Recovery in parisan crosshairs; New conspiracy evidence; China fighting back!
As if quarantine and recovery were not enough to worry about, Americans have other headlines competing for our attention. Most tiresome is the conflict between those who want to resume economic activity as much as possible and those who don’t. At issue is the frustration experienced by everybody at the lifestyle we have been forced to adopt because of the threat of the COVID-19 pandemic – everybody staying home while their jobs and earnings dwindle away.
Recovery in partisan crosshairs
A vocal minority has rebelled openly against the closed-door policies of many jurisdictions which have been slow to authorize the back-to-work recommendations of the President. Some are claiming that these restrictive mandates violate the basic rights guaranteed by the Constitution. Others are desperate for an income, still others are just tired of the inactivity. None of this is too surprising given the circumstances.
The surprising part comes when many leading Democrats began advocating the stay-at-home crowd, claiming that the plague is still too widespread to admit the proximity of daily life encounters in businesses and churches. They blame President Trump for sloppy management of the national response, apparently because he has instituted a “go-local” approach economic recovery.
They claim that there should be a “one size fits all” federal policy for the recovery, even though there is a vast disparity between the various local circumstances. This is not really a credible solution to the problem of managing the national opening of doors. But it gets serious when the House of Representatives passes a bill aimed at financially supporting the closed economy in the name of public safety from the virus. How do you deal with ridiculous proposals which are advanced by one of the highest authorities in the land?
New conspiracy evidence
Then, just when we are beginning to deal with that idiocy, we find out that President Obama may have been intimately involved in the attempted overthrow of his successor. The Dems are losing their minds over this one. The current administration has released some very incriminating documentation of testimony kept hidden for as long as two years by Adam Schiff, Jerrold Nadler, and Nancy Pelosi. These documents in effect begin to substantiate the assumptions of the President’s supporters that the attempted coup d’état which led to the impeachment trial of Donald Trump was in fact a treasonous conspiracy to overthrow the legitimately elected President of the United States.
China fights back
This is very serious stuff, but it is hard to concentrate on it when you are facing financial ruin because of a lost job or business. But if you are able to devote sufficient attention to these two political issues, there’s still another one brewing which is equally important but just about, as they say, “a bridge too far”. This is the mounting tension between the USA and China. The war of words is getting more and more aggressive. More importantly, the Chinese are increasing their military threats to American shipping and air surveillance. Unless cooler heads prevail on both sides, this is the kind of rhetoric that can lead to war.
America is already taking on many of the policies which characterized our Cold War with Russia for two generations. But China is a different opponent. It is better positioned to engage in an economic and diplomatic rivalry not only because of the leverage of its huge market, but also because it is much more familiar with the intricacies of the American corporate and technological infrastructure, having worked closely with American firms and government departments and personnel (including Joseph Biden and family) for the past forty years (since the collapse of the Soviet Union).
Those relationships are wide and deep, including not only corporate partnerships but also generations of Chinese students educated in American universities, as well as the capture of America’s technological base, and the purchase of US public debt.
We do not want this cold war to turn into a hot war not only because of the tragic cost to all concerned, but also because it is not at all clear that we would ultimately win such a war. China’s space and long range weapons technologies are arguably superior to our own, especially since, unlike China, we have not been preparing for war over the past two decades and in fact let our military capacity deteriorate to an alarming extent during the Obama years. The Steve Bannon hawks need to think through again their anti-China positions before someone starts shooting. Yesterday’s fall of Hong Kong may be just the provocation to precipitate Western action. Things are getting very tense.
What can you do?
So, that is the menu of top issues facing America. The question is, how do we deal with all these problems? Do we just decide to let the powers that be resolve everything? Do we pick a cause and go all out to support it with demonstrations, social media campaigns, and all the modern communications technologies?
There is an ancient prayer which includes the words,” Lord, give me the strength to accept things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” Good advice in these troubled times.
“This proposal is essentially reverse Robin Hood… Billions of dollars coming out of the pockets of working people and working families and it is transferred to the most fortunate in our country.”
Although those words from career politician Ron Wyden were intended to deride a Republican policy he opposed back in March of 2017, they instead perfectly describe a proposal he himself put forth in March of 2020. Senator Wyden recently sponsored an amendment to save taxpayer-funded subsidies for luxury electric vehicles [EVs] often enjoyed by ultra-rich multimillionaires like himself.
For more than a decade, the working people and working families that Senator Wyden claims to fight for in Washington have collectively been forced to help contribute up to $7,500 for every EV sold in America – that is, until each manufacturer sells 200,000 units. As one of Wyden’s Senate colleagues, Wyoming’s John Barrasso, notes, between 2011 and 2017, EV buyers therefore received a total of $4.7 billion in tax credits. The bipartisan Joint Committee on Taxation, meanwhile, estimates that the credit will cost taxpayers $7.5 billionbetween FY2018 and FY2022 alone in its current form.
Given the tremendous amount of taxpayer assistance the industry has already received, its response to the foregoing phase-out period should be rooted in gratitude rather than greed. But these billions are apparently insufficient for colossal electric car corporations hoping to sustain their taxpayer-funded windfall from Washington for as long as professional politicians like Ron Wyden will permit. Accordingly, in an act of total contempt for his middle-class constituents, Senator Wyden is working to deliver an additional $16 billion to these carmakers’ coffers over the course of the next decade – a product of the industry’s relentless lobbying push to lift the aforementioned limit up to 600,000 units as more and more EV manufacturers prepare to join giants like General Motors and Tesla in outselling their caps.
While a $7,500-per-vehicle tax credit may sound like pocket change to the sixteenth richest lawmaker in the United States Senate – back in 2016, Wyden had an estimated net worth of nearly $10 million – it is a significant sum to the working people who must subsidize the purchases of his prominent pals in the top 1 percent. Yet, this precise group of people is priced out of very luxury cars they help finance as “the median price for electric vehicles is roughly $20,000 more than the median price of gas-powered cars.” Per a recent reportreleased by the nonpartisan Congressional Research Service – which is widely considered to be Congress’s think tank – “EV tax credits are disproportionately claimed by higher-income taxpayers.” More specifically, “most of the tax credits (78%) are claimed by filers with adjusted gross income (AGI) of $100,000 or more, and those filers receive an even higher proportion (83%) of the amount of credits claimed.”
Additional data about the income demographics of those who most frequently claim the credit make clear that EVs are taxpayer-funded toys for wealthy people like Wyden:
– A 2018 Pacific Research Institute study found that “79 percent of electric vehicle plug-in tax credits were claimed by households with adjusted gross incomes of greater than $100,000 per year”;
– The 2017 U.S. Department of Transportation’s National Household Travel Surveyrevealed that “about two-thirds of households with [battery electric or plug-in hybrid electric vehicles] have incomes higher than $100,000”;
– In a 2017 CarMax/CleanTechnica survey, 17 percent of households with EVs – the largest share of any income bracket – earned $200,000 or more the previous year; and
– Energy economists at the University of California, Berkeley concluded that “the top income quintile has received about 90% of all [Qualified Plug-in Electric Drive Motor Vehicle Credits].”
Setting aside the EV subsidy program’s disturbing proneness to fraud and abuse – late last year, a government watchdog concluded that “bogus electric vehicle tax credits” cost taxpayers tens of millions of dollars – it can clearly be called a failed subsidy program because of the disparity between those who are fortunate enough to claim the credit and those who are compelled to contribute to it. As Senator Wyden so aptly put it, “this proposal is essentially reverse Robin Hood” because it redistributes precious resources from working people to the wealthy; from his middle-class constituents to massive EV corporations.
Eliminating, rather than extending or enlarging, the EV tax credit is clearly the proper course as Congress considers its path forward. Let’s pull the plug on this welfare program for the most affluent among us.
Look past the words at the actions
As the saying around Washington goes, “President Donald J. Trump frequently steps on his own message”. Nowhere is that observation more accurate than in the matter of his leadership during the current crisis. His verbal descriptions of the steps he has taken and the reasons for each step sound a lot like bragging – even, at times, a plea for credit. But in few cases do they clearly and accurately convey either the obstacles or the strategy that led to these decisions – both of which have been significant.
Let’s do a brief recap. The COVID-19 pandemic has thrown the country into the worst crisis since Pearl Harbor. The President started our national response virtually alone. As the crisis began to take shape, he enlisted the aid of the public health experts, the national laboratories, the privately-owned laboratories, then the hospitals, the manufacturing industry, and so on, as new requirements arose, one after the other. When called upon, these Americans put aside their personal feelings and opinions about politics and proceeded to perform nearly miraculous feats –as when the Army Corps of Engineers created a hospital in Central Park in three days!
What inspired this sensational cooperation? Trump’s mixture of salesmanship and pressure. The appeals of the President to the patriotism of the participants would not have been sufficient to effect the desired outcomes had the President not presented each group with specific, well-thought-out tasks which fit the capabilities of each party. This is called detailed planning.
The result was that each party was asked to do something they knew how to do and were capable of doing. And, in problem after problem – from medical supplies to hospital beds to pharmaceuticals to supply chains to manufacturing — the results were astonishing.
Then the President organized the governors of the 50 states and the territories into the most important role they have ever played as a group – perhaps in American history! Even the bitterest critics of the President joined the coalition and developed a working relationship with the federal administration and the President and Vice President (a former governor). We witnessed the greatest example of federalism in the history of the Republic – James Madison would have been proud the see it in action.
And there were also side effects of this strategy. First of all, it was the most practical solution to the extremely complex problems of a national recovery which featured thousands of varying local circumstances and conditions. Clearly, the Democrats’ call for a “national” one-fits-all policy would not work.
But that observation reveals another side effect. By sticking to the Constitution, the President’s approach also made those criticisms of the opposition so obviously misguided that even the friendly Press disregarded them.
In all, we saw the most impressive example of presidential leadership perhaps since Franklin Roosevelt in 1933.
The Press, of course, missed this amazing spectacle which was unfolding before their very eyes. For the most part, those eyes were blinded by the same unthinking bias which had caused them to join the Dems’ insane attempt to overthrow that presidency earlier this year.
I have commented in the past that other speakers, such as Vice President Pence, frequently describe the President’s actions more clearly and convincingly than does the President himself. However, the forum does make a difference.
The President is very effective during his famous rallies in describing the mountains he has climbed as president and the results he has achieved. In fact, his ability to attract and entertain thousands of people in his rallies is unparalleled in modern politics. In this realm only entertainers can compete. This ability is so unique that any discussion of Donald J. Trump’s communication skills must begin with his rallies.
Next would be his set speeches which have improved with practice and since he learned to use the teleprompter. Finally, would be his impromptu press briefings on his way to the airport. But his formal press conferences not so much.
In the end, of course, as the Bible says, “By his works you shall know him.”
By Red State•
The COVID-19 virus, which was effectively shipped to the U.S. and around the world from China, and the political response to the virus seem to be the lead story every day.
In this veritable flash flood of virus news coverage, one thing many media outlets have missed is the U.S. Postal Service’s release of its second quarter financials. Perhaps, Postal Service financial information sounds boring, but we must pay attention because they’ve been requesting $85 billion in what is essentially bailout funds as part of the numerous stimulus packages.
If the Postal Service gets its way, you and your children may be on the hook once again for the Postal Service’s failed business model and its refusal to get its finances in order. After all, the USPS has lost more than a billion dollars for 13 consecutive years. And it has promised time and again to revise its business model and reform itself but has not made good on that promise. As a result, they are coming back to the taxpayer asking for billions in bailouts.
Maybe the public doesn’t really care if the USPS is losing money or uses a failed business model. After all, if some local business operates inefficiently and loses money, the problem will solve itself as it will go out of business and others who perform the service or provide the product more efficiently will take its place. But that’s not how government related things work.
When a government related organization loses money and begins to fail, the taxpayer is asked to pump billions into it to keep it afloat. It refuses to change its business model or to right its financial ship because it doesn’t have to. It can go to Congress and ask for more cash. Why restructure? Why innovate? Why focus on core profitable business products? Just ask Congress to give you billions to maintain the inefficient and wasteful status quo. That’s the Postal Service’s business model.
One of the curious things revealed in the financial report is that the Post Office claims that its package delivery business is highly profitable and it experienced an almost exponential increase in its package delivery business. That should be good news. Anytime a normal business is able to sell more of its profitable goods or services, that means higher profits. But not so with the Postal Service which still claims to be losing billions. How do you dramatically increase the sale of your most profitable products and still lose money?
Separately, in regard to letter mail, the Postal Service has a government granted and enforced monopoly on First Class Mail. It is illegal for any competitor to provide a competing First Class Mail service. So naturally, the Postal Service makes a lot of money on First Class Mail. Quite frankly, if you can’t make money as a legally sanctioned monopolist, you’re horrible at what you do.
The Postal Service takes the profits from that monopoly business and uses it to compete with other private companies in the package delivery business. And despite the Postal Service’s claims, it is clearly losing a lot of money on its package delivery business. Their financial records and cost attribution practices are so poor and substandard that they can lose billions and still claim that almost all of their products, including packages, are profitable. But the bottom line can’t lie and the bottom line reveals that the Postal Service is losing its shirt in package delivery.
That may explain why a group of USPS customers have come out to support the Postal Service’s request for a taxpayer provided bailout. If you could get taxpayer subsidized shipping and thereby lower your costs, you’d be for it too. It’s just a matter of self interest.
So these companies using the Postal Service’s package delivery services are effectively asking every American to subsidize their multi-billion dollar business and help them keep their shipping costs below market rates so that they can increase their profits. Wouldn’t it be great if all of us could reach into the taxpayer’s pocket to increase our salaries?
All of this is troubling. But the fact that a government sanctioned monopoly is using its monopoly profits to subsidize competition with other legitimate businesses is even more troubling. Imagine if the government set up a monopoly with guaranteed profits and then unleashed that monopoly to compete with you and used its monopoly subsidies to undercut your line of work. They could afford to lose a ton of money, but still harm your business, reduce your salary and profits, and get the taxpayer to cover their massive losses. Does that sound fair? Is that a good use of government power and taxpayer funds?
While the Postal Service claims that its package delivery service is profitable, that simply cannot be true. If it were true, as their package business grew, they would stop hemorrhaging so much money. But they haven’t stopped losing money. Every quarter, when they release their financial reports, it’s just more bad news. If you drill down in their financial information, it is clear that the Postal Service is delivering packages at a loss. But the USPS uses its profits from First Class Mail to subsidize those losses. And when their losses overwhelm their monopoly profits, they call upon the taxpayer to bail out their failed business model.
It is time for real reform at the Postal Service. It is time to stop the perpetual taxpayer bailouts. If nothing is done, next year even after COVID-19 has passed, the Postal Service will concoct another excuse to get more taxpayer bailouts. The Administration should impose meaningful reform because it is in the taxpayer’s interests for the Postal Service to get its business model and financial house in order. COVID-19 shouldn’t be used as a phony excuse to bailout failed monopolists.
Democrats in the U.S. House of Representatives may have been stuck in their districts because of the coronavirus but Speaker Nancy Pelosi has been working hard on their behalf. On Tuesday she introduced the next in what’s getting to be a long line of COVID relief bills that, true to form, is loaded with tax and spending increases.
According to a quick but probably not definitive analysis of what she’s calling The Heroes Act by the good folks at Americans for Tax Reform, the Pelosi bill:
The new Pelosi bill also bails out her political allies, whether they be the cashed strapped, heavily indebted blue states like California, New York, and Illinois or cities like Baltimore, Los Angeles, and Philadelphia or her wealthy coterie of San Francisco sophisticates who probably also have freezers full of designer ice cream.
First off, she’s calling for $500 billion in funding to assist state governments with the fiscal impacts from the public health emergency caused by the coronavirus, followed by $375 billion in funding to assist local governments. Then she wants $20 billion to assist Tribal governments, $20 billion for the governments of the Territories, and an additional $755 million for the District of Columbia.
But the biggest kick of all is the two-year suspension — for 2020 and 2021 — of the elimination of the cap on the deductibility of state and local taxes on federal tax returns. That deduction, called SALT by the tax policy experts, helps ease the burden of living in high cost, high tax states like California while increasing the total burden of the federal budget sitting on the shoulders of low tax and no tax states like South Dakota, Texas, Tennessee, and Florida. To put it another way, it’s a way to get the red states to pay for the upgraded standard of living enjoyed by blue voters in blue states.
Congress and President Donald Trump capped the deductibility of SALT in the Tax Cut and Job Acts, making everything fairer to all. Pelosi wants to undo that permanently, which is probably why her proposed suspension lasts two years — which she figures is enough time for a Biden administration to get repeal through a Democratic Congress. What’s especially galling is how no one is going to call her out on how she and her husband will personally benefit if the cap is lifted. The Pelosis stand to save a lot of money if the SALT cap comes off while many of the rest of us end up paying more. Didn’t she recently call a scheme like that where an elected official stood to profit personally from political action they’d proposed or undertaken an impeachable offense?
The judge’s temporary restraining order sets the stage in Illinois and perhaps nationally for a legal battle over public health experts’ far-reaching demands for public confinement.
In one of the nation’s first successful legal challenges to mandatory quarantine directives, an Illinois state judge has thrown a wrench into Gov. J.B. Pritzker’s extension of his stay-at-home order until at least May 30.
The judge’s temporary restraining order sets the stage in Illinois and perhaps nationally for a legal battle over public health experts’ far-reaching demands for public confinement against the rising fear about the drastic consequences of a nationwide economic shutdown.
In the case, Downstate Circuit Court Judge Michael McHaney on Monday temporarily restrained Pritzker from enforcing the lockdown order against state Rep. Darren Bailey, a Downstate Republican from tiny rural Xenia. Bailey sued Pritzker for violating a provision of the state Emergency Management Act that allows such drastic closure actions for only 30 days. Because Pritzker originally issued his order on March 8, Pritzker’s authority expired on April 8, Bailey argued.
Bailey said he is “irreparably harmed each day he is subjected to” Pritzker’s executive order. In a statement, he said, “Enough is enough! I filed this lawsuit on behalf of myself and my constituents who are ready to go back to work and resume a normal life.” The judge cited in his order Bailey’s right, in “his liberty interest to be free from Pritzker’s executive order of quarantine in his own home’
The suit follows an argument made earlier made by Northbrook, Illinois attorney Michael Ciesla, who first pointed out on his law firm blog how Pritzker’s extension violated the 30-day provision and that even the governor is required to follow the law. Ciesla’s argumentation was widely ignored while Pritzker, Democratic Chicago Mayor Lori Lightfoot, and the Chicago media scorned or dismissed the suit as a cheap political stunt.
So when McHaney saw enough merit in the lawsuit to issue an injunction against the extension, Pritzker and Lightfoot claimed the action threatens everyone’s health. But they utterly failed to address the heart of the lawsuit—the plain language of the act that clearly lays out the 30-day restriction.
Technically the decision applies only to Bailey, but legal experts agree that the precedent gives weight to any Illinoisan who chooses to challenge the order. Just how seriously Pritzker and Lightfoot take the decision can be measured by the depth of their denunciations.
Pritzker warned that if his order were immediately lifted “people would die” and deaths would “shoot into the thousands by the end of May…. Our hospitals would be full, and very sick people would have nowhere to go.” Lightfoot called the decision “troubling and wrong” and despite it would continue her lockdown policies “to stay the course.”
The “course” is some of the country’s most stringent controls, such as Lightfoot’s closing of parks and other outdoor activities. Pritzker’s new order, effective May 1, would among other things require everyone in Illinois to wear a face mask outdoors, while including some modifications such as opening state parks.
Bailey says he was hoping to push Pritzker into creating a “more realistic plan” reflecting the fact that Illinois is such a diverse region, requiring different approaches for the mostly rural Downstate and metropolitan Chicago. Bailey’s hometown of Xenia has a population of 364. It’s located about 100 miles east of St. Louis in Clay County, which has recorded just two confirmed coronavirus cases and no deaths.
Chicago’s Cook County has 31,953 confirmed cases and 1,347 deaths, but the most feared outcome hasn’t materialized. The city’s sprawling exhibition hall, McCormick Place, had been fitted with 3,000 emergency beds to handle the expected overflow from jammed hospitals, but because of low usage, 2,000 beds are now being removed.
Tensions between the state’s two regions are an historic constant. Most recently those differences show up in a growing movement by Downstaters to separate Chicago from the rest of the state. In this, Illinois is but a microcosm of how heavily infected, urbanized New York and vast swathes of Middle America are vastly different and require tailored approaches in the fight against the coronavirus pandemic. It also reflects the argument—opposed by many liberals—that the fight is best carried on the local level.
Illinois’ regional differences will play out in an expected high-speed appeal of McHaney’s stay. The Downstate appeals court that would hear the case is dominated by Republicans, who, being elected, would not be expected to overturn McHaney’s decision. The Illinois Supreme Court, which could hear the appeal directly, is controlled by Democrats, and considered likely to ultimately back Pritzker.
Still, with growing sentiment that the various shutdown orders have gone too far, with increasing public protests against the restrictions, crushing unemployment, and the unease that epidemiologists and their models are running the country, what’s happening in Illinois could presage even more objections to unprecedented assaults on liberty.
Here comes the 'dumb reopening'
Very soon, you and I will have to figure out how to navigate a semi-open America where coronavirus is a terrible fact of life. The lockdowns and stay-at-home orders that state and city governments announced in March are breaking down. This is not red-versus-blue. This is reality. Two weeks ago, Georgia’s Republican governor Brian Kemp faced widespread criticism for his easing of restrictions on business and outdoor activities, even as Colorado’s Democratic governor Jared Polis did the same thing. Now most states are joining in.
In the past few days, California’s Gavin Newsom has said he will begin relaxing parts of his statewide directives, and so has Virginia’s Ralph Northam. Maryland’s Larry Hogan has announced that residents of his state will be able to undergo non-emergency medical procedures and play a round of golf. Newsom, Northam, and Hogan are not the sort of politicians likely to be swayed by a “Lockdown Rebellion” protest. The governors have been led to these decisions by the realization that blanket limitations on individual behavior have done about the best they could do.
States imposed these rules to “bend the curve” of infection so that the medical system did not become overwhelmed. The policy worked, up to a point. New York City, where Ground Zero has taken on another, equally horrible meaning, avoided the nightmare Italian scenario in which doctors had to deny care to some in order to save others. Nationwide, the curve was not so much bent as flattened. The seven-day average of cases and deaths peaked in April. It has since leveled off, and tapered somewhat. Some 1,700 deaths per day for the near future is an awful statistic to contemplate. Especially because other democracies—Taiwan, South Korea, Australia, New Zealand—were able to bring the disease under control.
America is not like them. Three are islands, and the fourth, Korea, is surrounded on three sides by water and on one side by the DMZ. America is also much bigger. We have six times the population of South Korea, and many more times the people of Australia, Taiwan, and New Zealand. We are a more diverse and less cohesive society. Our system of government is designed for inefficiency, to better protect individual liberty. Our bureaucracies show it.
America was unprepared. Unlike the smaller Asian democracies, America did not experience and thus did not learn from the SARS outbreak of 2003. George W. Bush’s 2005 warning was ignored. The sense of invulnerability that comes with living between two oceans, and with allies to the north and south, was once again exposed as an illusion. Leaders at every level of government—federal, state, local—downplayed the threat until it was too late. The desperate circumstances forced us to use the bluntest tool available: shutdown.
The lockdowns were necessary. They were also unsustainable. Americans, so accustomed to freedom, were bound to chafe at being told what to do. Justified fear of coronavirus devastated the food and beverage, travel, hospitality, and entertainment sectors. The economic toll could persist just for so long before it became unbearable. Nor are public health, personal freedom, and economics the only competing values in this emergency. Spiritual life has been harmed. For people living alone, the social and psychological costs of prolonged isolation can be traumatic. For children, extended separation from friends and socializing experiences will have unknown consequences.
The lockdowns are precarious. Therapeutics are in the trial-and-error phase. A vaccine, if one can be found, is many months away. What’s needed is a means of bridging the gap between pandemic and immunity.
The epidemiologists’ preferred strategy is test, trace, and isolate. That is how our fellow democracies suppressed the outbreak. It will be harder for us. The scale of testing required for the plan to work is massive. At the current rate of increase, it will take us months to achieve. There are also supply problems to consider and logistical obstacles to surmount. It’s not a matter of snapping one’s fingers. Frontline medical personnel, for example, continue to identify shortages of personal protective equipment months into the crisis.
Amassing the significant labor force necessary for “contact tracing” might not be too difficult in a time of mass unemployment. What will be harder to overcome are the legitimate worries Americans will have over violations of privacy. Not to mention how they might respond to the techniques of “isolation.” Checking oneself into a government-approved corona-hotel requires a deference to authority and devaluing of autonomy that runs against the American grain. We have enough trouble getting folks to wear masks.
John Cochrane of Stanford’s Hoover Institution calls the expert recommendations a “smart reopening.” He also says it is unlikely to happen. Instead, we are in for a “dumb reopening,” where people tentatively resume patterns of life resembling normality until they hear of rising infections in their area and reduce social contact voluntarily, causing a decline in new cases. “There are hundreds of little behaviors each of us take that push the reproduction rate around.” Think of a turtle retreating to his shell.
It is astonishing (and frightening) to consider that, despite our technology and wealth, America seems fated to respond to the coronavirus much in the same way it responded to the Spanish influenza a century ago: stop and go, in fits and starts, a 3,007-county patchwork of closings and re-openings and more closings, where individual responsibility and self-discipline matter as much as, if not more than, bureaucratic fiat. A “dumb reopening” would not suppress the disease, but it might provide a chance to address some of the economic, social, religious, cultural, and psychological damage that the coronavirus has wrought. And, given the recent decisions by officials both Republican and Democratic, a “dumb reopening” lies ahead. Whether we like it or not.
Important to get our priorities straight
There appear to be two major stories contending for coverage by the press and the attention of Congress at the moment, both related to the COVID-19 pandemic: the economic recovery and the culpability of China in the escalation of the coronavirus from a potentially local tragedy to an international pandemic.
On the one hand, the USA faces an almost insurmountable challenge to restore our recently booming economy from the depths of a Depression-like crash. On the other hand is the primal need to find a culprit for all the pain, sorrow, and deprivation we — and the rest of the world — have suffered in fighting this evil scourge and to punish that source accordingly. The issue at hand is how to accommodate both needs at the same time.
This issue arises because the two factors are on a collision course. The facts are increasingly obvious. While the federal government appropriately pursues an intensive investigation of the precise sequence of events in the discovery and dissemination of this strain of coronavirus, evidence from outside sources is rapidly emerging that the Chinese Communist Party (CCP) consciously, deliberately, and with malice of forethought concealed from the rest of the world its early experiences with the outbreak of the plague and then schemed to spread the virus to all parts of the world. The motivation for this policy is not clear, although the working hypothesis is that the leadership was not about to suffer a severe economic catastrophe while the rest of the world looked on from the safety of having escaped the same fate.
The result of this news has been a surge of rage on the part of Americans, fueled principally by press accounts of these discoveries and speculation, some informed and some not so much. Responding to this national outrage, some Senators (the Republican Senate is in session and functioning while the Democrat House is still in its lengthy recess) have started proposing punitive measures against China. The attraction of this issue is obvious: it is emotional, not overly complicated and, most of all, potentially non-partisan. “Potentially” because there are close ties between leading Democrats, especially presumptive Democrat presidential nominee Joseph Biden, and China. In general, the Dems have been less aggressive on this issue than have the Republicans.
Compared to the progress in re-opening the American economy, the “blame China” issue is pretty straightforward. Economic recovery is proving complicated, spotty, and dangerous. The best summary comes from Governor Michael DeWine (R-Ohio), considered one of the most competent governors in the country.
“There is a risk in either direction”, says Governor DeWine. “The risk of re-opening the economy is the re-emergence of the pandemic. The risk of maintaining the strict mitigation is a prolonged Depression. So, my solution is to re-open CAREFULLY AND SAFELY.” (Fox News, 5/10/20).
There are now emerging a number of second guesses as to what the Public Health experts recommended (as this column predicted on March 22 (see “Trump’s Huge Gamble”). Prominent among medical critics has been the idea that the “shelter in place” requirement should have been applied only to the most vulnerable, namely to those over 65, and all who suffer from “underlying conditions”. Of course, these demographic details were not known when the shutdown was first announced. Little details like this do not stop the critics, however. Nor does the fact that immunity for young people does not appear as universal today as it once did.
The most common critique is that adopted by some Democrats, namely, that the strict mitigation policies should be continued much longer. But there are many areas in America, mostly the less densely populated regions, which are in fact relatively untouched (so far) by the pandemic.
Thus, the recovery is spotty, uncertain, and carries its share of danger. But so does every alternative. Like Governor DeWine, most of America is slowly, carefully venturing out of our self-imposed quarantine. Except the elderly and victims of “underlying conditions”. It seems apparent that the overwhelming need and desire of Americans is to get back to work – in spite of the risks. The final judgement, of course, will come from the American people who will vote with their feet
These risks are serious enough without adding to them the risk of alienating China. There are reasons to put aside our worse fears and anger at the recent behavior of the CCP until this current economic disaster has been put in the rearview mirror. Some of the reasons are:
1) We are still in a major trade agreement with China to provide billions in exports, most notably from American farmers. In addition, many of the intellectual property issues — our most important reason for negotiating with China – are yet to be resolved. It is vital to our national interests to disengage our technologies and our supply chains from Chinese control.
2) China still holds a significant portion of America’s national debt ($1.05 Trillion as of February 15, 2020). Although this holding represents a small percentage of America’s sovereign debt (5%), the Federal Reserve is going to market right now with an additional issue of several trillions of US dollars to cover the cost of the pandemic. This is not a good time to antagonize China into selling its US bonds at a discount just to make us suffer more.
3) China is a powerful, unpredictable rival for world domination. The Chinese also are very jealous of their international influence – and their massive financial stake in so many developing countries in Asia, Africa, and South America.
Even aside from humanitarian considerations, this is not a good time for us to provoke China. It is a time to return to the rapport we had before coronavirus and conclude our trade talks, disengage our technology and our supply chains from dependence on China – and save our anger for another day.
Not a moment too soon, the reopening of America has begun.
When the coronavirus crisis began, and the nation’s governors began to order the closure of factories, restaurants, parks, beaches and other public accommodations, very few of us thought we’d have to endure an eight-week long period of self-quarantine. Somehow, the impetus to “flatten the curve” to prevent the hospital system from becoming overwhelmed, as the direst forecasts said possible, mutated into a push for continued isolation while the virus was active.
No one signed up for that. Americans are instinctively a free people who, more than less, would rather the government leave them alone. The crackdown on commingling reached levels in Michigan, California, Illinois and other states that made many uncomfortable with the exercises of police powers on display and the threats from elected officials. Hopefully, those who exceeded their authority will face a day of electoral reckoning sometime in the future while the rest of us get busy rebuilding our lives and our savings. We’re not out of the woods, by any means, but some things are getting better.
What’s not getting better is the financial outlook for the U.S. government. Washington has shoveled so much money out the door since the coronavirus pandemic started that it’s hard to imagine it will ever be repaid. It will be, for the most part, just like the outlays from the savings and loan industry bailout of the 1980s and the 2008 TARP bailout were eventually recouped. What matters now is that Congress put the brakes on spending, a message House Speaker Nancy Pelosi doesn’t seem to be getting.
Rather than stop and evaluate the effect of what’s already been done, she’s at work putting together a bill with an estimated $2.5 trillion price tag that, among other things, reportedly contains provisions allowing people who are not working to receive a generous stipend from the U.S. government. And that’s on top of a provision in an earlier relief bill that ended up allowing people to draw more in unemployment than they had been making on the job.
As Newsweek, The Wall Street Journal and other publications have reported, that’s making it awfully hard to get people to come back to work. And if people are coming back to work with one out of every five Americans out of a job according to the latest figures, the recovery we hoped would take off like a rocket is going to stay on the launchpad for far too long.
Pelosi’s plan to give people even more money is a bad idea. There may be some who need it, perhaps even badly, but their interests do not and cannot be allowed to outweigh the interests of those who kept working during the crisis or who want to get back to work. The government shouldn’t hold people’s hands like mommy walking a child to school on the first day. It should just get out of the way.
The South Dakota governor rejected the mandatory government-forced shutdown. Now, the media claim her decisions were made out of emotion and naked ambition, not courage.
As the Coronavirus spread from Wuhan, China, to the United States, most governors quickly acquiesced to the media’s demand that they force a governmental shutdown of their states in order to prevent hospitals from being overwhelmed. The media continue to be heavily invested in the shutdown model, even as the country realizes that hospitals are nowhere close to being overwhelmed and, in fact, many hospital systems are furloughing doctors and nurses due to the mandatory cessation on handling most non-COVID-19 cases.
With the predicted hospital demands being dramatically off, the media’s goalposts have shifted violently from demanding a shutdown to “flatten the curve” of exponential growth that would overwhelm hospitals to demanding a continued shutdown to lower the number of COVID-19 deaths, no matter the consequences, including long-term economic damage, serious harm to the food supply, or death from other causes. While the media generally praise “government shutdown” politicians such as New York Gov. Andrew Cuomo — who kept unsanitary subways running, forced people into deadly nursing homes, and demanded tens of thousands of ventilators he never used — they condemn politicians such as South Dakota Gov. Kristi Noem, who has strongly encouraged social distancing measures but not used government force to accomplish public health goals. The media predicted that Florida’s Republican Gov. Ron DeSantis’ more measured approach would result in horrific disaster. It hasn’t. Unlike Cuomo, DeSantis focused on nursing homes more than the low likelihood of transmission on big, sunny beaches.
The media sense that they will face less scrutiny for their preferred policy position if they can remove sane alternative policy approaches from the table. To that end, Noem and others who reject the mandatory, long-term, government-forced shutdown model as the preferred option for their states must be condemned. The media aren’t uniform in condemning alternate policy approaches, it should be noted. Georgia’s Republican Gov. Brian Kemp is one of the media’s enemies for encouraging phased reopening of his state while Colorado’s Democratic Gov. Jared Polis, who is following the same approach, has not received similar media hatred.
Whether it relates to sexual harassment claims, or Coronavirus policies, the media play by two different sets of rules. To get good coverage as a Republican, in this and all other storylines, one must typically condemn conservatives or President Donald Trump. Just ask Utah Sen. Mitt Romney, or Massachusetts Gov. Charlie Baker, or Maryland Gov. Larry Hogan for more details on how to secure friendlier media coverage.
MSNBC’s histrionic Rachel Maddow devoted nearly a week of programming to condemning Noem in mid-April, around the time the Washington Post ran a piece of panic pornography headlined, “South Dakota’s governor resisted ordering people to stay home. Now it has one of the nation’s largest coronavirus hot spots.”
The article, which was tweeted out by the New York Times’ Ken Vogel, CNN’s Jake Tapper, NBC News’ Sahil Kapur, the Washington Post’s Glenn Kessler, MSNBC’s Rachel Maddow and many others, was written at the time that South Dakota had 6 deaths. As of May 3, the number had risen to 21. The outbreak was at a Smithfield pork processing facility that even the most stringent of state lockdowns would have deemed an essential business to allow to keep open in preservation of the country’s food supply.
Modelers predicted South Dakota would need 10,000 beds if no government order were put in place and nothing were done to stop the spread of Coronavirus. While no government stay-at-home order has been put in place and Noem has simply encouraged citizens of the state to make good decisions, the latest prediction is that the state will need a peak total of 127 beds on June 20. Noem argues that this shows her state’s population is properly practicing social distancing. The state was one of the first to launch a contact tracing application as well.
The latest media attack on Noem comes from out-of-state reporter Thomas Beaumont, filing from Iowa, and his colleague Stephen Groves, both of the Associated Press. It’s a bizarre piece. The article begins with an unflattering photograph of Noem, a difficult feat given how attractive the governor is. (Noem was rated the most beautiful member of Congress when she served in the House.)
The two men who wrote the article purport to get into the governor’s mind and ascertain that her policy goals are driven not by her leadership or rational decision making but by emotion and naked ambition. It is unclear why they believe they’re qualified to perform this type of analysis, much less how these men developed their theories about this woman’s political path. Courageous leadership is certainly a way to stand out, but comes with extremely high risk in our media environment, as articles such as this attest. It would seem that a more ambitious politician would attempt to find safety in the herd. They admit that the media politically oppose the governor but suggest that they’re not alone, “It’s not just the media who have questioned her approach,” they write.
The two men cite the mayor of Sioux Falls as a prominent Noem critic. They repeatedly cite the talking point that Mayor Paul TenHaken called for “sweeping stay-at-home orders,” which was true a few weeks ago. They do not note that he has since declined to institute a stay-at-home order for his own city, even after saying he was going to do soin mid-April.
During a historically tough year for Republicans, Noem’s winning of the state most politically famous for having previously produced Democratic Majority Leader Tom Daschle is redefined as “She won the governor’s office with just 51 percent of the vote in 2018.” Her opponent, the reporters forget to mention, was an extremely popular state senate leader.
Nowhere in the article is it mentioned that a Tax Foundation analysis shows that South Dakota has the lowest percentage in the country of a state’s workforce filing unemployment claims. Nowhere in the article is last week’s parade in honor of the governor mentioned. The parade featured hundreds of cars, and one horse.
The article has a few other factual problems. Without evidence, and in the face of contrary evidence, it suggests Noem is following Trump’s lead on mandatory shutdowns. His comments have been inconsistent but his administration has strongly supported government shutdowns and he himself has condemned Kemp for attempting to restart his state’s economy. The article falsely claims that there is no evidence that the veteran malaria drug is effective for Coronavirus treatment. While the effectiveness is hotly debated by doctors and researchers, multiple perspectives have evidence in support of their claims.
For her part, Noem seems unlikely to be bullied by media. In a Coronavirus update at the end of April, she told citizens, “As governor, I did not dictate to the people of South Dakota, tell people which activities are officially approved or not, or begin arresting, ticketing, or fining people for exercising their rights. Nor am I doing that today. I will, however, continue to lead and help South Dakota navigate a path forward in this uniquely difficult and challenging time.”
Noem praised the prudent decision making of the people of South Dakota in the face of a global pandemic, saying it was them that make the state great, not the government. “The people of South Dakota are the source of the power and legitimacy of our government – not the media, not politicians and not political parties. That’s a healthy perspective for any elected official to keep in mind.”
By Fox News•
“Of all tyrannies,” C.S. Lewis once observed, “a tyranny sincerely exercised for the good of its victims may be the most oppressive.”
We’re seeing the truth of these words play out right now all across the country, and if you don’t believe me, just look at the headlines.
While we try to help each other stay healthy and safe, state and local authorities are seizing unprecedented amounts of power in the supposed pursuit of that goal, setting dangerous precedents along the way.
Economic czars in the form of governors, including in my own state of Kentucky, are taking it on themselves to decree which businesses will live and which will shutter for continually extended lengths of time, leaving those who have poured their entire lives into their businesses to try to pick up the pieces and do their best to survive and feed their families in the meantime.
The czars decide who can and can’t get medical treatment and restrict fundamental liberties such as the right to gather to worship.
Kentucky Gov. Andy Beshear went so far as to tell some churchgoers their license plates would be scanned, and they would be forced to quarantine for two weeks – never mind that, having an interest in their own health, these worshippers are more than capable of conducting their services safely.
Innocence is not allowed to be presumed. Comply or else.
In Michigan, a self-appointed monarch dictates away basic needs such as landscaping. Not willing to let a little thing like the state legislature get in her way, she simply charges ahead and ignores it when it refuses to support continuing a state of emergency. Gov. Gretchen Wittmer seems to have forgotten she serves the people of Michigan and is not living in Buckingham Palace a century ago when subjects would bow obediently to their sovereign.
Incredibly, in California, a paddleboarder was chased, not by one but two government boats – all while he was about as socially distanced alone in the ocean as one can get. I’ve heard of high-speed car chases in California, but this might be the first high-speed boat chase involving a paddleboarder.
Concerns are also being raised both at home and abroad over excessive use of force.
In West Odessa, Texas, the county sheriff showed up with a SWAT team in response to a local bar reopening and protesters peacefully assembling. Surreal news footage shows the owner being taken away by an officer, hands behind her back.
Let’s take an important second to get something straight: I actually support the concept of states taking the lead in responding to the pandemic, and I applaud President Donald Trump for following this approach as he focuses on broader federal efforts that no state could do on its own.
Is it any wonder, when tensions are already ratcheted up due to the virus itself, that we are seeing false accusations and outright violence and threats?
But it does not excuse abuse of authority. It does not require executives to ignore their legislatures or place unreasonable or unconstitutional burdens on Americans, and we should call those overreaches out when we see them.
In fact, I have said time and again that reopening our nation will require an even more tailored local response, right down to the city level. Bowling Green is not New York City or even Louisville, for example, and should be free to take different steps to get its local economy going again.
This means state and local leaders working with each other instead of acting unilaterally.
In some cases, authority figures are turning Americans against each other, echoing stories we once thought we would only hear coming out of the Soviet Union or Communist China as neighbors are encouraged to turn one another in to the authorities if they see or even suspect anything less than perfect compliance with often arbitrary guidelines.
Mayor Bill de Blasio, saying, “[W]e still know there’s some people who need to get the [social distancing] message,” has encouraged New Yorkers to take a picture when they think social distancing guidelines aren’t being followed and text it to the city. “[A]ction will ensue,” promises the mayor.
Is it any wonder, when tensions are already ratcheted up due to the virus itself, that we are seeing false accusations and outright violence and threats?
A dad and mom taking their young kids into a bank to try to open a joint account are criticized for supposedly not socially distancing enough and are – anonymously – turned in to Child Protective Services on false accusations.
A woman identified as a teacher in New Jersey wishes “a long, painful death” from coronavirus on students playing football. We read stories of alleged choking over social distancing, and the antagonism plays out in attacks online.
C.S. Lewis also warned us that “[t]he robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”
There is little government cannot – and has not tried – to justify with the words “for our own good” or “to keep us all safe.” And once that justification – even if genuinely offered – is allowed to automatically stifle debate, actions build “without end.”
You don’t have to look far back into our own history to see where such roads can lead, as the federal government’s response to 9/11 morphed into surveilling innocent Americans. Yet I and others cannot even bring the issue up in Congress without being accused of not taking our national security and safety seriously.
Already, we hear talk of how much additional surveillance we will be expected to tolerate due to the pandemic – for our own good, of course.
As concerning as these issues are, I remain encouraged by the many positive stories that exist of Americans coming together to face this challenge, and I am confident we will beat it as we have so many others.
But it’s imperative we do so while protecting both life and our unique way of life – defined as one that gives the benefit of the doubt to freedom and responds from that philosophical grounding.
Recent events again prove the Founders’ wisdom in deliberately spreading power out and decentralizing our system to try to curb infringements on our liberties.
That is supposed to set us apart, and it is up to each of us to make sure it continues to do so.
America used to be the place where, as Emerson is said to have observed, the person building the better mousetrap could be assured the world would beat a path to their door. We were driven by an entrepreneurial spirit that led to an increase in global living standards and produced some of the great advances of mankind.
Nowadays the pathway to prosperity is blocked by plaintiffs’ lawyers, federal and state regulators, crusading consumers advocates, environmental activists and others who believe the only institution on which we can rely to solve the really big problems is government.
That’s a shame because the spirit of free enterprise problem-solving is still alive and well. Everyone who realizes there’s profit to be made coming up with solutions are hard at work doing what so many of the so-called smart people say is impossible.
“We are a nation that knows how to solve big problems when we set our minds to it,” says Nate Morris, the CEO of Rubicon, a technology company at the leading edge of 21st century waste management. “Waste is a big problem, and we should not wait for someone else to try to solve it. We should do the work, we should use innovation and free markets to drive transformation, and we should build a stronger, more resilient economy in the process.”
The numbers alone are scary. According to some estimates over the next ten years nearly 95 million metric tons of plastic waste the United States once sent to China for permanent disposal will have to go put elsewhere thanks to import restrictions.
Whether or not it can be done, an effort must be made to try. Right now there are two approaches: one, as typified by Rubicon’s efforts, relies on innovation, investment, and consumer-driven demand to creates a new infrastructure relying more on the use of recycled goods to manage waste and prevent the build-up of discarded plastics and other items the American shopper depends upon. The other approach, the one government regulators, social justice warriors, and those like them prefer is to the use and manufacture of certain items no matter how expensive, inconvenient, or comparably unsafe the alternatives might be.
On Wednesday Rubicon issued a report, Toward a Future Without Waste, that shows how technology-based solutions can increase the proliferation of sustainable products The evidence comes from its experiences delivering results for its customers, with plenty of examples demonstrating the market-based approach to waste and emissions reductions works. The company found, for example, that local governments could generate significant cost savings while sending fewer materials to landfills through the making better use of technology.
Using the RUBICON SmartCity technology suite “helped the city of Atlanta save up to $783,453 annually while reducing the recyclables going to landfill by 83 percent by adjusting the city’s solid waste service schedule,” according to the report. As one estimate has it, it has the potential to save US cities up to $208 million over the next 10 years through reduced disposal costs, optimized fleets, and other metrics. For cash strapped urban centers like Atlanta, that’s money that can instead be channeled into childhood conservation education and other environmental stewardship projects that can create a pathway to the clean air, water, and environment everyone wants but is so often too expensive to get, we’re told by experts, without draconian changes to the way we live our lives.
Advances in technology have also made it easier to dispose of products that are hard to recycle. The fast-food chain Chipotle partnered with Rubicon to create a mail-back pilot program at 25 of its locations to keep single-use gloves out of landfills. From April 2019 through December 2019, the report says, more than 625,000 gloves were recycled, giving the company plenty of incentive to expand the program to all its stores.
“There are currently two ways to make money from waste. One is by setting up the equivalent of a utility, where big corporations and big government agree to a one-size-fits-all approach, charging businesses and households to haul away their waste and bury it,” Morris says. “The other is a free market-based, dynamic approach: cooperate with others and innovate to help people reduce or reuse more of their waste— and inspire a new generation to build on our progress to bring about the end of waste as we know it.”
This is the kind of private sector, technology-based innovation that can change the planet for the better while adding favorably to the corporate bottom line. It requires no government regulation, no special licenses, and no additional fees to bureaucratic institutions that “feed the beast” while giving us all a cleaner world to live in.
How the U.S. telecommunications industry helped America manage and get through the COVID-19 pandemic can be a lesson for other industries and for the U.S. government, which has been hamstrung by a failure of imagination common to those working in bureaucratic institutions. Consider where we’d be if the phone, cable, and satellite companies had been unable to keep us connected.
The migration was rapid and thorough once the closures began. Collegiate and local classrooms moved online. Grocery items started coming into our homes from web sites rather than the mall. Telehealth exploded as doctors began to see patients over webcams instead of in the office. Examples of America’s resilience and resourcefulness were everywhere. The Internet allowed families to visit, for all of us to stay up to date on the latest advisories, and for each of us to remain plugged into civilization while unable to participate in it.
Mobile devices are just as important as the networks that connect them. Our smartphones have become our eyes and ears to the outside world. Their signals go where we now cannot, only because the Internet is an American product, governed largely by American ideals. If it were not, if the Chinese were in charge, for example, the official response to the pandemic would have probably included enforceable restrictions on Internet access or a complete shutdown of the ‘Net to stop the spread of information.
Whether it remains free and open depends on many factors. The People’s Republic of China has an unfair advantage in the global race to 5G. It has developed, through its Huawei subsidiary, technologies it’s trying to force the rest of the world to adopt. If they succeed, as I’ve written before, it would be a clear and present danger to the future of global commerce and the free flow of information.
In recognition of this, the Trump Administration has been right to acknowledge that a threat exists and to take steps to keep China and Huawei from winning. The Commerce Department is finalizing regulations aimed at limiting American firms’ sale of chips to Huawei. The Justice Department has charged them with conspiracy. That’s only a start. A government-wide effort is needed to blunt the impact of Huawei’s efforts to make it the global provider of choice for the world’s 5G needs.
As part of that, American consumers must continue to be allowed to buy smartphones and tablets made by companies other than Huawei. An obscure Irish company called Neodron, which recently filed patent complaints with the U.S. International Trade Commission, could make that difficult.
Neodron, which is backed by some of the same people who brought us the mortgage securities financial crisis, has filed two complaints with the ITC alleging that virtually every non-Chinese smartphone and tablet maker – Apple, Amazon, Motorola, LG, and Samsung, to name but a few – is infringing on patents related to touchscreens.
If the commission agrees finds that to be so the only remedy it can impose would be an exclusion order that would effectively block the importation of any device found to be infringing on the patents at issue. That would include greater than 90 percent of all smartphones and over 90 percent of all tablets currently available in the U.S. market. The only device manufacturers left would pretty much be Chinese companies which could, therefore, control American markets. As we’ve seen over the past several months as the COVID-19 virus has spread, the Chinese cannot be trusted.
The ITC needs to dismiss the Neodron complaint post haste. It’s bad enough the company could lodge a complaint that might paralyze a critical sector of our economy. The U.S. government has no business giving away the kind of strategic advantage we could never get back to a potential enemy. The Chinese operate by their own rules when it suits them – even when it makes them poor global citizens. They’re out to dominate every aspect of the world economy. We’d be foolish to let that happen – and it would if the ITC finds in Neodron’s favor.
Government policies restricting the operation of markets usually do more harm than good. Even in times of crisis, such as the current coronavirus pandemic, policymakers should do everything possible to keep markets working and private incentives strong.
The unprecedented shutdown of much of the US economy that has been ordered by federal, state, and local governments is understandable given the need to slow the coronavirus’s spread. Too often, however, well-intentioned and often long-lasting government interventions prevent markets from working properly and thus do more harm than good. Even in times of crisis, markets solve problems well, because they provide the right incentives to use resources effectively.
Policymakers dealing with the COVID-19 pandemic should therefore do everything possible to keep markets functioning and private incentives strong. And history can serve as a useful guide in this regard.
For starters, government should impose minimal restrictions on firms and employees when harnessing the private sector for temporary emergency purposes – whether producing tanks in World War II or ventilators now. Extraneous or overly aggressive government policies often hinder both recovery and the economy’s long-run health. Indeed, in most cases (with some sensible exceptions), less regulation is a good prescription for economic success. Today, for example, why not relax occupational licensing requirements for retired doctors and nurses to help relieve pressure on overwhelmed hospitals?
Preserving individual responsibility is also crucial. Frequent government interventions in major labor disputes during the administrations of Presidents John F. Kennedy and Lyndon B. Johnson always ended up with a settlement in the White House. That destroyed private bargaining, because executives and unions didn’t make their best offers until they got to Washington. But when President Richard Nixon was faced with a longshoremen’s strike in 1969, he let the parties know that they had to take responsibility and settle the matter themselves; once that message registered, they did.
Next, policymakers should not intervene in pricing. Having inherited inflationary pressures throughout the economy, the Nixon administration eventually introduced mandatory wage and price controls in 1971, with broad bipartisan support. Although these measures initially seemed to work, they wound up harming the economy. By contrast, President Ronald Reagan went back to tried-and-true macroeconomic policies, lifted the regulatory burden, and swiftly reduced tax rates – all of which worked where earlier government intervention hadn’t.
Another guiding principle is to let markets adjust. In the summer of 1971, US deficit spending and domestic inflation caused the dollar to become overvalued, triggering a run on Fort Knox as European countries began redeeming their currencies at the fixed rate for gold. Nixon then closed the gold window and began a move toward a global system of flexible exchange rates.
After an initial fight to defend this new regime, it ended up working well. As Milton Friedman later explained: “Suppose we had continued with the system of fixed exchange rates […] When the  Arab-Israeli war broke out, and when the oil embargo came on, there would have been a major international financial crisis […] None of that happened. Why not? Because there was a free price system operating.”
Similarly, policymakers should not let public magnanimity displace private markets. Shortly after the Berlin Wall fell, the Soviet Union’s leader, Mikhail Gorbachev, was in political trouble because his country’s economy was imploding. In order not to “lose Russia,” world leaders urged the United States to lead a huge bailout, including the delivery of a large quantity of US government surplus wheat. But that would have destroyed Soviet agriculture, which had been partly freed from planners’ controls. Instead, President George H.W. Bush’s administration minimized its assistance, and the crisis was solved by markets.
More governments need to appreciate that open markets improve economic outcomes. When Iraqi President Saddam Hussein invaded Kuwait in 1990, oil prices spiked to the equivalent of about $200 per barrel today. The two deepest US recessions since World War II had followed similar dramatic oil-price increases, caused by the Arab oil embargo and Iran’s Islamic Revolution. Indeed, one proposal was to shut down the oil futures market. But after intense debate, cooler heads prevailed, and markets remained open.
Today’s market interventions will need to be unwound. Sometimes, a government must act to prevent previous desirable government actions from being abused and threatening the functioning of a vital market.
Such was the case when the US government resolved the Savings and Loan (S&L) debacle in the early 1990s. The combination of federal deposit insurance and pension pass-through to it had enabled many insolvent S&L institutions to stay open, taking greater investment risks while paying ever higher interest rates on deposits to keep the money flowing in. That was threatening solvent financial institutions’ lifeblood, so rapidly taking over many insolvent S&Ls, while unpopular, limited the ultimate damage.
Governments must take care to intervene properly. In the aftermath of the September 11, 2001, terrorist attacks, President George W. Bush’s administration worked to keep markets open. The immediate task was to cut off al-Qaeda’s financing without disrupting global financial flows needed for economic growth. The strategy proved successful: The economy did not tank, and the 9/11 Commission later awarded the administration’s economic-policy response its only “A” grade.
Finally, policymakers must focus on economic impact. During the 2008 global financial crisis, Congress passed a temporary “stimulus” package of tax rebates, while a bailout mentality had started earlier that year with the rescue of Bear Stearns. But people largely saved the rebates, and the economy continued to sink. During the COVID-19 pandemic, therefore, US taxpayers must be encouraged to spend their temporary cash payments from the federal government – including in parts of the economy that are still operating and may grow in the future, such as online sales and remote work.
Looking beyond today’s public-health imperatives, the US must develop an economic strategy that does not override markets. Effective implementation of such policies will require continuous interaction between government and private-sector actors, lest bureaucratic inertia and needless red tape slow things down. That has been the main lesson of many crises over time: Keep markets open and private incentives strong.