Will the recovery be V shaped, quickly roaring back to the previous level? It does that every January 2 after the long Halloween-Thanksgiving-Christmas-New Years slowdown, and it did in 1984. Or will it be an agonizingly slow U or L shape, as the recovery from 2008 turned out to be?
I had early hope for a V, but a fear that shuttered businesses and permanently fired people would turn it into an L. Those take much more time to reorganize. Hence, lots of blog posts advocating a more nuanced policy than a blanket lockdown.
But now I think it’s clear the virus will not end with a sudden all-clear, like January 2 or an air raid. If, as we all hope, the current unbelievably costly lockdown does its job, we will in a month or two emerge with the curve bent, a stable or declining number of cases. But the vast majority of the population will still not have been exposed. We will not have “herd immunity” — and a good thing too as 1% of the herd will not have died to get there. And cases both home and abroad will not be zero.
Nothing short of a cheap, effective, incredibly safe vaccine given to just about everyone on the planet will change that.
That means the virus is ready to reemerge promptly. All it takes is one person to travel to a town, go to a restaurant or club meeting, wait two weeks, and you have an outbreak all over again. We will have hotspots and flare-ups needing intense testing, contact tracing, local lockdowns, travel restrictions, and so forth — if our bureaucracies are finally up to the task of doing anything competently.
On the individual and public health level this means almost all of us — who have not gotten it or don’t trust that you can’t get it again — will be practicing some sort of social distance for a long time. And, getting to the point, this all suggests a period of very slow economic activity. I don’t want to call it “recession” as that word implies simple lack of aggregate demand, the Keynesian uni-causal story. No amount of printed or borrowed money will get the social distance economy going again.
Ross Douthat nicely sketched a picture of the coming economy in the Sunday NYT:
Life at half capacity: Right now our institutions must survive while essentially closed — with few or no customers, moviegoers, travelers. But soon they will have to figure out how to reopen while maintaining the social distancing that semi-normalcy requires.
… fewer people will come out, and because there will be rules governing how many people can come in.
…the scenes at some grocery stores right now, the line of people six feet apart waiting to come inside and shop, may become a permanent feature of the semi-normal landscape. Churches will hold services with every other pew occupied. Restaurants will seat every other table. Planes could fly without a single middle seat occupied. Sports may resume without spectators, relying on TV revenue alone.
Ross doesn’t fully draw the economic conclusions of this vision. Such grocery stores can only serve a fraction of the number of customers, yet need more employees and still have to pay the rent. Such restaurants make half as much money yet still must pay the rent. Such airlines still pay the pilots, flight attendants, fuel, and larger cleaning and disinfecting crews. This is not a sustainable economy — at today’s prices.
Ross turns to the government
And since the flow of money and custom and attendance won’t come close to what existed just a month ago, any government response will have to be calibrated to a half-capacity world — where institutions are technically open for business, but they still need help to stay alive.
I have bad news. The government is also a limited resource. We cannot go on for months on end with the government paying half the bill of everything. Just who is buying all those government bonds? With what income? A trillion dollars a month adds up.
The answer is, this is an enormous negative supply shock, together with a big shift in demand. If only half the seats can be filled, running an airline just got twice as expensive. If only half the tables are filled, running a restaurant just got twice as expensive. Those prices have to double. Which in turn, will drive customers away, towards driving (RV sales should go up), cooking at home, fancy takeout, and so forth.
There is likely also to be a shift towards precautionary savings. I think lots of people and businesses have figured out that keeping some cash or money market investments around is a good idea, and overall appetite for risk is going to be lower. I diagnosed markets as suffering from a panicked demand for cash last month. But the standard business cycle mechanism of lower “risk appetite” makes a lot of sense. The shift towards a desire for safe investments may also keep markets low for a long time. This is the standard business cycle mechanism. (Don’t think about saving vs. investment. Think about desire for risky vs. safe investments. Business cycles are about risk premiums.)
Torsten Slok writes by email (summarizing gated DB research) suggesting
Increase in precautionary savings for households… More space between seats at restaurants, cinemas, sports events concerts, conferences, trains, buses and airplanes. Fewer people traveling on vacation and going out… Older generations staying at home, less willing to put parents in retirement homes. Limits on the numbers of people un supermarkets, more online shopping, more online doctor visits. Fewer people going to fitness centers, doing group sports. More people driving their own car to avoid public transportation.
Aside. This could be the kiss of death for public transport in the form of busses and trains. If there is anything that cannot stand a doubling of its cost, and attendant decline in demand, that’s it.
Less business travel.. more video conferencing… fewer buybacks, lower dividend payouts [more equity less debt]
and, I am not alone worrying
more supply of government bonds, increasing risk of a debt crisis.
Policy will face the usual cruel tradeoff: The more help you give the unfortunate, the more disincentives, and the slower the recovery. Noah Williams writes perceptively of unemployment expansion (which, whatever its faults, is probably the best of the government’s responses — better than cash payments to everyone which will arrive late summer, better than bailouts for airline stock and bondholders, and municipal bond holders)
the program is poorly designed. It provides incentives for employers to lay off workers. In the future—assuming the pandemic restrictions are lifted before August—it will discourage people from returning to work.
The current federal relief package extends unemployment benefits to 39 weeks, plus additional payments….Under the new expansion, the average replacement rate across states would increase to roughly 116 percent
You’re running a business. You have some cash around, and could keep people on, at least at reduced hours and health insurance. If you fire them, though, they can get 116% of their salary from the government, and Obamacare. It’s a no brainer.
There is good news in this however. It means that much of what looks like unemployment may really be furlough. The people and employer know where each other is and can snap back more quickly.
39 weeks of 116% of salary though gives people little incentive to answer that phone call. Especially while schools are closed, day care is closed, and gardeners aren’t allowed to come around.
Moreover, there is already a shift in demand — to cleaning crews, online services, and so on. Paying people to sit at home makes sense in the lockdown. But much less in life at half capacity — and rapidly changing — economy.
This seems heartless, but it is brainless to ignore that there is always a tradeoff between help and incentives. The last recession and half-hearted recovery was a chaos of bad incentives. Noah:
In general, unemployment-benefit programs try to balance insurance with incentives, seeking to provide relief when needed while also offering motivation to look for work. States typically require recipients to search for a job. Setting the replacement rate well below 100 percent is usually a strong encouragement for them to do so.
Covid-19 presents unusual circumstances because unemployment has been enforced by government decree. Much of this joblessness will likely be temporary, with workers rejoining their employers once the pandemic subsides and restrictions are removed. Further, while some employers (Amazon, Walmart, grocery stores) are adding jobs, most companies are, at best, putting a freeze on hiring. The disincentive effect of unemployment benefits in the current crisis is minimal, while relief needs are large; thus, Washington has increased benefits, and many states are waiving job-search requirements.
Policymakers should be wary, though, of implementing relief provisions that will delay economic recovery, as occurred during the Great Depression and the 2008–2009 Great Recession. The Federal Pandemic Unemployment Compensation program is time-limited, but if the shutdown ends within the next four months, the aggressive unemployment-benefit replacement rates well in excess of 100 percent would hamper the labor market’s recovery.
In short, great generosity makes sense in the lockdown, but must be much more carefully calibrated if we do not want an L shaped recovery.
And emerging chaos at unemployment offices and small business administration suggests the help may come just as it is no longer needed.
Column: The enduring relevance of a tricky concept
Long before the onset of the pandemic, some of the journalists and politicians on the American right began speaking of the “common good.” Back in 2005, Rick Santorum titled one of his books, It Takes a Family: Conservatism and the Common Good. More recently, last October Sohrab Ahmari wrote that the common good should replace individual autonomy—i.e., freedom—as the touchstone of a new conservatism. The following month, Marco Rubio told an audience at Catholic University that a “common-good capitalism” would promote dignified work for all and incentivize businesses to reinvest “enough” of their profits to create jobs in the United States.
Reaction to the upsurge of interest in the common good was divided into predictable camps. Social conservatives applauded the introduction of another concept from Catholic social thought into conservative discourse. They hoped that the common good would be added to solidarity, subsidiarity, and the preferential option for the poor as a guidepost to political action and public policy. Economic conservatives rejected the term as meaningless at best and authoritarian at worst. The other day, during a discussion of trends on the intellectual right, a young person asked me in earnest, “And, what is the common good?” It was the right question. There is no easy answer.
The coronavirus prompts us to think about this question a little more seriously. The mounting toll of the disease and the extreme measures governments around the world have imposed to contain it suggest that there really is something called the “common good” after all. It is the flourishing of communities, from family to neighborhood to locality to state to nation, that the virus endangers, and that the authorities hope to preserve. This good both includes and transcends the flourishing of individual persons within the community. A functioning system of public health, then, contributes to the common good. So does the rule of law, and an economy where households do not go bankrupt because of social distancing.
The common good exists. It ought to be recognized. Dismissing the idea would be an error. But it also would be a mistake to deny that the concept is vague and slippery, that in a context of religious diversity it will mean different things to different people, and that American proponents of the common good operate within a system in which popular sovereignty coexists with constitutionally protected individual rights. “How one can square the common good with personal liberty and cultural pluralism,” wrote Michael Novak in 1986, “is most unclear.” He spent a lot of time trying.
Indeed, one of the most dispiriting aspects of the common good revival is its neglect and even derision of Novak (1933-2017). He faced a set of economic, social, and cultural issues similar to the ones that confront us today. And while one might not agree with the answers provided in his more than 50 books, one cannot pretend that those books do not exist, or do not contain at least partial truths. “The economic order of the United States tested a proposition,” he wrote in Free Persons and the Common Good (1989), “viz; whether an economy may raise the common good of all through granting unparalleled economic liberties to free persons. Such an economy is dedicated both to the general welfare and to the freedom of persons.”
As the pandemic reorders society, reorganizes the economy, and diminishes individual liberty, the sustainability of the U.S. proposition has come into question. And so some, like Adrian Vermeule of Harvard University, believe it is time to abandon a jurisprudence of original intent for a “common-good constitutionalism” whose “main aim” is “to ensure that the ruler has the power needed to rule well.” (It is noteworthy that the words “Bill of Rights” and “Amendment” do not appear in this essay on the Constitution.)
Novak acknowledged that references to the common good strike a jarring note in modern rhetoric. The very notion of a “common good” hails from an epoch when there was no distinction between state and society, between public and private. For centuries, liberal writers have defined themselves against authorities to which everyone is subject. Nor has there been a settled consensus as to what the common good actually is. “Catholic writers, one will find, not only frequently disagree about the meaning of the term but make significant errors in discussing it,” he wrote. Still, Novak continued, the common good is located somewhere in the space between individualistic self-obsession and totalitarian mass control. Why? Because both of these systems deny the dignity of the human person.
Critics accuse liberal democracy of being purely individualistic and procedural. Novak pointed to the social-cultural sphere as the potential site of robust communal activity. “The liberal society has its own methods for giving preeminence to the common good—above all, in actually achieving and in progressively raising the levels of the common good,” he wrote. “It does so, to be sure, by taking care to include within the definition of the common good the securing of human rights: that is, the rights of free persons and free associations.”
Associations are key. Under a regime in which government is limited to secure the unalienable rights men and women possess because they each were created in the image of God, society is as important as the state. “The chief and most potent instrument of achieving the common good—in such a novus ordo—is not the state but the society at large, in its full range of social institutions,” Novak wrote. “These include families, churches, schools, workers’ associations, private enterprises, and so forth. Whereas in some earlier systems or social orders, the government was believed to be the chief agent of the common good, in the novus ordo a larger and more various set of social institutions would rightfully become the primary agents of the common good.” Novak often cited the following line from Tocqueville: “If men are to remain civilized or to become civilized, the art of association must develop and improve among them at the same speed as equality of condition spreads.”
So, government is not the only means by which the common good can be pursued. Equally if not more important to human flourishing are the mediating structures of family, religion, community, vocation, and voluntary association. Yes, law, economy, society, and individual character are connected. But social causation does not follow a straight line. And just as the structure of our economic institutions might be traced to political decisions, so might the strength and weaknesses of our social institutions. From Burke to Tocqueville to Robert Nisbet, conservative social thought has catalogued the ways in which the expansive state pushes through the mediating structures by assuming their functions. Then the solitary individual is left to face the Leviathan alone. The common good and the art of association are not separate phenomena. They are linked.
A post-corona politics of the common good that recognizes freedom must be exercised within the constraints of a moral tradition; that encourages able-bodied men and women to work and form families; that makes it easier to enter a profession, buy a home, raise children; that preserves the independence of religious institutions from state interference and resists the separation of religion from society; that protects communities from lawlessness, epidemics, and external threats; and that builds the capacity of public institutions to promote transportation, health, education, research and development, and the defense industrial base would fit comfortably in the American political tradition of “freedom and justice for all.” A politics that pursues a sectarian definition of “the common good”; that models its ideal government after a religious bureaucracy with a decidedly imperfect history; and that imperiously and rather impishly rejects longstanding indigenous norms of liberty and conscience does not.
“It is my hope,” Novak concluded, “that during the next two hundred years, the Catholic tradition and the liberal tradition will work as allies rather than enemies, each correcting the other from its own proper viewpoint. They have different purposes—one focused on the City of God, the other on the City of Man—and operate within two different perspectives. But the free persons that both address, and the common good that both are called upon to serve, dwell under the light of both Cities simultaneously. Both are called upon to promote the common good of free persons. Would that they do so together!” The time of coronavirus is an opportunity to answer Michael Novak’s call.
“He who controls the sea controls everything.” -- Themistocles of Athens, circa 500 BC
INTRODUCTION: America Should Protect Its Own People and Interests
A national sentiment has recently revived which elitist for years have discouraged. This is the sentiment that America should promote its own interests, despite the globalist trend which gives the country’s needs a lower priority.
One example is the Jones Act. This long-standing law is under attack because the act favors U.S. interests within its own borders. The law essentially requires that cargoes traveling from one U.S. port to another must be carried on vessels that are American-owned, American-built, and American-crewed. But it does not apply to international shipping and trade.
The Jones Act must be appreciated in context. And it must be preserved.
The philosophy of “America First” is disparaged as being nationalistic; this ignores the key point that nationalism is not about money or military power. First and foremost, it promotes this country’s values and economic interests.
For instance, the coronavirus outbreak has increased awareness that it can be dangerous to depend on China to provide the makings of pharmaceuticals, and how risky it is when businesses large and small have their supply chains disturbed because factories abroad become idled. Overseas diseases can disrupt America just as surely as wars, political or social upheavals.
“America First” patriotism is not blind jingoism. It is not linked to any particular race. It encompasses all religions. It promotes national principles that include self-governance, equality before the law, and human rights. It promotes economic security for the people in the United States of America, and elevates their interest above those of foreign lands.
Globalism, however, considers all nations the same, treating oppressive regimes as deserving equal value with democracies, and totalitarianism as the moral equivalent of constitutional rights. Or it asserts that pursuing the well-being of a country’s own people is somehow immoral.
Critics of the Jones Act ignore the protection of American values and national interests, arguing as though U.S. law should only consider money. Their objection to the Jones Act is that some companies might save on shipping costs if foreign interests were allowed to handle domestic freight. The critics also ignore how China in particular has launched a massive plan to dominate the world’s oceans and to control the essential sector of transporting goods.
In short, America has become dependent on foreign countries to carry goods to and from the U.S., thus controlling global trade because 90% of global trade goes by ship. Only the Jones Act blocks countries from spreading their monopoly to include the waterways within U.S. borders.
TO DOWNLOAD A PDF OF THE FULL STUDY ON THE JONES ACT, PLEASE CLICK << HERE >>
The Jones Act Is Being Attacked Although It Protects American Interests
For 100 years, a pro-American law known as the Jones Act has served national interests without controversy. But recently a campaign to challenge the Jones Act has been launched, based on claims that its pro-American requirements increase the costs of moving goods by ship between American ports.
The campaign disregards America’s national interests; it promotes a pure laissez-faire approach by the U.S. regardless of whether competing countries will support free trade. It ignores the enormous subsidies, protective tariffs, exclusionary tariffs and policies of other countries which disadvantage American businesses. Promoters oppose all forms of American tariffs, especially those of President Donald Trump, even when they are in response to tariffs enacted by other countries.
A Jones Act repeal would sacrifice America’s borders and America’s interests, allowing heavily-subsidized foreign shipping within domestic U.S. waters as well as international waters. The rationale is simplistic: Businesses might save money by using shipping offered by nations which undercut competition by subsidizing the building and operating of huge craft, and which offer foreign flags of convenience that often ignore safety and other standards.
This competition from other countries should not be labeled as free enterprise. For example, China dominates shipbuilding by using their state-owned enterprises and subsidies, weak labor protections and cheap or even slave labor, plus lavishing government money to subsidize operating costs of cargo ships.
For those whose sole criteria is lower costs, China has much to offer. China’s communism and human rights record can be disregarded if money is all that matters. According to the infamous quote attributed to Vladimir Lenin, capitalists would eagerly sell rope to the communists and then be hung by that rope.
For those who cherish America’s values and system of government, other issues are paramount. Protecting America’s shipping interests was promoted by that father of capitalism, Adam Smith. He wrote in The Wealth of Nations that a country should protect its maritime trade from foreign competition. Smith saw economies as a servant of national interest.
The principle extends beyond ships. Foreign air carriers can fly between U.S. airports and those in other countries but cannot fly purely-domestic routes. Foreign trucks face restrictions on operating within our borders.
Congress just passed an economic package designed to inoculate the American economy from the devastating impacts of the coronavirus. At the same time, medical experts are working around the clock to develop treatments to help people recover from the virus as well as vaccines to prevent it from infecting people in the future.
There is some concern that once the current emergency has passed the coronavirus could make a comeback each year like the flu itself. Developing a vaccine therefore will likely be a key part of preventing the future spread of this virus.
Dr. Anthony S. Fauci, now famous for his role in the daily White House COVID-19 briefings, has been the Director of the National Institute of Allergy and Infectious Diseases since 1984. Dr. Fauci has overseen research during his tenure to prevent infectious diseases like HIV/AIDS, tuberculosis, malaria, Ebola, Zika, and now the Coronavirus. He recently emphasized how critical safety is when developing new medicines noting:
“The issue of safety is something I want to make sure the American public understands…Does the vaccine make you worse? You can get a good feel for that in animal [testing].”
Dr. Fauci makes the important point — science, medical ethics and human decency require animal testing for safety so that in our attempt to help, we don’t accidentally make things worse.
But there are voices that oppose Dr. Fauci. They oppose sound science. They oppose medical ethics. And they oppose basic human decency. One such group, the poorly named “People for the Ethical Treatment of Animals” (PETA), oppose any and all animal testing and have tried to shut down testing and testing facilities.
PETA has mounted a pressure campaign to get airlines to not transport medical research animals. Unfortunately that means they are standing in the way of ethical and legally required research that will stop the coronavirus (and other diseases like cancer, diabetes, and heart disease) from killing those we love.
PETA’s president and co-founder, Ingrid Newkirk, admitted: “Even if animal research resulted in a cure for AIDS [or cancer or other horrible diseases], we’d be against it.” PETA’s supporters have filed comments with the Department of Transportation hoping to shut down any medical research with animals by blocking their transportation. One representative comment said: “Stop experimenting on animals. Experiment on your children and mothers instead.” Then the commenter called those who reject the idea of mothers and children being used in medical testing “a bunch of barbarians.” Let that sink in for a moment. These people are unhinged extremists and their political agenda is dangerous!
Rather than stand up to these radicals some U.S. airlines, like United, have willingly accepted their demands hoping to avoid social media attacks on their brand. They now refuse to assist American research companies – the very companies we now are relying on to develop a cure for COVID-19 – in transporting badly needed research animals.
This comes despite PETA’s own horrible track record on animals. For example, in Virginia, PETA activists were charged with criminal animal abuse. It turns out that animals that were intended for adoptions were abused and then killed in 95.3% of cases— for an entire decade! Simply put, PETA’s moral compass is broken. Whether you’re talking about human lives or animal lives, PETA cannot be trusted.
Now, America needs reliable, ethical medical research more than ever before. We need to ensure that we have the desperately needed medical treatments to cure those suffering with coronavirus, and in the near future safe, effective vaccines to provide immunity. PETA stands in the way and hopes to prevent this important progress. And the airlines that have caved to PETA’s pressure campaigns unwittingly harm America and put us all at greater risk.
Given that Americans have just provided billions in financial relief to the airlines, it isn’t too much to ask that the airlines help those doctors and scientists working to find cures by not caving in to PETA’s pressure campaigns. And for the record, the airlines aren’t asked to deliver medical animals for free. Medical research facilities pay top dollar and the airlines can collect hundreds of millions of dollars transporting medical animals to research facilities. So, not only could airlines make some additional money at a challenging time, but they could help America find the cures that we desperately need.
America’s best research facilities are racing to find cures, vaccines, and treatments to combat the Coronavirus. But if researchers cannot test these cures — in a supervised and ethical way — tens of thousands of people could die. And long after the coronavirus is gone, the need to find other cures will persist.
Therefore, we must stand up to the extremists at PETA. And we must demand that airlines stop caving to PETA’s pressure campaigns. Americans have helped the airlines — and now it is their turn to show that they want to help America by facilitating the transportation of medical research animals.
The Jones Act Webinar is part of WJLA-TV’s Government Matters series on “Sea-Air-Space 2020 Virtual Edition.” It will include Frontiers of Freedom Senior Fellow, the Honorable Ernest Istook, who served in the U.S. House of Representatives from 1993 to 2007 and is currently teaching at Brigham Young University.
The Host will be Francis Rose. Topics will include: What is the Jones Act? Why is it both a commercial and national security issue? What are common misconceptions about the Jones Act? How does it work? How does China and its “One Belt, One Road” plan play into this issue?
If you are in the Washington DC metro area, you can watch the program on WJLA 24/7 News (formerly NewsChannel 8). If you are anywhere else you can watch it at FedInsider.com.
It will be broadcast on Tuesday, April 7, 2020 from 1 p.m. to 2 p.m. Eastern Time.
Since the election of Donald John Trump as the 45th President of the United States of America on November 8, 2016, the political culture in the country has gone from mildly insane to absolutely idiotic. Before his election, the constitutional principle that the majority of the electors legitimizes the choice of the citizenry was never seriously challenged. Yet, his opponent’s followers, which included the overwhelming majority of the grossly overrated academia, the self-serving media, the Democrat-installed and ideologically blinded bureaucracy and judiciary, have had a different interpretation of the constitution. In their boundless arrogance they decided that their fellow citizens were politically and intellectually not mature enough to bring about the promised “fundamental transformation of society”, promised by their idol, former President Barack Hussein Obama. Infatuated also by the mirage of political correctness, identity politics, and the “glass ceiling”, they concluded that only a revolutionary minority could lead and bring about the desired Obamaesque political, social, economic, and cultural revolution. What they clearly overlooked was the not so negligible fact that Hillary Rodham Clinton’s disagreeable personality, her past activities and campaign themes were way outside the constraints of the majority’s political and moral beliefs and, more importantly, ran against almost all the cherished traditions of the people.
To add insult to the already existing injurious situation, the midterm elections of 2018, have cemented a broken political system in Washington, D.C., and beyond. The Speaker of the House Nancy Pelosy, aided by the Senate Minority Leader Chuck Schumer, have behaved as though they were the majority within the federal government. Moreover, supported by the ubiquitously and fiercely biased media on behalf of the Democrat Party, the President’s and the Senate Majority Leader’s utterances and statements have been systematically misstated, misinterpreted, taken out of context, and even altered, in order to serve the opposition’s nefarious political objectives. A case in point is the titles of lead articles in the Washington Post’s March 23, 2020 edition, in which the authors praised the warlike attitude of European governments in light of shortages of ventilators, beds and other essential medical equipment to fight the coronavirus, while condemned the President for his alleged “ lagging response” to desperate demands for assistance by state, municipal, and city leaders across the nation.
Meanwhile, because they could not directly attack the electoral college enshrined in the constitution, they embarked on inventing perhaps the most absurd lie of American political history, the so-called “Russian interference in the American elections on behalf of the Trump campaign.” Having been aided by the written and electronic media that for many decades have been constitutionally incapable of grasping the fundamental difference between strict adherence to the facts and the capricious presentation of purely subjective, irresponsible, and even maliciously disseminated falsehoods, the overwhelming majority of media personalities have turned into despicable liars par excellence. Having realized that their ideas are not winnable, these ruthless political operatives and extremist propagandists have come to the conclusion that the only way for them to regain their lost political powers enjoyed under the eight years of the Obama administration is to overthrow the legitimately elected President and his administration by outrageously false narratives, defamation of characters, and blatantly illegal or pseudo-legal manipulations. In order to round up this vicious circle of anti-American conspirators, these two groups enlisted the politically corrupt bureaucrats of the government, in particular the leaders of the various intelligence agencies, the upper echelons of the Department of Justice, and its investigative arm the FBI.
The resulting crimes committed by these groups and connected individuals then led to the totally groundless Mueller investigation, the multitude of laughable House proceedings, and finally to the pathetic impeachment trial in the Senate. What has been remarkable in all these political charades that in the name of maliciously invented human rights, worn off Marxist social justice slogans, self-serving and inverted racial discrimination grievances, misguided notions of multiculturalism, disrespectful anti-religiosity, and savage anti-Americanism, they have attempted to convince the majority of Americans that society shall not save all the praiseworthy characteristics that made their country great, but that they must at all cost to annihilate greatness itself. This compendium of destructive rants against the United States of America, its history, and its constitutional principles, has been packaged in the poisonous wrapping of senseless irreverence.
The charge for this kind of irreverence was led from its inception by none other than President Barack Hussein Obama, the most incompetent, yet the most overrated pseuedo-politician in the annals of American history. Having talked about American exceptionalism often and as usual from both sides of his mouth, he has only succeeded to unsettle both himself and everybody else. As a result, his inherent intellectual confusion culminated in total chaos in the minds of his clueless adherents. Out of this intellectual confusion was born the notion of the Obamaesque Democrats that finality does not exist in society, and that permanent chaos is like Trotsky’s permanent revolution, assuredly beneficial to humanity. Again, what they have clearly overlooked is that the United States of America and the rest of the world foremost needed stability. The era of experimenting with dogmas, ideologies, and extremist intellectual ideas was over. While the history of the 20th century was littered with the failures of the Soviet Union, Nazi Germany, Arab Socialism, African Socialism, Chinese Maoism, etc., the United States of America’s Constitution-and-Bible-based political, legal, and spiritual realms have survived without major interruptions or upheavals.
Thus, the reason President Donald John Trump beat Hillary Rodham Clinton decisively on November 8, 2016, is simple. The former understood better what motivates the American people than the latter. Moreover, the President understood the rest of the world better than his defeated opponent. Therefore, the President has embarked on a whale of a job, namely, to restore and preserve the proven foundations of the Republic, specifically American democracy. In order to accomplish these objectives, the President has spoken truth to the extremist minority. His fighting spirit on behalf of the country has attempted to recreate a feeling of confidence in the institutions of government across the land.
Presently, under the guise of initially blaming the outbreak of the coronavirus on the President, even calling it the “Trump Virus”, and since then vehemently criticizing almost his every decision, the Democrat opposition is hell bent to repeat the outrageous abuse of the rule of law of the last three years, in the hope that they can ride the coronavirus horses of apocalypse to absolute power on November 3, 2020. As recently as last weekend, the Speaker of the House again raised the specter of impeachment against the President for failing to prepare for the pandemic, saying “while the president fiddles, people are dying.” In the same vein, perhaps the most stupid television personality among all the blooming idiots in the American media, NBC’s own Chuck Todd asked Joe Biden whether he believes that the President “has blood on his hands.” This scurrilous and destructive opposition, which is a minority, remains utterly stupefied intellectually by the discredited ultra revolutionary socialist and 19th century syndicalist nonsense. Yet, if it would be successful, it will only accomplish one objective: the total destruction of the Republic, democracy, and the rule of law.
Thus, in today’s health emergency situation the most important task of every government should be to preserve a prudent balance between well-defined legislation enacted by Congress and the strict implementation of the laws by the executive branch. This requirement is important because in the last five decades Congress, the Executive Branch, and the Courts have not performed well in preserving this delicate balance. Particularly, under the presidency of Barack Hussein Obama legislation often suffered from vagueness. Glaring examples of recent congressional sloppiness are the Patient Protection and Affordable Care Act and the Massachusetts Senator Elisabeth Warren inspired Consumer Protection Act. In both cases, Congress’s intent was to fundamentally reform major segments of the American economy. In reality, Congress has created significant loopholes in both the meaning of definitions and the interpretation of key provisions. The resulting legal uncertainties have often contributed to bureaucratic overreach and abuses of the Executive Branch’s discretionary powers as well as the inviolability of the principle of the rule of law.
Giving universal value to the rule of law is the responsibility of the judiciary. Decisions handed down by the courts affect individuals in the present, but also will have a more enduring impact on the life of future generations. Thus, judges must be ideologically independent, politically impartial, and therefore not concerned with the politics of the present. For these reasons, judicial activism can be as threatening to the rule of law as the broad discretionary powers granted by the legislature for the executive.
Regrettably, in the present political climate, everybody believes that his or her ideas have the blessings of the future and for this reason rejects out of hand any contradictory arguments. And when these arguments have no or merely miniscule chance to be adapted by the majority, their adherents will try to utilize the powers of the news media and unelected law enforcement and intelligence agencies, as well as the politically and ideologically biased members of the judiciary. In this political tower of Babel the future of the American Republic, democracy, and the rule of law becomes less predictable.
The moral decline and the resulting ideologically misguided politicization of the nation’s political realm is best illustrated by the Democrats’ insistence on pushing their so-called politically correct agenda during the debate about the stimulus package. Spurned by Majority Whip James Clyburn, third in line within the House Democrat leadership, who opined that the Coronavirus crisis provides the Democrats with “…a tremendous opportunity to restructure things to fit our vision,” the Speaker of the House deemed it appropriate to held up the stimulus package already agreed upon by both parties in the Senate. In this manner, realizing that their outlandish ideas have no chance to be approved by the majority of the voters in the upcoming elections, Nancy Pelosi wanted to blackmail the President and the Republican Party into accepting her and her Party’s takeover of corporate America. Termed by the Heritage Foundation as a “veritable pork barrel for programs that would force corporations receiving government aid to implement diversity and inclusion initiatives that have nothing to do with combating COVID-19,” Pelosi’s alternative stimulus bill pushed social policies that are outrightly destructive to democracy and the free market economy. This is clearly malicious politics.
Conversely, the guarantee of good politics resides in the characters of the policymakers too. Attempting to promote a dictatorial version of Socialism is tantamount to placing an already discredited political agenda, namely government takeover of the national economy with the goal of establishing a classless society, ahead of the well-being of the American people, is by definition against the national interests. In the same token, Vermont Senator Bernie Sanders’s advocacy of Communism in the guise of “Social Democracy” is equally bad, because of its irrationality and its practices of concluding bad compromises. His revolutionary fantasies amount to an idiotic hoax. What his intellectually blinded followers do not understand is that Senator Bernie Sanders’s call for “revolution” means the violent overthrow of the political, legal, economic, and social order of the Republic. In politics, one can traffic in contradictory ideas, but cannot play with contradictory emotions. In essence, the Democrats have declared war against the unity of the nation, the cohesion of the family, and the Judeo-Christian religion, the three enduring pillars of the American Republic.
It looks more and more like the President clearly understands what is transpiring in the United States of America. His opponents appear to dig in deeper and deeper in their destructive tactics. To provide practical solutions to challenges in general and to the present pandemic crisis in particular are what the overwhelming majority of the people want. Telling Americans how to think and how to live, when they mostly disagree with the Democrats’ prescribed impractical cures, is not conducive of national unity and individual happiness.
History, in its dealings with great nations, has in many instances played havoc with their destinies exactly when they have been at the apex of their powers. However, what has distinguished a great nation from a mediocre or a bad one has been its superior ability to manage crises. Ultimately, the character of a nation and the qualities of its leaders is defined by the manner they triumph over a crisis situation.
Now, the origin of the Coronavirus pandemic is not the primary matter. This question can be researched and analyzed later by the experts. What is presently important, however, is the fact that the entire world is in a biological warfare situation. As in the aftermath of every war in the past, the world has had to adjust to the changes brought about by those extraordinary events. In this respect, two fundamental questions must be answered: Will the solution or solutions contain the lessons learned during the crisis? What kind of changes will happen in the future in the various societies as a result of the crisis?
Clearly, the world is in a turmoil. The member states of the European Union are on the verge of deep recessions and possibly a ubiquitous depression. Politically, the disunity between the western and the eastern parts of the Union is threatening the very survival of the organization. Instead of having shrunk, the economic and cultural differences between these two poles have been growing exponentially.
Russia has historically been the sick nation of Europe. With the exception of its military might, Russia is a political, financial, and economic basket case. President Vladimir Putin is a gambler. His obsession with reintegrating Belorussia and the Ukraine into Russia, his incompetent handling of his country’s economy, and his adventurism across the globe, do not bod well for the future stability of his dictatorship, and the general well-being of Russia itself.
Contrary to all the optimistic predictions, the People’s Republic of China has been in a steady decline politically, economically, and financially since 2012. The rigid dictatorship that President Xi Jingpin has cobbled together with blood and extreme coercion has also been detrimental to China’s continual progress. Under his limitless rule, his country will regress toward the state of stagnation and even the deterioration of the Mao era. Adding insult to injury, China’s over-extension internationally, will only accelerate its ongoing domestic and global decline.
Japan’s economy, once the envy of the world has been stagnating since the end of the 1980s. With its demographic challenges, it will never regain its status as an economic powerhouse. Politically, Japan cannot stand up to the Chinese challenge without the help of other Asian states and the United States of America.
India is growing, but so does its population. Multi- ethnic and multi-religious, it will face enormous problems and challenges to its tenuous democracy in the future. Its economic progress has been slow. The current global crisis will only make growth more difficult.
The greater Middle East is a powder keg. It is only a question of time before the entire region will explode in a protracted and extremely violent combination of civil wars and wars among all the Arab nations. In Iran, the Mullahcracy will collapse and the ensuing chaos will break up the country. Africa will also fall back to tribalism, civil wars, and ubiquitous decline.
The overall picture does not look better in Central and South America. Bloody upheavals, senseless revolutions, self-serving dictatorships will destroy progress in most countries. Experimentation with Marxist, pseudo-Marxist, Chinese, and even local revolutionary models will follow. The result will be enduring chaos and extreme poverty.
The restrictions that have been introduced in the United States of America and in many other countries across the world to combat the spread of the coronavirus have negatively affected their economies. As the number of coronavirus cases here in America surpassed 160,000 as of Monday – the dilemma facing policymakers has already been raised by a Wall Street Journal editorial on March 19, 2020, concerning the safeguarding of public health versus the shutdown’s effects on the health of the economy. This dilemma of the “cure is worse than the disease,” and the President’s musing about it, has again awoke the worst political instincts of his opponents. Pointing triumphantly at the President’s statement, in which he said that “We cannot let the cure be worse than the problem itself,” while omitting the second part that added the following caveat: “At the end the 15 day period, we will make a decision as to which way we want to go,” they have declared that the President would prefer to kill Americans rather than let the economy further deteriorate.
To bolster their claim of questionable accuracy, they have quoted Dr. Anthony Fauci, the head of the CDC, who said that it might take several more weeks until people can start going about their lives in a more normal fashion. In reality, the President has already extended the CDC guidelines until the end of April.
Politicizing a life and death challenge for each individual as well as for the society at large is clearly counterproductive to support national unity and well-intentioned cooperation in a global crisis situation. In the same vein, the major national television stations, with the exception of the Fox Network, have threatened to stop broadcasting the President’s and the Coronavirus Task Force’s daily briefing because of its alleged inaccuracies and even outright lies. As a result, instead of a direct broadcasting of the President’s and the Task Force members’ statements, the viewers might be confronted with the interpretations of the extremely biased and mostly incompetent commentators about the briefings. That much about the mainstream media’s commitment to free speech and democracy.
A more cynical interpretation might point to the latest poll numbers, according to which the President’s approval rating shot up to 60%, exactly as a result of his daily communication with the nation and his competent handling of the coronavirus crisis. Complaints from the anti-Trump media about “completely ruling the news cycle” by the President and thus eclipsing Joe Biden are abound. Thus, it appears that for the anti-Trump crowd, defeating the President in November is more important than fulfilling their responsibilities of providing the public with up to date and objective information. While the President has demonstrated leadership, his opponents have managed to reveal to the nation their small-minded and contemptuous disposition.
No doubt that this crisis created by the coronavirus is both political and economic. The historic stimulus package officially named the Coronavirus Aid, Relief, and Economic Security or “CARES” Act, will inject in the American economy a staggering $2.2 trillion to support businesses, public institutions, and individuals affected by the COVID-19 pandemic. The 880-page legislation is not perfect. It suffers from vagueness and is replete with the provisions of the usual “pork barrel” politics. Yet, for the first time from the beginning of the crisis, it is the product of a broad bipartisan consensus. Its expanded unemployment benefits will surely help even those who are not employed full time, such as gig workers, contract workers, and freelancers. The Act also includes an additional $600 per week on top of the already existing state benefits to support the jobless to survive the crisis. These benefits are time-limited and will run out after four months.
Small businesses are helped with $350 billion, up to $10 million per individual business. In addition, a separate $10 billion in emergency small business grants of up to $10,000 is also set aside by the Small Business Administration.
Larger businesses will be bailed out, when needed, from a pool of $500 billion. The Act also sets aside $100 billion for hospitals and health providers.
One of the most significant parts of the Act are the direct cash payments to most Americans. These cash payments include $1,200 for adults and $500 for children. Over an adjusted gross income of 75,000 for single filers and 150,000 for couples filing jointly the payment phases out by $5 for every $100 in extra income. Single filers without children earning $198,000 will not receive any benefits.
The coronavirus pandemic has also generated global fear. Fear of the barely understood disease, fear of economic collapse, fear of government overreach, fear of any other already existing and future, real and imaginary threats and dangers. Such all encompassing and often unpredictable fears in many instances threaten relations between and among states. The more a government perceives the danger of losing power through elections or by being overthrown, the more willing they become to reach for emergency powers. Such developments can increase the danger of misinterpretation or even misunderstanding of foreign intentions, thus raising the possibility of different levels of confrontations between and among states. The ensuing mistrust and insecurity can ultimately result in war and global anarchy. Clearly, the world in general and humanity in particular need global leadership. The only country that can provide it is the United States of America. Consequently, as soon as this pandemic will subside domestically, we must ready ourselves to assist others. The quality as well as the quantity of this assistance will determine the future of America’s position in the world. Equally importantly, our international policies will also define the future direction of freedom across the globe. Upon the fulfilment of these responsibilities will depend the fate of America as well as the future of the entire world.
The recent coronavirus pandemic has left Americans scrambling to adjust to the new reality of state-sanctioned isolation. As governments struggle to address the crisis, big conglomerates have been trying to leverage this scare to get public approval wins and points with legislators.
We’ve all received emails from companies this week who can’t wait to talk about how much they’re helping. Amazon is conducting a massive hiring push; utility companies are postponing payments. But don’t be fooled. They never have, and never will, set aside their own self-interest and have only the consumers’ best interest at heart.
As this crisis continues, we should observe their interactions with legislatures and be vigilant in monitoring the favors for which they are asking.
Take, for example, Exelon. Exelon is a national energy supplier that operates in five states and the District of Columbia. It generated over $33 billion in revenue last year alone, and during the crisis has tried to drum up headlines by donating more than $1 million through its family of companies to fight the pandemic.
Additionally, they have suspended service disconnections to customers and have made direct donations to relief efforts. All of this is undoubtedly good for consumers and the public, but what do they want in return?
We’ve seen plenty of examples of what companies want when they work with governments. It’s the same thing they want from consumers: money. Whether it’s Foxconn and Amazon asking for relocation tax credits, or local developers cashing in on bad government policy, big companies do whatever it takes to turn their cash-grabs into positive PR.
You’ve seen the photo-ops. Company heads and elected officials standing together, praising the potential economic gains that will be made by these deals. In reality, however, these deals rarely amount to anything more than a taxpayer-giveaway to special interest groups.
In examining what the end goal is for some of these corporations, let’s look at an example of lobbying issues currently happening in Illinois. The state is looking to do an overhaul of the energy sector by passing a green energy bill, known as the Clean Energy Jobs Act.
State lawmakers created sections within the bill that would allow Exelon to inflict even higher costs on taxpayers, but then corruption probes into the company’s lobbying and relationship with state lawmakers got in the way and sidelined the bill in 2019. Now with the virus presenting an opportunity for a PR victory, it’s not surprising to see the neighborhood utility conglomerate strike a more helpful appearance right before the state legislature is expected to move the bill.
While $1 million and some customer bill relief may sound generous, it’s barely even a fraction of the hundreds of million this Fortune 100 company receives in subsidies from taxpayers annually. And what Exelon would get in return with the passage of this new bill will amount to substantially more than its $1 million PR push. At the end of the day, companies do what’s best for their bottom line.
Companies like Exelon operate as opportunists when disasters provide a chance to gain support from the public (think Oakley sunglasses with the Chilean miners.) Still, we can’t allow that to distract from the predatory actions these same companies use when pushing to gain access to tax dollars.
Exelon has attempted to hijack a clean energy jobs bill to receive more business and subsidies — ensuring continued cash flow regardless of performance, all while destroying any good the bill would do.
As we watch the world respond to this terrible crisis, we must remain vigilant to the cronyism that persists in the economy today from massive corporations whose entrepreneurial instincts have led them to reach for the state coffers in hopes at an easy payday.
While we should praise the companies who commit to actions that better the public good, we must never lose sight of the possible corruption these conglomerates are perpetrating. The health of our nation depends on it.
The Wuhan Flu’s impact on the U.S. economy is self-evident — and not just because we’ve seen three years’ worth of stock market gains wiped out in three weeks’ time. There’s a human cost, not just for the people who’ve become sick and for those who didn’t recover but for everyone whose life has been turned upside down.
Congress and President Donald Trump have thus far managed to enact several economic stimulus proposals, none of which have been perfect but all of which have been necessary. That process stopped over the weekend when House Speaker Nancy Pelosi’s demanded — and Senate Democrats bowed to her wishes — that every item on her party’s wish list be included in the latest package.
That fight may be resolved, or everything may freeze where it is. What that means, as the global pandemic spreads and we work out what to do, is uncertain. The already approved plan to move Tax Day to July 15 is a winner. So is the proposal to suspend payroll tax collection through the end of the year, retroactive to March 1. That plan, authored by Steve Forbes, Art Laffer, and Stephen Moore would give business a temporary but immediate 7.5 percent reduction in the cost of each worker and give each worker a temporary but immediate 7.5 percent increase in pay.
The big issue for many, especially those in the upwardly mobile middle class, is the burden imposed by home mortgages. For most families it’s their single biggest expense each month. And if one or both parents aren’t working because their workplace has been shuttered as part of government-mandated efforts to slow the spread of COVID-19, lots of people may be thinking they might lose their homes.
That’s a fear the Washington politicians must face head-on. This probably means some form of forbearance for homeowners by taking actions to persuade mortgage providers to allow a reduction or temporary halt in monthly mortgage payments.
To lessen such a burden for needy Americans, any attempt to do this must also ensure continued liquidity for certain companies that lend to borrowers, through no fault of their own, most in danger of financial collapse. A consumer level pause on mortgage payments does not, however, alleviate of lenders the requirement they pay what is owed to those underwriting the mortgages in the first place.
For the so-called big banks, forbearance would likely not pose any real short term risk. Thanks to Dodd-Frank, they’re sitting on huge capital reserves that can be leveraged against any cash-flow concerns a temporary lull in payments might create.
This would be a huge step, many would say in the wrong direction, especially if the government or the Federal Reserve ordered the big banks to do it. That’s in part because nearly half of all mortgages are now held by what are called non-depository lenders.
There are lots of reasons for this. One is convenience. Another is the big banks’ increasing unwillingness to play in the mortgage market. And some credit-worthy applicants are simply unable to meet the mandatory threshold for credit, income, and/or other factors necessary and must go elsewhere.
Non-depository institutions accept applicants whose circumstance impose a slightly higher risk. Their mortgages are made available to those buying a first house, providing for children in a single-parent home, and veterans returning from active combat and transitioning back into civilian life.
These lenders, which include firms like AmeriSave, Reali Loans, and Freedom Mortgage, provide mortgages to Americans who would benefit most from forbearance as the jobs in their sectors of the economy are most at risk in the slowdown the pandemic has triggered. Unfortunately, these lenders do not have the same degree of liquidity as the big banks and would be disproportionately affected by a mortgage payment moratorium.
If lenders are ordered to offer forbearance as a form of financial support to borrowers, as many expect Congress will do in one form or another, then additional liquidity for non-depository lenders must be provided alongside what the big banks will receive.
It’s undeniable things have improved for lenders and consumers since the sub-prime mortgage crisis almost took the U.S. economy down in 2007. Still, that led to a bailout of a size and scope we should not routinize, even if the funds were mostly paid back. This time big banks may be hoping to recoup their losses by scarfing up assets of failed non-depository lenders that crash once their income stream stops. The “big boys and girls” should look elsewhere, perhaps to the overages on their balance sheets, and Congress should make sure this happens.
The choice of rates and options provided by the big banks’ competitors is a net positive for consumers and the overall economy. Forcing their collapse while saving the name-brand institutions who’ve already been bailed out once would be a major mistake.
By Red State•
After returning to Washington from a week away in San Francisco, House Speaker Nancy Pelosi brought her caucus’ new demands for passing a coronavirus relief bill. While the focus of the bill is supposed to be helping the American people through this pandemic, the Speaker’s bill is filled with special handouts to her political supporters, donors and well-connected California friends.
Pelosi is following the advice of House Majority Whip Jim Clyburn, who argued that the rush to enact legislation to assist the American people is a political opportunity to “restructure things to fit out vision.”
Take the solar subsidies section of the House bill. While they do little to help the hospitals and families that are supposed to be a focus of these efforts, they do help Pelosi’s well-connected California cronies like Elon Musk and his corporations.
This wouldn’t be the first time Musk received hefty payments from federal coffers. Under President Obama, Musk was able to secure billions for his solar operation, even though his company still nearly went bankrupt. It was only after merging with Tesla that SolarCity’s insolvency came to light. After that merger, the company also had to settle with the Department of Justice for nearly $30 million because of allegations that it cheated the government, including by deliberately overstating the cost of its installations to receive inflated government grants off the taxpayers’ backs.
Tesla’s go at solar has been equally as abysmal as SolarCity’s. Reports earlier this month showed that Tesla’s energy partner was pulling out of their agreement because of the company’s failing (and heavily subsidized) solar factory in New York. The company is struggling to meet the terms of its current subsidies with the state of New York, and now, with sales dropping, Elon could apparently use another bailout.
Pelosi coming to the aid of Musk, her home state business interest whose companies have a history of misleading the government and investors to receive more aid, with government subsidies and corporate giveaways, is par for the course. In the past, when electric vehicle tax credits were phasing out, the Speaker singled out electric vehicle manufactures like Tesla for renewed subsidies. These EV subsidies benefit no one other than Musk and the overwhelmingly wealthy Americans who make six figures or more a year that purchase his cars. It’s money that could’ve went to vulnerable Americans instead. Then again, Pelosi has a history of putting her political interests above those of the American people, so her cozy relationship with Musk shouldn’t surprise anyone.
If these direct bailouts to “green” energy interests within the Democrats’ COVID-19 relief demands aren’t enough, they’re also adamant about passing other radical parts of the Green New Deal within this package. They’re tying relief loans to the airline industry to new, stricter emission standards. It’s only a matter of time before more significant automotive restrictions enter the arena as automakers rush to deal with shuttered factories and tapering sales.
By playing along with Pelosi’s shameful D.C. insider games, House Democrats this time around have shown they’ve learned nothing from past mistakes and want to take needed funding away from struggling small businesses and give it to the protected billionaire class.
Whether it’s expanding unrelated subsides or putting burdensome regulations in place, these so-called “lawmakers” are making it clear the only interests they represent are of those who fill their pockets and fall in line. As our country faces a once in a generation crisis, we must hope that our representatives use their place of power to advance the best societal interests, not for those of the already well-off. As the corona aid enters the final stage, lets’ hope Congress takes a stand for the hard-working American people and passes a clean relief bill. The nation is watching.
President Donald John Trump, 45th president of the United States of America, has just made the biggest gamble of his career.
On the unanimous recommendation of the public health professionals, he decided to close down the US economy in a manner more severe than any other measure ever taken by a U.S. president, with the possible exception of Abraham Lincoln’s declaration of martial law on September 15, 1863.
Clearly, no one can reasonably disapprove of the need to save American lives by containing the deadly coronavirus. If the next few weeks occur as expected by the public health experts, the virus will peak and begin to recede, allowing normality to return. If that sequence of events is delayed much longer than a total of 30 days or so, the country risks falling into a recession that could rival the Great Depression of the 1930’s – 25% unemployment, long bread lines, starvation staring out of the hallow eyes of children.
The President is fully aware of this danger. He knows he is risking becoming another Herbert Hoover, who was unjustly blamed for the Depression and lost the presidency by a landslide in 1932. One big difference is that Hoover was a victim of circumstances, whereas Trump’s fate will be seen as the inevitable result of his own decision.
Closing down the economy was not the only choice that could have been made. Woodrow Wilson did nothing to affect the Spanish Influenza pandemic of 1918-20, and the result was the Depression of 1920. Wilson was in his second term and could not run again (although this did not stop Franklin Roosevelt in 1940 and 1944). Wilson’s Democrat party lost the 1920 election in a landslide.
George Bush did invoke a few measures to mitigate the immediate effects of the 9-11-2001 attack but concentrated his primary efforts on foreign policy actions. He survived the temporary shutdown and won re-election in 2004. Barak Obama did very little to fight the outbreak of West Africa Ebola of 2013-16, which ultimately killed 11,310 victims but was not a candidate in 2016.
President Trump could have followed any of these strategies. Instead, he gave the public health experts full reign over the nation’s response to the threat of the new virus. Their prescription for countermeasures has had temporarily catastrophic effects on the economy. These people have dedicated their lives and talents to saving and enriching all our lives by seeking effective cures for the diseases which threaten us and identifying the best preventative measures to mitigate the ones that cannot be cured. These are truly noble goals.
However, that perspective has its limitations. It emphasizes one dimension of human life, namely, physical health — often to the exclusion of all other factors. Among those other factors are the economic and social needs which are also shared by all people. The compromise we are now living out is “Let’s follow the public health scientists until we beat the virus, and then we will revert to normal life.” The gamble is: “Will normal life still be possible after we beat the virus?”
For President Trump, the stakes are very high. If he wins, he will be the Savior who rescued the nation from disaster. If he loses, he will lose everything, including his second term, the destruction of all his innovations, as well as his reputation. His legacy will be remembered as either victory or tragedy.
For the American people, the stakes are even higher. Never before have we faced the near shutdown of the economy, even for a day, let alone a month. The closest we have come is the Great Depression, when things were so desperate that Russian communism was openly advocated. We don’t know if the damage will be permanent, overcome quickly, slowly, this year, or if it will take years to regain our momentum.
What we have to remember, especially in this perilous time, is that we Americans have survived many other crises in our history. We have flourished throughout the ages no matter the obstacles. In fact, America’s history is the story of crises happening and crises overcome.
Our greatest crisis was the Civil War, when we fought ourselves and lost an estimated 650,000 lives, a whole generation of young men. But the newly reunited nation came roaring back in the Gilded Age (c.1870 – 1900), a period of extraordinary growth in all areas of American life, including technology, manufacturing, transportation, and higher learning, among many other areas.
In the 1930’s, the Great Depression nearly destroyed America’s will to survive. Yet the country rallied out of the Depression when the Japanese Navy destroyed the Pearl Harbor naval base in 1942, proving that the American spirit was not only not dead but so filled with vitality that we won both the war with Japan and saved Europe from the Nazis – at the same time! And it took us only three years to go from a dead stop to overdrive.
We are seeing much of the same spirit of unity in the “war”, as was evidenced in WWII, as political opponents join forces (except the Governor of Michigan) with companies and whole industries to shore up scarce supplies and bring supply chains back home. Likewise, stories of outstanding generosity and kindness on the part of individuals and local businesses are beginning to surface. This generation is proving that the American spirit of our forebears is still alive as we rally to save our country from disaster.
The moral of the American story is that Americans can overcome every threat we have ever faced, and we will overcome this one – whichever way it goes!
The coronavirus was originally thought of as a health care issue. But then the stock market started to tank, and it became an economic issue. Now with the nation on virtual lockdown, the economic losses are not just paper losses in the nation’s stock portfolio. Hourly employees at America’s ballparks and arenas, restaurants, hotels, malls, airports, etc. are all facing economic disaster. But it doesn’t stop there — the economic slowdown will impact us all. Even if we never become infected, we are all victims of the virus.
This economic destruction is difficult to imagine, given that only a few weeks ago, our economy was strong and growing rapidly and all the indicators were that it was going to continue. But now economic catastrophe is staring us in the face as extraordinary measures are taken to protect the public health and the gears of our economy grind to a virtual halt.
The good news is that we can mitigate the severity of the outbreak so as to not strain the health care system to its breaking point. But in so doing we can’t let sectors of our economy that were vibrant until just last week be destroyed forever. This moment will require extraordinary measures by the U.S. government to protect and defend not only the public health, but also the waiters, waitresses, and hourly workers across our country who are in trouble. It will also require aid to some very large, very established companies — whose employees and the innovation and global competitiveness they support — are also at risk. In many cases, this isn’t just an economics question, it is also a matter of national security.
Some might call the emergency actions that need to be taken to inoculate the nation’s economy against the Coronavirus a “bailout” (and as a conservative, my default position is to oppose bailouts). Subsidizing bad economic decisions is wasteful and unwise. But to be completely candid, this crisis is not akin to the bank bailouts of 2008, which I strenuously opposed. This economic downturn wasn’t caused by foolish business decisions. Rather, we are now facing a shock and downturn similar to that caused by the 9/11 attacks — only this may be far worse in size and scope.
One of the sectors whose plight has been most acute is commercial aviation. With airlines slashing flights and grounding fleets, there are cascading impacts across the flight attendants, baggage handlers, mechanics, ticket and counter representatives who serve the industry. Beyond these front lines are an additional 17,000 companies and 2.5 million good paying jobs responsible for building the airplanes. In the midst of this crisis, domestic and foreign airlines will not be buying more planes and they may not be able to pay for the planes they have already committed to.
We can’t afford to allow the health of our aerospace manufacturing sector to languish. These manufacturers and their high-tech suppliers are also a critical part of our national security apparatus and a foundational part of our ability to defend ourselves. Our nation’s leadership in aerospace is not something we can take for granted, as competitors in Europe and China work every day to outcompete our aerospace and defense capabilities. To cede this sector for the long term would do serious damage to our nation’s economy and security, as well as millions of workers in all 50 states.
Crude oil prices fell dramatically over the weekend. Between March 4 and March 9, Brent crude, the international benchmark, fell from $51.13 to $34.36 per barrel, a drop of 32.8 percent. As of this writing (the afternoon of March 10, EDT), the price has recovered to $36.89 per barrel. The price of U.S. West Texas Intermediate crude, the standard measure of U.S. oil prices, fell from $46.78 on March 4 to $31.13 on March 9, a drop of 33.5 percent. Pippa Stevens at CNBC wrote that “U.S. West Texas Intermediate crude and international benchmark Brent crude are both pacing for their worst day since 1991.”
Why worst? Implicit in Stevens’s statement is the idea that low oil prices are bad. All other things equal, of course, low oil prices are bad for oil producers. But also, all other things equal, low oil prices are good for oil users. And the latter includes all of us. How do we assess whether the net effect of the plunge in oil prices is good or bad? We have to look at why they fell suddenly. We pretty much know why: a temporary collapse of the Organization of Petroleum Exporting Countries (OPEC.) For that reason, the drop in oil prices over the weekend is good. It’s roughly a wash for the U.S. economy and it’s good for the overall world economy.
A most useful principle I learned in my Ph.D. economics program at UCLA, about which Professor Benjamin Klein never failed to remind his students, is “Never reason from a price change.” Scott Sumner, an economist at the Mercatus Center and one of my co-bloggers at EconLog, often points that out in his posts.
Let’s apply that lesson here. There are three (and only three) reasons that oil prices drop: (1) demand decreases, (2) supply increases, or (3) the monopoly power of oil producers falls.
When economists say that demand decreases, we mean something very specific—that at any given price, the amount demanded decreases. There are two main ways that can happen: a slowing of the world economy or an increase in the supply of a substitute.
If the world economy slows—and it certainly looks as if it has slowed, or will, due to the COVID-19 virus and people’s reaction to it—the demand for oil will fall. With a given supply, that will cause the price of oil to fall. The fall in the price of oil is not bad per se; rather, it’s a consequence of something bad, namely, the slowing of the world economy. And it certainly appears that a fall in demand due to a slowing economy caused prices to fall before last weekend. But it’s unlikely that there was a sudden fall in demand last weekend. We have to look elsewhere.
The other possible cause of a fall in the demand for oil is an increase in the supply of a substitute for oil. If, for example, solar or nuclear energy became more competitive, the demand for oil would fall. In that case, the fall in oil’s price would be a sign of something good happening in the economy. Did solar, nuclear, or any other energy source suddenly become more competitive over this weekend? No. So that’s not it.
How about an increase in supply? If supply increases, then, with a given demand, prices will fall. Notice that I’m using the word “supply” to mean not the quantity supplied, but the whole supply curve. When an economist says that supply increased, he means that at any given price, the quantity supplied has increased. The whole supply curve has shifted to the right. This sounds wonky and may remind you of an old economics class in which the professor insisted on the distinction between a shift in supply and a movement along a stable supply curve. But here we need a little wonkiness to help us analyze.
But there were no major discoveries of oil or breakthroughs in technology over the weekend that would cause the supply to increase. So that’s not what drove prices down.
There’s one culprit left: a decrease in monopoly power. If buyers and sellers in the stock market think that a major monopolist in the world market has lost market power, the world price of oil will fall. So let’s look more carefully at OPEC to see what went on last weekend.
First, recall that OPEC is a cartel. Government officials of the member countries get together and try to agree on a price. They want a price above what the competitive, non-colluding price would be. To achieve that cartel price, the members must produce an output below the output they would ideally like to produce. Each firm or, more accurately, government (since we’re talking about OPEC) would like to produce more and have every other country produce less. The members of OPEC meet regularly in Vienna to hash out their differences and try to reach an agreement. This time, though, there was real tension between Saudi Arabia’s desires and those of Russia. OPEC lists its members on its website, and although the Russians attended the latest meeting, and typically attend OPEC meetings, Russia is not, and never has been, an OPEC member.
Saudi Arabia is the most important OPEC producer; Russia is the most important non-OPEC producer that attends the meeting. This time, the Saudis and the Russians had a big disagreement. The Saudis wanted to slow or stop the price erosion that had happened due to the drop in demand by cutting output: that of OPEC members and that of other countries that attend OPEC meetings but are not members. The Russians wanted the output cut too but didn’t want to be the ones doing the cutting. As CNBC’s Brian Sullivan put it on Friday, they wanted to have their cake and eat it too. In that respect, the Russians are like the non-Saudi members of OPEC: all of them want the Saudis to cut output. Although the violin I will play for the Saudis’ predicament is very tiny, it is true that they have traditionally been the “swing producer:” the country that sucks it up and reduces output to maintain the price while many other members of the cartel cheat like crazy. At times, the Saudis have produced as little as 4 million barrels a day to support the price; at other times, they have said the hell with it and have produced as much as 10 million barrels per day.
This time the Saudis said the hell with it. They will produce more and the Russians will produce more. Thus the lower price. And it doesn’t take a whole lot more production to drop the price. The reason is that the demand for oil is inelastic: a one percent increase in output will lead to a ten percent drop in price. So all it takes for a 30 percent drop in price is a three percent increase in output.
Is it bad that the price of oil will drop due to a reduction in monopoly power? No, it’s good. Ever since the fall of 1973, when OPEC raised the world price of oil from $3 per barrel to $11, OPEC has had some monopoly power in the world oil market. This causes the price to be higher than the competitive price would be and we oil users respond by using less oil than we would use at that lower competitive price. When the monopoly power comes about, not due to innovation or invention, but due to collusion, as with OPEC, economists almost unanimously object to monopoly: it holds output off the market for which consumers would pay an amount greater than the cost of production. This underproduction causes what economists call a “deadweight loss,” a loss to consumers that is not captured by producers. That’s what OPEC does. In his article on monopoly for The Concise Encyclopedia of Economics, the late Nobel Prize winner and University of Chicago (and Hoover) economist George Stigler laid out the reasoning behind deadweight loss.
So the cut in the price brings the world oil market closer to the competitive price.
Does that mean that the price cut is good for the United States? No. The price cut is good for any country that is a net importer of oil. In recent decades, therefore, the United States would have gained big time from the cut in the world price. The loss to U.S. producers would have been less than the gain to U.S. consumers because we consumers would have gained on every barrel we used and the producers would have lost on the smaller number of barrels they produced.
But something important has happened in the last decade: fracking. As I noted in my most recent Defining Ideas article, fracking substantially increased the U.S. supply of oil and natural gas. In December 2019, the United States became, for the first time since 1949, a net exporter of oil. So the drop in prices is bad for the U.S. economy as a whole: the loss to the producers will exceed the gain to consumers. But it’s only slightly bad because the United States is barely a net exporter.
For the world economy as a whole, then, the drop in oil prices due to demonopolization is a net plus. That should be no more surprising than the fact that the increase in competition in the retail sector is a net plus.
So why has the stock market fallen so much? Part of the reason is, no doubt, the increased panic, possibly justified, about the loss in output due to the Covid-19 virus. You might expect that if the only event affecting the stock market was OPEC’s temporary loss in monopoly power, the losses to industries that produce energy would be only slightly larger than the gain to industries that use energy as an input. But that ignores the fact that a large percentage of the gain from the drop in price is to final consumers, and most of us consumers don’t sell stock in our wealth. There’s no stock called David Henderson, Inc., for example. So a large part of the gain is not visible on the stock market.
French economist Frederic Bastiat wrote, back in the 1840s, that we should always take account of the unseen as well as the seen. The seen is the stock market losses of energy producers. The unseen is the gain to ultimate consumers.
We don’t know what will happen in the next few months, either with the Covid-19 virus, the world economy, the stock market, or oil prices. As Danish physicist Niels Bohr said, “Prediction is very difficult, especially about the future.” But we should be clear that the drop in oil prices due to OPEC’s loss of pricing power is a gain to the world, and close to a wash for the United States.
Column: Is American society ready for the coronavirus pandemic?
A few months after September 11, 2001, David Brooks went back and looked at coverage of Pearl Harbor for an article in the Weekly Standard (“After Pearl Harbor,” December 10, 2001). What he saw intrigued him. A sense of unity and patriotism followed both surprise attacks. But media after Pearl Harbor had none of the sorrow, sensitivity, and angst that filled the news, with reason, after 9/11. Recognizing the inevitable costs of war, Americans on the home front at the outset of World War II were nonetheless eager to carry on as usual. They did not apologize or second-guess. They soldiered on. “When you step back and contemplate the range of post-Pearl Harbor media,” Brooks wrote, “you are struck by how extraordinarily proud of itself America then was.”
I revisited Brooks’s article this week while thinking about the differences between America during the Spanish flu pandemic of 1918-1919 and America during the Wuhan coronavirus pandemic today. Some of the distinctions are self-evident. America is far more wealthy, free, and technologically advanced than it was then. We enjoy the benefits of incorporating half the population into our economy and society, of ending de jure anti-black racism, of attracting the best and most ambitious talent from across the globe. We are no longer a rising power but a reluctant hegemon. A raw deal awaits any American who trades places with a doppelgänger from midway through Woodrow Wilson’s second term.
What changed is the American ethos. Expressive individualism replaced self-restraint. Narcissism and the therapeutic sensibility triumphed over the reticence and sense of tragedy that comes from living in places and times where there is no safety net and death is a constant presence. The culture of debunking, revisionism, and repudiation informs education, entertainment, art, and occasionally sport.
The size, scope, and ambition of the federal government and its managers is far greater now than it was then. So are the public’s expectations of government capabilities and performance. The institutions that stand between the individual and state have weakened where they have not crumbled. Family, community, religion, and voluntary association attenuate as modernity deprives them of their traditional functions.
The United States is beginning to shut down and self-isolate. Its G7 partners range from states of quarantine (Italy) to lockdown (France) to closed borders (Germany). Countries do not make such decisions on a lark. Nor is the reason for these extraordinary measures a secret. What terrifies the authorities is the prospect of surges in infection that would push public health systems beyond capacity and result in mass death. To prevent a medical catastrophe, the authorities guarantee an economic one.
The social capacity of America has received less attention. The worst-case scenarios anticipate an epidemic that lasts until a vaccine can be mass produced 18 months from now. Do we believe that American society could withstand until then the additional pressures that have been put on it over the past week?
The typical discussion of how coronavirus will change your life focuses on a specific practice or sector of industry. You hear a lot about telework, home schooling, vote by mail, or movies released on Video on Demand rather than in theaters. This piecemeal approach is understandable. Perhaps the problem is so complex, the potential extent of the disruption so massive, that the way to approach it is to study one aspect at a time.
But an extended lockdown will affect more than activities. It will warp institutions. There is a debate over how Congress might operate under social distancing. What about churches, synagogues, and mosques? Church attendance was falling before the virus. Even if the pandemic were to revive the religious impulse, would-be prodigal sons won’t be able to attend services. Church finances—nonprofits in general—will be harmed. In some cases, the damage will be irreparable.
The family enters this crisis beleaguered. My American Enterprise Institute colleague Nicholas Eberstadt writes in National Affairs of “the collapse of work for adult men, and the retreat from the world of work of growing numbers of men of conventional working age.” The recent improvements in the overall labor force participation rate will disappear if the economic fallout of the pandemic is large and enduring. Long-term joblessness and lack of prospects are barriers to marriage and to family formation. And the two-parent family is the seedbed for the character formation of young people. The social costs are enormous. And they are mounting.
Bill de Blasio’s indecision over whether to close New York City schools revealed that these institutions perform parental functions as much as educational ones. The school has become much more than a place of instruction. It is the site of feeding, caring, and supervision (if not disciplining) of children. Deprived of the shelter of the local school, children and young adults will have to look to parents for meals, instruction, and surveillance. Are parents ready to fulfill the responsibilities assumed by the state? What will happen when parents return to work or look for new employment? Will teenagers obey a guidance or curfew that is not enforced under penalty of law?
Large pools of nonworking or truant males are not associated with social or political stability. But they loom large in our future. The economic self-isolation of America can continue only for so long as American society permits. And if Americans, as they have tended to do, revolt against strictures from above, how will authorities respond? None of the answers are comforting. If the coronavirus overwhelms America’s social capacity, our government won’t be in a position to choose between an economic crisis or a pandemic. It will have both.
As the nation edges toward full-blown panic over the spread of the coronavirus, there are people and institutions upon whom we depend for leadership and information who should be ashamed of themselves for feeding it. Their response, loaded as it has been with worst-case scenarios and predictions of dire consequences, only compounds the fear many Americans are now experiencing.
So far, the virus has killed more than 6,500 worldwide, according to Monday’s report from the World Health Organization, and there have been about 165,000 confirmed cases. There are likely many more that are unconfirmed, as people can be ill and not show any symptoms. A large study in China found that more than 80 percent of confirmed cases had fairly mild symptoms, and under 5 percent of cases were critical.
That’s insufficient reason for rational people to panic. “Caution” should be the word of the moment. Thought leaders, politicians and medical professionals should be doing their best to prepare people for what might happen rather than pronouncing our doom—and attacking the president, as we saw in Sunday night’s debate between Senator Bernie Sanders and former Vice President Joe Biden, neither of whom had anything positive to say about the steps taken by the administration thus far.
This encouraging of widespread fear only makes matters worse for public health and the economy.Ads by scrollerads.com
President Donald Trump declared a national emergency on Friday that could free up $50 billion to help fight the virus. On Monday, New York Governor Andrew Cuomo praised his response to the outbreak in the state, as Governor Gavin Newsom did with regard to California.
Nevertheless, most of the folks who have never quite adjusted to the fact that Trump is the president of the United States are quick on the trigger with their criticism no matter what he does. They continue to overstate the lack of response by the U.S. government and blame the president for it.
That’s fair, at least to some degree. As Republican communications expert Rich Galen, my old mentor and former boss, used to remind me back when I was doing politics for a living rather than writing about it, the president gets to take a lot of credit he doesn’t deserve when good things happen, and he has to take a lot of the blame for things well beyond his control.
But remember: Trump didn’t cause the coronavirus and didn’t cause it to spread.
While the president is trying to act like the adult in the room, his opponents are going after him like vultures feeding on roadside carrion. It’s unseemly, and, more than that, the attacks on him undermine the public’s confidence in the national systems we’re depending on to keep us safe and help us manage our lives at a time when many of us can’t go to work, can’t go to our places of worship and can’t send our kids to school.
Recall, for example, Senator Chuck Schumer’s press conference last month in which he called the administration’s response to coronavirus totally inadequate. He also has been demanding expanded free coronavirus testing for anyone who wants it when he knows full well not enough test kits are available.
Likewise, new legislation negotiated by Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi, who took the president’s request for $2.5 billion in emergency funding and blew it up into an $8.3 billion aid package, passed the House on Saturday. Democrats initially failed to ensure that abortion services weren’t eligible to receive funds, and they reportedly attempted to establish a permanent paid sick leave entitlement for all families, a longtime Democratic Party desire. What former Chicago Mayor Rahm Emmanuel once said about not letting a crisis go to waste is fully on display, and it’s shameful.
To be sure, caution is in order—along with hand washing, avoiding crowds, staying home if you’re sick, covering coughs with your arm and other sensible measures. As for panic, why don’t we ask a person who has had the coronavirus? A 37-year-old woman in Seattle was reportedly “surprised” to learn she’d had the virus, after thinking it was the flu and treating it with over-the-counter medications, rest and plenty of water. Her message: “Don’t panic.”
Or consider what Franklin Delano Roosevelt famously said: “The only thing we have to fear is fear itself.” His fellow Democrats and a more than few Republicans would do well to remember those words at this time, given that all they seem to have to offer now is fear.