Covid, BLM protests and the election: America's year in pictures
Donald Trump arrives at a campaign rally in Toledo, Ohio, on 9 January
Photograph: Jacquelyn Martin/AP More
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in US PoliticsDonald Trump arrives at a campaign rally in Toledo, Ohio, on 9 January
Photograph: Jacquelyn Martin/AP More
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in World PoliticsLast 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 PoliticsThe lawyer and conspiracy theorist Sidney Powell was back at the White House on Sunday night, reportedly to pitch Donald Trump on a plan to seize voting machines as the US president continues to dispute the result of November’s election, which he lost.Trump refuses to concede defeat by Joe Biden and continues to advance baseless claims of electoral fraud, despite Biden’s electoral college victory and regardless of the Democrat’s lead in the popular vote by more than 7m ballots.Over the weekend, Trump tweeted encouragement to Republicans reported to be considering challenges to the electoral college results when they come before Congress on 6 January. Such moves will in all likelihood not succeed in overturning the result, representing instead political appeals to the Republican base, many by senators who harbour White House aspirations of their own.Nonetheless, aides to the president, speaking anonymously, have told reporters they are concerned about Trump’s behaviour as inauguration day, 20 January, draws near.Powell was cut from Trump’s campaign team after spouting wild conspiracy theories but continues to advance the president’s cause. Spotted by CNN on Sunday night, she denied meeting the president and said it was “none of your business” why she was at the executive mansion.But she was among attendees at a Friday meeting at the White House at which Trump reportedly proposed naming her as special counsel to investigate alleged electoral fraud, and flirted with the pardoned former national security adviser Michael Flynn’s suggestion that the army might be used to rerun votes in battleground states.Trump attorney Rudy Giuliani was reported to have pooh-poohed the special counsel and martial law plans, but to have asked about seizing voting machines, all ideas knocked down by the chief of staff, Mark Meadows, and the White House counsel, Pat Cipollone.Speaking to the Wall Street Journal, one White House aide said Trump’s current strategy for holding on to power amounted to: “Let’s throw a giant plate of spaghetti at the wall and hope that at least one noodle sticks.”Maggie Haberman, one of the New York Times reporters who broke news of the Friday meeting, tweeted: “Sources who have gotten used to Trump’s eruptions over four years sound scared by what’s transpired in the past week.”Haberman also said Powell had returned to the White House to pitch “an executive order on seizing voting machines to examine them, per a person with knowledge of the meeting”.On Monday, outgoing attorney general William Barr told reporters that though he was “sure there was fraud in this election” it was not “systemic or broad-based” and he would not name a special counsel to investigate such claims. Barr also said he saw “no basis right now for seizing machines”.“If I thought a special counsel at this stage was the right tool,” he said, “I would name one. But I haven’t and I’m not going to.” More
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in US PoliticsA statue of the civil rights activist Barbara Johns, who played a key role in the desegregation of the public school system, will be installed in the US Capitol, officials said on Monday, replacing one of Robert E Lee, a leader of the pro-slavery Confederacy.Johns was 16 when she led classmates at her all-black Virginia high school in protest of substandard conditions, leading to a lawsuit that was resolved in the US supreme court’s 1954 Brown v Board of Education decision, which declared segregation illegal. The statue, provided by Virginia, will replace one of Lee, a Confederate general during the civil war who owned slaves himself.“The Congress will continue our work to rid the Capitol of homages to hate, as we fight to end the scourge of racism in our country,” the House speaker, Nancy Pelosi, said in a statement. “There is no room for celebrating the bigotry of the Confederacy in the Capitol or any other place of honor in our country.”Representative Donald McEachin of Virginia said on Twitter: “I look forward to seeing a statue of Barbara Johns, whose bravery changed our nation, representing Virginia here soon.”Virginia’s governor, Ralph Northam, said workers removed the statue from the National Statuary Hall Collection early on Monday morning. Northam, a Democrat, requested the removal. A state commission decided Lee was not a fitting symbol of Virginia and recommended a statue of Johns.Lee’s statue had stood with one of George Washington since 1909 as Virginia’s representatives in the Capitol space. Every state gets two statues.Washington commanded American forces in the revolutionary war and became the first president. Like other Virginian founders and presidents Thomas Jefferson, James Madison and James Monroe, he owned enslaved people.John Adams of Massachusetts, the second president, did not. He is not represented in the National Statuary Hall collection.Confederate monuments have re-emerged as a national flashpoint since the death of George Floyd, a Black man who was killed when a white Minneapolis police officer knelt on his neck in May this year. Protesters decrying racism targeted Confederate monuments in multiple cities, and some have been taken down.“The Confederacy is a symbol of Virginia’s racist and divisive history, and it is past time we tell our story with images of perseverance, diversity and inclusion,” Northam said.“I look forward to seeing a trailblazing young woman of color represent Virginia in the US Capitol, where visitors will learn about Barbara Johns’ contributions to America and be empowered to create positive change in their communities just like she did.”The presence of statues of generals and other figures of the Confederacy in Capitol locations such as Statuary Hall, the original House chamber, has been offensive to African American lawmakers for many years. Former representative Jesse Jackson Jr, an Illinois Democrat, was known to give tours pointing out the numerous statues.But it is up to the states to determine which of their historical figures to display. Jefferson Davis, a former US senator from Mississippi who was president of the Confederacy, is still represented. So is the Confederate vice-president, Alexander Stephens, from Georgia.A statue of Andrew Jackson, the seventh president, who enslaved people, represents Tennessee. More
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in US PoliticsThis article is made possible through Votebeat, a non-partisan reporting project covering local election integrity and voting access.
Americans shattered records for voting by mail in many states in the 2020 presidential election, a phenomenon that tested existing election laws, new pandemic-related regulations, postal service capacity, voter education efforts and voters’ own resolve.
Some states had more wiggle room in accepting the mail-in votes than others, allowing ballots that were postmarked by election day to come in later, anywhere from the following day to nearly three weeks after. These grace periods became a highly contentious and politicized aspect of the election. The Trump campaign and its allies challenged them all the way up to the US supreme court as part of an overall campaign questioning the legitimacy of mail-in voting.
Grace periods for mail-in ballots also became more significant as it became clear that the vote’s results would not be even close to final on election day and that the country would indeed experience the “big blue shift” that experts predicted.
But what are the implications of letting ballots arrive late? A state-by-state look at the turnout data shows that the numbers weren’t large but were substantial enough to potentially sway a local race or a tighter election. It also shows a messy national picture, with chaotic regulations and poor record-keeping.
Late-arriving ballots, by the numbers
Twenty-two states had grace periods for late-arriving ballots this election – some already had the provision written into their laws, some implemented special extensions just for the pandemic. Five states allowed ballots to arrive three days after election day (until 6 November) and five others allowed a full week (until 10 November). There is no uniform system in the United States for tracking data on ballots, and some of the data Votebeat collected are merely estimates.
Bar chart showing the number of days in states’ grace period.
In Pennsylvania, after a partisan legal battle, the US supreme court (Scotus) allowed election officials to keep accepting absentee ballots over a three-day extension. About 10,000 votes arrived in that period, according to the secretary of state’s office. Those ballots are still subject to a lawsuit pending at Scotus and are sequestered from official results. They made up about 0.4% of the total mail-in vote. In Massachusetts, which also had a three-day rule, 3,403 votes came in, or 0.2% of the mail-in vote, the secretary of state’s office told Votebeat. More
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in ElectionsDonald Trump’s flirtation with declaring martial law in battleground states and appointing a conspiracy theorist as special counsel to help his attempt to overturn defeat by Joe Biden are “really sad” and “nutty and loopy”, Mitt Romney said on Sunday.“He’s leaving Washington with a whole series of conspiracy theories and things that are so nutty and loopy that people are shaking their head wondering what in the world has gotten into this man,” the Utah Republican senator said.Joe Biden won the 3 November election by 306-232 in the electoral college and by more than 7m ballots in the popular vote. Nonetheless, Trump is entertaining outlandish schemes to remain in office, egged on by allies like former national security adviser Michael Flynn, who Trump pardoned for lying to the FBI, and former New York mayor Rudy Giuliani, the president’s personal attorney.During a Friday meeting at the White House first reported by the New York Times, Trump discussed security clearance for Sidney Powell, a conspiracy-spouting attorney who was cut from Trump’s campaign legal team.It is unclear if Trump will actually attempt to install Powell as a special counsel, a position which the US attorney general, not the president, appoints. Numerous Republicans, from outgoing attorney general William Barr to governors and state officials, have said repeatedly there is no evidence of the mass voter fraud Trump baselessly alleges.“It’s not going to happen,” Romney told CNN. “That’s going nowhere. And I understand the president is casting about trying to find some way to have a different result than the one that was delivered by the American people, but it’s really sad in a lot of respects and embarrassing.“Because the president could right now be writing the last chapter of this administration, with a victory lap with regards to the [Covid-19] vaccine. After all he pushed aggressively to get the vaccine developed and distributed, that’s happening on a quick timeframe. He could be going out and championing this extraordinary success.“Instead … this last chapter suggests what he is going to be known for.”Trump’s campaign and allies have filed around 50 lawsuits alleging voting fraud – almost all have been dismissed. Trump has lost before judges of both parties, including some he appointed, and some of the strongest rebukes have come from conservative Republicans. The supreme court, which has a 6-3 conservative majority and three Trump appointees, has refused to take up cases.Trump has been fuming and peppering allies for options. During the Friday meeting, Giuliani pushed Trump to seize voting machines. The Department of Homeland Security (DHS) made clear that it had no authority to do so. It is unclear what such a move could accomplish.Barr told the Associated Press this month the Department of Justice and DHS had looked into claims voting machines “were programmed essentially to skew the election results … and so far, we haven’t seen anything to substantiate that”. Paper ballots have been used to verify results, including in Georgia, which performed two audits of its vote tally, confirming Biden’s victory.Flynn went yet further, suggesting Trump could impose martial law and use the military to re-run the election. Chief of staff Mark Meadows and White House counsel Pat Cipollone voiced objections, people familiar with the meeting told news outlets. Trump, who spent much of Saturday tweeting and retweeting electoral fraud claims, responded on Twitter.“Martial law = Fake News,” he wrote. “Just more knowingly bad reporting!”Trump’s grip on the Republican party remains secure, suggesting members in Congress will dutifully raise objections to the electoral college results on 6 January. Such objections will be for political ends and will not in all likelihood succeed in overturning the election. Democrats hold the House and Senate majority leader Mitch McConnell has indicated he will knock down objections in the Senate.On NBC’s Meet the Press on Sunday, Romney, who did better at the polls in his 2012 defeat by Barack Obama than Trump did in 2016 and 2020, was asked if his party could ever escape Trump’s grip.“I believe the Republican party has changed pretty dramatically,” he said. “And by that, I mean that the people who consider themselves Republican and voted for President Trump I think is a different cohort than the cohort that voted for me.“…You look at those that are thinking about running in 2024, [they are] trying to see who can be the most like President Trump. And that suggests that the party doesn’t want to take a different direction.”Josh Hawley of Missouri, Tom Cotton of Arkansas and Ted Cruz of Texas are among senators thought likely to run to succeed Trump in the White House, and therefore likely to object to the electoral college results.“I don’t think anyone who’s looking at running in 2024 has the kind of style and shtick that President Trump has,” Romney said. “He has a unique and capable politician … But I think the direction you’re seeing is one that he set out.“I’d like to see a different version of the Republican party. But my side is very small these days … I think we recognise that character actually does count.” More
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in US PoliticsWhere does the New York Times reside in the subconscious of news hounds across America? Paul Rudnick wrote this answer for a New York City mother played by Bette Middler in Coastal Elites on HBO this year:
I love the Times. I feel like it’s my child, or my parent. Do you know what the Times means to a liberal Jewish woman like me? On the census, when it asks for religion, I don’t put Jewish. I put the New York Times. Which I have delivered. The real Times. The newsprint Times. I know I’m old-fashioned, but reading the Times online is like having sex with a robot. I mean, it’s cleaner and it’s faster but you can tell the difference. OK, I’ll just say it. The New York Times online is the New York Times for the gentiles.
The former New Yorker editor Robert Gottlieb put it slightly differently to me, long ago: “The Times is in the same position as the Jews: it’s expected to behave better than everybody else.”For a hundred years, for better or worse, no institution has played a larger role in American culture and politics. And no corporation with comparable clout has been continuously controlled by a single family since 1896.This month, at 69, Arthur Sulzberger Jr will retire as company chairman, after decades of speculation that he would be the last Sulzberger to run the business.In 2005, a vicious profile in the New Yorker asked: “Can Arthur Sulzberger Jr save the Times – and himself?” A couple of years later, Vanity Fair declared that he had “steered his inheritance into a ditch”.As the New Yorker editor, David Remnick, put it to the Guardian this week: “As recently as five years ago, the biggest question was: “Is [Mike] Bloomberg going to own the Times or [Mexican billionaire] Carlos Slim?”And yet, 11 days from now, Sulzberger will defy almost every expectation except his own and hand over a healthy, thriving enterprise to his son AG Sulzberger, giving the fifth generation of the Ochs-Sulzbergers the rudder of the enterprise.“It’s a rare thing and a wonderful thing to see someone exit the stage on a note of real triumph,” Remnick observed.‘I realized change needed to happen’I’ve been a student of the Times ever since I wrote my first story as a 20-year-old student at Columbia, working as the paper’s college correspondent, a part-time post that launched the careers of many Times editors. I only wrote for the paper for eight years, five as a reporter on the metro staff. But the Times tends to enter the bones of everyone who works there, and a preoccupation with its peculiarities has been my hobby ever since.The first time I met Arthur Sulzberger Jr was at a party of budding journalists in Washington at the end of 1980. I can still see him striding into the room with a swagger, a huge smile and his infant son, AG, on his shoulders. Back then, the father was just a young reporter in the Times Washington bureau. But like almost everyone else, I assumed I was watching the next publisher – and the publisher after that.In a series of conversations this month, father and son offered plenty of evidence that a love for journalism can indeed be passed down through DNA. But they also insisted that what looks like old-fashioned primogeniture is actually a bit more complicated. Each told me he had never felt the slightest pressure to follow in his father’s footsteps – and neither decided he wanted to become the boss until he was a young adult.For Sulzberger Jr, the lightbulb came on when he went to work in the advertising department.“I figured I’d give it a year, I’d hate it, and I’d go back to the newsroom,” he said. But then he made his first big ad sale and “realized that I had just covered Johnny Apple’s liquor bill for a year!” (RW Apple Jr, a fabled political correspondent and London bureau chief, had the traditional journalist’s goal: to always submit the largest possible expense account.)“Suddenly it came to me that this was supporting the enterprise. This was the critical part. It was a real eye-opener for me.”“And your father was completely silent about whether he wanted you to succeed him?” I asked.“Oh yes, very much so. You don’t want to pressure somebody to do something they don’t want. Because in the end, if they get it and they don’t want it, that doesn’t help the institution or the individual. Right?”So Sulzberger Jr adopted the same strategy with his own son.“He did not ever push me to be his successor,” AG Sulzberger said. “He was always really consistent about me following my passions. But I made the mistake of having my first job out of college being a reporting gig.” It was at the Providence Journal, and he fell in love with it.“I would have been very happy to spend my career as a reporter or editor,” he continued. But when he was 33, Jill Abramson, then executive editor of the Times, asked him to write an innovation report about the newspaper’s future.“I realized how much change needed to happen at the Times and how essential that change was for the institution to continue to thrive,” he said. Suddenly, it felt like his “highest purpose was trying to make that change happen”.His father agreed: “I think that was his sort of eye-opening moment.”One secret to the Sulzbergers’ success is that each time power has been given to a new generation, predecessors have not become second-guessers. This is what has made it possible for the paper to change with the times.In the case of Arthur Sulzberger Jr, the first and biggest beneficiaries of that tradition were the Times’ lesbian and gay employees. During the regime of his father, Arthur Ochs Sulzberger, Abe Rosenthal, the top editor from the late 60s to the mid-80s, made it clear that the career of any gay employee would end as soon as they came out of the closet.When Arthur Sulzberger Jr became an assistant metropolitan editor, in the early 80s, he figured out who every gay employee was. Then he took each of them out to lunch, told them he knew they were gay, and promised this would have no effect on their career once Rosenthal had departed.“Until you said so,” David W Dunlap, then a metropolitan reporter, wrote years later, “I couldn’t have imagined how to reconcile my soul with my professional calling. Now suddenly there was a Sulzberger … cheerfully reassuring me I had nothing to worry about.”Indeed, as soon as Rosenthal was succeeded by Max Frankel as executive editor, the Times was transformed from the most homophobic to the most gay-friendly major institution in America.Articles of faithA big reason there was so much skepticism that the latest Sulzberger handoff would ever take place was the fate of almost every other major American publishing family of the last 40 years. The Binghams got rid of the Louisville Courier-Journal in 1986. The Taylors unloaded the Boston Globe in 1993 – to the Sulzbergers. The Chandlers of the Los Angeles Times sold their presses in 2000. The Grahams of the Washington Post hung on longer, but even they took $250m from Jeff Bezos in 2013.Sulzberger Jr insists he “just refused to to consider that kind of stuff”. Instead, as the internet ate away at the print advertising that had fuelled the business for so long, he unloaded hundreds of millions of dollars in assets.In 2007, nine TV stations went for $575m. In 2011, it was $143m for 16 regional newspapers – there had once been 35. The WQXR radio station went in two stages, AM and FM. In between came the toughest decision of all for the family, which drew much of its income from shares. In 2009, the Times suspended all dividend payments to shareholders.The Sulzbergers never flinched. But even all of that wasn’t enough. In 2009, Sulzberger Jr had to borrow $250m from Slim – at 14% interest.Four years before that, the paper had made its first effort to make subscription money off of its online edition, by putting some of its columnists behind a paywall in a program called Times Select. But after two years the company decided the loss of online revenue was more important than the gain in subscriptions, and the paywall was abandoned.That made the decision to resume a paywall in 2011 all the more difficult – and it only happened after a fierce internal debate. In the end, Sulzberger Jr sided with the then chief executive, Janet Robinson. It turned out to be his most prescient announcement.“A few years ago it was almost an article of faith that people would not pay for the content they accessed via the web,” he said. But he predicted the paywall would allow the company “to develop new sources of revenue to support the continuation of our journalistic mission and digital innovation … This system is our latest, and best, demonstration of where we believe the future of valued content – be it news, music, games or more – is going.”He turned out to be right.Last month, the company said it had 6 million paying online readers, and for the first time more revenue from digital than print subscribers. The Times had $800m on hand, with $250m available through a revolving credit line. It no longer has any debt, and last year it paid off a loan that allowed it to buy back its Manhattan headquarters. ‘It got really tough’Sulzberger Jr’s close friend Steven Rattner, a former Times reporter turned investment banker, explained his success this way: “If you want just one quality, it would have to be determination. No matter how tough it got – and it got really tough – Arthur never gave up. He was among the first (if not the first) traditional newspaper guy to grasp the importance of the internet, focus on it and never get distracted from it.”Paul Goldberger, a longtime Times architecture critic and one of the paper’s wisest observers, said the most relevant description of Sulzberger Jr’s philosophy could be found in an Italian novel, The Leopard: “If we want things to stay as they are, things will have to change.”I repeated that to the departing Times chairman.“Yes,” he said. “Adapt or die.” More
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in US PoliticsHow 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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