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      Will Millennials and Zoomers Save the Future?

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      “All of you young people who served in the war. You are all a lost generation.” This famous phrase is credited to Gertrude Stein by Ernest Hemingway, who popularized it in the epigraph to his 1926 novel “The Sun also Rises.” The phrase encapsulates the feelings of a generation, disillusioned by the civilizational breakdown witnessed during the Great War, the loss of faith in the ideals and values that had marked their pre-war youth, which left them empty and cynical. In Europe, many of them would ultimately find a new purpose in the ranks of Mussolini’s squadristi, Hitler’s Sturmabteilung and the various fascist movements that sprang up in their wake — with disastrous results.

      It might appear preposterous to compare today’s younger generations, millennials and zoomers (aka Generation Z), to Hemingway’s cohort of young women and men on both sides of the Atlantic. And yet there are good reasons to presume that today’s younger generations are going to be as deeply, if not more, scarred — socially, economically and psychologically — by COVID-19 as the Lost Generation was by World War I.  

      Foretaste of Things to Come

      The travails of COVID-19, as has been frequently noted, are just a foretaste of things to come. The combination of climate change and the destruction of natural habitats has made the outbreak of infectious diseases spreading from animals, such as bats and birds, to humans increasingly likely. As a landmark study published in Nature put it a decade ago, “mounting evidence indicates that biodiversity loss frequently increases disease transmission.” Or, to put it differently, “current evidence indicates that preserving intact ecosystems and their endemic biodiversity should generally reduce the prevalence of infectious diseases.”

      Unfortunately, the opposite has been the case. The current rate of extinction is “tens to hundreds of times higher than the average over the past 10 million years — and it is accelerating.” By now, humanity, which accounts for not more than a small sliver of life on this planet, is responsible for the loss of more than 80% of all wild mammals and half of all plants. The consequences are potentially catastrophic.

      For the moment, concerns about global warming and the rapid loss of biodiversity has been overshadowed by the all-consuming issue of COVID-19. And for good reasons. The novel coronavirus has severely disrupted life as we have come to know and expect it. And there is no end in sight. Its social, economic and psychological consequences, in addition to its impact on public health, has been profound and far reaching, particularly for the younger generations. Millennials, already pummeled by the fallout from the Great Recession of 2008, have been hit hard once again. For zoomers, the generation born between the mid-1990s and the early 2010s, COVID-19 is likely to be the formative experience shaping the rest of their lives.

      For both generations, the economic impact of the pandemic has been disastrous. Already last year, months before the pandemic hit the United States full force, Annie Lowrey wrote in The Atlantic that millennials were “likely to be the first generation in modern economic history to end up worse off than their parents. The next downturn might make sure of it, stalling their careers and sucking away their wages right as the Millennials enter their prime earning years.” The pandemic confirmed her worst fears. Early this year, Lowrey characterized the pandemic as a “financial tsunami for younger workers.”

      According to preliminary data, after the onset of the pandemic, “a staggering 52 percent of people under the age of 45 have lost a job, been put on leave, or had their hours reduced due to the pandemic, compared with 26 percent of people over the age of 45.” Federal aid was likely to do little to nothing to alleviate their financial woes.

      The outlook is equally bleak for zoomers. According to the consulting firm Delloite, in April and May 2020, 30% of Zoomers reported having lost their job or having been put on temporary, unpaid leave. This is particularly ironic. As Mathew Goodwin has recently noted, zoomers “find themselves in a strange position — on the one hand, they are on track to be the most well-educated generation in history but, on the other, they are entering the labour market amid one of the most challenging periods in history.” Given their educational background and levels of skills, their prospects in the labor market should be bright; instead, they are nothing short of bleak.

      At least for the moment, opportunities for internships have largely dried up, entry positions are rare and, for those who manage to get one, the pay is low. And things are unlikely to get better any time soon, given the depth of the coronavirus-induced recession. As an essay in The Economist recently put it, “Economic misery has a tendency to compound. Low wages now beget low wages later, and meagre pensions after that. The prospect of middle-aged drudgery beckons.”

      After Us, the Deluge?

      The Lost Generation’s soul-shattering experience of senseless death during the Great War turned many of them cynical while leading them into aimless and reckless pursuit of vacuous, decadent hedonism, reflected in the writings of F. Scott Fitzgerald and the paintings of George Grosz. Given the circumstances, one might expect history to repeat itself, not as a “grand tragedy” but as a “rotten farce,” as per Karl Marx’s “The Eighteenth Brumaire of Louis Napoleon,” reflected in the infamous “COVID parties” on the beaches of Florida, with their flair of Russian roulette, scripted according to the adage “after me, the deluge,” or, more prosaically, “who gives a shit about the future.”

      As it turns out, zoomers do — or so a growing number of recent studies suggest, whether produced by think tanks or by business consulting firms seeking to exploit Gen Z’s consumer potential. The results are nothing short of stunning, the implications potentially revolutionary. Take global warming. In 2019, an Amnesty International-sponsored survey found more than 40% of young people considering global warming the most important global issue. At the same time, however, almost half of zoomers and more than 40% of millennials thought that it was already too late to repair the damage caused by climate change.

      This, however, does not seem to have turned them cynical, self-centered, apathetic or escapist. On the contrary. An article in Forbes, written at the height of last year’s global mass demonstrations calling for action to confront climate change, put it best, claiming that Gen Z was “a force to be reckoned with. They’re not trying to change the world; they’re already doing it and, in many cases, they’re leading the way.”

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      Recent studies support this contention. They find that the younger generation holds deeply engrained values that more often than not are in complete opposition to the values that dominated advanced capitalist societies pre-coronavirus. In the face of a resurgence of ethnocentrism and tribalism, they cherish diversity while rejecting the knee-jerk nationalism that has been the hallmark of right-wing populism currently en vogue from Britain to Denmark, from Italy to the United States.

      Unlike their elders, who for decades allowed themselves to be subjected to incessant neoliberal indoctrination claiming that the state is part of the problem, that only markets get things right, that society does not exist, and that everybody fends for themselves, zoomers are pro-government and supportive of a strong state. COVID-19 has not only validated and reaffirmed their belief in government action and the extension of social welfare policies but also in the necessity of fundamental, radical change.

      With Gen Z, the old slogan from the student movement of the 1960s that “the personal is political” has come back with a vengeance — and a new meaning. We have seen it with the controversies over the wearing of masks that have shown how quickly and to what degree personal choice turns into political statement these days. Today, as a number of top-notch business consulting firms have affirmed, this is particularly true with respect to consumption patterns and consumer choices. Veganism, for instance, is not only a lifestyle choice — it is also, and in some instances even predominantly, a political statement. As Deborah Kalte has recently noted, the “vast majority of vegans is politically motivated and aims to induce change in society at large.”

      In the past, as Thorstein Veblen and Pierre Bourdieu have argued and shown, consumption served as a marker, a sign of distinction, and this in a very material sense. Today, or so a number of studies suggest, at least with the younger generation, consumption is tied in with ideals and values, which makes it highly political.

      The Personal Is Political

      Even before the onset of the pandemic, business reports noted the central importance of sustainability for the younger generation. In 2015, a Nielsen report found more than 70% of global millennials were willing to pay more for sustainable goods. Five years later, a First Insight report found that “the vast majority of Generation Z shoppers prefer to buy sustainable brands, and they are most willing to spend 10 percent or more on sustainable products.” At the same time, the report noted that Gen Zers and millennials “are the most likely to make purchase decisions based on values and principles (personal, social, and environmental).”

      And the revolution does not stop here. Business consultants have already set their eyes on Generation Alpha — the offspring of the millennial generation and younger siblings of Gen Z — who populate today’s cradles and kindergartens. As an article in Wired puts it, the “latest age group to emerge are barely out of diapers, and the internet is already serving them ads.”

      Raised and influenced by their millennial parents and Gen Z siblings, they are expected to be just as progressive and radical — even more so — as their immediate elders, or so a recent report from the e-commerce consulting firm Wunderman Thompson Commerce wants us to believe. Confronted with myriads of global crises — humanitarian, ecological, economic, social — they are characterized as “uniquely ethically inclined and value-led.” This is based on the finding that more than two-thirds “of 6 to 9 year olds say that saving the planet will be the central mission of their careers in the future, joining the fight that current Gen Zs are leading.” An equally large proportion indicated they would like to buy from companies that “are trying to do good in the world.”

      Embed from Getty Images

      If the findings of these studies are true, things are likely to heat up considerably in the near future, both socially and politically. What the younger generations represent is a reality that is fundamentally at odds with the one peddled by Donald Trump, Boris Johnson, Jair Bolsonaro and Scott Morrison (Australia’s champion of coal), to name but a few. There is a huge gap between the perceptions and values of the younger generations and those of the older generations, as most recently seen once again with COVID-19, whether with regard to wearing masks or accepting track-and-trace apps. Today, the fate of the planet is to a large extent in the hands of generations that are unlikely to experience the full force of the disasters their actions and inactions have caused. The reality is that governments, corporations and the older generation have largely failed the younger generations and continue to do so — with catastrophic consequences.  Over the past several decades, governments have piled up huge amounts of national debt.  With COVID-19, they have added further layers, bound to impose yet another enormous burden on today’s youth.     

      Under the circumstances, it might be tempting to dismiss them as another Lost Generation. It bears remembering, however, that it was the original Lost Generation that was instrumental not only in the rebuilding of much of Europe after the Great War, but also in the establishment of the postwar liberal order — “embedded liberalism” — and the entrenchment of the social-democratic welfare state. 

      Today, we confront another crucial moment. Once again hope rests on the younger generations to provide the vision and energy not only to meet the numerous social, economic, cultural and particularly ecological challenges that threaten to overwhelm humanity. All available data suggest that they are quite prepared to meet the challenge, if only because they don’t have much of a choice. Chances are that the young people will make a difference — provided their parents and grandparents will take them and their concerns and worries seriously, rather than dismissing them as alarmism or folly.

      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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      Boris Johnson Takes England, and COVID-19, Back to Square One

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      Not only has UK Prime Minister Boris Johnson failed to learn from other countries’ dealings with COVID-19, he has stubbornly refused to learn from his own experience. He is the true king of fools. It would be laughable were it not for the tens of thousands of deaths he and his government are responsible for.

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      On March 23, Johnson led England into a lockdown. It was far too late. In May, he led the country out of lockdown in what was supposed to be an incremental fashion. It was far too early. It was also confusing, chaotic and only encouraged people to abandon all pretense long before the final restrictions were lifted in July and August. Johnson is now back where he started, declaring, as he did before March 23, that normality and the economy must be preserved at all costs. As before, infection rates are on the rise, especially in London and parts of the north. As before, these facts are being ignored. Under no circumstances will a second lockdown be contemplated, nor will schools close after September 1. Responses to any future outbreaks will be localized and short term.

      If Possible

      The guidance being handed to England’s hapless schools is remarkably similar to that issued back in January, February and March: wash your hands, clean surfaces and, if possible, keep your distance from each other. (The government adds “if possible” to its documents because it knows full well that such distancing is impossible in most schools and in most classrooms.) As before, teachers or children who are clinically vulnerable — or who are shielding a husband or wife, a mother or father, a daughter or son who is clinically vulnerable — can attend school and should do so when the new term starts in early September.

      If you are a parent who is determined to keep your child at home, you will be fined, as before, by the secretary of state for education. And, as before, there will be no testing unless someone displays symptoms. There is, however, one innovation being introduced this time around: children, parents and staff who do show any symptoms are asked to get themselves tested, to trace contacts and to report their findings to the school.

      Embed from Getty Images

      Johnson’s motivation for all this nonsense is the economy. He is seemingly and willfully unaware that it tanked by a whopping 20% of GDP in the first quarter, compared to just under 12% across the EU. This is not because Johnson locked down too early and for too long, but because he didn’t lock down early enough or for long enough and didn’t take that breathing space to organize an effective track-and-trace regime or institute a mask-wearing culture. He also failed to engage with local governments and instead treated them with contempt and withheld from them the information they needed to protect the vulnerable. He has, in other words, assiduously ignored the best strategies that are on public display in China, Taiwan, Hong Kong, Macao and South Korea. These include the restriction of movement and physical distancing, rapid identification of positive and suspected cases through mass testing, and the immediate isolation of positive and suspected cases with appropriate treatment rendered.

      The pillars of Seoul’s response, for example, are promptness and transparency, and a willingness to learn from the 2015 MERS outbreak. Government, local and national, did not hesitate: It tested aggressively, launched epidemiological investigations and imposed quarantines, shared information and began disinfection efforts.

      South Korea saw its first confirmed case of COVID-19 on January 23. Within a week, hand sanitizers and disposable masks were being distributed for free on public transport, and seats and handles were being disinfected. Within 16 days of the first case, museums, galleries and other cultural venues, along with taxis, subways and buses, were being sterilized with ever more frequency, and people who had been exposed were quarantined and given specialist medical care. Within four weeks, screening stations were up and running around the clock. Risky venues such as bars and cafes were closed, and treatment was being extended to citizens with suspected COVID-19 symptoms. Within five weeks, public facilities were shut.

      Unsurprising Results

      In the UK, within five weeks of the first confirmed case on January 29, Johnson, on the best scientific advice the country could muster, had done almost nothing. The government’s modeling group had advised that isolation and tracking wouldn’t do much other than delay the peak of the epidemic. Life might as well go on as normal. Masks were not needed. More proactive measures were not advised until six weeks after the first case. On March 3, Johnson’s government, having listened to the great and the good of Britain’s scientific community, declared that it would be better if people did not shake hands. That same day, Johnson proudly boasted that he had been shaking hands with everyone, including coronavirus patients.

      The results are as stark as they are unsurprising. While the UK has had more than 60,000 deaths and has taken the worst hit to its GDP year on year in the second quarter in 64 years, just over 300 people have died from the virus in South Korea, its economy grew through the first quarter and is expected to manage around -0.8% over the year. Even in the Philippines, where the government has been equally as irresponsible as Johnson’s, there are those who see the choice between keeping the economy going and tackling COVID-19 as an entirely fictitious one.

      Yet perhaps the most exasperating thing about this whole sorry debacle — surely the worst exhibition of foolhardiness and incompetence since the 1853 Crimea campaign, the First World War, Chamberlin’s policy of appeasement or Britain’s chaotic and bloody withdrawal from India (take your pick) — is the fact that Boris Johnson is still in Number 10. Not so long ago, a few weeks before the outbreak, I heard a young lecturer, a social psychologist from China, say that the English, so used to being smothered by their government and their aristocracy, are most at ease as placid and compliant followers. I’m beginning to see what she meant.

      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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      What the weakening dollar means for the global economy

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      A near 10% drop in the value of the US dollar since its March high has given rise to two distinct narratives. The first takes a short-term perspective, focusing on how a depreciation could benefit the US economy and markets; the second takes the long view, fretting over the dollar’s fragile status as the world’s reserve currency. Both narratives contain some truth, but not enough to justify the emerging consensus around them.Several factors have combined to put downward pressure on the greenback (as measured by the DXY index of trade-weighted currencies) in recent weeks, resulting in a depreciation that has reversed almost half of the appreciation of the last 10 years within the space of months.As the US Federal Reserve has loosened monetary policy (actually and prospectively) in response to a worsening economic outlook, the income accruing to dollar-denominated safe havens, such as US government bonds, has declined. And with US-based investments having lost some of their attractiveness, there has been a shift in holdings in favour of emerging markets and Europe (where the European Union last month agreed to pursue deeper fiscal integration).There also are indicators of lower capital inflows into the United States. House purchases by foreigners appear to have decreased again, owing in part to the US government’s embrace of inward-looking policies and the weaponisation of trade and sanction measures.With the exception of Lebanon, Turkey and a few other countries that have experienced even sharper exchange-rate depreciations than the US, most currencies have strengthened against the dollar. But among those with appreciating currencies, the reactions to this generalised phenomenon have been far from uniform.Some countries, particularly in the developing world, have welcomed the reversal, because their previous currency weakness had been contributing to higher import prices, including for foodstuffs. Moreover, a weaker dollar provides them with greater scope to support domestic economic activities through more stimulative fiscal and monetary measures.But the reaction has been less welcoming in the other advanced economies. Japan and eurozone member states, in particular, fear that currency appreciation could threaten their own economic recovery from the Covid-19 shock. Also, the Bank of Japan and the European Central Bank now have to worry that they are not only reaching the limits of their policy effectiveness, but could also be putting their economies at greater risk of collateral damage and unintended consequences.In the US, meanwhile, the dollar’s depreciation has been welcomed as an overwhelmingly positive development for the economy, at least in the short term. After all, economic textbooks tell us that a weakening dollar boosts US producers’ international and domestic competitiveness relative to foreign competitors, makes the country more attractive for foreign investors and tourism (in price terms), and increases the dollar value of revenue earned overseas by home-based companies. That is also all good for US stock and corporate bond markets, which benefit further from the greater attractiveness of dollar-denominated securities when they are priced in a foreign currency.The longer-term consensus view is less positive for the US. The worry is that dollar depreciation will further erode the currency’s global status, which has already been weakened by the US policies of the past three years – from protectionism and weaponised sanctions to bypassing global standards and the rule of law.The more the dollar’s credibility is eroded, the more the US risks losing the “exorbitant privilege” that comes with issuing the world’s main reserve currency. A country in this position can exchange bits of printed paper or digital entries – currency creation – for the goods and services that other countries produce. It enjoys disproportionate influence over important multilateral decisions and appointments. And it benefits from others’ willingness to outsource to its own institutions the management of their financial wealth.Both of these (partly true) consensus narratives imply further significant dollar depreciation. While the immediate effects are theoretically positive, the practical situation is likely to be different, because so much economic activity is currently impaired by government restrictions and the reluctance of individuals and companies to return to previous consumption and production patterns. Around half of US states have now reversed or halted the process of economic reopening.Moreover, today’s positive market effects demand further qualification beyond the health crisis. Owing to the reliable and ample provision of liquidity, particularly by central banks, most valuations have already decoupled from economic and corporate fundamentals. Under these financial conditions, it is hard to imagine that a dollar depreciation will have any more than a marginal effect on real economic performance.As for the dollar’s role as a reserve currency, I am reminded of a simple principle I learned at university: it is hard to replace something with nothing. At this time, there simply is no other currency that can or will fill the dollar’s shoes. Instead, we will continue to see small pipes being built around the dollar. And, because none of these will be large enough to replace it, the eventual result will be a more fragmented international monetary system.As has happened before, the current consensus views on the dollar will probably end up overstating the long-term implications of short-term movements. Today’s dollar weakness is neither a boon to markets and the US economy nor an augury of the currency’s global downfall. But it is part of a larger, gradual fragmentation of the international economic order. The main factor in that process is the shocking lack of international policy coordination at a time of rising global challenges.• Mohamed El-Erian is chief economic adviser at Allianz. He served as chair of President Barack Obama’s Global Development Council and is a former deputy director at the IMF© Project Syndicate More

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      The CO2 Border Adjustment for the EU

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      The heads of state and government of the European Union propose introducing a “carbon border adjustment mechanism” from 2023, to charge imported goods according to the CO2 emitted during their production. At their recent summit, they decided to use the ensuing revenues to boost the EU’s budget. This gives a fiscal twist to an instrument actually designed for climate policy.

      Ursula von der Leyen, the president of the European Commission, had already announced in 2019 that she would like to introduce a “carbon border tax” as part of her European Green Deal. In spring 2020, the commission launched a roadmap process to prepare concrete legislative proposals by 2021. Its proposal also responds to fears that higher European CO2 costs caused by EU emissions trading (EU ETS) could cause companies to relocate activities outside the union, causing carbon leakage.

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      Outsourcing would contribute to reducing European emissions, but not to tackling the global problem. To date, the European Union has addressed the risk of relocation by allocating free emission allowances to sectors at risk of carbon leakage. A CO2 border adjustment could create an alternative with a global impact.

      There is rising support for the idea, after years of resistance from many EU member states and business associations. And the pressure is set to grow, with an increase in the EU’s climate target for 2030 — and anticipated higher CO2 costs for EU businesses — expected this fall. Furthermore, a CO2 border adjustment for foreign products will be widely interpreted as a clear message, especially to Washington and Beijing, that the EU intends to implement the 2015 Paris Agreement. When designing the instrument, it will be important to comply with World Trade Organization (WTO) rules and to get important trading partners on board. 

      WTO-Compatible Design

      The European Commission proposes three ways in which a “carbon border adjustment mechanism” could be implemented: “a carbon tax on selected products, a new carbon customs duty or the extension of the EU ETS to imports.” From a trade law perspective, any of these options could be designed in accordance with WTO rules. The crucial aspect is the principle of non-discrimination: that a CO2 border adjustment must not differentiate among like products or between WTO members. If it were necessary to depart from the principle, for example, where a trading partner or individual company is able to demonstrate that it is already taking care of emissions reductions, the rules for exceptions would need to be observed.

      An EU-wide CO2 “product tax” and its implementation by the EU member states would be the most straightforward approach from a trade law perspective. To do this, the EU would first have to levy a CO2 tax on goods manufactured in the European Union. Then, it would be unproblematic to apply this tax to imports as well — the value-added tax, for example, follows this approach. Imported “like” products would be treated the same way as domestic products, which is WTO-compliant.

      Extending the EU ETS to industrial imports would be more complex. The task for the European. Commission would be to demonstrate that under trade law, the CO2 allowance price is ultimately equivalent to a “product tax.” Failing that, the commission could argue that it was acting to protect a global resource, i.e., that avoiding carbon leakage was the central aim of the EU legislation. The “conservation of exhaustible natural resources,” which includes the Earth’s atmosphere, is a valid ground for violating WTO principles, subject to certain conditions. Such an exemption would also have to be claimed for a new CO2 customs duty.

      However, the European Council decision has exacerbated the risk that WTO dispute settlement panels will regard the new instrument as a means of generating income, rather than a means to protect the climate. This would make a difference if trading partners challenged the new tool. The climate focus, which would be taken into account in WTO rulings, is currently slipping into the background.

      Don’t Underestimate the Diplomatic Effort

      A CO2 border adjustment mechanism will need extensive explanation given the many open details, and it can only promote international climate policy cooperation if trade partners are informed at an early stage and regularly consulted. For this, the European Union should use WTO forums and the climate regime as well as other international organizations. In 2012, the European Commission was made painfully aware of the difficulties involved in going it alone, after seeking to include international aviation in the EU ETS. Major partners put political pressure on the EU, even threatening sanctions, and the union decided to backtrack and reduce the coverage of the ETS to flights within the European Economic Area.

      Trust can only arise if the EU adheres to multilateral climate and trade agreements — i.e., supports the Paris Agreement and the troubled WTO and expresses this clearly and often. This task has probably become much more difficult after the European Council decision because a fiscally-motivated border adjustment cannot be convincingly attributed to these multilateral concerns — especially as the revenues would flow to the EU rather than to funds supporting climate protection, for example, in poorer countries. If a CO2 border adjustment specifically targeted cement, steel and other energy-intensive industries, as has already been discussed, producers from emerging and industrialized countries would be especially affected.

      The union should start discussions with these countries without delay. A good opportunity will arise at the meeting of G20 finance ministers in Saudi Arabia toward the end of the year. In addition, the EU should insist to the US that this initiative is not intended as a provocation in the smoldering customs dispute. Ultimately, the climate policy success of a CO2 border adjustment will depend on how the world’s major economies react to it.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions relating to foreign and security policy.]

      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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      Another 1.18m Americans file for unemployment as benefits expire

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      Another 1.18 million people filed for unemployment benefits last week as economists worry the expiration of enhanced unemployment benefits will lead to a sharp drop-off in household spending and set back the US economy’s near-term recovery.Claims dipped last week after two weeks of rises and were the lowest since March but the latest figure from the department of labor marked the 19th week in a row that claims have topped 1m. Before the coronavirus pandemic gripped the US, the record for weekly claims was 695,000 in October 1982.The figures come ahead of Friday’s monthly snapshot of the job market. Economists expect the unemployment rate to have dipped to 10.6% in July from 11.1% in June, a significant drop but still three times the pre-pandemic level.Americans have been receiving an extra $600 in emergency benefits since March as part of the government’s coronavirus stimulus package. But that agreement expired at the end of last month and Congress is split over a possible extension. About 30 million people have been receiving the extra cash and it has accounted for 15% of all weekly wages paid in the US.The expiration of the benefits without any replacement would likely cause a surge in evictions, hunger and poverty as well as having consequences for the wider economy.According to the Economic Policy Institute (EPI) the knock-on effect of removing that cash from the economy could be severe. The EPI estimated 5mn jobs could be lost by July 2021 if it is cut as consumers are forced to cut back on spending.“The $600 benefit is essential for millions of people to get food, to pay rent, to care for their children, to afford basic necessities. If it is cut off, it will mean a sharp decline in their living standards, an increase in poverty, and completely unnecessary suffering,” Heidi Shierholz, EPI senior economist and director of policy, wrote recently.“The spending generated by that $600 is supporting over 5m jobs. In other words, kill the $600 and you will kill 5m jobs – jobs in every single state,” she wrote.A recent paper from the JP Morgan and The University of Chicago argued that allowing the extra payment to expire could “meaningfully reduce” consumption. Eliminating the benefit “could result in large spending cuts and thus potential negative effects on macroeconomic activity”, the authors concluded.If the $600 payments expire and are nor replaced, the authors project that US consumption will 4.2% – a drop that exceeds the entire 2.9% fall in the Great Recession.🚨 new predictions of effects of alternative UI benefit supplements 🚨The UI supplements have expired. Congress is considering a range of options.What will happen to 1) *consumption*2) *UI replacement rates*Thread w/@JoeVavra @pascaljnoel pic.twitter.com/YdENQzgzBY— Peter Ganong (@p_ganong) July 31, 2020 More

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      With the BRI, China Still Has a Long Road Ahead

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      To determine whether China can deliver a better Belt and Road Initiative (BRI), we must first ask whether Beijing is first of all capable of delivering a better BRI? Accusations of practicing debt-trap diplomacy and new forms of colonialism have had some impact on Beijing’s thinking, resulting in its pivot in 2018 to commit to a new, greener BRI, but the foundation of its “grand plan” for implementing the BRI basically remains similar to when it started in 2013.

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      President Xi Jinping and the Communist Party of China (CCP) have put some good-looking window dressing on the basic package, but so far, many BRI host country governments would say not all that much has changed since 2018, when Xi announced a pivot. Beijing is very good at saying one thing and doing another, as numerous governments around the world have learned. As a result, BRI host nations will inevitably believe that Beijing has had a real change of heart when they see it.

      Deaf Ear

      Part of Beijing’s problem is that it does not appear to be attuned to what the world is thinking. Perhaps it does not care. Reading Chinese media reports on the subject leaves one with the impression that the world is in unison and harmony with Beijing, its vision for the world and its performance thus far with the BRI. For example, according to  the CCP’s primary media outlet, the China Daily, a 2018 survey of 8,500 people in 17 BRI countries determined that “more than 70% agreed with the concepts of the “Chinese Dream,” the Belt and Road and “a community with a shared future for mankind.” But even this Chinese government-sponsored survey admitted that 64% of respondents believed that the BRI will confront many difficulties and challenges in the future.

      That concern was echoed by a 2019 survey by Singapore’s ISEAS-Yusof Ishak Institute, which polled more than 1,000 respondents in the government sector, the business community, civil society, academia and the media from across all 10 member states of the Association of Southeast Asian Nations. It found that fewer than 10% of respondents viewed China as “a benign and benevolent power,” 64% had little or no confidence that Beijing’s revised approach to the BRI will result in a fairer deal for their respective countries, and nearly 50% responded that they believed that Beijing possessed an intent to turn Southeast Asia into its own sphere of influence. That does not sound like a particularly inspiring foundation from which to try to turn things around.

      Beijing knows it has a long road ahead. To its credit, it has issued regulations intended to better monitor the conduct of state-owned enterprises and private Chinese businesses, mandating that they should pay more attention to environmental, social, integrity, financial and other risk factors. If a particular host nation’s laws are weak, these entities have been advised to ensure compliance with Chinese law, international treaties and conventions, and industry best practices. Reporting requirements, capital controls, and the regulation of overseas finance and investment have been tightened, which has contributed to the notable decline in new Chinese overseas loans and investments since 2017.

      Outside the Norm

      That said, Beijing has generally been reluctant to apply its laws to the activities of its entities overseas. In fact, State Council guidance requiring extensive disclosure of contracts for major construction projects expressly exempts overseas investment and foreign aid projects. Laws criminalizing the bribery of foreign officials have never been enforced. Although Chinese courts have heard cases related specifically to the BRI, unless a project contract contains explicit obligations for which performance is sought, enforcement of Chinese laws for overseas actions almost never occurs. Beijing appears to be banking on the fact that a great many of the BRI’s host governments have worse transparency and corruption ratings than China, which presumably makes their willingness to pursue Chinese entities engaged in corruption less likely in the first place.

      As long as Beijing continues to insist that only Chinese entities will provide financing for BRI projects, there is no way for external organizations to monitor transparency, corruption or adherence to international standards. That will, by itself, ensure that tension remains between Beijing, BRI host nations and the West, and signals to the world that Beijing is not in fact serious about reforming fundamental aspects of the initiative. Greater emphasis can be placed on taking some care not to blatantly violate national laws and international norms, allowing Beijing to proclaim that progress is being made, but that will continue to be on a relative scale.

      If practices were previously wholly outside the norm of internationally acceptable behavior but they are improved, they can remain outside the norm of acceptable behavior even though they have improved. More than minor tweaks are required to demonstrate that a true pivot has occurred. Beijing certainly has the ability to implement meaningful wholesale change to the BRI if it chooses to, but it has yet to do so. Based on its prior history of performance regarding its flagship initiative, such changes stand little chance of being implemented.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

      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

      Think 'sanctions' will trouble China? Then you're stuck in the politics of the past | Ai Weiwei

      by

      The Trump administration has floated the idea of sanctioning Chinese officials and members of the Communist party of China. Before we ask whether this is a good idea, let’s ask how Sino-US relations got to this stage.The US cold war with the Soviet Union was over ideology, but today’s standoff with China is different. The Chinese state has no ideology, no religion, no moral agenda. It continues wearing socialist garb but only as a face-saving pretence. It has, in fact, become a state-capitalist dictatorship. What the world sees today is a contest between the US system of free-market capitalism and Chinese state capitalism. How should we read this chessboard?The post-Mao dictatorship in China has lived by the principle of “repress at home and be open to the world”. It has imported knowhow from abroad. There are an estimated 360,000 Chinese students currently enrolled who have come through America’s open door. Over 40 years, at least a million have returned to China and fed their new technical knowledge into the existing authoritarian structures that have built the dictatorship. It might be the most momentous personnel transfer in history. When I applied to study in the US in the 1980s, I filled out a questionnaire that asked if I had ever been a member of the Communist party. The point of the question was presumably to avoid ideological risks. But it is beyond doubt that the Chinese students coming in with me included many party members who were headed to some of the US’s finest schools, often with scholarships. Americans generally assumed that these students would feel the appeal of liberal values, which they would then take back to China. What happened more often, though, was that Chinese students were quick to see the cultural differences between the two countries, and to draw the very logical conclusion that American values are fine for America but would never work in the Chinese system.If those US hopes for the exportation of values had panned out, much of China would have been won over by now. But what has actually happened? Returnees are now leaders in much of Chinese business and industry, but anti-American expression in China is as strong today as it has been since the Mao era.Washington bears much of the responsibility for what has happened. In the years after the Tiananmen Square massacre in 1989, administrations of both parties touted the absurd theory that the best plan was to let China get rich and then watch as freedom and democracy evolved as byproducts of capitalist development.But did capitalist competition, that ravenous machine that can chew up anything, change China? The regime’s politics did not change a whit. What did change was the US, whose business leaders now approached the Chinese dictatorship with obsequious smiles. Here, after all, was an exciting new business partner: master of a realm in which there were virtually no labour rights or health and safety regulations, no frustrating delays because of squabbles between political parties, no criticism from free media, and no danger of judgment by independent courts. For European and US companies doing manufacture for export, it was a dream come true.Money rained down on parts of China, it is true. But the price was to mortgage the country’s future. Society fell into a moral swamp, devoid of humanity and difficult to escape. Meanwhile, the west made their adjustments. They stopped talking about liberal values and gave a pass to the dictatorship, in which Deng Xiaoping’s advice of “don’t confront” and Jiang Zemin’s of “lie low and make big bucks” made fast economic growth possible.European and American business thrived in the early stages of the China boom. They sat in a sedan chair carried up the mountain by their Chinese partners. And a fine journey it was – crisp air, bright sun – as they reached the mountain’s midpoint. But then the chair-carriers laid down their poles and began demanding a shift. They, too, sought the top position. The signal from the political centre in China changed from “don’t pick fights” to “go for it”. Now what could the western capitalists do? Walk back down the mountain? They hardly knew the way.Covid-19 has jolted the US into semi-awareness of the crisis it faces. The disease has become a political issue for its two major political parties to tussle over, but the real crisis is that the western system itself has been challenged. The US model appears to others as a bureaucratic jumble of competing interests that lacks long-term vision and historical aspiration, that omits ideals, that runs on short-term pragmatism, and that in the end is hostage to corporate capital.Are sanctions the way to go? A foreign ministry spokesperson in Beijing recently remarked words to the effect that the US and China are so economically interlocked that they would amount to self-sanctions. The US, moreover, would be no match for China in its ability to endure suffering. And there he was correct: in dictatorships, sacrifices are not borne by the rulers. In the 1960s Mao said: “Cut us off? Go ahead – eight years, 10 years, China has everything.” A few years later Mao had nuclear weapons and was not afraid of anyone.The west needs to reconsider its systems, its political and cultural prospects, and rediscover its humanitarianism. These challenges are not only political, they are intellectual. It is time to abandon the old thinking and the vocabulary that controls it. Without new vocabulary, new thinking cannot be born. In the current struggle in Hong Kong, for example, the theory is simple and the faith is pure. The new political generation in Hong Kong deserves careful respect from the west, and new vocabulary to talk about it.“Sanctions” is a cold war term that names an old policy. If the US can’t think beyond them, the primacy of its position in this changing world will disappear. More