Yes, the Coronavirus Is Different from the Flu, but Acting out of Fear Is Not Smart.

I live in Massachusetts, in the Berkshires ... 7 cases as of today.  When I went to the supermarket today, the place looked like it had been ransacked.  The shelves were almost bare of canned goods, paper products, broth … all kinds of products.  What is going on?

The President has basically said, what’s the big deal?  Each year we see deaths from the seasonal flu of between 12,000 and 60,000, but the media mentions not a word about it.  In this case, even if you look at China, deaths are at around 3,100, Italy 600.  Why is the media making such a big deal about this?  It reminds me of what they do these days with bad weather events; everything is catastrophized.

There is one big difference between the seasonal flu and the coronavirus: there is a vaccine each year for the flu.  Millions of people, around half of the U.S. population, get their flu shot each year.  Because of that, people feel comfortable engaging in all normal activities during the flu season.  And because of that, there is no slowdown in production, travel, events, etc. and thus no major economic consequence, despite all the deaths.

But because there is no vaccine for the coronavirus, it’s an unknown, and it can result in death, albeit in only 1-2% of cases, people are very leery of going about their usual activities.  Especially since undoubtedly many people are walking around infected because they don’t know they are as testing is hard to come by and there is much confusion.  This fear, and the fear of countries, leads to drastic measures.  It is these measures, not the deaths or illness, that cause the economic disruptions that investors fear.

A recent article raised the question, specifically regarding China, whether the “cure” of lockdowns is worse than the danger.  That is a very good question.  If people went about their business as usual while being very conscientious about washing their hands frequently and thoroughly, you would almost certainly have more spread than with a lockdown, and more deaths,   But you would have to have 500,000 cases of virus before hitting the lowest number of deaths from the seasonal flu.

It really comes down to fear … on the part of individuals who don’t want to get sick and possibly die, and by governments that don’t want to see their citizens overwhelmed with this new “plague.”

If I look at the situation rationally, on balance I would say that healthy people should go about their business as usual unless they live in a virus “hot spot,” but they should maintain social distancing, that is not go to crowded bars or theaters ... actually such places should be closed ,,, and not go on a cruise or fly in an airplane, both of which pack people in intimate quarters.  And they should wash their hands often and thoroughly.  If you use public transportation, wear a mask.

People who think they may be infected or have had contact with someone who is or may be should be tested immediately.  People who are infected or think they may be should self-isolate so that they do not transfer the virus to others and they should wear a mask, both at home and if they do go out.  Shutting down the country is not necessary if people act responsibly.

Think about it.  You have a greater chance of dying or being seriously injured from a car accident or the flu than from the corona virus.  You should act accordingly.  For once, Trump has the right idea, even if for the wrong reason — his political self-preservation.

Making Trade and the Global Economy Work for the American Worker

The global economy is a fact and there is no avoiding it.  Trade is also a necessary fact of economic life.

The question is, how to make the global economy and trade work for America.  And by work I mean work for the American worker, not allowing corporations to prosper and investors to get rich at the expense of workers.  In today’s multi-national corporate world, we must remember that the interests of the corporation are often if not mostly not in line with the interests of their workers because of off-shoring and out-sourcing; we are increasingly not producing here to send abroad, but producing abroad to import here.

As I’ve stated previously, corporate interests have been the true driving force behind most government decisions in this as in all areas for the last 3-4 decades.  While that should continue to be part of our strategy, for the health of both corporations and investors are  very important to our economy, those interests should not be the driving force.  Instead, our most important goal must be to make the global economy work for the American worker.

As I stated in my 2004 book, We Still Hold These Truths, the American worker is the backbone of the American economy.  “Whether blue collar or white collar, whether skilled or unskilled, whether managing a major corporation or a local fast-food operation … each individual American worker contributes to and sustains the American economy.  He/she is both producer and consumer.”    I would note as an aside that American independent farmers, as opposed to big farm corporations, are self-employed American workers and so very much part of the backbone of our economy.

It is the American worker as consumer, together with constructive government action, that has enabled our economy to sustain itself and recover from hard times.   Not corporate America.

How would this revised decision-making perspective impact government policy in the areas of  trade, industrial development, infrastructure investment, worker education, and Third World development?  I am not an expert on economics, and so I will not pretend to have solutions or opinions on how best to implement such a strategy.  

We will need to develop new economic models that show how the American economy and its workers can prosper in this changed environment.  We must ask questions, like, are even “smart” free-trade deals that harm American workers while enriching corporations better for the economy and the worker than having no free-trade deals?  What is the role of government-funded infrastructure projects, so badly needed for our future economic health, to providing un- or under-employed ex-factory workers with good-paying jobs?  How do we encourage corporate investment in manufacturing jobs in the United States?  Is the best way of restoring the economic strength of the middle-class worker to bring development and rising wages to the Third World?

Let me just say a few words on this last point.  It is to the American worker’s benefit for our government to aid Third World development.  Why?  As the standard of living rises in the Third World, wages will rise and the benefit of off-shoring or out-sourcing work will decrease for American business.  That has already happened to some extent with China where companies have transferred production to lower cost countries in Southeast Asia.  When their wages rise, as they inevitably will, jobs will start returning to the U.S.  This is admittedly not a short-term solution, but it must be part of the strategy.

The Democratic Party must make this an important part of its 2020 campaign platform.  It fits seamlessly with the Democratic vision statement I proposed in my post, “The 2020 Election Is about the Survival of American Democracy, Our Historic Values.”  

And it provides an important differentiation between Democratic policy and Trump policy.  Despite his rhetoric, Trump has approached nothing, including the revision of NAFTA, with the interests of the American worker as the driving force.  It’s been business as usual, what’s best for corporate interests.  Democrats must make this startlingly clear.

Understanding Why America Is No Longer, and Perhaps Can Never Be, As Great As It Was

People either go on about how great America is, or they lament that America is not as great as it used to be.  In the first case, people typically ignore reality.  In the second case, they often ignore fundamental factors. 

When people say that America is great, they are either referring to the strength of our military (which is a fact), the size of our economy (which is a fact), or the things America stands for (which is also a fact, at least in theory).  

However, while we unquestionably have a strong military it does not serve its purpose of protecting American interests because our enemies are not cowed by our might nor do we have the political willingness or financial ability to send our military everywhere it is needed to protect our interests.  Thus we are not really as strong as our size and might would make it appear.  American strength is somewhat of a facade.

Our economy is also the largest in the world, even though the Chinese have been rapidly catching up with us.   We also have the most stable and strongest domestic economy in the world.  But our corporations, and as a result our financial well-being, have become so interconnected with the stability of the rest of the world economy that our economy is not as strong/stable as it was.  

Further, because of stagnant wages and loss of middle-class jobs, financial inequality in America has soared and become damaging and our middle class, which was the bedrock of our consumer economy, has been eviscerated.  The American people are hurting even as its corporations are prospering.  Then there’s the fact that the rest of the world, in particular China, holds most of the debt that we have incurred spending more than we take in, especially as a result of the disastrous Bush II tax cuts and the Iraq war.

As to American exceptionalism being a function of our ideals, as I’ve noted in prior posts, this exceptionalism is mostly a myth (see “American Exceptionalism - A Myth Exposed”).  America has never lived up to the ideals expressed in the Declaration of Independence or the 14th Amendment.

On the other hand, when people speak of America not being as great as it was, they often speak of America not being respected because our military needs to be stronger.  But the lack of respect has little to do with the strength of our military.  It is more because America has not for many years had the moral authority that it once had, even if it was based on an illusion.  Also, as noted above, our guerrilla enemies are not scared of our military prowess.

When they speak of our economy being weaker, they do focus on the issues I raised above, but the underlying context is not addressed.  The economy is not as great as it was because the world has changed and America has changed.  

The world has changed because 3rd world countries are no longer just producers of raw material (with the glaring exception of most of Africa).  And so they produce products that would pose competitive problems for U.S. production even without the free market trade agreements that have proliferated at the behest of both economists and corporations.  Unless the U.S. would enact high protective trade barriers to keep many foreign products out of the U.S.  But that would create a different problem … the combination of not having inexpensive foreign-produced items to purchase and a reasonable growth in U.S. workers’ wages would lead to high inflation rates that would damage our economy.  (Also, the inevitable trade war fight that would ensue would harm our exports.)

But America has changed in significant ways as well.  During the first stage of explosive growth in our economy, much of the country was still unsettled frontier leaving room for  a huge expansion of economic activity accompanied by huge increases in population through immigration from all parts of the world.  During the second stage, from the turn of the 20th century into the initial post-WWII period, America was unequaled because the rest of the world’s developed economies were minuscule by comparison and China and most of the non-European world were undeveloped, not even developing.

None of that is true today.  And so, because of all of these factors, the way often cited for the American economy to regain its strength is through American creativity or innovation.  And many think we’ve done just that.  

But while we have seen lots of American technological innovation in the last few decades, it has only fueled American corporate profits, not worker wealth, since the products are all produced overseas, and so the economy has not really been strengthened.  Only if those jobs were brought back would it make a real difference.  

As for creativity, since the creation of the computer chip, there really hasn’t been much creativity, just innovation.  Even nanotechnology is innovation, not creativity.  But regardless, unless creativity resulted in good, middle-class jobs for U.S. workers, it would not help strengthen our economy.

But this discussion begs the question, “Does America have to be great?”  Economically, given the size of our population and the standard of living that we were used to 40 years ago and would like to reacquire, that answer is unfortunately, yes.

Thus, bottom line, figuring out how to bring American jobs back or create new ones without creating other major economic disruptions such as high inflation is a task that corporations and workers/unions need to sit down at the table to discuss, probably at the behest of government.  One point seems clear.  To significantly increase the number of American middle-class jobs, wages will have to be lower than they once were, but that would still result in a benefit for both workers and the economy.

The only other way that America will either be or viewed as the great nation it once was economically is if much of the rest of the world implodes and the U.S. finds a way of disconnecting itself from that calamity.  I think recent history shows that it would be prudent to prepare for that eventuality.

Militarily, America certainly needs to be strong.  But what that means in the context of current or projected international conflicts has been a subject of some debate.  Many argue that we need a leaner and more flexible military rather than an updated version of the current dinosaur.

As for being great from a moral authority perspective, while there is no need to be great, it certainly would be very beneficial from many perspectives for the U.S. to regain its moral authority.  President Obama certainly tried to move in that direction in the beginning of his first term.    But to regain that authority, much would have to change both within this country as well as how it engages the rest of the world. 

If the advice I have given in many of my posts on this site were followed, it would go a long way to regaining our moral authority.  But that, unfortunately, is highly unlikely because to bring about that change means changing who holds power in Washington … ending the control that corporate America and the wealthy have over our policies.  Although Bernie Sanders talks of such a revolution, achieving it is another matter … and he is the only candidate talking about it.

As has been the case in many of my posts, the final analysis is that we survive in an outdated, broken system and cannot be what we need to be in the future without major changes in our political, social, and economic structure.

Peak OIl or No, The Answer is Back to the Future

I have been a firm believer in the peak oil theory.  A recent article in the Atlantic, however, “What If We Never Run Out of Oil?” provided updated facts and changed my perspective.  If one believes in peak oil, then one believes in an oncoming economic disaster since the world’s economy is based on oil.  But the proponents of peak oil provide no answer to that scenario.  If one believes that there is no end to obtainable oil reserves, and we keep on living as we have been, perhaps even more so, then the disaster comes from climate change which will also reek economic disaster.  And we have no answer for that either.

In addressing these issues, people either seem focused on how to keep living as we have been, or they throw up their hands in despair.  Even climate change proponents don’t argue for a radical change in lifestyle but base their proposals on the smarter use of fossils fuels together with alternative energy sources because of the economic implications of doing otherwise.  No one is really moving us closer to an answer to the riddle.

This is one of those moments that screams for thinking outside the box.  Whether peak oil  is or comes to be, or whether we have an endless supply of it, the bottom line is the same ... we must find a way to wean the world off of oil so that we avoid economic and social disaster, whether it comes from the lack of oil or climate change.

The answer I propose is in one sense surprisingly simple.  We go back to the future.  We for the most part go back to a system and structure that is not dependent on oil or other fossil fuels.  We don’t have to make up a new world, we just have to look back at the world we came from to see how it would work.  

That at least is the basic rule, though in some areas of life the use of fossil fuels will continue to be necessary.  Why?  Because our population has grown so much and is more concentrated in cities.  Because, for example, the cold-water flats of the past are no longer acceptable in a modern-day scenario and heating with wood is not a viable option.

There are various ways to look at the implications of what I am proposing.

Replacing oil as an energy source.  As the industrial revolution advanced, one of the main changes was the replacement of human labor by machines.  And that has increased exponentially in the digital and robotic age of manufacturing.  Modern methods of manufacturing and farming are highly energy intensive.  We will have to go back to a form of operation that is more labor intensive.  That will have the double advantage of not only freeing us from oil, but once again finding appropriate employment for masses of workers in industry and farming, thus ending the unemployment problem.  To the extent that an energy source is needed, it will have to come from cleaner sources.

This will without question make products more expensive, which will mean a drop in the standard of living for many, but that will be offset by the increased standard of living of all the millions of people who now once again have gainful employment.  We have been living too long with the illusion of cheap goods fostered by the exploitation of the poor in far away lands and the availability of cheap transport made possible by cheap oil.

Where goods are manufactured.  In a back to the future world, the modern global economy will cease to be.  Instead, the economy will be as it was before ... primarily national, and in many cases regional or local.  While again this means an increase in the cost of many items, and a corresponding lowering of the standard of living many are used to, it will mean the repatriation of millions of jobs which will, together with the increased employment of human labor noted above, result in far less income inequality than has existed in recent times as well as an increased standard of living for many.  Plus whole towns and cities will be reborn.

The products we use.  Almost everything we use today is derived at least partially from oil.  That will end.  Instead, we will go back to natural products ... whether it’s glass bottles, or cotton shirts, or wood siding for homes, and of course all food products.  Again, this will mean an increase in cost but it will have the benefit of reviving rural economies, both nationally and world-wide, that have been devastated by the modern industrial economy. 

There is at least one area, though, where limited use of oil will be required, and that is in the production of modern pharmaceuticals.  Unless a way can be found to produce them without the organic compounds that come from oil, that will remain a necessary ingredient.

Transportation.  While we won’t have to go back to the horse and buggy, major changes will be necessary.  First, all cars will have to be electric, and the electric generating plants that produce the electricity to charge them must be operated on natural gas, hydro-electric, nuclear, or alternative energy, otherwise there is no energy saving.  All public transportation must be electric or alternate energy, and there must be more public transport.  The nation’s regional train system needs to be revitalized with efficient, modern high-speed trains.  Air travel would be limited to national (i.e. not regional) and international travel.

While all of this will involve a massive restructuring, given the entrepreneurial prowess of American business, there is no question in my mind that all of this can be accomplished.  If we start planning now rather than waiting for disaster to strike, our economy and people will prosper as perhaps never before and with greater equality.  

But American business and politics has operated for a long time on a short-term planning basis.  The question is whether our corporate and political leaders can face the facts and engage in the type of long-range planning that this massive restructuring of our system and lives will require.