Sunday, April 19, 2020

Economic and political outlooks - a pair of scares

New Yorker columnist John Cassidy thinks that There Is No Panacea for the Coronavirus Economy. Even under optimistic scenarios, restoring the economy to health is going to be an extended and difficult task.

In terms of necessary and sufficient conditions for opening up, “Practically everybody agrees that comprehensive testing will be vital going forward. …” But:

The reality is we are not even testing health-care workers,” Paul Romer, a Nobel-winning economist who is a professor at New York University, told me on Friday. “We need to be testing all of them regularly, and many others, too. Trump’s medical advisers are stuck with blinkers on. They are not stepping back and looking at the big picture.’’ In Romer’s view, this involves creating a public-health strategy that can be sustained for a year or eighteen months, until a vaccine is developed. The only available options, he said, are continued shutdowns or a massive expansion of testing to find and isolate asymptomatic carriers before they spread the disease. Romer, who served as the chief economist at the World Bank from 2016 to 2018, is calling for at least ten million tests per day, and ideally as many as twenty million or thirty million.

Absent large-scale testing, the outlook is grim, he said. “As soon as we stop the shutdowns, we’ll go right back to exponential growth. It won’t even help us much if we get down to very low rates of infection first, because exponential growth is so fast you get right back there very quickly.” Given the limits to testing capacity and the Trump Administration’s refusal to take the lead in this area, Romer suggested that the most likely outcome is a series of reopenings and renewed shutdowns, as the infection rate rebounds. “From an economic perspective, that is almost as bad as a permanent shutdown,” he said. “Nobody is going to invest. Nobody is going to reopen a restaurant.”

Not everybody agrees with that analysis, of course. But there is general agreement among economists that even under optimistic scenarios, where the rate of infection doesn’t shoot back up immediately, restoring the economy to health is going to be an extended and difficult task. “Absent a vaccine or treatment breakthrough, reopening will be gradual,” the economists at Goldman Sachs wrote this week. “Several other countries have taken steps toward reopening. We see three lessons from their experiences. First, initial reopening timelines often prove too optimistic. Second, even countries at the forefront of reopening have gradual and conservative plans. Third, recovery is easier and quicker in manufacturing and construction than in consumer services.”

The reason why #3 is problematic is that consumer services make up a huge proportion of our economy.

Today’s American economy is predominantly a service economy … Private-service industries, such as retail, finance, lodging, entertainment, and restaurants, contribute close to seventy per cent of the gross domestic product. Even if some restaurants do defy Romer’s prediction and reopen, they will have to meet social-distancing requirements, which will reduce their capacity. The same goes for airlines, hotels, gyms, and many other businesses. …

For now, the stock market is focussing on the upside. [Ian Shepherdson, founder of Pantheon Macroeconomics] said that institutional investors, whose performance is often measured against the market, can’t afford to miss out on a rebound, and they are placing a great deal of faith in the Federal Reserve. “If you are out of the market now, you are fighting against the momentum, you are fighting the stimulus, and you are fighting the Fed,” he said. “The only thing you have going for you is the truth—the recovery is going to be very slow, and on the virus front there are going to be relapses.”

And if all that was not enough to scare the bejesus out of everyone who is paying attention, we have our wannabe king fomenting civil unrest (to put it mildly). The Arizona Blue Meanie warns us that Trump is inciting insurrection and rebellion … and a ‘Covid Civil War’? Here are excerpts.

Trump has continued his baseless assertions of widespread voter fraud since his election. Does anyone seriously doubt that if he loses the election in November he will insist that the election was rigged and fraudulent and question the legitimacy of the results, as he was prepared to do in 2016? And does anyone seriously doubt that this could trigger violence from his most unhinged personality cult followers?

Mary McCord, former acting U.S. assistant attorney general for national security from 2016 to 2017, and legal director of the Institute for Constitutional Advocacy and Protection and a visiting professor at the Georgetown University Law Center explains at the Washington Post, Trump’s ‘LIBERATE MICHIGAN!’ tweets incite insurrection. That’s illegal.

President Trump incited insurrection Friday against the duly elected governors of the states of Michigan, Minnesota and Virginia. Just a day after issuing guidance for re-opening America that clearly deferred decision-making to state officials — as it must under our Constitutional order — the president undercut his own guidance by calling for criminal acts against the governors for not opening fast enough.

Trump tweeted, “LIBERATE MINNESOTA!” followed immediately by “LIBERATE MICHIGAN!” and then “LIBERATE VIRGINIA, and save your great 2nd Amendment. It is under siege!”

It’s an echo of the “Second Amendment remedies” rhetoric of the 2010 midterm election. It’s clearly a violation of federalism principles, and it’s quite possibly a crime under federal law. And insurrection or treason against state government is a crime in Virginia, Michigan and Minnesota, as well as most states. Assembling with others to train or practice using firearms or other explosives for use during a civil disorder is also a crime in many states. But the president himself is calling for just that.

Republican strategist Rick Wilson suggests that Trump is, in fact, fomenting a “civil war” from his unhinged personality cult followers. Trump Leads Pro-Plague States of America to a COVID Civil War (excerpts):

Let’s be clear about the things he’s going to do and the risks he is willing to take with the American people. Trump is telling us bluntly and plainly that he will stoke civil unrest to find a political pathway out of a galactic-scale fuck-up of his own making. He’s willing to let a disease that’s already killed 33,000 Americans due to his inaction and dishonesty spread further, faster, and more widely.

Many of the people at his ‘liberation’ rallies may well get or spread COVID–19, just when the country’s continued diligence and caution about flattening the curve through social distancing is most vital. These engineered protests are taking resources that first responders desperately need to respond to the crisis, not Trump’s crisis actors. The one person who won’t pay a price? Donald Trump.

… The simplest solution is for voters to vote out of office every Republican enabler of Donald Trump, from president on down to your local school board. Such a complete and total devastating defeat would suck any oxygen out of Trump’s vain attempt to claim the election was illegitimate in order to hold onto power.

And if his unhinged personality cult followers do resort to violence in a fit of rage, they will have revealed themselves to be anti-democratic domestic terrorists engaged in unlawful insurrection and rebellion against the legitimate U.S. government, a federal crime under 18 U.S. Code § 2383:

Whoever incites, sets on foot, assists, or engages in any rebellion or insurrection against the authority of the United States or the laws thereof, or gives aid or comfort thereto, shall be fined under this title or imprisoned not more than ten years, or both; and shall be incapable of holding any office under the United States.

This last clause would apply to Donald Trump and any other damn fool Republican politician who would join him in such a heinous act against America.

In any event, the media must stop normalizing this behavior. This is not normal nor acceptable. Treat this with the seriousness and level of concern that this merits.

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