Nel's New Day

April 23, 2022

Inflation from Corporate Greed, Disasters

With no real platform except for raising taxes on the poor, Republicans search for campaign topics for the fall 2022 election. A major one will certainly be inflation. The GOP talks about how it never would have happened if Deposed Donald Trump (DDT) were in the White House and how he needs to be returned to the Oval Office. They have no solution for the problem, but they figure they only need to condemn Democrats for not solving the issue.

Beyond the continued pandemic because of GOP spreaders, the invasion in Ukraine, and DDT’s shattering of the supply chain by allowing COVID to run rampant, corporate profits with no regulations raise prices. The Economic Policy Institute and the Brookings Institution report on the problem.

EPI’s Josh Bivens wrote:

“Since the trough of the COVID-19 recession in the second quarter of 2020, overall prices in the [non-financial corporate] sector have risen at an annualized rate of 6.1%—a pronounced acceleration over the 1.8% price growth that characterized the pre-pandemic business cycle of 2007–2019. Strikingly, over half of this increase (53.9%) can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60%.”

These facts don’t jive with the wishful thinking that current inflation is “based purely on macroeconomic overheating.” Bivens continued:

“Evidence from the past 40 years suggests strongly that profit margins should shrink and the share of corporate sector income going to labor compensation (or the labor share of income) should rise as unemployment falls and the economy heats up. The fact that the exact opposite pattern has happened so far in the recovery should cast much doubt on inflation expectations rooted simply in claims of macroeconomic overheating.”

In DC Reports, Dean Baker agrees. History shows that low unemployment forces companies to pay higher wages and thus raise prices. Yet data disproves that reason for higher prices now because “the wage share of income has fallen sharply since the pandemic.” In 2021, the wage share fell from 76.1 percent to 73.7 percent. Baker does blame supply-side disruptions, caused by corporations not successfully planning sufficient products, for inflation.

In a report from Brookings, examining 22 major companies, “the average real wage gain, factoring in inflation, was between 2% and 5% through October 2021. Unless these companies raised wages substantially since then, fast-rising inflation would have eroded most, or even all, of the 2% to 5% average wage gains. And at most, only seven of the 22 companies are paying at least half of their workers a living wage—enough to cover just their basic expenses.”

The same companies paid their shareholders very well, spending five times more on dividends and stock buybacks than on paying their workers better. Sixteen companies repurchased almost $50 billion of their shares, equal to raising the annual wages by an average of 40 percent.

Most people are noticing—and complaining about—price increases for food. A “perfect storm” causes some of the problem: drought, an outbreak of avian flu, Russia’s war in Ukraine, and Texas Gov. Greg Abbott’s personal war at the southern border. Older factors are worker shortages, higher fuel costs, and supply chains snarls beginning when DDT failed to control the pandemic in the U.S. for political reasons. The other factors:

Russia’s invasion of Ukraine: Prices, especially for corn, skyrocketed. To mitigate the high price of gas, President Joe Biden permitted high-ethanol gasoline to be sold throughout the summer. Ethanol is made from corn usually used for human and animal food. Animal feed is 60 percent of the cost of raising livestock, even farmed fish. Ukraine’s inability to produce fertilizer contributes to higher meat prices because it is sometimes the only source of carbon dioxide for the pre-slaughter stunning of animals. Without that product, facilities need another way to humanely prepare animals. 

The avian flu: In 27 states, the worst outbreak in the U.S. since 2015 raised prices for chicken, turkey, and egg. Growers have killed 29 million affected birds, about three-fourths of them egg-layers. April and May are peak months for the disease; droppings of wild birds infect domestic flocks during migration patterns, especially in Iowa.  

California’s ongoing drought: As the disaster hits its third year, the government, operating the water systems, reported it has no more water for farmers who will now plant much less or nothing. In the Central Valley providing one-fourth of U.S. food, rice growers in the northern part plan to leave their fields fallow.

Border truck jams: Abbott’s decision to block the border to Mexico with unnecessary inspections stalled produce from the south, raising prices especially on avocados, limes, and tomatoes. The governor’s political stunt lost Texans $477 million per day for its ten days, and the U.S. lost $8.97 billion.

Examples of corporate greed:

  • Procter & Gamble raised prices on their product such as diapers and toilet paper and reported an almost 25-perent profit margin. Kimberly-Clark, dominating the market with P&G, raised its prices at the same time.
  • Pepsi-Cola, with increased prices for the second quarter of 2021, recorded a $3 billion profit for that time.
  • Coca-Cola made $10 billion in revenues for the third quarter of 2021, up 16 percent from the previous year.
  • Meat accounts for half of the increase in food prices, 15 percent more than the previous year. The U.S. has only four major meat processing companies. Antitrust enforcement all but disappeared in the 1980s with control by Ronald Reagan and the Republicans—including banks, pharmaceuticals, airlines, meatpackers, and soda.
  • Food prices are soaring, but half of that is from meat, which costs 15% more than last year. There are only four major meat processing companies in America, which are all raising their prices and enjoying record profits.

Conservative columnist Jennifer Rubin pointed out how Republicans are responsible for our current inflation. Capitalists favor legal immigration because the shortage of workers raises prices by too little goods produced. The need for workers has been exacerbated through the pandemic and retirements, but the previous administration blocked immigration as a solution to transportation, warehousing, and accommodation and food services. The GOP, however, keeps its exclusionary policies, hurting former pro-business and pro-growth positions. Instead Republicans’ goal is only increasing wealth for the rich and big businesses.

DDT’s government actions also caused inflation to make himself look good on a short-term basis. His tariffs raised prices, and creating more money causes inflation. Instead of solving the pandemic problem, DDT kept the economy at a satisfactory level by printing new money at an unprecedented rate. More money in circulation means more spending and greater demand. That’s when prices go up. People like Karl Rove blame Biden for inflation with his pandemic payoff to people, but DDT gave away more money, vastly lowered the taxes on the wealthy and big business, and increased the national debt by $7.8 trillion. 

According to economists, a good economy can cause higher inflation. Positive news since Biden’s inauguration:

  • Over 6 million jobs created last year, compared to the minus number during DDT’s term.
  • Unemployment cut in half last year with jobless claims at their lowest level since the 1960s.
  • In this century, the first year the U.S. grew faster than China.
  • The highest rate of economic growth since Reagan’s first term.
  • Biggest drop in unemployment claims in U.S. history.
  • Since Biden’s inauguration, 1.36 million small business jobs created.

The pandemic caused oil companies to scale back in production; with the letup of the lockdown, prices went up because the oil demand was greater than the supply. Biden authorized the release of 1 million barrels of oil each day for the next six months to drop gasoline prices. He also made plans to increase food production and lower food prices rising because of lack of Russian and Ukrainian exports. The two countries are the largest and sixth-largest wheat producers in the world. 

An article in Hustle, blames future inflation on psychological reasons. Mark Dent and Zachary Crockett wrote that people spend more if they think prices will go up in the future and businesses raise prices if they think costs will go up in the future. Research shows that households are eight percent more likely to buy durable goods such as cars and refrigerators if they think the prices will increase. In February, ten percent of respondents said they bought goods for fear of price increases, mostly for houses.

The same approach is goes for basic goods such as toilet paper, cat food, and baby formula. People stock up, leaving store shelves looking bare. Other shoppers panic and try to load up on products for fear they won’t be available. Prices go up because corporations know they can charge more money. Thus the circle continues.

April 1, 2022

News – But Not ‘April Fools’

A gain of 431,000 new jobs in March makes this the 11 straight monthly gain above 400,000 on record beginning in 1939 and dropped unemployment to 3.6 percent. Job totals for January and February were also revised upward with 95,000 more new jobs on top of those 431,000 jobs in March. The U.S. economy has replaced 93 percent of pandemic job losses since President Joe Biden took office 14 months ago. In his first three years of Dictator Donald Trump (DDT), which he called the greatest U.S. economy in the history of the planet, he gained 6.5 million jobs—and lost all and more with his mismanagement of the pandemic. In Biden’s first 14 months, the nation’s economy created 8.43 million jobs.

DDT is the only person in the White House to record net job losses since Herbert Hoover’s presidency led to the Great Depression. George W. Bush’s eight years saw a gain of only one million compared to the gain of 12 million jobs during President Obama’s eight years.  Per the chart, Trump is the only president in the last 80 years to net job losses during his presidency. 

Republicans fight any increase in the federal $7.25 minimum wage, but in 2020, CEOs were paid 351 times as much as a typical worker, up from 307-1 in 2019 and 21-1 in 1965 and 61-1 in 1989. The 2020 ratio is an 18.9 increase from 2019 because of the rapid growth in vested stock awards and exercised stock options. The average CEO compensation in 2020 was $13.9 million. CEO gets these increases because they set pay and their pay is stock-related.

In contrast to CEO salaries, those for teachers are so bad that many of them are forced to take a second job for survival. In the first years that they work, many of them have to pay off student loans; when that is finished, the child care expenses are stupendous. Average salary for new teachers is $41,000; it’s $64,000 for teachers across all levels of education and years of experience. The 18 percent of teachers holding second jobs outside their teaching makes them three times as likely as all U.S. workers to handle multiple jobs at once. Forty-one percent of preK-12 teachers work more than one job.

Raises for teachers haven’t kept up with inflation in over half the states, stagnating in the past two decades within two states and declining in another 27 states. With a loss of 20 percent in Indiana, for example, the $61,000 that a teacher makes today would have the buying power of under $48,000. For that money, teachers not only instruct but also act as facilitators, mentors, family liaisons, behavioral interventionists, etc. Staff shortages erased planning periods, moving all lesson preparations, grading communication, and other work into evenings and weekends. Teachers make 19 percent less than employees in commensurate professions, about 81 percent on the dollar. In 1996, the penalty was only six percent for teachers.

Some teachers have more advantages than others. The highest-paying states are Massachusetts, Rhode Island, New York, Pennsylvania, and Connecticut. Those with partners or other family members may keep them from taking on additional paying jobs.

One person other than teachers will make less money after DDT stiffed her. Since Ronald Reagan’s presidency, each man in the Oval Office has had an official photographer to chronicle his administration’s experiences. Many people take photos of the president for the media, and the White House has staff photographers. Only one person, however, is the chief White House photographer for the president.

After another photographer failed to stay, Shealah Craighead, staff photographer for George W. Bush, had the primary position. Like every other chief White House photographer, she planned a collection of her photographs, and asked DDT if he would write a foreword. Unlike other men in the Oval Office, however, DDT wanted some renumeration for doing this historical document. She obtained his commitment and negotiated her contract with a publisher when DDT stalled on his commitment.

That’s when Craighead discovered DDT took her photos for his own book, Our Journey Together: he’s selling it for $75 a copy, $229.99 for a signed copy in his “Winning Team Publishing” section of his merchandising operation. This after he insulted Craighead and told White House guests “that he questioned her skills as a photographer.” His “publishing” is “co-founded by Donald Trump Jr. and Sergio Gor, a former Capitol Hill aide and Republican campaign operative.” DDT’s representative told Craighead that the “noncompete” clause from DDT’s publisher meant more stalling of the foreword. The book from DDT also provides no photo credits and doesn’t not mention any photographers taking the images until the last page that has a “grateful acknowledgement” to “all the phenomenal White House photographers” listed them.

No president personally profited from the photographs as DDT has. The company has evidently grossed at least $20 million by now. After the New York Times contacted DDT for a comment, he said he’s ready to write the foreword.

DDT’s behavior with the book is nothing new: he cheated hundreds of contractors, ran a scam university, and misstated his assets’ evaluation to cheat on taxes and loans. He wrote all the photo captions, including one for House Speaker Nancy Pelosi (D-CA):

“She was screaming and shaking like a leaf, she’s f***ing crazy, hence the name ‘Crazy Nancy.’”

My personal suggestion is for a collection of DDT’s photographs taken by the media. It could include photographs such as the one of his dragging toilet paper behind him while he ascends the stairs to Air Force One. Or this one. 

Biden has rescinded Title 42, DDT’s policy expelling and blocking migrants at the border from seeking asylum. Supposedly based on the pandemic, the order was lifted by the CDC because it is no longer needed “to protect U.S. citizens.” Most of those crossing the border will still not be permitted to stay, removed if they cannot prove a legal reason for remaining the U.S. Asylum is for “a well-founded fear of persecution on protected ground.” Biden’s administration used Title 42 to expel migrants 1.7 million times.

Biden also announced an expenditure of $3.2 billion to retrofit 450,000 homes in low-income communities to cut power bills and lower fossil fuel emissions. Funding comes from last year’s $1.2 trillion infrastructure bill to boost the home weatherization program from the 1970s. Other climate-related actions announced Wednesday include new energy code requirements for federal buildings and new efficiency standards for residential air conditioners and pool heaters. Federal contractors use concrete and asphalt with a low carbon footprint.

After Florida had an almost perfect election with GOP winners, the Republican governor, Ron DeSantis, led the charge in legislation highly restricting voter access to the polls. At least one federal judge agrees that the new laws cause unneeded problems and banned the enforcement of most new restrictions, calling them discriminatory and infringing on voting rights. Mark Walker’s 288-page ruling declared much of the state’s voter suppression law unconstitutional and issued a permanent injunction barring its enforcement—with lots of details. The order also mandates “preclearance,” using Section 3(C) of the 1965 Voting Rights Act to get pre-approval on election law changes with Walker’s court for the next ten years if they involve drop boxes, third-party voter registration, or line-warming activities (giving food or water to people waiting to vote). Appeals will go to the highly conservative 11th Circuit Court. Heather Cox Richardson has more to say about the decision.

The DOJ has also filed its third lawsuit against Texas about its discriminatory voting laws, this one over county precincts in Galveston that disenfranchise Black and Latinx voters. The U.S. has already sued Texas for its new redistricting maps and its new voting law restricting mail ballots and outlawing drive-through voting and 24-hour polling places. Texas rejected at least 23,000 mail ballots last month under the new law, a 13-percent rejection rate. Usually, the rate is in the low single digits. The state has had to defend every redistricting process since the 1965 Voting Rights Act went into effect, but the U.S. Supreme Court struck down preapproval for the process in 2013.

Texas has had to defend its maps in court after every redistricting process since the Voting Rights Act took effect in 1965. Previously, Texas and other states with a history of racial discrimination had to seek preapproval before changing election laws, but that is no longer the case after the U.S. Supreme Court struck down that requirement in 2013.

Despite Amazon’s dirty tricks in union votes, its 6,000-employee warehouse on Staten Island won its union election—on April Fools Day—making it the first U.S. union in the company’s 28-year history. Amazon, the second largest employer in the nation, issued a statement disapproving of the vote and the possibility of challenging the results. It alleged misconduct on the part of the National Labor Relations Board that administered the election. A similar vote at Bessemer (AL) came out against the union by 993-875, but 416 ballots have been challenged. Starbucks workers have unionized nine stories and filed for elections in over 100 stores within 25 states.

February 9, 2022

Republicans Whine, Democrats Succeed

Republicans repeatedly revile President Joe Biden, focusing on the rising inflation. They overlook rising salaries, and Fox network celebrated the estimate that new jobs were way down in January—until the report came out with 467,000 jobs. The adjustment for the month before, December 2021, added 311,000 jobs for a total of 6.4 million jobs in Biden’s first year. Deposed Donald Trump (DDT) promised 25 million new jobs in the next ten years; after his mismanagement of the COVID pandemic, he had 3.1 million fewer jobs in December 2020 than when he was inaugurated in 2017, the first elected president to leave office with few jobs since Herbert Hoover’s policies led to the Great Depression. The GOP answered with silence.

DDT’s GDP growth for his entire four years, 1.6 percent, was also the worst since Herbert Hoover. Obviously, COVID had a strong impact, but again DDT badly mismanaged the country during the pandemic. In 2021, Biden’s first year, the U.S. gross domestic product expanded 5.7 percent, the strongest calendar-year growth since 1984. October to December 2021 alone showed a 6.9 percent growth, the second strongest since 1966. On February 5, 2022, history scholar Heather Cox Richardson wrote her “Letters from an American” about consistent GOP failures and their reasons in managing the economy, compared to the Democrats:  

The economy has boomed under President Joe Biden, putting the lie to the old trope that Democrats don’t manage the economy as well as Republicans.

This should not come as a surprise to anyone. The economy has performed better under Democrats than Republicans since at least World War II. CNN Business reports that since 1945, the Standard & Poor’s 500—a market index of 500 leading U.S. publicly traded companies—has averaged an annual gain of 11.2% during years when Democrats controlled the White House, and a 6.9% average gain under Republicans. In the same time period, gross domestic product grew by an average of 4.1% under Democrats, 2.5% under Republicans. Job growth, too, is significantly stronger under Democrats than Republicans.

“[T]here has been a stark pattern in the United States for nearly a century,” wrote David Leonhardt of the New York Times last year, “The economy has grown significantly faster under Democratic presidents than Republican ones.”

The persistence of the myth that Democrats are bad for the economy is an interesting example of the endurance of political rhetoric over reality.

It began in the postwar years: the post–Civil War years, that is. Before the Civil War, moneyed men tended to support the Democrats, for the big money in the country was in the cotton enterprises of the leading enslavers in the American South, and they expressed their political power through the Democratic Party, which promised to protect and nurture the institution of human enslavement. Indeed, when soldiers of the Confederacy fired on Fort Sumter in the harbor of Charleston, South Carolina, in April 1861, it was not clear at all whether bankers in New York City would back the United States or the southern rebels. After all, the South was the wealthiest region of the country, and the North had just undergone the devastating Panic of 1857. Southern leaders laughed that without the South, northerners would starve.

The economic policies of the war years, including our first national money, national taxation, state universities, and deficit spending, created a newly booming industrial North, but many moneyed men resented the Republican policies they felt offered too much to poor Americans (the Homestead Act was a special thorn in their sides because it meant that western lands taken from Indigenous Americans would no longer be sold to bring money into the Treasury but would be given away to poor farmers). When the government established national banks, establishing regulations over the lucrative banking industry, state bankers were unhappy.

Whether moneyed men would stay loyal to Lincoln in 1864 was an open question. In the end, they did, but their loyalty after the war was up for grabs.

Democrats’ postwar financial policies drove moneyed men to give their allegiance to the Republican Party. Eager to make inroads on the Republicans’ popularity, northern Democrats pointed out that the economic gains of the war years had gone to those at the top of the economy, and they called for financial policies that would level the playing field. Notably, they wanted to pay the interest on the war debt with greenbacks rather than gold, which would make the bonds significantly less valuable. The alteration would also establish that political parties could take office and change government financial engagements after they were already in force.

Republicans recognized that if a change of this sort were legitimate, the government’s ability to borrow in the future—say, to put down another rebellion—would be hamstrung. They were so worried that in 1868, they protected the debt in the Fourteenth Amendment itself, saying: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

When it looked as if a coalition including the Democrats might win the presidency in 1872, leaders from Wall Street publicly threw their weight behind the Republicans, and in exchange, the Republicans backed away from supporting the workers who had made up their initial voting base.

Southern white supremacists had begun to charge that permitting poor men to vote would lead to a redistribution of wealth as they voted for roads and schools and hospitals that could only be paid for by tax levies on those with property. Such a system was, they charged, “socialism.”

While southern whites directed their animosity toward their formerly enslaved Black neighbors, northerners of means adopted their ideas and language but targeted immigrants and organized workers. If those people came to control government and thus the economy, wealthier Americans argued, they would bring socialism to America, and the nation would never recover.

Increasingly, power shifted to wealthy industrialists who, after 1872, were represented by the Republican Party. They demanded high tariffs that protected their industries by keeping out foreign competition and thus permitted them to collude to raise prices on consumers. By the 1880s, Republican senators were openly serving big business; even the staunchly Republican Chicago Tribune lamented in 1884 that “[b]ehind every one of half of the portly and well-dressed members of the Senate can be seen the outlines of some corporation interested in getting or preventing legislation.”

As money moved to the top of the economy, Democrats pushed back, calling for government to restore a level playing field between workers and their employers. As they did so, Republicans howled that Democrats advocated socialism.

Finally, after the spectacularly corrupt administration of Republican Benjamin Harrison, which businessmen had called “beyond question the best business administration the country has ever seen,” the unthinkable happened. In the election of 1892, for the first time since the Civil War, Democrats took control of the White House and Congress. They promised to rein in the power of big business by lowering the tariffs and loosening the money supply. This, Republicans insisted, meant financial ruin.

Republicans warned that capital would flee the markets and urged foreign investors—on whom the economy depended—to take their money home. They predicted a financial crash as the Democrats embraced socialism, anarchism, and labor organization. Money flowed out of the country as the outgoing Harrison administration poured gasoline on the fires of media fears and refused to act to try to turn the tide. Harrison’s secretary of the Treasury, Charles Foster, said his job was only to “avert a catastrophe” until March 4, when Democratic president Grover Cleveland would take office.

He didn’t quite manage it. The bottom fell out of the economy on February 17, when the Reading Railroad Company could not make its payroll, sparking a nationwide panic. The stock market collapsed. And yet the Harrison administration refused to do anything until the day Cleveland took office, when Foster helpfully announced the Treasury “was down to bedrock.”

To Cleveland fell the Panic of 1893, with its strikes, marchers, and despair, all of which opponents insisted was the Democrats’ fault. In the midterm election of 1894, Republicans showed the statistics of Cleveland’s first two years and told voters that Democrats destroyed the economy. Voters could restore the health of the nation’s economy by electing Republicans again. In 1894, voters returned Republicans to control of the government in the biggest midterm landslide in American history, and the image of Democrats as bad for the economy was cemented.

From then on, Republicans portrayed Democrats as weak on the economy. When the next Democratic president to take office, Woodrow Wilson, undermined the tariff as soon as he took office, replacing it with an income tax, opponents insisted the Revenue Act of 1913 was inaugurating the country’s socialistic downfall. When Democratic president Franklin Delano Roosevelt pioneered the New Deal, Republicans saw socialism. Over the past century, that rhetoric has only grown stronger.

And yet, of course, it has been Republican economic policies that opened up the possibility for Democrats to try new approaches to the economy, to make it serve all Americans, rather than a favored few. As FDR put it: “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.”

In the end, that’s what the economists Leonhardt interviewed last year think is behind Democrats’ ability to manage the economy better than Republicans. Republicans tend to cling to abstract theories about how the economy works—theories about high tariffs or tax cuts, for example, which tend to concentrate wealth upward—while Democrats are more pragmatic, willing to pay attention to facts on the ground and to historical lessons about what works and what doesn’t.

Notes:

https://www.cnn.com/interactive/2019/business/stock-market-by-president/index.html

December 30, 2021

Republicans Glory in Their Manufactured ‘Poor’ Economy

As 2021 ends, moans about inflation and people quitting their jobs fill the media. At the same time, the media ignores the booming economy. At the end of Dictator Donald Trump’s (DDT) rule, the economy followed the trajectory of COVID, going downhill into a disaster that DDT worsened for his efforts to be reelected. Less than a year after the inauguration, the economy has turned around, despite the worsening COVID cases from variants caused by people who refused vaccinations. How good are things? Here’s some indication.

Part of the change comes from President Joe Biden putting money into the hands of the poor and middle-class instead of using DDT’s approach to provide trillions to big business and the wealthy. His stimulus bill, passed only by Democrats but later touted by Republicans with their constituents prevented the recession and dropped unemployment to 4.2 percent. National economic consultant Robert J. Shapiro described “extraordinary gains” of the first three quarters of 2021:

“Real GDP increased at a 7.8 percent annual rate—that’s adjusted for the current inflation. The Federal Reserve expects real growth of 5.9 percent for all of 2021, followed by another 3.8 percent increase in 2022.”

By contrast, the real GOP grew at an annual average rate of 2.2 percent, never reaching even three percent, in the two previous decades. In this year’s stock market, the S&P Index, reporting the most diversified stocks, jumped 21.7 percent from January 20, Biden’s inauguration day, to December 7, 2021. People’s disposable income grew three percent after inflation between January and October compared to 0.5 percent increase in 2019 and 1.7 percent in 2018. Since January, unemployment fell by one-third, and wages climbed.

U.S. economic output jumped over seven percent in the last quarter of 2021, and overall growth for the year should be about six percent with another four percent increase in 2022—the highest increases in decades. During the same period, China’s growth is predicted at 4 percent and the Eurozone at two percent. U.S. companies have profit margins of 15 percent, higher than since 1950. Matthew A. Winkler wrote:  

“[The U.S. is] outperforming the world by the biggest margin in the 21st century, and with good reason: America’s economy improved more in Joe Biden’s first 12 months than any president during the past 50 years….” 

The jobless rate dropped from 6.2 percent in February, Biden’s first month in office, to 4.2 percent. His administration created 4.1 million jobs, more than new jobs in the 12 years of George W. Bush and DDT. Biden is the only president over the past half century with robust increases in non-farm payrolls (4.3 percent) and manufacturing jobs (2.6 percent). approaching the gains enjoyed by Carter in general employment (4.6%) and factory workers (3.9%).

Wages in the U.S. are increasing at an annual rate of four percent compared with under one percent in the Eurozone. The American Rescue Plan, passed by only Democrats in March cut child poverty in half when it put $66 billion into 36 million households. Over 4.6 million more people have insurance because of the Affordable Care Act—a total of 13.6 million insured people under the law. On Biden’s inauguration day, only 46 percent of the schools were open; now 99 percent are.

On the foreign-exchange market, the dollar strengthened 7.37 percent this year, the most under a presidential first year since Ronald Reagan. U.S. stocks outperformed the world equity market by 6.3 percentage points, the biggest advantage since 1988.   

Biden’s ratings in market and economic indicators for his first year when compared to seven previous presidents–no one matching Biden’s combination of No. 1 and No. 2 rankings:

  • Gross domestic product (1)
  • Profit growth (1)
  • S&P 500 performance (2)
  • Consumer credit (1)
  • Non-farm payrolls (2)
  • Manufacturing jobs (2)
  • Business productivity (2)
  • Dollar appreciation (2)
  • S&P 500 relative performance (2)

November saw the passage of a $1.2 trillion infrastructure bill to repair roads and bridges while getting broadband to areas lacking it. Over 93 percent of House Republican and 62 percent of GOP senators refused to support the infrastructure bill although many of them are now taking credit with its benefits when talking to their constituents. The law will help 2022 because it creates jobs. Republicans voted against it to keep Biden from positive publicity.

The only complaint people seem to have about Biden’s economy seems to be inflation, at 6.8 percent in November and the highest in 39 years. Yet gas prices are falling, under $3 a gallon in 12 states and $.25 a gallon lower in 36 U.S. cities, with skyrocketing gasoline inventories.  

The media were traumatized by problems with the supply chain, but 99 percent of packages arrived on time for the holiday, an improvement over the past two years. While U.S. major ports process almost one-fifth more containers in volume than two years earlier, European port container traffic stayed flat or declined. Consumer goods moved off the shelves at a 45 percent higher rate than in 2018, and expenditures is estimated at 11.5 percent more for the holiday season than a year ago. Consumer demand was a huge problem for the global supply chain bottlenecks.

According to polls, 63 percent said they think the nation’s economy is in bad shape because of bad news, and only 19 percent hear the good news about the economy. Part of that comes from how GOP congressional members have falsely convinced 91 percent of their party that the U.S. economy is in fair/poor condition. 

Why are people complaining about higher prices? Medications, rentals, houses costs, health insurance, etc.—the prices for all these have gone through ceiling for several years, but the media has never pushed them as “inflation.” At the same time, wages stayed largely static, but most people didn’t view these problems as a crisis. Now even with inflation outpacing the current wage increases, the bottom 60 percent of workers have more money left over than during pre-pandemic.

Publicity about inflation is being sensationalized by corporate lobbying groups such as the Chamber of Commerce in an attempt to promote conservatism. Corporate media looks for one family drinking 48 gallons of milk to push the idea of milk inflation, actually higher a decade ago, or complaints about gas prices, again higher a decade ago, by someone driving an older gas-guzzler. Corporations wanting to lower wages falsely state salary increases for lower-paid workers causes inflation. Yet the following issues are not addressed in the mainstream media:

Inflation by the Top: Corporate greed and power are jacking up the prices for the wealthy who can then spend tens of millions of dollars in speculation and purchasing “digital art” only on their computers. Income gains for the rich far outpaced inflation.

Corporate Consolidation: A few companies dominate the market for essential goods such as diapers and meat and insulin. At the same time, Republicans fight any kind of regulation to control unreasonable increases in prices.

Wars and Fossil Fuels: Despite fear mongering about government spending, the deficit, and inflation, Congress is delighted to pass a military budget larger than presidents’ requests. For political reasons, some presidents also start wars with the hopes they will provide reelection. Gas prices are also highly volatile because they are controlled in the Middle East, but conservatives fight clean energy which is less liable to inflation.

Health Care and Housing Costs: Conservative lawmakers refuse pass laws to address long-term inflation: healthcare costs have risen faster in the past 30 years than in any other sector, but conservatives won’t control drug prices.  

The Fed Tradeoff: The Federal Reserve requirement to maintain price stability and maximum employment is managed largely by adjusting interest rates and buying government bonds. Sixteen months ago, Chair Jerome Powell changed its inflation policy. Instead of keeping interest rates high leading to low inflation and keeping unemployment high enough to block worker bargaining power, he kept low interest rates to reach full employment with concern for high inflation. At this time, higher interest rates would slow market recovery; higher inflation is less devastating than mass unemployment. 

Price Controls: Congress could lower inflation without mass unemployment if it created price controls, used in the past during wartime. This move would block corporations from jacking up prices beyond the increased cost of input to report huge profits. During the first nine months of 2021, the world’s biggest fossil fuel corporations made $174 billion in profits–$74.9 net income for two dozen of them in just the third quarter.

Climate Change: Conservatives refuse to recognize the existence of global warming, but food prices have gone up because of changes in crop yield.

It’s to the advantage of Republicans to keep inflation high because it helps their chances of having majorities in the legislators. Sen. Rick Scott (R-FL) called it a “gold mine.”  Just like using a strategy of promoting COVID infections and deaths to make Democrats look bad, conservatives care nothing for people. They just want to keep their position and gather wealth. And like COVID, they won’t fix it if they become the majority party.

October 14, 2021

Supply Chain Problems: Shop Now

Over a year ago, people still struggled to buy toilet paper and paper towels with store restrictions in purchases for these items lasting well into fall 2020. A year later, the specter of shortages again rises in the United States. The news started with warnings about winter holiday items, including toys, not arriving in the U.S. and expanded to the same simple food products missing—flour, yeast, cocoa, etc.—not being available soon. Diapers are already in short supply, and the aluminum shortage could make pharmaceutical packaging a problem.

Shipping blockages from foreign harbors to U.S. rail yards and warehouses exist. The average anchorage time at the Port of Los Angeles is now over 11 days. Shipping from China to the U.S. which used to take four to six weeks now requires 12 to 16 weeks. Shortages also come from goods in the wrong places with a shortage of shipping containers coming from the shortage of truck drivers.

Savings from forced inactivity during the pandemic plus the distribution of money from federal stimulus checks vastly increased the demand for goods such as exercise bikes, patio furniture, etc. The damaged supply chain kept warm weather items from arriving in time for the season, and winter items are not yet available. 

People may be recovering from the pandemic in wealthier countries where 98 percent of vaccinated people live, but under one-third of the people in the world have the same advantage. In manufacturing areas as Vietnam, Malaysia, India, and Mexico, low vaccination levels cause production delays and reduced capacity. Vietnam, a key region for apparel and footwear, comes in second only to China, and factories are shuttered from outbreaks and lockdowns for a long period of time. Under 12 percent of its population in Vietnam is fully vaccinated.

At the worst of the pandemic, empty containers were stranded at sea or stacked up without being returned full. Their unavailability made rates spike.  The same thing is happening again: 56 ships are backed up at Los Angeles at any time, and some of them don’t even wait to be refilled before heading back out. About 80 percent of traded goods arrive in shipping containers. Last year, one 40-foot steel container cost $1,920 to transport. This year the cost increased to over $14,000. 

Another reason for price increase was last year’s energy grid failure in Texas, one of the largest producers of plastics in the U.S. After the factories shut down, the country never caught up from the shortage of packaging products, and the cost of polyethylene for milk jugs and vinegar bottles skyrocketed as did the PVC for tamper-resistant lids and breath mint packs and low-density polyethylene for six-pack soda can rings and grocery stores’ produce bags.

The shortage of wooden pallets from the mills’ shutting down last spring still affect prices, and food companies suffer higher costs in boxing, canning, and packaging products from the high prices of corrugated cardboard.

Prices for poulty and meat, especially beef and pork, have topped the inflation at a rise of 15.7 percent since 2019. Some of the increase may be from severe heat and drought in the U.S. during the past few months killing hay and making water prohibitively expensive. Many ranchers sold their animals or slaughtered early, predicting fewer animals next year. Pork producers struggled with a labor shortage and a workforce suffering from COVID. A hog processor in Missouri, Triumph Foods, had to increase its wages by $2.75 an hour to find employees. A possibility of higher meat prices may be 80 percent of cattle slaughter monopolized by only four companies and 70 percent of the U.S. hog market by four companies. Tyson poultry faced a price-fixing case.

Produce faces less inflation although Washington’s sweet onions were decimated from heat waves, and California tomatoes and melons expired in heat and drought. In the state’s Central Valley, cotton, wheat, and alfalfa may disappear because farmers diverted water to irrigate tree nuts. Next year will probably have a 20-percent cost increase in japonica (sushi) rice, and wine from Napa and Sonoma valleys will be more expensive because of lessened grape crops. People eating at home during the pandemic bought more fruits and vegetables, leaving less for frozen products, purées, and juices. Inflation in 2022 should go down to 1.5 and 2.5 percent, compared to 2.5 to 3.5 percent in 2021.

Shortages resulted in growing inflation—a leap of 5.4 percent Consumer Price Index (CPI) in September. [Note that the actually 0.4 percent during the month increased the possibility of 5.4 percent inflation increase for 2021 over 2020.] Much of this surge came from car costs after the lack of computer chips delaying production caused the leap in prices.

This week, President Joe Biden openly tackled the ongoing supply chain problems with an announcement with solutions. To increase capacity at major California ports and large goods carriers, the Port of Los Angeles agrees to change to 24/7 operations as the Port of Long Beach began a few weeks ago. Members of the International Longshore and Warehouse Union will work extra shifts. These two ports handle 40 percent of container traffic entering the U.S. Walmart, FedEx, and UPS, three of the biggest goods carriers, may move to the 24/7 operations.

Soon after his inauguration, Biden signed an executive order to review products in short supply such as semiconductors and pharmaceutical ingredients. A new task force created during the summer addressed the most urgent shortages and assigned President Obama’s transportation official, John Porcari, as “ports envoy” to see that goods flow. He helped broker the deal with the union and the ports.  

A June 22, 2021 photo of backlogged cargo containers stacked at Yantian port in Shenzhen in China’s southern Guangdong province. 

One suggestion to help the supply chain crisis is lifting  tariffs on $350 billion of Chinese-made goods that Dictator Donald Trump (DDT) created. U.S. importers paid over $106 billion to cover that cost thus far as they now face huge shipping costs. U.S. Trade Representative Katherine Tai said the U.S. could begin a targeted tariff exclusion process while leaving the majority of tariffs in place. 

DDT placed tariffs on the majority of goods shipped from China to the U.S. with an average rate of 19 percent, over six times higher than before the beginning of the trade war in 2018. All the costs go to the purchasers. DDT used tariffs to hurt China’s economy and pressure the country into agreeing to a new trade deal.

Some product shortages may lessen if people start spending money on entertainment and travel as COVID subsides, and Asian factories may open when severe weather no longer causes energy shortages. Some companies either use airlines instead of ships, but they may leave toys in China until costs come down. Walmart, Target, Costco, and Home Depot are among retailers paying for their own chartered ships, an advantage that small retailers lack. This tactic will increase the prices of goods but help the bottlenecks if cargo goes to less congested docks such as Portland (OR), Oakland (CA), and East Coast destinations. 

The shortage of truck drivers is one of the weakest links to the supply chain, and Biden may relax regulations for them. Transportation Secretary Pete Buttigieg stated a review for allowable hours for drivers to get more of them on the road, but safety issues must be considered. He also communicated with local Departments of Motor Vehicles to expedite processing of commercial driver’s licenses.

Conservative media outlets love to blame Biden for the supply chain problems, but a large portion of the problem lies with companies who moved all their business offshore to find cheaper costs. The U.S. share of world manufacturing shrank from 15 percent to 10 percent between 2004 and 2017 with a doubled reliance on Chinese inputs, costing 3.7 million jobs since 2000. DDT couldn’t get basic medical equipment such as masks for the first few months of the pandemic. This year a drought in Taiwan caused a shortage of semiconductors, blocking auto productions. Almost all supply chain executives believe their supply chains are too vulnerable, and up to 70 percent of firms surveyed are “likely” or “extremely likely” to re-shore in the future. Some of these have begun; i.e., Black & Decker, Whirlpool, GE, Apple, Caterpillar, Goodyear, GM, and Polaris. The current disaster could be more effective in returning manufacturing to the U.S. than DDT’s tariffs.

 

October 5, 2021

‘Pandora Papers’ Expose the Elite, South Dakota

Huge stories tend to disappear as soon as another one comes into the media; i.e., the shift from the Pandora Papers tax haven scandal morphing into the Facebook scandal. Because the latter directly affects more people in the U.S., it will dominate the media until the Senate Republicans cause a recession by blocking an increase in the debt ceiling, necessary because of their debts with Deposed Donald Trump (DDT). Therefore, Pandora first.

In Works and Days (ca. 700 BC), Hesiod wrote about the Greek mythology of Pandora, whose curiosity was so great that she opened a “box,” actually a large storage jar, left in the care of her husband, Epimetheus. Out came curses such as sickness and death. The message from the story is that opening a Pandora’s box will create many unforeseen problems. Thus the name for this last Sunday’s revelations called “Pandora’s Papers.”

Based on nearly 12 million documents, almost 3 terabytes of data from five continents, the report on hidden financial dealings of the elite and corrupt using offshore accounts to conceal trillions of dollars was prepared by over 600 journalists from 150 media outlets in 117 countries. They searched files from over 29,000 offshore accounts held by over 130 Forbes-identified billionaires and 330 current and former politicians in 14 offshore service providers around the world. Involved were 35 world leaders including Jordan’s King Abdullah II, former U.K. Prime Minister Tony Blair, Czech Republic Prime Minister Andrej Babis, Kenyan President Uhuru Kenyatta, and Ecuador’s President Guillermo Lasso; others are associates of both Pakistani Prime Minister Imran Khan and Russian President Vladimir Putin, Turkish construction mogul Erman Ilicak, and former CEO of software maker Reynolds & Reynolds Robert T. Brockman. Prominent athletes, models, and artists including India’s famous cricketer Sachin Tendulkar, pop music star Shakira, and supermodel Claudia Schiffer also hide their assets in these offshore accounts reported in the Pandora Papers.

Contracts, spreadsheets, memos, incorporation records, share certificates, compliance reports, emails—even complex diagrams of corporate structures—from 14 world-wide internet servers provided details of schemes to conceal assets from creditors, investigators, taxation, and people. Many of the records reveal the real owners of shell companies for the first time. Complicit in the sheltering of assets are banks, law firms, accountants, and the countries which permit the secrecy. In the U.S. alone, journalists found 206 U.S. trusts in 15 states and Washington, D.C. from 22 trustee companies.

A major location in the U.S., South Dakota, “rivals Switzerland, Panama, the Cayman Islands, and other famous tax havens as a premier venue for the international rich seeking to protect their assets from local taxes or the authorities.” The state’s low taxes and highly generous trust laws lead the world’s billionaires to that location, according to Chuck Collins, author of The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions. For example, Horst Happel, fined $88 million in 2016 for underpaying workers at his Brazilian orange juice company, moved many of his assets to South Dakota the next year. The state also became the location for trusts moved from the Bahamas and set up by Carlos Morales Troncoso, former vice president of the Dominican Republican and accused of human rights violations at his sugar company, Central Romana. Through these trusts, wealth can be hidden for generations and even centuries. 

Suzanne Garment, author of Scandal: The Culture of Mistrust in American Politics, wrote about South Dakota’s successfully abolishing limits of a trust’s lifespan by making them permanently private. Other popular states for hiding assets are Alaska, Delaware, Florida, Nevada, New Hampshire, and Texas. According to Collins, these places make the United States “the weak link now in the system of global financial transparency.”

Writing about all the hidden assets, tax policy lead at Susana Ruiz at Oxfam International stated:

“This is where our missing hospitals are. This is where the pay-packets sit of all the extra teachers and firefighters and public servants we need. Whenever a politician or business leader claims there is ‘no money’ to pay for climate damage and innovation, for more and better jobs, for a fair post-Covid recovery, for more overseas aid, they know where to look.

Tax havens cost governments around the world $427 billion each year. That is the equivalent of a nurse’s yearly salary every second of every hour, every day. Ordinary taxpayers have to pick up the pieces. Developing countries are being hardest hit, proportionately.”

OxFam wants world governments to end these tax havens with these steps:

  • End tax secrecy on individuals, offshores, and multinational corporations.
  • Set up a public register on the real owners of bank accounts, trusts, shell companies, and assets.
  • Require multinational corporations to publicly report their accounts where they do business, country-by-country.
  • Increase the use of automatic exchange, allowing revenue authorities access to information they need to track the money.
  • End corporate profit shifting to tax havens via new rules, and by setting a global minimum tax under the OECD’s BEPS deal, ideally of around 25%.
  • Agree on a global blacklist of tax havens and take counter measures, including sanctions, to limit their use.
  • Set a new global agenda on taxing wealth and capital fairly while addressing tax competition between countries on high-net-worth-individuals, either on income or wealth, against agreed standards.

A few findings in the Pandora Papers:

  • The largest law firm in the U.S., Baker McKenzie, helped created the modern offshore scheme with extensive financial system lobbying.
  • A Panama firm, ALCOGAL, helped banks through the world create thousands of offshore accounts for hiding money.
  • The large U.S. bank Morgan Stanley asked ALCOGAL to set up 312 companies in the British Virgin Islands.
  • Noted museums, including New York’s Metropolitan Museum of Art, contain looted Cambodian antiquities trafficked through U.S. art trader Douglas Latchford’s offshore trust.
  • Jordan’s King Abdullah II bought $106 million worth of luxury homes in the U.S. and UK including three Malibu beachfront homes as well as $10 million worth of condominiums in Washington, D.C.’s Georgetown neighborhood.
  • Cyprus president, Nicos Anastasiades, founded a law firm accused of hiding the assets of a controversial Russian billionaire behind fake company owners.
  • Czech Prime Minister Andrej Babis used shell companies to purchase a $22 million chateau near Cannes in 2009. Babis is up for re-election this week.  

Although offshore accounts may not be illegal by themselves, tax evaders, fraudsters, and money launderers often take advantage of their secrecy. Countries are also deprived of tax revenue when money, at least $11.3 trillion in wealth, is concealed offshore. Australia, Britain, and Pakistan plan to investigate the revelations.

On Friday, Congressional members plan to introduce the ENABLERS Act, to attack global corruption, part of which denies corrupt foreign officials safe haven. The announcement came from Reps. John Curtis (R-UT) and Tom Malinowski (D-NJ), co-chairs of a new caucus against kleptocracy. The GOP co-lead of the bill may be Rep. Maria Salazar (R-FL), daughter of Cuban exiles familiar with autocrats in the Western Hemisphere. The main provision would require lawyers, investment advisers, art dealers, realtors, accounts, public relations firms—those identified in financial corruption—to perform “due diligence” to ensure their clients aren’t using money of suspicious origin; i.e., proceeds of crime. Banks are supposedly already bound by this requirement. Industries, however, can be expected to fight back against such mandates, and many Republicans will complain about regulations. 

According to Josh Rudolph, a corruption expert with the Alliance for Securing Democracy at the German Marshall Fund, other countries with similar regulations require these entities to “have compliance officers, trainings, audits, and controls reasonably designed to spot potential money laundering by identifying customers, scrutinizing transactions, keeping records, and reporting suspicious activity to the government.” In the U.S., some anti-corruption legislation has moved forward, for example into the House-approved version of the National Defense Authorization:

  • Require the administration to evaluate 35 people linked to Putin for potential sanctions.
  • Counter efforts by other countries to abuse tools offered by Interpol.
  • Require reporting on how other countries are battling corruption.
  • Simplify publicizing names of allegedly corrupt officials facing U.S. visa bans.
  • Regularly publicize how much money stolen from other countries is recovered by U.S. law enforcement.
  • Reauthorize the Global Magnitsky Act, permitting economic sanctions on corrupt individuals and human rights abusers.

President Joe Biden is currently writing rules for a law, passed during DDT’s term, banning the anonymous registration of shell companies, major drivers of the corruption identified in the Pandora Papers. A goal in the upcoming virtual Summit for Democracy for world leaders on December 9-10, 2021.

The current administration, however, may be too weak to help the U.S. democracy and block corruption. Senate Minority Leader Mitch McConnell (R-KY) has told Democrats that paying DDT’s debts from the past term is their entire responsibility and then blocks them from doing it by involking the filibuster. Current Republicans would rather destroy the country than come up with ideas that might get them elected.  

September 5, 2021

Feds Stop Unemployment Boost on Labor Day

Filed under: economy — trp2011 @ 10:57 PM
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Last week, the last week of summer vacation before Labor Day, saw a huge number of disasters: Taliban controlling Afghanistan after a frantic U.S. airlift of 123,000 people from the country; the nation literally on fire as the Caldor fire threatens Lake Tahoe; another part of the U.S. under water as Hurricane Ida killed at least 51 people in a swath from New Orleans to the Northeast; Florida’s COVID cases going sky high while Gov. DeSantis tries to conceal the facts; and Texas Republicans passing draconian anti-choice, unlimited gun carry, and voter suppression laws. All these were anticipated, but GOP lawmakers postponed prevention for decades—no solutions for climate change, corruption in Afghanistan, increasing COVID disasters, etc.

Tomorrow, on the day to honor workers, life will become harder for ten million people in the U.S. when they lose their federal jobless benefits. Three federal programs expire in an abrupt finish with no relief in sight. Almost three million workers to lose the benefit don’t qualify for regular state unemployment insurance including gig workers, caretakers, and self-employed people. Representing 40 percent of all unemployment claims, these people, typically lower-income and younger, will have no unemployment insurance starting on Labor Day 2021.

At the same time, the large number of unvaccinated people and movement of the COVID Delta variant sweeps the U.S. Both disease and lack of benefits will cut back on spending in parts of the country, especially in restaurants and other service businesses. Pulling people from this federal support will throw millions back into poverty with much less access to food and housing.

Bipartisan legislation approved the emergency jobless aid in Spring 2020 through the CARES Act as almost one million people lost their jobs each day and the economy went into freefall. Lawmakers believed the pandemic was short-lived because of assurances by Dictator Donald Trump (DDT), but it didn’t. The aid was extended again in December 2020 and in another three months until Labor Day through the American Rescue Plan.

Republicans maintained people on unemployment were lazy, wanting to stay home when they could have a job, and demanded an investigation into fraud, declaring hundreds of billions of dollars in unemployment aid were stolen. Twenty-six states run by Republicans ended unemployment benefits early, giving a preview of what people in other states now face.

Economists researched the relationship between local economies and the combination of GOP benefits withdrawal and the pandemic. One study revealed withdrawing benefits didn’t force people back into the workforce: for every eight workers losing benefits, only one could find a job, resulting in a drastic drop in spending throughout the state. Those states saw seven cents in increased earnings for every dollar lost in benefits. Labor Day marks the beginning of “$8 billion in reduced spending during September and October,” according to Arindrajit Dube, an economist at the University of Massachusetts at Amherst.

In states continuing unemployment insurance, 21.5 percent found employment while states without the unemployment saw only 24.9 percent of the unemployed finding jobs. Earnings in the states refusing to pay unemployment rose by an average of $14 for people who found employment while benefits declined by $278 per week, a net income decline of $264 per week at $13,728 on an annualized basis. In the same states, spending decreased by $145 per week ($7,540 annually) compared to states continuing to pay benefits. Workers may not have had much increase in wages during the pandemic (a 3.9 percent increase), but CEOs made out well—18.9 percent gain on average.

When the pandemic began, 152.5 million were employed, compared to the 146.8 million people now with jobs. With employment continuing its increase of 900,000 jobs a month, the gap would be closed in six months without damaging the economic recovery. States don’t have to stop the unemployment benefits on Labor Day: President Joe Biden told states they can use funds from the American Rescue Plan Act, the federal stimulus law passed in March 2021, for some of the lost federal aid. Of the 24 states continuing federal benefits until tomorrow, most said they didn’t plan to use stimulus plans in this way or would let the legislature made the decision.

A common question in the media is why over 8.4 million unemployed are searching for work in a market with 10 million job openings. One major reason is that the pandemic situation in which people lost their jobs, even temporarily, or were forced to stay home, perhaps working remotely, set up a “Great Reassessment” of work by both employers and employees. Employees may want to continue remote work, spend more time with their families, or find more flexible or more meaningful careers. Some people are still afraid to come into the workplace, especially with the concern for contracting “long-haul” COVID, coronavirus-like symptoms affecting their organs, joints, and muscles for months and possibly years after recovery of the infection.

Some companies, still desperate for employees, have increased wages, 8.8 percent up for nonmanagerial workers in the restaurant-and-hospitality sector and 6.1 percent for warehouse workers. Almost half the 3.1 million jobs gained since March are in hospitality although employment stalled with the Delta variant surge in August. Job resignations are up 13 percent over the beginning of the pandemic with an additional 4.9 million people who aren’t working or searching for work. During the pandemic, 3.6 million people resigned, two million more than expected. Others became entrepreneurs.

Many available jobs aren’t in the same locations or occupations where people worked before the pandemic. For example, professional and business services have 1.8 million job openings with 925,000 unemployed people who had worked in that category. Leisure and hospitality, retail, and wholesale trade have more openings than pre-pandemic workers in those areas, and many workers losing jobs in those industries don’t want to return. Education and health services have .6 million more job openings than unemployed workers from that sector. Workers in those areas have quit their jobs at the highest rate on record beginning in 2002. Child care facilities are in trouble with a serious shortage of applicants, and people with children need care for them to go back to work.

Alternatively, many employers want to hire fewer people and expanded their automation or completely revised supply chains and office organization. Last year, 43 percent of companies planned to use new technology to reduce their workforce, and business investment grew 26 percent in the past year, over twice as much as the economy. Roving machines are cleaning supermarket, hospital, and warehouse floors, and robots will start delivering room service. Salads and cooked vegetables will start being prepared by kitchen robots. Diners scan barcodes to access a menu and order food without servers.

People searching for jobs say they aren’t being hired, especially if they haven’t worked for a year—even if they were laid off because of the pandemic. About 40 percent of those now unemployed, 3.2 million, haven’t had a job for at least six months. Workers have had to decide whether to keep their jobs or follow COVID guidance. These people may have a good reason for not working, but employers worry that their skills may not be up-to-date. With prior jobs and employers often gone, job-seekers also may not have personal connections for resumes.

Job losses are worst for Latinas, Black women, and people without college degrees. In Idaho and Utah, employment recovered months ago with 2.6 percent and 3 percent unemployment respectively. On the other hand, tourist-oriented states are struggling: Hawaii is short 12 percent of its jobs, New York 9 percent down, and both Nevada and Alaska 7 percent behind. Urban downtowns such as San Francisco and Washington D.C. don’t have need for shops and restaurants because office workers aren’t back. Employers such as Google, Amazon, Apple, and Facebook won’t open until January. Buffets and movie theaters don’t need half their workers while RV dealers, carwashes, breweries, and appliance stores are going gangbusters. Some industries such as delivery services, mortgage lenders, and breakfast-cereal manufacturers had no job losses and now have 10 or even 20 percent more employees than 18 months ago.

Far more than 10 million people will participate in the massive loss. Because the average household getting unemployment insurance has 3.8 members, almost 40 million people, over 10 percent of the U.S. population, will lose this benefit tomorrow—on Labor Day. Keep this in mind tomorrow while you go shopping and then join friends in the backyard to grill hotdogs. 

 

August 8, 2021

Whither Infrastructure, DDT?

President Joe Biden’s first bill to repair U.S. physical infrastructure—roads, bridges, railroads, etc.—is limping on its way over the weekend as some Republican senators try to delay it and Deposed Donald Trump (DDT) lambasts Senate Minority Leader Mitch McConnell (R-KY) for permitting its existence. The bill, moved forward by Democrats and 18 Republicans, would add $550 billion for the project if it passes a vote after up to 50 hours debate. The bill would then have to pass the House where several Democrats are trying to wait for a second bill for social spending to pass the Senate. Because the second bill would be through the reconciliation process, it needs only 50 votes, probably from Democrats, and cannot be filibustered which demands 60 votes. The question is whether Sens. Joe Manchin (D-WY) and Kyrsten Sinema (D-AZ) would not support the measure.

DDT’s ally Maria Bartiromo attacked Sen. Kevin Cramer (R-ND) on her Sunday Fox show, accusing him of “betraying the Republican base” and not providing money for DDT’s wall. In defense of the bill, the far-right senator said that there were things that both parties did and didn’t like. When Cramer repeated that Democrats won’t agree to building a wall, Bartiromo said, “Why not work for the American people!” Then she repeated DDT’s comments about the bill being used against the GOP in 2022 and 2024. DDT has said he won’t endorse any Republican who supports it. Cramer pointed out that “the vast majority of Republicans are very supportive of this” and that DDT “didn’t give one reason why it’s a bad deal other than it’s Joe Biden’s.”

DDT used the infrastructure bill to again insult McConnell, first calling the bill a “disgrace” and then blaming the Senate Minority leader for it. DDT wrote:

“If Mitch McConnell was smart, which we’ve seen no evidence of, he would use the debt ceiling card to negotiate a good infrastructure package… It is a gift to the Democrat Party, compliments of Mitch McConnell and some RINOs [Republicans in name only], who have no idea what they are doing.”

DDT also stayed in the limelight when his replacement for AG Bill Barr in late December 2020, acting AG Jeffrey Rosen, testified in a closed-door hearing before the Senate Judiciary Committee about DDT’s efforts to suborn the election in a conspiracy with acting deputy AG Jeffrey Clark. The testimony concerned Clark’s attempts to push top leaders to falsify the election and publicly assert that election fraud investigations went against the Electoral College results. Earlier Barr had stated that DOJ found no fraud in the 2020 presidential election. Rosen refused to follow DDT’s demands, leading DDT to consider replacing Rosen with Clark in January 2021. Clark continues to maintain his official White House communications “were consistent with law.”

Rosen described five encounters with Clark, including one in late December when Clark admitted to meeting with DDT and promised he would not do so again. Clark continued his unauthorized conversations with DDT about casting doubt on Biden’s victory, especially in close states such as Georgia, and drafted a letter for Rosen to send to the state’s legislators, wrongly demanding they should void Biden’s victory in the state because DOJ was investigating voter fraud there. These actions were followed by DDT’s fiery speech on January 6, encouraging his followers’ violent insurrection at the U.S. Capitol.

DDT ranted about election fraud, claiming his victory for president in the 2020 election, in an interview with Fox’s Dan Bongino last night, but his lies were edited out, according to his furious spokeswoman Liz Harrington. Her tweets justifying his statements are here. DDT also claimed he was being politically persecuted by prosecutors in New York.  

While the infrastructure bill keeps chugging along, the U.S. added 943,000 jobs in July, bringing the total during President Joe Biden’s first six months to over four million, the only president with this achievement. June’s job gain was adjusted upward to 938,000 positions. Economic growth is the fastest in 40 years, and the unemployment rate of 5.4 percent is the lowest since the pandemic began. Now people wait to see the effect of COVID-19 problems from the unvaccinated affects.

Thanks to congressional action, the poverty rate in the U.S. may drop to 7.7 percent for the current year, a 45 percent decline from 2018 and the largest drop on record. The money sent to people in the past few months put food on the table and made rent payments as the pandemic forced people out of work. Without stimulus checks and enhanced unemployment insurance—which 26 states refused—the poverty rate would be at 23.1 percent. White people benefited the most: non-Hispanic White people in the U.S. have a projected 5.8 percent poverty rate compared to 11.8 percent for Hispanic people. Although the poverty rate for Blacks will still be 9.2 percent, it would have been 36.0 percent without assistance. 

After concerns that U.S. withdrawal from Afghanistan abandoned Afghans helping U.S. forces including interpreting for them, Congress has passed $500 million to fund emergency transportation and housing for them and their families. Another $600 million goes to State Department funding and makes an additional 8,000 “special immigrant visas beyond the exiting 26,500 authorized while easing some eligibility requirements for those visas. Another $71 million in the $2.1 billion emergency spending package went to avert the Capitol Police funding crisis, and $42 million covered the pandemic costs on Capitol Hill, including reimbursements for overtime, protective equipment, cleaning costs, and telework equipment. More funding–$521 million—covers National Guard costs—and $300 million will harden doors and windows on the Capitol campus and install new camera systems. including reimbursements for overtime, protective equipment, cleaning costs and telework equipment. The Senate voted 98-0 and the House, 416-11 for the expenditures.

Republicans claim their objection to the second infrastructure bill is the $2.3 trillion over eight years, under $300 billion a year, to “Build Back Better.” Yet they don’t object to their expenditure of $6.4 trillion—outside the outrageously normal Pentagon budget—on destabilizing wars in the Middle East based on GOP lies. Deaths, either foreign or in the U.S., give Republicans no concern. The GOP expenditure of $6.4 trillion could give the U.S. a completely renewable energy grid. War and militarization annually take almost two-third of the U.S. discretionary spending.

Last year, the Defense Department, its leadership appointed by Deposed Donald Trump (DDT), gave $422 billion in frequently non-competitive contracts, $40 billion more than the previous year and $60 billion more than the year before that. The Pentagon is also spending $1.6 million for the F-35 fighter jet so unfunctional that it recently shot itself. At ten percent of GDP, Biden’s jobs package is one-fourth of the 1930s New Deal bringing the U.S. out of the Great Depression.

The GOP 2017 tax cut for the wealthy and big business costs the U.S. $2.3 trillion over ten years, a little more than the progressive American Jobs Plan, thus the U.S. is giving trillions more in tax breaks to the wealthy and big business than helping the economy. Taxing investment income like wages and strengthening the estate tax for the wealthy would bring in $886 billion more each year, over three times what the jobs act would cost. Tax evasion by the wealthy annually costs the U.S. $175 billion, one-third of that from the top 1 percent. Collecting that money would pay for two-thirds of Biden’s jobs plan, but Republicans refuse to allow it in protection of their donors.

At a hearing before the Senate Finance Committee, IRS Commissioner Charles Rettig reported a loss of perhaps $1 trillion each year because of error, fraud, and lack of staff to get the revenue. The loss of corporate taxes in a half century is phenomenal: corporate taxes provided 23 percent of federal revenue in 1966 compared to seven percent in 2019. Treasury Secretary refers to the “30-year race to the bottom” as tax havens and globalization ease the process of escaping taxes.

From 2000 to 2016, corporate tax receipts averaged about 1.7 percent of total GDP; corporate revenues dropped almost 40 percent and will be over 25 percent less during the next decade.

In the 1950s, revenue from the federal corporate income tax averaged about 5 percent of GDP per year. Last decade, corporate tax revenue averaged just 2 percent of GDP annually. Since 2009, corporate tax revenue has averaged just 1.2 percent, the lowest three-year average in American postwar history.  

The U.S. is at the bottom of the G7 countries.

 

 

 

Biden recommended that an increase for big business would more than pay for the two infrastructure bills, but Republicans are protecting their donors. Instead people will go back to poverty when they no longer receive the benefits from the stimulus bills. Republicans in the 1950s understood the importance of living wages, unions, healthcare, and other rights bringing people out of desperation. A half century later, Republicans use people only as menial labor in order to enrich themselves. That’s the reason they don’t want the second infrastructure bill.

April 25, 2021

Biden’s Economy Disappoints GOP

With lies and no evidence, Sen. Lindsey Graham (R-SC) said President Joe Biden is taking “destabilizing” actions, his foreign policy has been a “disaster,” and he has tossed a “wet blanket” on the economy. He accused Biden of “wanting to raise taxes in a large amount” although Biden’s taxes will drastically drop for anyone making under $75,000.

The U.S. economy seems to be humming along: stock markets rising, the weekly number of unemployment claims is almost half what they were a few months ago, and March saw almost one million new jobs, the largest increase in seven months. The thought of Biden’s stable economy greatly disappoints most Republicans. Deposed Donald Trump (DDT) ran his losing campaign by claiming Biden’s election would cause a huge economic crash.

“If he gets in, you will have a depression the likes of which you’ve never seen. Your 401(k)s will go to hell and it’ll be a very, very sad day for this country.”

Republicans guaranteed the American Rescue Plan Act (ARPA) would be a disaster. Sen. Pat Toomey (R-PA), leaving Congress next year, warned about “too much liquidity going into the system.” The checks went out last month, immediately after the GOP congressional members voted en masse against ARPA and then had to lie about supporting the law all along. Retail sales are up, and the unemployment rate is dropping. Federal Reserve Chair Jerome Powell, a DDT appointee, dismissed the GOP’s dire warnings  about runaway inflation.

Republicans trying to sabotage any Democratic success and help for people howled about Biden’s proposal of an infrastructure law paid by the corporate tax increase to seven percent lower before DDT’s tampering. They claim the tax increase will “hurt the American family and millions of struggling small businesses.” Yet reducing the corporate tax rate in 2017 didn’t lower prices, and Biden’s plan raises capital gains tax only on people earning more than $1 million a year.

The American Families Plan provides for national paid leave, reduction in childcare costs, and free prekindergarten and community college. With free childcare costs, mothers can afford to find employment. Increasing taxes for the wealthy and big businesses also provides lead-free water, transit, education, and other infrastructure as well as decent jobs. Republicans know that Biden’s success means their possible failure in the 2022 and 2024 elections.

The International Monetary Fund predicts Biden’s economy will have its best year since 1984 after the first quarter indicated an annual increase of six percent or possibly higher by the end of the year. DDT gained no new jobs during his full four years; Biden added 1.3 million jobs since the election. DDT’s sole economic metric was the stock market: the Dow Jones has gone up almost 17 percent since Biden’s presidency was announced on November 7, 2020, greater than DDT’s 10.5 percent gain in the same time period four years ago.

Republicans spread the same doom and gloom after the election of Bill Clinton in 1992. John Kasich, a former GOP congressman and Ohio governor, said about Clinton’s agenda:

“This plan will not work. If it was to work, then I’d have to become a Democrat.”

Clinton’s plan worked, but Kasich stayed a Republican. Republicans predicted George W. Bush’s tax cuts would bring historic economic gains; his second term ended with the worst recession in many decades. Republicans predicted disaster for President Obama’s Recovery Act; Indiana’s Mike Pence claimed in 2009, it “won’t work to put Americans back to work.” He continued:

“It won’t create jobs. The only thing it will stimulate is more government and more debt. It will probably do more harm than good.”

President Obama’s plan brought the U.S. out of the Great Recession, rescued jobs, and introduced a decade of sustained growth.

In 2017, Republicans and DDT lost big when their regressive tax plan failed to improve private-sector hiring, bring higher wages, and greatly increase business investments. Corporations used financial gains from tax cuts to buy stocks in their companies, purchase other companies, fire employees, and stash money overseas. Lack of revenue from less consumer spending by lower- and middle-class people couldn’t replace losses from the tax cuts, and business investment abruptly dropped.

Why Republican presidents’ economies fail:

Republican presidents are slow to respond to recessions and other crises.

Democratic presidents are more pragmatic and listen to evidence about deficit reduction and government support.

Republican presidents believe only in tax cuts for the wealthy that do nothing for economic growth.

According to Neil Barron in the conservative Hill, Biden’s ARPA reverses 30 years of failed trickle-down economics widening income and wealth inequality to trickle-up economics. It creates demand for products and services to generate economic growth by increasing spending ability for consumers who will spend money. Biden’s “jobs” (aka infrastructure) plan invests in families, education, clean water and energy, housing, healthcare, etc. The strategy follows economic success after World War II when the top tax rate was 70 to 90 percent. Funding the world’s biggest middle class, investment went not only to the GOP mandate of roads and bridges but also to education, health, and research. The 1950s brought three of the four biggest decreases in U.S. unemployment and two years of the nation’s fastest economic growth—under a Republican president.

For the last half century, the GOP trickle-down tax cuts for the wealthy brought negative or flat economic growth, higher unemployment, and stifled consumption by moving income from consumers to rich savers. In over a half century, Republicans contributed more to federal deficits: Ronald Reagan and George H.W. Bush raised the deficit from $70 billion to $175 billion (almost double today with inflation), but Democrat Bill Clinton cut it to zero. George W. Bush took the deficit back to $1.2 billion with tax cuts and war; Democrat Barack Obama rescued the nation from the Great Recession and halved the deficit to $600 billion before DDT ran it up to $1 trillion—before COVID-19.

Barron writes:

“Spending $100 billion [in infrastructure] would add roughly 1 million full-time American jobs. And each $100 invested in infrastructure would boost productivity and private sector output by $13 to $17, generating more wage growth and economic benefits across more income classes. Every dollar invested in infrastructure under the AJP is expected to return $1.50, which is among the highest rates of return for federal government spending. And by 2024, the AJP would grow GDP by 3.8 percent and add 13.5 million jobs, compared with just 2.2 percent GDP growth and 11.4 million jobs if it doesn’t become law.”

Graham complains about “destabilizing,” but evidence shows a different picture. In the three months since Biden’s inauguration, fewer households say they can’t pay their rent and don’t have enough to eat in the past week. In December, 1 in 7 adults reported they sometimes or often didn’t have enough to eat; now that number is 1 in 11—the lowest percentage since April 2020 when the survey began.

In Biden’s first three months, 200 million doses of vaccines were administered although a large number of Republicans, including 47 percent of white males, refuse to be vaccinated. The United States is experiencing a greater feeling of optimism although the wealthy are still doing better. The economy may largely depend on the pandemic: GOP counties and states may suffer the most if Republicans continue to refuse vaccinations. Most Southern states, like tourism-dependent North Carolina, lag behind the national average in vaccinations.

Bloomberg’s positive view of Biden’s economic dynamism comes from companies’ readiness to increase efficiency and employees ready to return to work. The pandemic changed business practices—stronger productivity with increased online marketing and automation. In the last quarter of 2020, businesses increased spending on equipment by 25.4 percent after reducing this spending for over a year. For two decades, the GDP increased at two percent average, lower than 3.3 percent than the previous two decades. A faster growth in the future will help the government’s debt because of increased revenue.

A major difference between Biden’s and DDT’s economic strategies is DDT’s reliance on the Federal Reserve. In the past decade, Congress counted on the Fed’s cheap-money policies for economic health, causing more wealth inequality: the stock market kept rising, but people couldn’t find jobs. Richer people worked from home, but poorer people couldn’t find jobs. Fifty million people in the world moved from middle- to lower-class. With GOP presidents, Republicans gave some support for the poor to be re-elected and then declared austerity with Democratic presidents.

In 2010, GOP lawmakers called for cuts before the economy healed. With interest rates almost at bottom, the Fed made large-scale bond purchases, hoping to save the economy. The slow solution finally dropping the unemployment rate after a decade to a half-century low. In 2007, the bottom half of the population had 2.1 percent of U.S. assets, and the top one percent had 29.7 percent. By 2020, the bottom half dropped to 1.8 percent while the top one percent owned 31 percent of the wealth. The pandemic made the situation worse.  

April 5, 2021

‘Ever Given’ Causes Economic Difficulty, Craziness

Filed under: economy — trp2011 @ 9:59 PM
Tags: , , ,

The episode is over except for the economic fallout, but internet liars can’t let it go. Sexist media created the falsehood, complete with photoshopped images, that Egypt’s first woman ship captain, Marwa Elselehdar (right), was responsible for the debacle. If so, she is quite talented because on the day the Ever Given ran aground, Elselehdar was working as first mate on another ship in Alexandria, hundreds of miles from the Suez Canal.

The first woman to enroll in the Arab Academy for Science, Elselehdar, 29, had to obtain permission from then Egyptian President Hosni Mubarek. Her 1,200 male classmates were “older men with different mentalities,” according to Elselehdar: they didn’t accept women “working in the sea away from their families for a long time.” In 2015, she helped lead the procession to celebrate the Suez Canal expansion and was the first Egyptian woman to captain a ship cross the canal. Only two percent of worldwide seafarers are women with almost all working on cruise ships.

On March, 2021, the combination of high winds and a dust storm supposedly caused the Ever Given to accidentally hit the canal bottom at a diagonal angle between opposite banks of the canal. An investigation may discover whether human or technical errors were responsible as the head of the Suez Canal Authority (SCA) has claimed. Bound for Rotterdam, it was fifth in a northbound convoy of 20 vessel. All ship traffic was blocked for almost a week, causing a blockage of 422 other ships.

The Ever Given may be floating, but it’s still “stuck” in the Suez Canal while maritime lawyers determine liability for its grounding. The ship’s owner lawsuit against the ship’s operator in UK’s High Court highlights ownership complexity and determination of responsible parties for anything going wrong. The vessel flies Panama’s flag, two Japanese firms own the ship, and it is leased by Taiwan-based Evergreen Marine Corporation. A German entity, Bernhard Schulti Shipmanagement, is the technical manager. Although the company hired the Indian crew, it isn’t party to the lawsuit.

Another question is which nation’s courts have jurisdiction. Egypt has started an investigation by reviewing the data recorder and interviewing the captain and crew while both Panama and the ship management company plan separate probes.

The SCA wants $1 billion to cover lost revenue from tolls during the six-day period, the cost of equipment and work to free the ship, and the damage to the waterway to complete the freeing of the ship. The ship’s owner cited maritime law requiring the owner of cargo on a ship to contribute to the vessel’s rescue because of a major casualty event. For example, Ikea, shipping furniture on the beached ship, couldn’t get its furniture back until it pays a percentage of the furniture’s total value. Delays for ships now going through the canal may keep them from places to dock and/or unload their cargo, and their goods could spoil or have charges for late arrival. The insurance claims could be phenomenal. The 25 crew members, all Indian nationals, will be under “house arrest” during any review while the Ever Given is anchored in the Great Bitter Lake, halfway through the canal. The ship can’t leave until a final court settlement if needed to determine compensation.

About 12 percent of global trade uses the 120-mile-long canal, saving ships an extra eight-day trip around South Africa’s Cape Horn while traveling between Asia and Europe. About one million barrels of oil and eight percent of the world’s liquefied natural gas normally go through the canal each day. In addition to the longer time, shipping costs thousands of dollars in additional fuel costs which are passed to the consume, and pirates preying on ships along the longer route may be interested in the valuable consumer products shipped out of the East. 

Alternatives to the Suez Canal are the Panama Canal and the Northwest Passage, but many ships, like the Ever Given built in 2018, are far too large for the Panama Canal. The trip through the Arctic could be safer than in the past after climate warming melted a great deal of ice, but the Northern Sea Route still sees only a few hundred shipping vessels a year. Yet Russia will be pushing for the this alternative. 

The 220,000-ton Ever Given finally escaped the mud and sand with the use of a Dutch dredger, over a dozen tugboats, and a high spring tide caused by a full moon and a “king tide.” Equipment and workers removed over 1.1 million cubic feet of the muck from around the ship.

The SCA lost about $15 million every day the canal was blocked. Tolls provide about two percent of Egypt’s GDP. For six days, the blockage stopped about $9.6 billion of trade each day–$400 million and 3.3 million tons of cargo each hour ($6.7 million per minute). German insurer Allianz said annual trade growth could lose 0.2 to 0.4 percent for the year. The cost of renting ship to and from Asia and the Middle East increased 47 percent to $2.2 million.

Egypt considers extending another channel after paying $8 billion in 2015 for that process of 43.5 miles, over one-third the complete length. The SCA will also purchase two new tugboats, get the biggest dredger in the Middle East, and arrange for another five Chinese tugboats.

Almost all container ships headed to Europe from China’s factories go through the Suez Canal; the shutdown affected up to 15 percent of the world’s container shipping. Delayed oil supplies to Syria caused rationing for “basic services … such as bakeries, hospitals, water stations, communication centers, and other vital institutions,” according to the Syrian Ministry of Petroleum and Mineral Resources.

Bizarre QAnon conspiracy theories emerged from the blockage of the canal. An early one blamed Hillary Clinton for operating the ship with a cargo of child sex slaves. QAnon followers connected the name “Evergreen” on the side of the ship to the concealed Secret Service name for Clinton when she was first lady. Note the ship’s all sign of “H3RC”? It’s close to Clinton’s initials! And the falsehood that the ship’s captain looks like Monica Lewinsky! Elselehdar has little similarity in appearance to Lewinsky and wasn’t the captain.

In another viral—and false—Facebook post, the grounding was planned to raise prices. The falsehood claimed this was the first accident in the canal although three others closed the canal in the past two decades. The ship charted a course in the Red Sea like a giant penis before entering the Suez Canal, according to another post, giving credit to a hacker friendly to the QAnon cause who controlled the ship’s computers. The lengthy treatise compared the canal to a birth canal showing imminent unmasking of the deep state and worldwide changes. Resurrecting a 2018 post, supporters repeated “watch the water” because they believe the QAnon conspiracy is real regarding an occurrence on or near water. [Right: the QAnon “proof” board about its conspiracies.] 

The disaster presages future disasters. China is dependent on the three-fourths of its oil consumed as well as four-fifths of iron ore for its infrastructure building in exchange for exporting goods to pay for oil and iron ore. Eastern Asia is vulnerable to maritime blockades in case of geopolitical conflicts. One suggestion is for world powers to manage the Suez Canal with international authorities while respecting the current leadership.

Even a short-term hit to the economy can cause problems. The U.S., already suffering from economic shutdowns from the pandemic, experienced disruptions of traditional buying patterns like those in Europe and China. Purchasing changed from eating out to ordering imported goods for working at home, and shipping costs from China to the U.S. doubled in less than a year. Metal shipping containers sat in some ports while others had a shortage, and COVID-19 resulted in fewer longshoremen while dozens of container ships waited for California ports. The lack of truckers caused more problems after goods were unloaded from shipping vessels. The Suez blockage came on the heels of the “big freeze” in Texas which stopped petrochemical plants. Global executives may drop its strategies reducing costs and consider the vulnerabilities of disasters like this one in the Suez Canal, especially after the supply chain interruptions from the coronavirus.

Meanwhile oil prices are going down again, and conservatives will forget about the usefulness of globalization until the next disaster.

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