dejoy can take that Congress, the board of governors, and the American taxpayers would probably endorse enthusiastically. The first would be to announce a hiring freeze — a tactic common in private business when annual revenue looks to be less than expenses. The second would be to order a thorough audit of USPS-owned and leased real estate in preparation for selling, subdividing, and surrendering space that is no longer needed. The third would be to embark on a program to expand third-party relationships in midstream logistics and processing, which, remember, is the industry in which the future postmaster general proved himself to be quite adept.
The USPS doesn’t need to keep doing everything it does. It doesn’t need to keep losing money. It doesn’t need to be a living synonym for waste, sloth, and mismanagement. And it doesn’t need to keep getting bigger while its assets and potential pool of clients get smaller. What it does need to do is find a pathway to profitability. That will only come from focusing on core functions growing out of its universal service obligation. The sooner Louis Dejoy starts down that road, the better things will be.
If we’ve learned anything from the COVID-19 virus, it is that dependence on the Communist country is dangerous. For example, the Chinese authorities stopped a ship in transit filled with paid-for medical supplies at a strategic moment, hoping to hold us hostage. The Communist regime mixes all Chinese businesses with its military objectives using economics, trade and a growing dominance in the high-tech world to make their power and military might in the world greater.
That party has even bragged of its future capacity to attack and defeat the United States during an international pandemic. We must understand therefore that China isn’t merely a trading partner, it is also a dangerous international enemy. In response, we must always maintain a strong military. That is obvious. But what may not be quite so obvious, but every bit as important:
We must maintain our high-tech advantages and not make ourselves dependent upon a hostile power.
The Trump administration has been aware of these risks and has taken steps to stop China’s high-tech adventurism.
The administration recently enacted restrictions on Chinese tech company Huawei, which is infamous for placing backdoors in their chips so that the communist regime has control over any device with Huawei chipsets. This alone should make it clear the U.S. can never allow itself to become dependent upon China for its technology. Imagine American fighter jets, radars and missile defense that would work only if the communist regime in China decided not to switch them off.
This is why it seemed to be good news when the world’s third-largest chip maker, Taiwan Semiconductor Manufacturing Company (TSMC), and the Trump administration recently announced TSMC’s plans to build a large chip manufacturing facility in Arizona, bringing in over 1,600 good-paying high-tech jobs. It also puts a major chip manufacturing facility on U.S. soil.
If we look more deeply into the details though, there is lot that needs to be improved if this deal is to truly advance America’s economic and security interests.
First, the deal would build a factory that when complete will be building yesterday’s chip sets. The factory is currently planned to make 5 nanometer chips. But the next generation 3 nanometer chips are just a few years off. Given that the factory won’t be fully complete until 2030, it should be built to manufacture the highest tech chips — not ones that will be a generation behind by then. The 5 nanometer chips may still be used widely in consumer electronics in the future, but they won’t be the most powerful, efficient and capable chip sets needed for the most demanding applications.
Bottom line: We won’t be getting a facility capable of manufacturing the highest tech chip sets that will be needed in the future. However, TSMC is updating some of its facilities in Asia to build these next generation 3 nanometer chipsets. So we should insist that if we’re going to build a chip factory in the U.S., it must be a top of the line, high-tech factory — not yesterday’s tech.
The planned factory would also have a relatively low monthly output capacity. Other TSMC factories can produce more than five times the monthly capacity of the proposed U.S. factory. If the planned factory is too small to truly act as a counterweight to China’s plans or to make us truly independent of China’s high-tech tentacles, it doesn’t actually do that much to make America stronger or safer. We should insist therefore that the factory capacity be expanded to make it a true counter-balance to China’s aims.
Here is a solution to all of these concerns — the U.S. requires TSMC as a condition of the deal to form a joint venture with an American firm. It could increase the available funding to build a factory capable of manufacturing the latest and greatest and most powerful chipsets. Moreover, it would allow the factory to be built bigger so that its monthly capacity qualifies it as a true, cutting edge “Gigafab” facility. And finally, a joint venture with an American firm would insulate the venture from China’s active efforts to co-opt strategic businesses and thereby make America and others dependent or at risk to China’s designs.
The Trump administration is smart to build positive relationships that strengthen America and reduce our dependence upon China. But the details matter, and the deal with TSMC needs some serious improvement if it is to truly end our dependence on high tech semiconductors that are within China’s orbit. The last 30 years have been disastrous for American manufacturing. China has been the primary beneficiary of those wrong-headed policies, taxes and regulations that drove business overseas. Hopefully, the COVID-19 virus has woken us up to the malignancy of the communist regime and the risks of relying up on it for things that are fundamental to our security.
By Havasu News•
The coronavirus crisis has likely changed American business forever, as politicians use the deadly pandemic to push for changes that will have a major impact on how corporations operate.
How business respond will determine the future of American commerce for years. Important business leaders like Black Rock’s Larry Fink are pushing companies to expand their mission beyond maximizing value for shareholders into things that are on progressives’ political wish list.
What Fink and others are advocating for drifts harmfully towards what progressives promote as they seek to control the business sector and move to a centrally planned economy.
If the American economy is to survive, let alone thrive, we need corporate leaders to step up in defense of the free market. They need to eschew the insider deals and crony capitalism that have caused many Americans, especially the young, to lose faith in what, as Churchill might have quipped, is the worst of all possible economic systems except for all the others.
There are heroes out there like Tesla’s Elon Musk, who recently stood up to Gov. Gavin Newsome and other officials who would not permit his California manufacturing plant to reopen and get people back to work. To Musk’s credit, even though his empire is built on questionable tax breaks, credits, and subsidies, he pushed back where other business leaders have sheepishly complied. He announced he’d be taking his company and the jobs he created to Texas or Nevada, where they would be welcomed. Faced with that, Newsome and company seem to have backed down.
For every hero, there are goats like Alan Armstrong, the CEO of Williams Co., an energy pipeline company. According to recent allegations made in a Delaware court, he secretly worked to undermine a 2016 board-approved merger between his firm and Energy Transfer, a Texas-based pipeline company, that would have paid shareholders a significant premium over the then-market value of their shares.
Nearly four years since it fell through, Williams continues to seek more than a billion dollars in breakup fees, despite Armstrong’s recently alleged involvement in the deal’s demise. According to court documents, he even worked behind the scenes with a former Williams senior vice president by using a personal account and leaking inside information to assist a lawsuit filed to block the proposed and ultimately unconsummated merger. As a result, half of his board of directors resigned days after the deal was called off, citing a lack of confidence in his ability to lead the company.
The reason he acted as he did, the court was told, was out of a desire to maintain his position as CEO even if his continued leadership of the company was detrimental to shareholder interests.
Actions like these in the corporate community have regular Americans – more and more of whom join the investor class every day through their 401Ks, Roth IRAs, and by trading stocks online – wondering if their money is safe, or if they’re just feeding corporate cats growing fat off their investments.
Warren Buffet, one of the country’s most respected financial leaders, argued in a recent interview that not enough attention is paid to corporate leadership and governance. “Almost all of the directors I have met over the years have been decent, likable and intelligent,” he said. “Nevertheless, many of these good souls are people whom I would never have chosen to handle money or business matters. It simply was not their game.”
If the CEOs and boards of America’s companies don’t step up to restore public confidence in who they are and what they do, then the politicians will – as House Speaker Nancy Pelosi tried to do in the first coronavirus relief bill. Other than the privileged few that would have been picked to serve on boards if her proposed amendment requiring diversity on corporate boards had been adopted, it would have been bad for business and everyone else.
The clock is running.
Exactly how the COVID-19 virus found its way to humans isn’t entirely clear. But it is clear is that once the virus was out and people were dying, the communist Chinese regime did little to stop the world from getting sick. While they quietly locked down travel within China to limit spread of the virus, they did nothing to stop Chinese global travel that spread it and they employed the World Health Organization to support their claims that there was nothing to worry about. And when America locked down travel from China, they howled racism.
The communist regime also began hoarding medical supplies and equipment, while telling the world the virus wasn’t transmitted via human contact. Once more was known, China began to blame others — including Italy and the U.S. for the virus.
Everything they appear to do is motivated by gaining power and control over their own people and the world’s population. They see everything — not merely missiles, bombers and submarines, but also food, medicine, shipping, trade, etc. — as a weapon to be used to strengthen their stranglehold on power.
We must remember that this communist regime murders its own citizens in death camps and harvests their organs. It brutally oppresses the people of Hong Kong. It spies on its own people and tracks their movement so that it can punish them for worshiping or visiting the “wrong” friends.
These unpleasant truths have caused America to wake up and ask if it should be so dependent upon China for critically important things like medicine, medical equipment and other goods and services required in the high-tech world. The answer is now an obvious no.
We should also examine how China has been making America more and more dependent in other areas. We now understand this is not merely an economic issue, it goes to the very health, strength and sustainability of our nation’s long-term survival.
International trade is a huge driver of every nation’s economic health, and 90% of all global trade is transported by ship. It should not surprise you to learn that China has quietly made itself the dominant player in international shipping. They’ve purchased strategic ports around the globe and are by far the world’s largest subsidizer of shipbuilding. This is all part of the regime’s strategic plan to dominate world trade and make itself the world’s sole economic and military super-power. You can be 100% sure this power will not be used to promote freedom, opportunity or security. Look at Hong Kong and you know how that power will be abused.
The U.S. used to be a major player in international shipping and shipbuilding. But for a variety of reasons, the U.S. is now a minor player. Currently, China is building 1,291 ocean-going ships. The U.S. has only 8 under construction. Bangladesh meanwhile is building 56. Let that sink in. The U.S. now operates less than 1/2 of 1 percent of ocean-going maritime ships.
In the last several years, foreign powers and some domestic voices have been pushing for the U.S. to allow foreign shippers to take over domestic shipping routes within the territorial waters of the U.S. To do that, would require the repeal or substantial revision of the Jones Act, a move China would love. They could run their ships up and down the Mississippi with high tech electronics in our heartland gathering intelligence and at the same time make America entirely dependent upon them for our shipping and commerce.
This is why the Jones Act is needed now more than ever. It allows for any nation to ship goods to or from America, but within America and between its internal ports, shipping must be handled by American ships and American crews. These American ships and American crews work in our heartland and when the U.S. military needs their sealift capability, they stand at the ready. Do we really want to ask China to fill that role?
The purposes of the Jones Act are something that even free market champion Adam Smith endorsed in his seminal work, The Wealth of Nations. Moreover, the very first Congress, populated by signers of the Constitution and the Declaration of Independence passed the first version of the Jones Act.
The idea that we should let China expand its power within the territory of the United States is simply insane. Standing by and letting China tighten its grip on international commerce will eventually be our downfall if we don’t wake up. If this wasn’t clear before this pandemic, it is now painfully obvious.