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      in US Politics

      Is Donald Trump an aberration or a symptom of a deeper US malady?

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      The assault on the US Capitol by Donald Trump’s supporters, incited by the president himself, was the predictable outcome of his four-year-long assault on democratic institutions, aided and abetted by so many in the Republican party. And no one can say that Trump had not warned us: he was not committed to a peaceful transition of power.
      Many who benefited as he slashed taxes for corporations and the rich, rolled back environmental regulations and appointed business-friendly judges knew they were making a pact with the devil. Either they believed they could control the extremist forces he unleashed, or they didn’t care.
      Where does America go from here? Is Trump an aberration, or a symptom of a deeper national malady? Can the US be trusted? In four years, will the forces that gave rise to Trump, and the party that overwhelmingly supported him, triumph again? What can be done to prevent that outcome?
      Trump is the product of multiple forces. For at least a quarter century, the Republican party has understood that it could represent the interests of business elites only by embracing anti-democratic measures (including voter suppression and gerrymandering) and allies, including the religious fundamentalists, white supremacists and nationalist populists.
      Of course, populism implied policies that were antithetical to business elites. But many business leaders spent decades mastering the ability to deceive the public. Big Tobacco spent lavishly on lawyers and bogus science to deny their products’ adverse health effects. Big Oil did likewise to deny fossil fuels’ contribution to the climate crisis. They recognised that Trump was one of their own.
      Then, advances in technology provided a tool for rapid dissemination of dis/misinformation and America’s political system, where money reigns supreme, allowed the emerging tech companies freedom from accountability. This political system did one other thing: it generated a set of policies (sometimes referred to as neoliberalism) that delivered massive income and wealth gains to those at the top, but near-stagnation everywhere elsewhere. Soon, a country on the cutting edge of scientific progress was marked by declining life expectancy and increasing health disparities.
      The neoliberal promise that wealth and income gains would trickle down to those at the bottom was fundamentally spurious. As massive structural changes deindustrialised large parts of the country, those left behind were left to fend largely for themselves. As I warned in my books The Price of Inequality and People, Power and Profits, this toxic mix provided an inviting opportunity for a would-be demagogue.
      As we have repeatedly seen, Americans’ entrepreneurial spirit, combined with an absence of moral constraints, provides an ample supply of charlatans, exploiters and would-be demagogues. Trump, a mendacious, narcissistic sociopath, with no understanding of economics or appreciation of democracy, was the man of the moment.
      The immediate task is to remove the threat Trump still poses. The House of Representatives should impeach him now, and the Senate should try him some time later, to bar him from holding federal office again. It should be in the interest of the Republicans, no less than the Democrats, to show that no one, not even the president, is above the law. Everyone must understand the imperative of honouring elections and ensuring the peaceful transition of power.
      But we should not sleep comfortably until the underlying problems are addressed. Many involve great challenges. We must reconcile freedom of expression with accountability for the enormous harm that social media can and has caused, from inciting violence and promoting racial and religious hatred to political manipulation.
      The US and other countries have long imposed restrictions on other forms of expression to reflect broader societal concerns: one may not shout fire in a crowded theater, engage in child abuse images or commit slander and libel. True, some authoritarian regimes abuse these constraints and compromise basic freedoms but authoritarian regimes will always find justifications for doing what they will, regardless of what democratic governments do.
      We Americans must reform our political system, both to ensure the basic right to vote and democratic representation. We need a new voting rights act. The old one, adopted in 1965, was aimed at the South, where disenfranchisement of African-Americans had enabled white elites to remain in power since the end of Reconstruction following the civil war. But now anti-democratic practices are found throughout the country.
      We also need to decrease the influence of money in our politics: no system of checks and balances can be effective in a society with as much inequality as the US. And any system based on “one dollar, one vote” rather than “one person, one vote” will be vulnerable to populist demagogy. After all, how can such a system serve the interests of the country as a whole?
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      Finally, we must address the multiple dimensions of inequality. The striking difference between the treatment of the white insurrectionists who invaded the Capitol and the peaceful Black Lives Matter protesters this summer once again showed to those around the world the magnitude of America’s racial injustice.
      Moreover, the Covid-19 pandemic has underscored the magnitude of the country’s economic and health disparities. As I have repeatedly argued, small tweaks to the system won’t be enough to make large inroads in the country’s ingrained inequalities.
      How America responds to the attack on the Capitol will say a lot about where the country is headed. If we not only hold Trump accountable, but also embark on the hard road of economic and political reform to address the underlying problems that gave rise to his toxic presidency, then there is hope of a brighter day. Fortunately, Joe Biden will assume the presidency on 20 January. But it will take more than one person – and more than one presidential term – to overcome America’s longstanding challenges.
      • Joseph E Stiglitz is a Nobel laureate in economics, university professor at Columbia University and chief economist at the Roosevelt Institute.
      Ⓒ Project Syndicate More

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      in US Politics

      Healthcare to the electoral college: seven ways 2020 left America exposed | Robert Reich

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      If America learns nothing else from these dark times, here are seven lessons it should take from 2020:1 Workers keep America going, not billionairesAmerican workers have been forced to put their lives on the line to provide essential services even as their employers failed to provide adequate protective gear, hazard pay, or notice of when Covid had infected their workplaces. Meanwhile, America’s 651 billionaires – whose net worth has grown by more than $1tn since the start of the pandemic – retreated to their mansions, yachts and estates.Amazon’s chief executive, Jeff Bezos, sheltered in his 165,000-acre west Texas ranch while Amazon warehouse workers toiled in close proximity, often without adequate masks, gloves or sanitizers. The company offered but soon scrapped a $2 an hour hazard pay increase, even as Bezos’ wealth jumped by a staggering $70bn since March, putting his estimated net worth at roughly $186bn as the year came to an end.2 Systemic racism is killing Black and Latino AmericansBlack and Latino Americans account for almost 40% of coronavirus deaths so far, despite comprising less than a quarter of the population. As they’ve borne the brunt of this pandemic, they’ve been forced to fight for their humanity in another regard: taking to the streets to protest decades of unjust police killings, only to be met with more police violence.Among Native American communities, the coronavirus figures are even more horrifying. The Navajo Nation has had a higher per-capita infection rate than any state but cannot adequately care for the sick, thanks to years of federal underfunding and neglect of its healthcare system.Decades of segregated housing, pollution, lack of access to medical care, and poverty have left communities of color vulnerable to the worst of this virus, and the worst of America.3 If we can afford to bail out corporations and Wall Street, we sure as hell can afford to help peopleThe Senate majority leader, Mitch McConnell, continues to insist the nation cannot “afford” $2,000 survival checks for every American. But the latest relief legislation doled out more than $220bn to powerful business interests that could have been used for struggling working families.Another way of looking at it: the total cost of providing those $2,000 checks ($465bn) would be less than half the amount America’s 651 billionaires added to their wealth during the pandemic ($1tn).4 Healthcare must be made a rightEven before this crisis struck, an estimated 28 million Americans lacked health insurance. An additional 15 million lost employer-provided coverage because they lost their jobs. Without insurance, a hospital stay to treat Covid-19 cost as much as $73,000. Remember this the next time you hear pundits saying Medicare for All is too radical.5 Our social safety nets are woefully brokenNo other advanced nation was as unprepared for the pandemic as was the US. Our unemployment insurance system is more than 80 years old, designed for a different America. We’re one of the few countries in the world that doesn’t provide all workers some form of paid sick leave.Other industrialized nations kept unemployment rates low by guaranteeing paychecks. Americans who filed for unemployment benefits often got nothing, or received them weeks or months late. Under new legislation they get just $300 a week of extra benefits to tide them over.6 The electoral college must be abolishedJoe Biden won 7m more votes than Trump. But his winning margin in Arizona, Georgia and Wisconsin totaled just 45,000. Had Trump won those three states, he would have gained 37 electoral votes, tying Biden in the electoral college. This would have pushed the election to the House of Representatives, with each state delegation getting one vote. Even though Democrats have a majority in the House, more state delegations have Republican majorities. Trump would have been re-elected.The gap between the popular and electoral college vote continues to widen. The electoral college is an increasingly dangerous anachronism.7 Government mattersFor decades, conservatives have told us government is the problem and we should let the free market run its course. Rubbish. The coronavirus has shown yet again that the unfettered free market won’t save us. After 40 years of Reaganism, it’s never been clearer: government is in fact necessary to protect the public.It’s tragic that it took a pandemic, near-record unemployment, millions taking to the streets and a near-calamitous election for many to grasp how broken, racist and backwards our system really is. Biggest lesson of all: it must be fixed. More

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      in US Politics

      The three most misused phrases in US politics in 2020 | Jeffrey Frankel

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      Donald Trump and the Covid-19 pandemic dominated the news headlines in 2020. Three terms in particular came to symbolise the year: “witch-hunt,” “black swan” and “exponential”.Trump has tweeted the phrase “witch-hunt” approximately once every three days on average during his presidency and not only in connection with his impeachment trial. He continued to use it later in the year to describe accusations that he mismanaged America’s Covid-19 response, inquiries into his tax returns, an investigation into alleged criminal conduct at the Trump Organization and other controversies.Most people made their minds up long ago about whether Trump was guilty of his alleged transgressions. But neither his supporters nor his critics have given full thought to the linguistic implications of the term “witch-hunt”. Perhaps it doesn’t mean what they think it does.The original witch-hunts began in early modern Europe and spread to colonial America, in the religious persecution of those accused of practising witchcraft. In Europe, an estimated 40,000-60,000 people – mainly women – were executed between 1400 and 1782. Americans usually think of the 1692-93 witch trials in Salem, Massachusetts, in which 30 people were convicted and 19 hanged.The term entered widespread use only in the mid-20th century, to describe the frenzied search for communists “under the bed”. Arthur Miller’s 1953 play about the Salem trials, The Crucible, was an allegory for US senator Joseph McCarthy’s hearings into alleged communist infiltration of the US government.To be sure, the 17th-century witch trials and McCarthyism differed in important ways. For one thing, communists really existed. But the two historical episodes had one thing in common that distinguishes them from the accusations against Trump. In a genuine witch-hunt, the hunters start from the firm belief that a particular type of evil-doer – witches or communists – is hiding in plain sight, and then try to identify who they are.When the president and his many supporters accuse his detractors of carrying out a witch-hunt, they are making a different claim. They are claiming that Trump’s critics start from the unwavering belief that he is up to no good, and see it as their job to find crimes to pin on him. They have identified him, and they are out to get him one way or another. “Persecution” or “harassment” would more accurately convey Trump’s meaning.Such distinctions are crucial. When federal authorities charged the gangster Al Capone with tax evasion in 1931, it was not a witch-hunt. The target of their investigation was determined first; then the charges that could put him away were identified – an application of the rule of law.The second phrase that pervaded 2020 was “black swan”. When the new coronavirus spread beyond China and suddenly affected the health and jobs of people around the world, many described it as a quintessential “black swan” event.Nassim Nicholas Taleb’s eponymous 2007 book turned black swan virtually into a household expression, because it appeared to describe the 2007-09 financial crisis so well. Taleb defined the term to mean a major event that nobody realised was even a possibility, because they had never seen one of its kind before. But the metaphor is more insightful than that.The historical importance of the notion of a black swan lies in British philosophy. Like most Britons, David Hume (writing in the 18th century) and John Stuart Mill (writing in the 19th century) had never seen one. Reasoning by induction, they might easily have concluded that all swans were white. But, as British ornithologists were aware, Dutch explorers had discovered black swans in Australia in 1697. So, the best way to use the black swan metaphor is to point out that competent experts can and do factor in data from other decades, centuries and countries, and that competent policymakers should listen to their warnings.Contrary to the widespread belief in US financial markets before 2007, housing prices can go down as well as up. Similarly, health experts and well-informed policymakers had been well aware before 2020 that a pandemic like Covid-19 was not only possible, but likely to strike sooner or later. In too many countries, however, political leaders failed to heed the warnings and recommendations. The world has paid dearly for their mistake.So, this year’s Covid-19 pandemic was indeed a black swan. But the phrase is perhaps best defined not just as a sudden major development that catches the general public by surprise, but as a “tail event” – known by scientific experts and responsible officials to be a dangerous possibility (albeit one with relatively low probability in any given year).Finally, the word “exponential” was used frequently in common speech even before the pandemic – and almost always incorrectly, to mean “rapid”. Of course, anyone wishing to play language police must confront the argument made by Humpty Dumpty in Lewis Carroll’s Through the Looking-Glass, who insisted that, “When I use a word, it means just what I choose it to mean.”But linguistic precision is often important for achieving intellectual precision. Exponential is a mathematical term. It does not mean rapid. Hard as this may be to believe, there is not even a correlation or association between exponential and high growth rates. The money that one has in the bank changes exponentially, due to compound interest, but the rate can be low or even negative, as European interest rates demonstrate.With the arrival of Covid-19, people finally began to use the word “exponential” correctly, to describe the number of infections. The reason why the number of cases rises exponentially is that each infected person infects a number of other people. Epidemiologists call this average ratio the rate of reproduction, represented by R. It is designated R0 in a population with no immunity and no countermeasures.The use of R has drawbacks, particularly the difficulty of estimating it. But the concept makes an important point. If R is greater than one, as it was in the early stages of the pandemic and presumably has become again in many places, it means that things are getting worse.R can be brought down via wearing face masks, social distancing, frequent hand-washing, testing, isolation, and now inoculation with the new Covid-19 vaccines. When R falls below one, it means that the pandemic is dying out, and that the rate of exponential growth is negative.So, here’s wishing everyone no witches to hunt, the swans they expect and an R well below one in 2021.• Jeffrey Frankel is a professor at Harvard University’s John F Kennedy School of Government. He served as a member of President Bill Clinton’s Council of Economic Advisers© Project Syndicate More

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      in World Politics

      What Should Business Expect From Bolivia’s New President?

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      On October 18, the Bolivian public went to the polls and elected Luis Arce Catacora as the country’s 67th president in a surprise result that returned the socialist party of former President Evo Morales to power. Morales had previously ruled Bolivia as the leader of the Movement Toward Socialism (MAS) between January 2006 and November 2019, when he resigned from office and fled the country under pressure from the military following a controversial general election.

      The closeness of that contest — in which the conservative candidate Carlos Mesa missed forcing a runoff against Morales by 0.58% of the official vote tally — meant that 2020 was also expected to be a tight race. In the event, this year’s election saw Arce gain over half a million more votes than Morales had the previous year, with a similar amount bled away from Mesa’s 2019 total, handing Arce an outright victory without the need for a run-off.

      Why Is Foreign Investment Flooding Into India?

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      While it would be tempting to see the Arce administration as a continuation of the Morales era, on the campaign trail, the new president repeatedly stated, “I am not Evo Morales.” Since being elected, Arce has made clear that Morales would have “no role” in his government. Nevertheless, with Arce serving as minister of economy and public finance for most of Morales’ tenure, any consideration of what to expect from the new president must take into account his predecessor’s record. 

      Business Under Morales

      The Morales administration presided over a period of considerable economic growth and social development, which saw the rate of extreme poverty drop by more than half, from 48% in 2006 to 23% in 2018, while gross national income (GNI) per capita — a general indicator of prosperity among the population — more than tripled to reach $3,530 in 2019. GDP growth was also continuous and relatively consistent during this period, fluctuating between 3.4% and 6.8% until 2019, when it dipped to 2.2%. Those figures made Bolivia one of the fastest-growing countries in the region for much of Morales’ presidency.

      Embed from Getty Images

      These changes were partly the result of a policy of nationalizing the petroleum, telecommunications and mining industries, enacted by decree early in Morales’ first year in office and less than two years after 92% of Bolivian voters had supported the nationalization of hydrocarbons during a compulsory referendum. While the country’s revenues from hydrocarbons increased dramatically and provided the funds to support poverty alleviation programs, that approach did not lead to a dramatic fall in foreign direct investment (FDI) in oil and gas extraction or mining, as many expected. In fact, both industries saw significant increases in FDI, which subsequently declined again but never below the levels seen before Morales came into office. Throughout this time, it was Arce overseeing these programs and investment, as well as a process of agricultural development and rural land redistribution, which was followed by both a significant increase in cereal and fisheries production. 

      It is important to note that a major policy shift occurred toward the latter years of the administration, with Arce himself stating during Morales’ final term that “our nationalisation agenda is over. … we need FDI, and we respect genuine, new private investment. Today FDI makes up 2 percent to 3% of our GDP. We want to double that by 2020.” In 2017, the country signed deals with foreign investors for hydrocarbon exploitation worth $1.6 billion, supplemented by a further $2.5-billion deal the following year. 

      The fact that the interim presidency of Jeanine Añez, who occupied the office between Morales and Arce, largely coincided with the COVID-19 pandemic makes it incredibly difficult to properly assess its performance, given the massive economic upheaval experienced throughout the region. While the interim government ordered an audit of the previous administration early on, it was soon forced to focus on implementing a range of measures designed to address the closure of businesses and an increase in unemployment.  

      In October, the interim government reported that the economic damage caused by the pandemic totaled around $5 billion, with an economic contraction of at least 4% expected by the end of 2020. While this unprecedented situation might make an assessment of the interim government difficult, it at least provides some important context for Arce’s approach to business and investment, which will be framed by the need to address the deep economic wounds caused by the pandemic.

      Arce’s Approach to Business

      As a candidate, Arce highlighted the efficacy of the economic policies pursued during the Morales administration and his intention to continue them. While this has been met with concern among some commentators, the more FDI-friendly latter years under Morales should give some cause for hope for investment in the country. Arce has proposed a drive for industrialization to replace importing foreign products in order to stimulate the internal market and generate more opportunities for locally-based companies. He has also said that he wants to encourage new company formation in Bolivia in order to stimulate employment.

      Yet Arce has also said that some form of austerity to deal with the country’s economic woes will be needed, even as he has pledged not to reduce public expenditure. In a sign of his pro-FDI approach, he has also highlighted his desire to tap into Bolivia’s massive and unexploited lithium reserves, at a time when demand for the mineral is skyrocketing in the face of the shift toward electric vehicles. Arce has stated that exploitation of those reserves will demand the help of a “strategic partner” and could pour an additional $2 billion into state coffers over the course of his five-year term.

      With the economic uncertainty that continues to swirl due to the ongoing pandemic, it is difficult to draw concrete conclusions about what to expect from the Arce administration, given that it is impossible to know what challenges and obstacles may present themselves in the coming months or years. Nevertheless, his early moves have pointed to a clear desire to stimulate business, with measures taken to provide for deferred credit, refinancing and rescheduling of debts, as well as forbidding additional interest being added to such credit by banks. 

      What is abundantly clear is that Luis Arce understands how critical FDI is to Bolivia’s future development, and that understanding will surely only have deepened in the context of the economic turmoil that has traversed the globe. With Bolivia boasting a host of investment opportunities and unsaturated markets, and with the new president already highlighting his desire to bring foreign investment into Bolivia’s massive untapped lithium reserves, it seems reasonable to expect that his administration will pursue a significant deepening of FDI even while he maintains the high levels of social spending seen under Evo Morales.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in World Politics

      Was It Wise for India to Reject the RCEP?

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      Last month, 15 Asia-Pacific countries formed the world’s largest trading bloc. The Regional Comprehensive Economic Partnership (RCEP) is China’s response to the US jettisoning the Trans-Pacific Partnership (TPP) under President Donald Trump. The deal excludes both India and the US. Though the RCEP is not as comprehensive as the TPP and does not cut tariffs to the same degree, its members comprise a third of the world’s population and of the global GDP. Given international attention on Xinjiang and Hong Kong, pulling off the RCEP is a major feather in China’s cap.

      Is India Missing the Boat?

      Many blame India for not joining the RCEP, suggesting it is missing out on access to a big market. Indian policymakers take a different view. They realize that countries like South Korea, Vietnam and China have terrific manufacturing capabilities. Opening markets to their goods could damage India’s industry. India could risk that blow if it could sell services to manufacturing powerhouses and earn a net benefit in the process. However, the RCEP focuses on goods, not services, giving India little incentive to sign on.

      In the past, free trade agreements with Asian economies have yielded limited benefits in terms of economic growth, increased investment or geopolitical heft. Instead, they have led to a surge of cheap imports that have decimated India’s inefficient domestic industry. India’s goal is to make its industry more efficient instead of deindustrializing prematurely.

      In Asia, a New Kid on the Trade Bloc

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      While many experts and much of the media predict doom and gloom in a post-RCEP world, both foreign direct investment (FDI) and foreign portfolio investment (FPI) are flooding into India. The country received a record-high FDI of $35.37 billion in the first five months of India’s fiscal year starting on April 1. The November FPI of $8.5 billion exceeds FPI inflows of the past two years combined. Clearly, investors envisage a different reality than the pessimists.

      The pessimistic outlook on India in the post-RCEP world comes from the fact that India missed the free-trade boat earlier and stagnated in the 1970s. Starting in 1969, India lurched to hard-line socialism under Indira Gandhi, the daughter of India’s first prime minister, Jawaharlal Nehru. She began by nationalizing 14 of the largest private banks in the country. After her reelection in 1971, Gandhi nationalized the coal, steel, copper, refining, cotton textiles and insurance industries.

      Apart from going on a nationalization spree, Gandhi gave unbridled power to bureaucrats, who strangled businesses with red tape. She championed public sector behemoths that turned out to be corrupt, inefficient and uncompetitive. Arguably, she did more to destroy private industry than 190 years of British rule.

      Silver Linings to Staying Out

      There are key differences between the 1970s and today. Indian conglomerates such as Reliance Industries and Adani Enterprises have their flaws, but they are not as inefficient as the public sector. In the services sector, India has managed to provide for American and even European markets. Doing business is much easier than in the 1970s because the political elite and the colonial bureaucracy are not as capricious, arbitrary and toxic to private enterprise. So, staying out of RCEP is unlikely to lead to a 1970s-style stagnation.

      There is another tiny little matter. Many economists are blinded by the dogma of free trade. As one of the authors has argued in the past, trade invariably produces winners and losers. Recent press reports reveal that Hershey used financial instruments called futures to squeeze cocoa farmers in West Africa. This is part of a centuries-long pattern. Trade has not necessarily proven to be good to countries exporting commodities from Ghana to Bolivia. On the other hand, countries such as South Korea, Vietnam and, above all, China, that have industrialized, developed technologies and moved up the value chain have done quite well out of trade.

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      The US itself became a major industrial power through a policy of protectionism. Alexander Hamilton took the view that economic independence was as essential as political independence. The US Congress’s first piece of legislation was the Tariff Act of July 4, 1789, which protected American infant industries from ruinous British competition. Many others, including East Asian tigers, emulated American industrial policy.

      There is a strong argument to be made that India’s economic failure came not from protectionism but socialism. By giving colonial bureaucrats the commanding heights of the economy, Nehru and his daughter cut India off at its knees. Economic liberalization in 1991 unleashed growth, but competition from East Asia prematurely deindustrialized India, robbing it of productivity growth. 

      Badly burnt, Indian policymakers are trying something different. Like South Korea in the past, India is favoring its own version of chaebols. The country is embarking on an indigenous form of protectionism, so the RCEP is not on the cards. Furthermore, thanks to fear of both China and Pakistan, India has thrown in its lot with the US. Just as the country once traded preferentially with the Soviet Union, India now aims to do so with its new ally. Already, India exports services and people to the US and gets revenue and capital in return.

      The RCEP, as it stands, has little upside for India. Besides, some of its members like China and Australia have increasingly fraught relations with each other. Key details of the RCEP are yet to be worked out, and reality might turn out to be very different from the hype. Doomsayers damning India might not quite be right. Staying out of the RCEP could well turn out to be wise.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      Trickle-down economics doesn't work but build-up does – is Biden listening? | Robert Reich

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      How should the huge financial costs of the pandemic be paid for, as well as the other deferred needs of society after this annus horribilis?Politicians rarely want to raise taxes on the rich. Joe Biden promised to do so but a closely divided Congress is already balking.That’s because they’ve bought into one of the most dangerous of all economic ideas: that economic growth requires the rich to become even richer. Rubbish.Economist John Kenneth Galbraith once dubbed it the “horse and sparrow” theory: “If you feed the horse enough oats, some will pass through to the road for the sparrows.”We know it as trickle-down economics.In a new study, David Hope of the London School of Economics and Julian Limberg of King’s College London lay waste to the theory. They reviewed data over the last half-century in advanced economies and found that tax cuts for the rich widened inequality without having any significant effect on jobs or growth. Nothing trickled down.Meanwhile, the rich have become far richer. Since the start of the pandemic, just 651 American billionaires have gained $1tn of wealth. With this windfall they could send a $3,000 check to every person in America and still be as rich as they were before the pandemic. Don’t hold your breath.You don’t need a doctorate in ethical philosophy to think that now might be a good time to redistribute some of richesStock markets have been hitting record highs. More initial public stock offerings have been launched this year than in over two decades. A wave of hi-tech IPOs has delivered gushers of money to Silicon Valley investors, founders and employees.Oh, and tax rates are historically low.Yet at the same time, more than 20 million Americans are jobless, 8 million have fallen into poverty, 19 million are at risk of eviction and 26 million are going hungry. Mainstream economists are already talking about a “K-shaped” recovery – the better-off reaping most gains while the bottom half continue to slide.You don’t need a doctorate in ethical philosophy to think that now might be a good time to tax and redistribute some of the top’s riches to the hard-hit below. The UK is already considering an emergency tax on wealth.The president-elect has rejected a wealth tax, but maybe he should be even more ambitious and seek to change economic thinking altogether.The practical alternative to trickle-down economics might be called build-up economics. Not only should the rich pay for today’s devastating crisis but they should also invest in the public’s long-term wellbeing. The rich themselves would benefit from doing so, as would everyone else.At one time, America’s major political parties were on the way to embodying these two theories. Speaking to the Democratic national convention in 1896, populist William Jennings Bryan noted: “There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.”Build-up economics reached its zenith in the decades after the second world war, when the richest Americans paid a marginal income tax rate of between 70% and 90%. That revenue helped fund massive investment in infrastructure, education, health and basic research – creating the largest and most productive middle class the world had ever seen.But starting in the 1980s, America retreated from public investment. The result is crumbling infrastructure, inadequate schools, wildly dysfunctional healthcare and public health systems and a shrinking core of basic research. Productivity has plummeted.Yet we know public investment pays off. Studies show an average return on infrastructure investment of $1.92 for every public dollar invested, and a return on early childhood education of between 10% and 16% – with 80% of the benefits going to the general public.The Covid vaccine reveals the importance of investments in public health, and the pandemic shows how everyone’s health affects everyone else’s. Yet 37 million Americans still have no health insurance. A study in the Lancet estimates Medicare for All would prevent 68,000 unnecessary deaths each year, while saving money.If we don’t launch something as bold as a Green New Deal, we’ll spend trillions coping with ever more damaging hurricanes, wildfires, floods and rising sea levels.The returns from these and other public investments are huge. The costs of not making them are astronomical.Trickle-down economics is a cruel hoax, while the benefits of build-up economics are real. At this juncture, between a global pandemic and the promise of a post-pandemic world, and between the administrations of Trump and Biden, we would be well-served by changing the economic paradigm from trickle down to build up. More

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      in World Politics

      It’s Time to Introduce a Universal Basic Income for India’s Farmers

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      In September, India passed three bills that immediately led to protests by farmers demanding to repeal the legislation. The new laws seek to remove the government’s minimum support price for produce that shielded India’s farmers from free-market forces for decades. In allowing the farmers to set prices and sell directly to businesses, the reforms are …
      Continue Reading “It’s Time to Introduce a Universal Basic Income for India’s Farmers”
      The post It’s Time to Introduce a Universal Basic Income for India’s Farmers appeared first on Fair Observer. More

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      in US Politics

      'Right now, I'm in panic mode': US freelancers plead with Congress to pass Covid relief

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      Suzy Young, an artist in Winterport, Maine, cheered when Congress enacted an innovative program that provided unemployment benefits to artists, freelancers and the self-employed after Covid-19 hit the US. But like many others, Young – whose art sales have plunged in recent months – is angry that this pandemic aid program is due to expire the day after Christmas.Young was already upset that the most generous part of the program – $600 a week in supplemental jobless benefits – expired in July, but now she fears she will lose all her jobless benefits. Four months behind on her $1,800 rent, she is fighting her landlord’s effort to evict her and her disabled husband on 1 January.“Congress needs to do something, or a lot of people are going to face homelessness,” said Young, 58. A fiber artist who weaves works out of wool, Young saw her income disappear when the farmers market where she sold her work was closed due to the lockdown. “That killed my business,” she said. She was getting by while receiving the $600 weekly supplement, but once that disappeared, her unemployment benefits fell to $172 a week.A study by the Century Foundation estimates that 7.3 million freelancers, artists, self-employed and others will lose their weekly benefits if the Pandemic Unemployment Assistance program (known as PUA) expires, as scheduled, after Christmas. That program is unusual because jobless benefits traditionally go only to laid-off workers who are considered employees – and not to freelancers or the self-employed. A second program – Pandemic Emergency Unemployment Compensation – is also scheduled to expire 26 December, ending special federal benefits for 4.6 million laid-off workers who were considered employees.“A lot of these people [freelancers and the self-employed] were out of work, and not eligible for regular unemployment benefits,” said Andrew Stettner, a senior fellow at the Century Foundation. “This program has been really successful. These people really need this bridge until the economy gets back to a better place.” After the $600 benefit supplement expired in July, freelancers and the self-employed continued receiving regular unemployment benefits, but the average nationwide for them has been just $207 a week, although it’s two or three times that in some states.Last Tuesday, a bipartisan group of nine senators proposed a $908bn stimulus and relief package that included a $300 weekly jobless supplement, half the former $600. The senators said their plan “would increase unemployment benefits to help families make ends meet”. That same day, five Democratic senators, including the minority leader, Chuck Schumer, proposed a relief plan that would restore the $600 boost in benefits as well as extend normal jobless benefits by 26 weeks. The Senate majority leader, Mitch McConnell, threw cold water on the bipartisan plan, saying: “We just don’t have time to waste time.”Rafael Espinal, president of the 500,000-member Freelancers Union, said the senators’ $300-a-week proposal was inadequate. “Considering the cost of living in cities, $300 isn’t going to allow people to pay their rent or meet other demands.”Grant McDonald, a New York-based video director who films concerts and special events, has had little work since March and worries about PUA expiring. “It’s pretty drastic sitting here, waiting for my savings to run out,” he said. McDonald fears he will soon fall behind on his rent; he may then move in with his father.“I have worked very hard to build a career in this city,” McDonald said, worried that leaving New York will set back his career.McDonald and Stephanie Freed, who lights fashion shows and other special events, founded ExtendPUA, a group that has lobbied dozens of senators and representatives to extend pandemic assistance and restore the $600 supplement. Many Republicans oppose the $600 level, saying it costs too much and discourages people from seeking work.We need to help people out here from starving. We need Congress to hear us, we’re in the worst placeBut ExtendPUA argues that it’s not wise to press people to look for work when the pandemic is raging or when skilled people with long careers, on Broadway, for instance, have little idea when they’ll return to regular work.“Any economist will say you don’t want skilled people to give up their work and not be able to get back to what they’ve given up,” Stettner said. “We can see that the vaccine will make everything better, and if we can just extend these benefits a little longer, it will make a big difference for a lot of people. If you lose your car or get evicted, those are not easy things to recover from.”Steve Gregg stopped working as an Uber driver in San Francisco after Covid-19 hit – he has diabetes and lung problems. Greg said the $600 supplement, on top of his $450 in regular weekly jobless benefits, “saved me, I would have lost my home”. But with the $600 expired, Gregg, divorced and paying child support, has moved into a single room in Modesto he shares with a cousin. “If they want us not to be homeless, they better pass something,” Gregg said. “I have no flexibility. I’ve cut back on many things.”Friends tell Gregg he has an extraordinary voice and should do TV voiceovers, but he doesn’t have the several hundred dollars to go to a studio to prepare a proper sample recording.Shan Grimm, a guitarist for jazz and R&B bands in New Orleans, fears she and her daughter will be evicted once the moratorium on evictions ends. She receives $247 a week in jobless benefits, but her rent is $850 a month, her car insurance $193 and her phone $60. “I’m trying to figure out what I’m going to do, where I’m going to go,” said Grimm, who also worked as a bartender. “Even $300 a week would make a big difference. Right now, I’m in panic mode. I have $107 in my bank account. I’ve been eating once a day.”“We are the people and Congress needs to hear us,” Grimm added. “We need to help people out here from starving. We need Congress to hear us, we’re in the worst place.” More