Category Archives: Gov’t Policy

#394 Post COVID-19 — How Do We Repurpose Fixed Assets and Human Capital? (Part 1)

21 Wednesday Oct 2020

Posted by in Economics, Education Issues, Gov't Policy, Societal Issues, Tech Tsunami, Uncategorized

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Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the the future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #394: Note: Yikes, the craziness of the Trump administration has continued the last couple of weeks. Trump and a substantial portion at his staff contracted the COVID-19.  After a few days hospitalization at Walter Reed Army Medical Center, and after taking a host of unapproved drug cocktails plus some steroids, Trump claimed that he was feeling better than any time in the last 20 years.  Must have been a rough 20 years.

Then, in only Trump fashion, he claimed getting COVID-19 was a blessing from G_d. Of course, who else would G_d choose to save the world from this scourge? Mother Teresa? An epidemiologist? No, the Harvard/MIT grad, Trump. Well, maybe Trump didn’t go to Harvard or MIT but just ask and he’ll tell you he’s a stable genius and one of G_d’s favorites.

A bit of irony was part of Trump’s treatment at Walter Reed included cells obtained from an abortion. Where was the outrage from Trump and the far-right about stem cells from an abortion? Cat apparently got their tongue.

More seriously, and the focus of this entry is the major restructuring of the US economy that’s going to occur whether or not there is a vaccine or even cure for COVID-19. The US is faced with an economic upheaval that may rival what occurred during the first and second phases of the Industrial Revolution.

Industrial Revolution Phase I started in earnest around 1800 with the introduction of machines and devices that replaced handcrafting. These machines could complete a task in a fraction of the time and with higher precision than the work done by hand.  Phase I also benefited from the refinement of the steam engine, which allowed the engine to power such mobile devices as a locomotive.  The locomotive enabled the creation of a railroad network to deliver goods to more locations.  Steam-powered tractors used in agriculture resulted in significantly higher output per man-hour of labor.

What I’ve labeled as Phase II of the Industrial Revolution started about 1900.  Two major breakthroughs: (i) introduction of the internal-combustion engine, which was smaller and lighter than a comparable output steam engine, and (ii) standardization of parts. Standardizing parts, originally developed by the rifle manufacturing industry for easy replacement in the field, was later adopted by manufacturers of transportation – automobiles, locomotives and aircraft.  Standardization enabled the use of assembly lines, which lowered labor cost per unit and increased quality.

Phase II also resulted in workers shifting from agriculture to manufacturing jobs.  The shift required workers to have a different set of skills, although for most workers skills required for jobs in manufacturing were limited and could be learned on the job. 

The vast majority of manufacturing companies, especially automotive, were based in the Northeast and Midwest, both of which experienced a major influx of immigrants and southern blacks leaving the farm.  While the manufacturing companies made enormous profits, hourly workers were not well paid until the companies faced work stoppages as the UAW and other unions gained membership.  Following WWII the economy steadily improved and wages for factory workers increased to the point that many enjoyed what could be called a “middle-class lifestyle.”

The plethora of well-paying manufacturing jobs began to erode in the 1980’s with the introduction of: (i) companies shifting production of goods to plants outside the US; (ii) robotics and somewhat later, artificial intelligence-based programs.

Rather than the disruption being caused by a change in required job skills, as seen in Phases I and Phase II of the Industrial Revolution, jobs were shifted outside the US due, in part, to: (i) US tax laws on corporations, which ended up favoring job shifts rather than penalizing job shifts; (ii) erroneous analysis of costs by the employer.  Shifting jobs outside the US accelerated further in the 1990s and by the early 2000s, a substantial number of manufacturing jobs had been shifted outside the US.

The analysis of costs justifying the shift to plants outside the US often focused primarily on labor costs per unit rather than a more holistic approach that accounted for all costs associated with manufacturing.  High labor costs were blamed on union contracts and therefore the only way to keep costs down was to move jobs to a different location.  But were labor costs really too high? 

Following is an example I experienced personally.  While the story is a data point of one, my experience is the thinking of the Board was fairly typical among many companies, large and small. 

One of my jobs post GM was running a company in northern California that assembled electric scooters.  When I took the job the Board said to shift assembly out of northern California (Sonoma County) to China, where labor costs were much lower.  I resisted and within seven months we had increased productivity (with virtually no capital expenditures) to a level where we could double the labor costs in California and pay the Chinese workers zero and it would have been cheaper to continue to produce in California.  Why?  When all related costs were considered, producing in Northern California – in the middle of wine country, no less – was cheaper.  Such a holistic approach to calculating costs apparently was not considered by many companies. 

In addition to being affected by jobs shifting elsewhere, many assembly and other semi-skilled workers in the US are facing another growing threat — robots. The increased use of robotics and AI represents a fundamental shift in how goods are designed, manufactured, assembled and processed for shipment.  The shipment of these goods to the buyer’s location is going to be disrupted as autonomous vehicles migrate from testbed demonstrations to daily use.    

As if implementation of technology were not enough of a formidable threat, these workers face yet another threat caused by COVID-19. To control the spread of the virus, many employers mandated that staff work from home. COVID-19 restrictions also forced many businesses to close, at least temporarily, although more and more businesses are closing permanently.

Within the service sector, the great unknown is to what degree travel and entertainment and supporting businesses will be changed post-COVID-19.  By the time the threat of the virus subsides, will a substantial portion of the population have become less interested in traveling on crowded airplanes, sailing on petri-dish-like cruise ships with hundreds of others, eating in crowded restaurants, or attending sporting events with tens of thousands of others? 

If so, then many assets supporting travel and entertainment will become obsolete – airplanes, hotels, restaurants, theme parks, cruise ships, large athletic stadia, etc.  Some of the buildings can be repurposed but what does one do with a surplus jet liner, cruise ship or football stadium? 

In the retail sector, the shift toward on-line shopping in not new.  For several decades, the brick-and-mortar retail sector has been facing disruption.  The shift toward internet sales, both personal and business, started to take hold in the late 1990s, early 2000s. While some of the shift to internet sales replaced transactions previously completed using 800#’s, most of the shift has been new.    

Restrictions associated with COVID-19 have been like a rocket ship propelling the shift forward.  In a manner of months, forced isolation may have accelerated on-line shopping patterns an amount that otherwise would have taken 10-20 years to achieve.  The shift to the internet and the number of store closings generate the question, “What to do with all the empty retail space?” 

Thus, any plan to stimulate the economy post-COVID-19 needs to address job creation as well as how to repurpose many assets associated with the service sector.  One assumption seems certain – the mix of output in US economy will be different post-COVID-19 than pre-COVID-19.  Making America great again will not be looking in the rear-view mirror and trying to recapture what once was.  The Pre-COVID economy and valuation of assets is as long gone as Wally and the Beaver.    

The US, and many countries worldwide, will have a blob of dislocated assets that have little or no value in their current configuration. Repurposing some of the fixed assets could be fairly straightforward.  Office buildings, shopping centers, many factories could be converted into housing, assisted living facilities and schools.  Converting shopping centers to housing seems ideal to help address the shortage of affordable housing in many cities. 

What do we do with surplus airplanes and cruise ships?  Beyond scrap metal, there’s not much use.  What about surplus infrastructure supporting the air-travel industry?  Some surplus airfields could become ideal recreation centers.  Or, the airfield could be reforested to support wildlife and help address global warming. 

The more difficult problem is how to repurpose human capital.  Without significant training, how do you take someone who was in a semi-skilled job – say an assembly plant or sewing clothing – and have the person perform in a job requiring a more advanced skill set?  How does society repurpose service workers, especially those in travel-related Industries? 

Even many semi-skilled, white-collar workers will be displaced post-COVID-19.  As organizations adjust to more remote working, some middle management jobs likely will be eliminated.

Repurposing the human assets is a daunting task for government and organizations.  In terms of required job skills, Phase III of the Industrial Revolution will be the opposite of Phases I and Phase II.  In Phases I/II new jobs often required less skill, or a skill that was relatively easy to learn on the job. 

Phase III job skills will be more advanced.  Robots and AI-based machines can replace many existing lower-skilled jobs.  OJT will be very difficult.  An example.  There is a company in Fort Wayne, IN that makes exhaust systems for many auto OEM’s.  The plant runs 24×7.  Despite the high output, the plant has few employees.

At first glance, bending pipe a few ways for an exhaust system seems simple enough.  However, the exhaust system might be different for the same model car/truck with a different engine.  Plus there are at least three different auto OEM’s serviced by this plant, which complicates production schedules. 

Bending pipe is a bit more complicated than it seems.  When pipe is bent, one side becomes thinner and the other side of the bend tends to crinkle. 

The Fort Wayne company’s solution to pipe bending and complicated production schedules is a highly automated process to bend the pipe and to change configurations automatically.  Most workers at the plant are skilled in computer programming.  There are no manual “pipe benders.”  The only non-skilled jobs are the lift-truck operators moving raw material to the beginning of and off the end of the line.  In a few years, the lift-truck operators could be replaced by autonomous lift trucks. 

For the US, post-COVID-19 the training of unemployed workers for new skills will be more difficult than repurposing fixed assets.  How do we approach solving this problem? More thoughts in the next entry.  For some guidance, see the existing write-up titled “Technology Tsunami.” (https://usrevolution5.files.wordpress.com/2020/01/tech-tsunami-booklet-with-supplement-1.pdf)

#392. “Mommy, Why Is that Big Teddy Bear in Our Backyard? He Looks Angry!” (#14 in Series)

13 Sunday Sep 2020

Posted by in Gov't Policy, Societal Issues, Uncategorized

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Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the The future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #392: In a couple of earlier posts, I noted I was working with a group of MIT alumni on actions to address the impact of climate change. Some of the alumni in the group are recent grads and some, like me, graduated seemingly eons ago.

The group is very much trying to be apolitical and focus on science and practical solutions. Such an approach is complicated by the Trump Administration’s refusal to make any meaningful decisions on a scientific basis.  All decisions, regardless of the topic, are based on politics.

How urgent is the need to address climate change?  Even if beginning tomorrow we could somehow reduce net CO2 emissions to zero, existing CO2 would have a warming effect on earth’s temperature for several hundred years.

The MIT group understands there is no silver bullet to address the problems with climate change.  Thus, the need to take a multifaceted approach that can: (i) implementing what technology is available today to begin to reduce emissions.  Even if the solution is not sufficient long term, a number of actions can be taken today that will reduce CO2 emissions.  Using biodiesel can reduce tailpipe emissions up to 75% in heavy trucks; (ii) what technology needs to be improved or even invented to reduce emissions to zero; (iii) what’s required to remove CO2, thereby shortening the time for the earth’s temperature to return to normal.

As a group, we spend virtually no time discussing whether climate change is man-made or a natural phenomenon. The point of such a debate is moot. Even if a natural phenomenon, we as a society need to take steps to mitigate the effect for future generations.

For those who think climate change has not been exacerbated by industrial activity, take a look at the chart CO2/ppm and the Earth’s average temperature. The change in temperature is significantly faster than any “natural change” in earth’s temperature.  The slope began to change with the beginning of the Industrial Revolution and has accelerated since.

Okay, you say, but what’s a few degrees? Some years are a little warmer than others, some years a little cooler.  So it’s getting warmer. Relax propeller head, a few degrees is no big deal.

Well Bubba, the last time CO2 parts per million was this high was about five (5) million years ago. Yes, that’s 5 million. And who was the big dog on the block then? Not man. Although T-Rex was gone by then there were some really mean and nasty animals and reptiles.  And some of these guys were real bad asses.

And what else? There were palm trees in the Arctic Circle. Oh, I forgot the ocean was 45-50 feet higher.

That’s where we’re headed if we don’t make a major change…now.  The oceans already are rising quickly and will continue to rise for several hundred years. Even an increase of 10-15 feet, which seems more likely than not, would wipe out many coastal cities, cause huge population disruptions worldwide and create havoc for agriculture.

Still think climate change is a hoax?  Just look at the all the fires on the West Coast. Our old house in Sonoma County was burned a few years ago in a major fire.  And taking Trump’s suggestion about sweeping the forest floor won’t have any impact.  Mmm, sweep the forest floor.

Here’s what life will be like for your grandchildren and their children and grandchildren.  Much higher temperatures, little or no ice in the Arctic, and maybe one of the kids yelling “Mommy, why is that big Teddy Bear in our back yard?  He looks angry.”  “Honey, that’s a very hungry and very angry grizzly bear who’s looking for dinner.  Let’s hope we’re not it.”

Think about such a life for the next week or so.  And also think about Trump and his band of climate-change deniers refusing to take any meaningful action to address what contributes to climate change.  Are you going to be satisfied with some lame non-scientific-based proposal and some even more lame excuse that blames someone else for not taking action?

More on climate change next entry.

#391 They’re Coming to America. Well, Not Any More. (#13 in Series)

30 Sunday Aug 2020

Posted by in Causes of the Revolution, Gov't Policy, Post Trump Presidency, Societal Issues

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Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the The future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #391: At the end of Entry #390 I wrote the next entry would be a discussion about actions to affect climate change.  Wait one more entry.

I decided to change the topic because of two events.  One was this past week’s reality show claiming to be the Republican National Convention.  The reality show pointed out just how far the country has regressed from its core principles, especially the Republican Party.  Ethics?  Why bother?  Respect for others?  Why bother?  Self-respect?  Why bother?  Duty, honor, country?  What’s that?  If I’m not the center of whatever is occurring, then I’m not interested.

Maybe more telling, at least for me, about how far the country has strayed, was the second event that occurred this past week.  While walking back from the coffee shop, I finished a podcast and decided to finish the walk listening to some music.

The song that first played I’d heard many times before but not recently.  For some reason, this time I paid more attention to the words and less to the music.  By the end of the song I was really sad and asked myself, “What have we done to this country?  What can we do to return to the country to what it once was?”

The song was Neil Diamond’s “America.”  Below are the words.  Read them carefully and as you do, think about the America being described in the song – written in the mid-1980’s – and compare that America to the America of today.

With Trump we have a president and administration with policies that are the polar opposite of the America described in the song.  If Trump and supporters want to make America great again, they should start by studying the words of “America.”

“America” by Neil Diamond

Far
We’ve been traveling far
Without a home
But not without a star
Free
Only want to be free
We huddle close
Hang on to a dream

On the boats and on the planes
They’re coming to America
Never looking back again
They’re coming to America

Home, don’t it seem so far away
Oh, we’re traveling light today
In the eye of the storm
In the eye of the storm

Home, to a new and a shiny place
Make our bed, and we’ll say our grace
Freedom’s light burning warm
Freedom’s light burning warm

Everywhere around the world
They’re coming to America
Every time that flag’s unfurled
They’re coming to America

Got a dream to take them there
They’re coming to America
Got a dream they’ve come to share
They’re coming to America

They’re coming to America
They’re coming to America
They’re coming to America
They’re coming to America
Today, today, today, today, today

My country ’tis of thee
Today
Sweet land of liberty
Today
Of thee I sing
Today
Of thee I sing
Today

Do yourself a favor, go back and read the words again, slowly.  Then ask yourself, “How far have we as a country strayed from our core principles?”  Now ask yourself, “What am I and what are we going to do to make America the country described in the song ‘America’?”

#390: Bring in the Repair Crew to Fix Trump’s Damage (#12 in Series)

23 Sunday Aug 2020

Posted by in Causes of the Revolution, Education Issues, Gov't Policy, Post Trump Presidency, Societal Issues

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Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the The future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #390:  One of the more positive events the last couple of weeks was Snoopy’s birthday. Yes, that Snoopy.  You know the great philosopher whose many friends and admirers include Lucy, Woodstock and Linus.

More seriously, the past weeks have been mind-wrecking. Coronavirus aside, Congressional Senate Republicans have all but disappeared from the landscape. Based on different credible news sources, no Republicans in the Senate, especially Mitch McConnell, were involved in the now stalled negotiations to extend government support for those whose economic well-being has been hit hard by Covid-19.

Trump became the de facto Republican negotiator. The outcome was no surprise.  Trump has proved repeatedly – in private and public life – to be one of the world’s worst negotiators. He maintained that pattern during these negotiations.

Always wanting someone to blame rather than working with someone to solve a problem, Trump and his brain-dead band of Munchkins refused to cut a deal with house Democrats.  Trump claimed the Democrats were at fault even though the House passed phase two of an economic recovery package in May.

McConnell, who may star in the sequel to “Dr. No,” refused to have any hearings on the House-passed bill or participate in negotiations.  Ah, isn’t it wonderful to play the fiddle while Rome burns?  Dilbert recently coined a new Covid-19 phrase that could be applied to McConnell’s behavior, “What a maskhole!”

So as McConnell fiddled instead of negotiating, Trump again declared himself king.  This time the self-declared king signed several half-baked Executive Orders that will do nothing to help those in need but seemingly will reinforce Trump’s image with his base as “solving the economic recovery problem.”  If his base only understood as much about economics as most 4th graders understand.

One half-baked Executive Order of his was to suspend Social Security withholding tax.  First, people who are working are not the bulk of the problem.  People who aren’t working or working very little need economic assistance. At least those working have an income.  Second, the withholding tax was to be “suspended” not eliminated.

As president, Trump has no power to change the tax law, especially with an Executive Order. So what does a “suspended withholding tax” mean? The money that should have been withheld from paychecks needs to be repaid. Thus, Trump’s Executive Order gave workers an opportunity to loan themselves money that they must repay.  Let me repeat, if his base only understood as much about economics as most 4th graders understand…

Suspending withholding tax seems fair, right? Mmm, maybe not.  Let’s see, workers get a loan they must repay while business owners get a loan from the federal government to pay workers and use for other expenses, but that loan doesn’t have to be repaid.  No such gift for the workers.

If you completed a survey of how many Trump supporters understood how Trump’s Executive Order really affected them, I’ll bet the total would be less than 5%. Why they continue to support actions by Trump that are not in their economic best interest is beyond me.

Trump’s nonsensical behavior and the abdication by Republican Senators of any responsibility to help the public does not bode well for the US post- 2020 election.  A Trump re-election would likely result in ever more dictatorial tirades. Some of his claims of late, as one reporter noted wryly, would make North Korea’s Kim Jung-un blush with embarrassment.  Attorney General Bill Barr seems equally bent on promoting an authoritarian-led Trump regime.

If Trump is re-elected and Republicans hold the Senate, another US civil war seems certain.  Yes, civil war with armed conflicts and attacks on segments of society deemed to be “Never Trumpers.”

If Biden wins, he and Kamala Harris will have an incredibly tough road ahead, even if the Democrats win back the Senate. The damage done by Trump, Barr, Pompeo and their cronies can be repaired, but…

Think of how long it takes to repair something – house, car, relationship – compared to the time it takes to cause the damage. What’s the time difference between time to break and time to repair? To repair takes probably ten times as long, or longer.

So, if Trump is re-elected and the US experiences a severe Revenge Revolution, or if Biden is elected and the US experiences a mild Revenge Revolution, the country is going to face a decade or possibly two decades before the damage from Trump can be repaired.  Repairing damage to some international relationships could take even longer.

Compounding the repair efforts will be demands to address societal issues caused by racism.  Effectively addressing issues caused by racism may be more complex than repairing Trump-related damage.

People who think some government actions or more laws will make racism disappear are being foolhardy. Racism, and not just racism directed at blacks, has been around for thousands of years.  For centuries, people outside one’s circle – immediate family, local community, ethnic background, religion, etc. – have viewed others with suspicion and often discriminated against them. No law is going to change such attitudes.

The demands that something be done right now to address issues caused by racism are understandable but very likely those demands will divert time and valuable financial resources from the effort to repair the economy, educational system, political system, infrastructure and other critical items which need to be repaired now.  In fact, one could argue rationally that without significant progress in repairing the Trump-caused damage, efforts to address racism will be for naught, and could even backfire.

The best solution for minorities to address the effects of racism, seems to be as it has always been for minorities – education, Education when supported by one’s community begets economic opportunity.  Consider the recommended approach racist if you want.

My view is members of the black community need to take the initiative to help one another.  The Black Lives Matter and other movements would do well to study the pattern of how every other ethnic group that migrated out of poverty.

There are many wealthy blacks who can support such an effort, from athletes to entertainers to business people. We need fair and equal enforcement of the law for sure.  But, it is also time for blacks to look in the mirror and begin to take charge of their destiny.

Significant progress might take two or even three generations. A journey of a 1,000 miles begins with one step.

As far as demands for reparations, my view is be careful what you ask for and especially be careful of what you demand.  Reparations might make some people feel better in the short terms.  Keep in mind reparations are a superficial solution that does not solve the underlying problem. A good sense check for reparation would be to research the lives of lottery winners for say 5-6 years following their so-called lucky day.

Real change takes time.  Real change takes commitment to change.  Real change takes hard work.  Respect must be earned.  Respect cannot be legislated.

Next time: discussion of actions to address climate change post-Revenge Revolution.

#385. Is a Rational Conversation about Racial Injustice Possible? (#8 re US Post COVID-19)

12 Friday Jun 2020

Posted by in Gov't Policy, Personal Stories, Rebranding Black Community, Societal Issues, Uncategorized

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #385: An unexpected addition to the post-COVID-19 conversation is whether widespread racism exists in the United States. While such a discussion comes to the fore periodically, the current discussion seems to be more intense and have garnered a broader audience.

As usual in this administration, comments from Trump have created frustration and anger among most blacks and many whites. The event that precipitated the current conversation was not Trump but the gross misconduct of the Minneapolis Police in the death of George Floyd.

Although Mr. Floyd had a minor rap sheet, by all accounts from bystanders, Floyd’s behavior did not justify actions taken by the police – a knee to the neck for nearly nine minutes, with the cop apparently unconcerned about a possible video from a bystander.

The protest against the police following Floyd’s death started with the release of the video.  The protests started in Minneapolis-St. Paul then spread quickly throughout the country. Protests have continued for more than two weeks, and as of today, still continue.

Actions taken by the Trump administration have created more anger and frustration. The most egregious action seemed to be when Trump, using a loophole in the law that allowed military troops deployed in Washington DC to bring protests “under control.”   Some of the protests included looting.

Last weekend (06/06-07/2020) Trump ordered Attorney General William Barr to have the military troops disperse peaceful protesters away from Lafayette Park. Protesters were met with “chemical” smoke (likely pepper spray or teargas), rubber bullets and low-hovering helicopters.

Why such drastic action? Was the White House in danger of being overrun?  Was there extensive looting?  No and no.  The protesters were cleared by military troops so Trump could walk across the street for a photo op at Saint John’s Episcopal church, often referred to as the “President’s Church.”  Trump, the paragon of Christianity, stood in front of the church holding a Bible.  What more could his hard-core base want than a picture of Trump in front of a church holding a Bible?

As the second week of protests progressed, conversations started to include demands for reducing funding for police departments, and in some cases, eliminating police departments. Other demands focused on improved healthcare, better education, improved housing and some discussions about reparations for blacks.

I’ve tried to listen and understand. Over the last week or so, I’ve also spent 4-5 hours on Skype with a long-time friend whom we met in our early days in Charlotte.  While we have great respect for one another, our ethnicity and backgrounds are vastly different. He grew up in eastern North Carolina.  His parents were sharecroppers with limited education, probably 8th grade. Interestingly, all six children of the sharecropper parents went to college.

My friend’s wife, whom he met in Charlotte. as did we, is a high-energy go-getter who’s had a very successful career in the insurance industry. One assignment was managing an insurance company’s operation in a very large developing country.  The couple has two children – one in college in California and the other finishing high school.

Our recent Skype conversations have included him describing the experiences of an educated, affluent black family with different police departments. Over the years I’ve heard bits and pieces of some of the stories.  However, until this series of calls and then when I read his detailed accounts, which I encouraged him to write, I never realized the entire story. Not pretty.

The Skype discussions also included what he viewed as ideas to address inequities between the races. Before we started that conversation, he said “Some of what I’m going to tell you will make you uncomfortable.”  He was right.

Every now and then I asked a question.  One question was, “How can some members of the black community seemingly justify looting?  How can one justify stealing, especially stealing from a neighborhood store?”  (His response paraphrased), “Whites have stolen from blacks forever. Some blacks feel the only way to get the white man’s attention is to steal from him.”  I found that rationale incredibly disturbing and still have not processed the idea.

Another suggestion was blacks should receive reparations from whites. The rationale, he explained, was if Republicans in the Senate were willing to spend $4,000,000,000,000 for a coronavirus stimulus package, they obviously didn’t care about deficits. Therefore, why not spend another $4,000,000,000,000 as reparations for blacks? Besides, he continued, the $100,000 per person (black population 45+ million so a bit high) reparation would flow back into the economy as recipients bought new cars, bought new houses, took vacations, etc.

At the end of that Skype call, the most recent, I indicated, yes some demands during the call made me feel uncomfortable. I also reminded him that I had listened carefully and didn’t challenge any of his statements. But the next call would be my turn. During that call, I might make some comments that made him uncomfortable.

What are we going to talk about the next call? First, I don’t believe the conversation about racism across the US should be viewed as a zero-sum game. If the parties involved will listen, and be willing to accept reasonable solutions, then everyone can come out ahead.  If one of the sides insists on their “solution” or none at all, then likely no progress will be made.

To me, the only issue that does not need a lot of debate is whether most organizations have some employees who are not performing appropriately and need to leave. Such organizations include police departments.  That conversation needs to include the police unions.  I understand the purpose and value of police unions. But the unions need to quit overprotecting the bad cops. Overprotecting is not good for the entire police force, not good for the union and not good for the community.

As far as the rest of the demands, I have attempted to frame the questions to allow more than one view to be discussed and evaluated.  The questions are:

  1. If every other ethnic group, many of which experienced extreme and overt discrimination, has been able to get off the bottom rung of the economic ladder and migrate toward the middle class, even though the journey often has taken several generations, then should blacks study these ethnic groups and consider a similar path? What’s preventing blacks from doing the same things as these other ethnic groups did?  While the situation for each ethnic group was somewhat different, the path followed seems somewhat similar.
  2. If there are reparations, is it fair to deduct certain amounts to compensate or repay taxpayers for the extra cost of education, the extra cost of welfare, the extra cost of incarceration, etc.?
  3. Wouldn’t money allocated for reparations be better spent on education, healthcare and housing? What happened to teaching someone to fish?
  4. If the percentage of blacks incarcerated is disproportionately high compared to the population, what percentage of crimes are committed by blacks? One can argue about the fairness of sentences for certain crimes, but that is a different issue than the percentage of crimes committed by blacks.  (And eliminate most traffic violations from the calculation.) Is there a reason beyond just “police harassment”?
  5. What percentage of businesses in predominantly black communities are owned by blacks? If the percentage is low, then why aren’t there programs by wealthy blacks to encourage and support such businesses?  Rebuilding black-owned businesses may be even more important post COVID-19.  A report by CBS News (06/12/2020) indicated that when restrictions are lifted, up to 40% of the black-owned businesses may not reopen compared to less than 20% of white-owned businesses. The higher closure rate was attributed in part to lack of available financing.
  6. Is it fair to demand quotas for white players in the NFL and the NBA? (Yes, that’s a joke.)

More to come.

#384 1967 Detroit Riots: Lessons for Cities and Trump Administration

02 Tuesday Jun 2020

Posted by in Causes of the Revolution, Gov't Policy, Lessons of Revolution, Societal Issues, Uncategorized

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

The topic of ENTRY #384 was not anticipated.  The civil unrest this past week may become more prevalent than anyone would like. Unfortunately, the unrest likely will continue well past COVID-19, and thus a topic for this series.

ENTRY #384 BEGINS:  The past week there have been rallies in numerous cities protesting the treatment of Mr. George Floyd by Minneapolis Police. More and more of these rallies have evolved into riots with extensive looting and burning of public and private property.  With Trump’s proclamation Monday evening, June 1, that maximum force, including US military personnel, could be used to quell all protests, the number and intensity may increase and the tactics more warlike.

Apparently the Donald forgot to read his history books and skipped classes as well on military strategy.  Using traditional brute force in a guerilla war, which is what is likely to evolve after the proclamation, rarely works, if ever.  The list is long of examples of brute force failing to stop guerilla warfare, including Vietnam.

Watching these riots has been painful. I can tell you from personal experience, it is quite scary to be caught in the middle of the violence itself.

In summer 1967, we were living in a suburb immediately north of Detroit. I was just months into my job at Cadillac Division of General Motors.

One Sunday afternoon our neighbor, a manager of a credit agency housed in Detroit, said he’d heard there was some disturbance downtown and wanted to go check on his office. I offered to accompany him and off we went.

What we got was a whole lot more than anticipated. When we arrived in front of the office, housed in the Fox Theater building, there were people everywhere. A liquor store next to the theater was being looted as was a TV shop next door to that.

We looked to be some of the first “outsiders” to arrive at this location because while we were still in the car, a number of police cars pulled in behind us. No, we weren’t stupid. It was time to get out of Dodge and we left.

Overnight there were more riots in selected parts of Detroit but there was no declaration of an emergency. So, Monday morning I headed to work. The main Cadillac plant was on the west side and several miles from downtown Detroit. Rioting continued as did the fires. Midday Monday a number of us stood on an enclosed walkway between the fourth floors of two different buildings. We could see parts of the city clearly burning.

Cadillac closed the offices and the assembly plant that afternoon and I headed back to the apartment using an alternate route that was even farther west and away from the activity. I returned without incident but was left with the nagging question, “Are we really safe?”

The apartment complex was just on the other side of the dividing line between Detroit and Southfield – 8-Mile Road. The apartment complex was not gated so there was nothing to stop rioters from entering. Fortunately, the rioting did not spread to our immediate area.

Rioting did continue to spread within the City of Detroit. Rioting became so extensive, Governor George Romney (Mitt’s father) asked for Federal assistance and members of the US Army’s 82nd and 101st Airborne Divisions were deployed to Detroit. In addition to light-infantry weapons, the units were supported by heavily armored tanks.

If you’ve never witnessed in real time the firepower of a .50-caliber machine gun mounted on a tank, visualize this. The machine gun is aimed at a sniper holed up in say the 5th floor of a brick building. The first few rounds from the machine gun literally blow away the brick facade and then subsequent rounds penetrate the interior of the building. That scene was fairly common in Detroit as the military attempted to control sniper fire.

Thus, in the span of a few days, much of Detroit became a war zone. The devastation is hard to describe and imagine. Some areas of Detroit have not yet recovered, more than 50+ years later. Yes, Detroit had some other problems as well but I think what tipped over the City was the 1967 riots.

What caused the riots? Was there an incident like George Floyd in Minneapolis or Rodney King in Los Angeles? On the surface, the riots were precipitated by a seemingly innocuous single incident. In the early hours of Sunday morning, the Detroit police raided and closed a blind pig in a black neighborhood (illegal bar often with some gambling as well).

While black residents were frustrated by the raid on the blind pig, residents housed a long-standing frustration with treatment by the Detroit Police Department, then mostly white. Economics was a contributing factor, but much less so than most people think. In the 1960’s, the US economy and especially Detroit’s economy were strong. Many black residents were employed at one of the many new-car/truck assembly plants or component plants in and around Detroit.

Further, all hourly employees in those plants were members of the UAW with extensive health benefits, multi-week vacation and a base wage that was sufficient for full-time workers to be classified as “middle class.” Detroit also had a relatively strong black-owned business community.

What happened to Detroit following the riots? Many whites fled the City for the suburbs. Auto companies gradually closed many of the assembly and component plants, although there were other reasons for that as well. Detroit became a shell of its former self. Only in the last decade, roughly 50 years after the riots, has Detroit started to rebound. New businesses are moving in. Housing is being rebuilt and population is gradually expanding.

What’s the lesson, or the caution, for other cities experiencing riots? While there is no simple answer, at a minimum, city leaders, public and private, need to work closely with citizens and be alert to problems with city services, whether garbage pickup, water quality (as in Flint), or unsavory or unethical actions by law enforcement. Understanding these problems, and making an effort to resolve the problems before getting out of control, will help mitigate the potential for disturbance.

An example of such an effort is the sheriff of Genesee County Michigan, north of Detroit and home to Flint, MI.  The sheriff has been working closely with residents throughout the county.  So far, there have been no unruly protests in Flint and other cities in the county.

Another issue that seems important, and one that does not get discussed enough publicly, is encouraging local residents to become business owners in their community. Maybe more black-owned businesses would prevent some of the insidious looting that occurred during recent protests. Why would you loot a store in your neighborhood that is providing critical services, and owned by one of your neighbors?

Those who loot or encourage looting neighborhood stores should not complain because few, if any, national chains open neighborhood stores. Why should these companies risk capital, if the stores are targeted for looting?

Finally, I think any honest conversation about unfair treatment, discrimination, and associated issues needs to ask the following questions. “How did other ethnic groups overcome what was often overt and brutal discrimination? What did these ethnic groups do, sometimes over several generations, to reduce discrimination and make better lives for themselves?”  The answers could provide some guidance for all sides.  Answers will also indicate solutions are never easy and never one sided.

#383 Job Creation to Address Climate Change

25 Monday May 2020

Posted by in Affordable Solutions, Common Sense Policies, Economics, Gov't Policy, Societal Issues

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #383 BEGINS: Is there a simple, understandable way to get virtually everyone in the United States to support actions to address climate change? Secure support from the left, right, center, techies, climate deniers, etc.?

My conclusion is, “yes.” The simple approach is to link climate action to job creation.

Post-CIVID-19, the US is likely to experience an unemployment rate of 10+% for at least five (5) years, if not longer. Many pre-COVID-19 jobs will be lost permanently.

How does the US re-energize the economy post COVID-19? Focus on creating jobs associated with technologies that will reduce carbon emissions. Not just jobs installing solar panels and putting up wind generators but a wide range of jobs.

There are numerous technologies that could be implemented to reduce carbon emissions. Why point fingers about who’s right and who’s wrong about the causes of climate change? If you think climate change is fake news, then you need to talk to people worldwide in coastal cities. If you think climate change is just part of the earth’s natural warming and cooling cycle, then take a hard look at the chart of temperature change just since 1950.  Now imagine that same amount of increase by the end of the century.

OK, even if you don’t believe the climate data, the US still has a major problem – and that long-term economic growth. Don’t believe the economy is going to return to pre-COVID days. Look in your history books and study what’s happened after every major economic disruption or war – things change dramatically. Post-COVID-19 will be no different.

So let’s begin thinking about how to create new products and new jobs that also reduce the impact of climate change. If you’re still in denial about climate change, then just focus on the job creation part.

Yes, science is sometimes difficult to understand. Science denial is also a major talking point with many politicians.

Job creation, however, is not hard to understand. Jobs generate income and help people to a better life. Job creation also appeals to both sides of the political aisle. Rather than blaming someone else, why not start asking, “Is there a way to stimulate the economy long-term and address climate change? Is there a way to ensure a better lifestyle for our children and grandchildren”?

In this discussion, seems that scientists might be better off to spend less time on CO2 PPM, mean temperature – for many people it is difficult to understand or appreciate what a couple of degrees Celsius means – loss of amphibians, greater intensity of hurricanes, etc. Important topics? Yes. But not a front-line topic when you’re out of a job, which many people are going to be for some time.

Making the message about actions to address climate change more positive and less about how people must be prepared to “sacrifice” is also not necessary. With the right technology, people won’t experience sacrifice.

What’s the sacrifice with a more efficient HVAC? An electric lawn mower? (I use a manual push mower and time to cut is about the same as the neighbor’s gas-powered mower.) An electric car? Attractive solar panels on the roof that look like shingles? More trees? And many other ways to reduce CO2 that are not “sacrifices” and can be configured as fun, new products.

Some groups are working on taking a more jobs-focused approach to help gain support for actions to address climate change. I’m part of such a group. Let me know if you’d like to learn more. Comments welcome, as always.

#379: Healthcare Quagmire: We Gotta Get Out of This Place (Part 2)

25 Saturday Apr 2020

Posted by in Affordable Solutions, Benefits of Revolution, Common Sense Policies, Gov't Policy, Possible Solutions, Societal Issues, Uncategorized

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #379 is the second entry and addresses healthcare cost. At this point not sure how many entries.  Like #378 this entry is a bit long.

ENTRY #379:  At the end of part 1 of this series (#378), I indicated suggestions to help address inequities in society would be forthcoming. Let’s start with what appears to be the closest to a practical solution, affordable health care for everyone.

The chart indicates the increase in medical care cost in the US as a percent of GDP. Since 1960, medical costs have increased from about 5% of GDP to more than 18% in 2018. These percentages include “discounts” offered to insurance companies and Medicare.

The impact of medical costs on a family vary widely. For families with health insurance partly or fully funded by an employer, the costs are relatively low. Yet, even with subsidies from employers, for most every family medical costs have increased faster than family income.

Until the Affordable Care Act passed under the Obama administration, families which did not have subsidized insurance, faced premiums that could be breathtakingly high, especially for those over age 50. In addition, many who had any one of a range of “pre-existing” condition often were unable to secure any coverage for the pre-existing condition.

The Affordable Care Act, aka Obamacare, made considerable progress in filling the “unaffordable insurance hole” in the societal safety net and for getting coverage for pre-existing conditions. While Obamacare included some coverage gaps, in part to ensure passage in Congress, the AFA did significantly reduce the number of people without medical insurance.

For example, immediately prior to AFA coverage taking effect, about 18% of the US population was uninsured. That percentage continued to drop through 2016:Q4. Immediately upon taking office in 2017:Q1, the Trump administration repealed many features of the AFA.

The Trump administration has continued to eliminate features, including many insurance exchanges, through which uninsured people could at least buy some coverage. The result of Trump’s policies has been a sharp uptick in the number of uninsured. While the chart stops at 2018, the latest projection for 2020 is 45-50 million people in the US will be uninsured.

Opposition to broader insurance coverage seems to focus on two issues: (i) potential elimination of the option to buy additional private insurance; (ii) additional taxpayer cost with expanded coverage for everyone. Both issues are solvable, if opponents will listen.

A Medicare-for-All (MFA) type coverage does not preclude availability of private insurance that would offer an additional level of service or benefits. In some metro areas, selected medical practices offer what is promoted as “concierge service,” ensuring quick access to physicians and more private facilities for many procedures.

While the initial cost for a MFA program could be somewhat higher as people formerly uninsured begin to address issues, longer term the cost could be less. Much of the cost savings could be from eliminating “unproductive” costs. While estimates vary because of different assumptions, overhead costs for Medicare appear to be about 50% less than overhead costs for private insurance. (NYT article)

Currently hospital costs and therefore healthcare insurance premiums include some amount for emergency room visits by the uninsured and those without financial resources. ER visits are far more expensive than office calls. In addition, people who have no insurance often wait until an illness or situation becomes extreme before visiting ER, thereby increasing the cost of treatment.

Opponents to Medicare-for-All should think about medical cost in the same way they think about maintenance on their personal vehicle. Routine maintenance, such as changing oil regularly, is much less expensive than doing no maintenance and eventually replacing the engine. In many ways, the human body operates much your car’s engine; preventive maintenance is much less expensive.

Getting Congress to agree to some form of Medicare-for-All should be much easier following the United States’ experience with the coronavirus. There has not been an event in most everyone’s lifetime that has demonstrated the importance of medical care for all citizens. Recent estimates indicate those without insurance infected with COVID-19 will face medical bills of $50,000-$75,000. Even those with insurance could face medical bills of $25,000 or more.

For those who still think the US cannot afford such coverage, the chart lists healthcare costs per capita by country. Note the cost per capita for highly developed countries. The cost in the US is 75% HIGHER than Germany, the next most expensive country. OK, if you’re still concerned these countries don’t offer the same level of care as the US, then buy the additional-cost option.

Addressing the Naysayers. Any effort to implement a Medicare-for-All type system will be met with vigorous opposition from the right. Following are some likely questions as well as suggested answers. I recognize no answer, however logical and supported by facts, will satisfy the hard right. But given how so many people have been affected by COVID-19 so far, and how many are likely to be affected in the coming months, the voice of the naysayers may be heard less and less, especially when facts are presented to support a Medicare-for-All type system.

Comment #1: The US has the best healthcare system in the world. Don’t mess with it! Leave it alone.

Response #1: Let’s look at the expected lifespan in the US compared to other countries. The US ranks 47th behind such countries as Sweden, Germany, China, Taiwan, France, Korea, Canada, UK, Costa Rica, French Guiana and a host of other countries and ranks just one ahead of Cuba. If the US has such a great healthcare system, why does it rank 47th?

Comment #2: Those countries don’t have as many immigrants as the US. Those immigrants are what’s causing the problem here.

Response #2: Take a look at life expectancy among whites, blacks and Hispanics. Whites have the longest life expectancy but the others are not bringing the US total down by much. You also realize that life expectancy in the US declined under the Trump administration, don’t you? The decline was the first since WWII.

Comment #3: Why should I pay for someone else’s healthcare? There are lots of slackards out there who don’t pay income taxes. Paying for their medical care is not fair to me.

Response #3: First, anyone who has worked, whether or not they pay income tax, contributes to funding Medicare. In addition, the vast majority of Medicare recipients paid while working and continue to pay a monthly premium in retirement.

Comment #4: Medicare-for-All will create another inefficient government bureaucracy. The private sector is always more efficient. Why waste my hard-earned dollars?

Response #4: The bureaucracy supporting Medicare already exists. Plus, overhead for Medicare is substantially less than for private insurance. While there are different estimates for overhead, there is almost universal agreement that overhead costs for Medicare are substantially less than for private insurance. Most estimates are savings for Medicare of 50% or more. Medicare is more efficient at administering care than private companies. Why should people have to pay 2x the administrative costs for private insurance as they do for Medicare?

Comment #5: How are the doctors going to make any money? Medicare screws them on pricing.

Response #5: One adjustment with Medicare-for-All might be to weight payment to doctors more toward prevention rather than procedures. The change should also generate cost savings. In addition, if necessary, fees to doctors could be increased. The area needs further analysis.

SUMMARY: Some form of “Medicare-for-All” with an option for additional-cost coverage seems an ideal solution to help us address “we gotta get out of this (healthcare quagmire)  place.”  Obviously there are some issues to be worked out in order to implement a Medicare-for-All type program. However, most of the issues have been solved with existing Medicare programs and the Affordable Care Act prior to the Trump administration cuts.

Enough discussion for now about a practical solution to addressing healthcare costs. Likely more later.

 

#378. US Societal Quagmire: “We Gotta Get Out of This Place” (Part 1)

19 Sunday Apr 2020

Posted by in Causes of the Revolution, Gov't Policy, Societal Issues, Uncategorized

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: in a couple of preceding entries I tried to address the seemingly endless number of inconsistencies in information from the Trump administration about the spread of the coronavirus and/or actions to mitigate the spread. After some reflection, I decided that was futile.  Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time on Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  At this point not sure how many entries.  The first one is a bit long.  

ENTRY #378 BEGINS: In the 1960s, there was a song by The Animals that included the lyrics, “We gotta get out of this place if it’s the last thing we ever do.”   While not written as a protest against the Vietnam War, the song was often used as a protest against the US participation in Vietnam.

Even though the song is more than 50 years old, the title seems appropriate today. The place we have to get out of is the economic and social quagmire in this country. The economic and social quagmire has been gradually getting worse with each decade. And while the Trump Administration has not been the sole cause, decisions by Trump with the support of the Republican Party have made the quagmire far worse.

Another perspective on the same situation is the US is sitting on an economic and social time bomb with the timer clock getting close to zero hour and ready to explode. What’s creating the time bomb is pressure from multiple sectors:

  1. Decades of limited earnings growth for middle and lower-income workers. The result has been greater income inequality.
  2. More medical risk. Fewer employers are providing company-paid medical insurance, thus leaving families to fund their insurance.
  3. Less job certainty. The uncertainty has been growing for some time as more organizations hire workers as contractors. Organizations are also automating an ever increasing number of functions of blue-collar and white-collar workers.
  4. More societal polarization with focus on one’s political party rather than with focus on solving problems. The shift began with the Reagan administration, when Reagan repeatedly declared, “Government is the problem, not the solution.” Trump’s public animosity toward anyone who does not support his views, however controversial, convoluted and even unconstitutional, has taken party loyalty over policy to an unprecedented level.

The four forces squeezing the US population are like hands squeezing a balloon. The coronavirus has intensified the squeeze, leaving little time before the balloon bursts. Reactions to state governors’ actions to control the spread of the coronavirus generally have been positive although some on the far right have protested. Apparently far-right Republicans think they have immunity to the virus.

The stay-at-home directives, closing of businesses and social distancing seem to have allowed the nation to pause and begin rethinking previously held assumptions. For example, prior to the coronavirus, certain jobs were considered relatively unimportant and, therefore, not worthy of much compensation. Such jobs included non-degreed healthcare workers, grocery store staff, transit workers and workers at food-processing plants.

Interestingly, the coronavirus changed those assumptions. People began to realize how important these jobs were to a functioning society. During the coronavirus those working in healthcare, grocery store and food-processing, among others, were categorized as “essential.” At the same time, many college-degreed, higher-paid white-collar jobs, including many executives, were categorized as “non-essential” and mandated to work from home.

Further, many “non-essential” businesses were ordered to close. The result was a huge spike in unemployment. Over a four-week period ending mid-April 2020, more than 22,000,000 workers in the US filed for state unemployment benefits. Over the next few weeks, the total will likely increase significantly since many unemployment offices were overwhelmed and furloughed workers unable to file.

How many of those currently furloughed will be re-employed post-coronavirus is uncertain. At a minimum, there likely will be a major disruption to the pre-virus job-status hierarchy. Many lower-paid “essential” workers could receive a pay increase and many white-collar workers deemed “non-essential” could be reclassified to lower-paid positions or jobs eliminated.

The COVID-19-related shutdown of the US economy has brought to the forefront social and economic inequities. Prior to COVID-19 these inequities often were discussed in the abstract since most of the people discussing the inequities were not affected directly. COVID-19 has reframed the conversation. Most of the public now realizes how fragile their jobs are and how the safety net for furloughed workers has a huge hole, starting with unemployment benefits and medical coverage.

Now that this “hole” in the safety net has been discovered, what steps will elected officials take to make repairs? The task of repairing the hole may be more complicated than policymakers realize. While anyone losing a job or being furloughed without pay suffers economically, the impact of that loss may be markedly different for different age groups.

Historically, as workers aged their families had been able to accumulate financial resources that could help cushion economic downturns. Thus, older workers furloughed because of COVID-19 should be in a better position economically than younger workers. But are workers today, older and younger, able to weather an economic downturn?

How do economic resources of today’s workers compare to workers at the same age say 25 years ago? Do today’s workers age 45 have the same relative assets as workers who were age 45 in 1995? What about assets of workers say age 25 in 2020 compared to those age 25 in 1995? Are workers today, older and younger, at a disadvantage economically compared to previous age cohorts? The answer is, “yes.” And that disadvantage has grown with each generation.

Over the last 50-60 years, there has a fundamental deterioration in affordability of key factors that help a family accumulate assets. Since roughly the mid-1960’s each succeeding age cohort has been faced with:

  1. Housing prices (and rents) increasing faster than income
  2. Medical costs increasing faster than income
  3. College tuition increasing at a rate much faster than inflation and income
  4. Retirement savings burden transferred to employees as employer-funded defined-benefit retirement programs have been eliminated

The economic pressures caused by each one of these factors probably could be managed by most families. For example, since 1960, when adjusted for inflation, housing prices have increased about 125%, rent about 75% and income only 25%.  However, when the increases in all factors are combined – each one has a similar curve – the result in a significant erosion in disposable personal income.

A story that hit me like a 2×4 to the forehead was an interview with a family trying to survive under the crush of these economic pressures. The interview was during the recent PBS News Hour. The subject was an ER- vehicle technician in New York.

The technician was describing the mental and economic pressures associated with the coronavirus. The ER technician earned about $40,000. As anyone familiar with cost of living in any of the NY boroughs, $40k for a family is tight. He also had a second job. What really struck me was the ER technician’s employer, apparently a contractor to the City of New York, did not provide health insurance.

Here’s the guy taking you to the hospital to get treated for coronavirus (or some other emergency) but the ER technician does not have employer-paid health insurance. Even worse he can’t afford private health insurance because the Trump administration eliminated many features of Obamacare and eliminated insurance exchanges. So, Trump and Republicans, the guy taking you to the hospital to save your life is risking his life and risking financial ruin if he contracts the virus from you. Does that seem fair?

Longer term, the impact of the coronavirus on the United States will likely end up changing permanently a number of aspects of society. The post-coronavirus United States will likely be forced to address the medical and economic inequities that have been building for the past 50-60 years. In addition, the US might begin to address the need retrain workers as more technology is integrated into the workplace.

The likely result of the coming technology tsunami? Many blue-collar and white-collar workers of all ages are going to be faced with possibly accepting a lower standard of living. (See booklet titled Technology Tsunami for more discussion and possible solutions.)

Will workers of different age cohorts be affected differently? Workers currently age 50 and older, even though they should have more resources, may be hit harder by the technology tsunami since many are less familiar with advanced technology and they have fewer years before retirement to try and recoup lost earnings.

But the technology tsunami is only one tsunami facing current workers. Another tsunami headed toward US shores is the retirement tsunami. What we as a society don’t talk about and certainly what has not been addressed at the Federal level is how unprepared for retirement workers are.

The retirement tsunami has been caused by the elimination of employer-funded health and retirement programs. The potential impact of the tsunami has been made worse by erosion of personal income from the accelerating cost of housing, medical and college tuition. Workers have nothing left over to save for retirement.

In a recent poll by Center for Retirement Research at Boston College, 75%, or 3 out of 4 people age 50-62 had jobs that fell into a “non-traditional” category — meaning, those without employer-provided retirement plans and health insurance. According to the report, workers in non-traditional jobs can expect their retirement income to be as much as 26% lower than that of people who spent their 50’s and early 60’s in positions with full benefit packages, according to the center’s findings.  (Update: NYTimes article about older workers without adequate retirement savings moving in with children, 20 05 03 NYT Underfunded Retirement Parents Moving in with Children) 

What about the impact of higher costs and the technology tsunami on younger workers? Don’t they have 30-35 years to recoup lost earnings from a coronavirus economic slowdown and the technology tsunami? Unfortunately, a greater percentage of younger age cohorts are likely to be even less prepared for retirement than those currently age 50-62.

If costs for housing, medical, education and retirement continue to exceed gains in income, the cumulative effect will further erode disposal personal income. Unless there is a fundamental change in how health care costs, retirement programs and advanced education are funded, more and more people will be underfunded for retirement.

What will make a bad situation worse is a prolonged economic slump associated with the coronavirus shutdowns. The rate at which people have been furloughed is unprecedented – 22,000,000 in four weeks and likely another 10,000,000 in the next four weeks.

Few people in business, few economists and much of the general public does not expect the economy to bounce back once the restrictions associated with the coronavirus are lifted. Even if employment in the manufacturing increases over the next 24-30 months as companies begin bringing jobs back to the US, overall economic growth will be very slow.

Some portions of the service sector employment seem likely to experience a permanent loss of jobs. After “stay-at-home” restrictions are lifted, how many consumers will immediately return to restaurants, attend sporting events, go to shopping centers or travel by plane – and especially take cruises? Consumers are likely to remain cautious until an effective vaccine has become widely available – probably as long as 18-24 months. Even with the vaccine will the public’s behavior be changed permanently?

During the next 18-24 months and maybe forever, how much of structure of service sector will change? Many formerly employed in the service sector have no employer-funded health insurance and even fewer have an employer-funded retirement program. Where do these former employees turn for help? Their jobs are gone, or at least not coming back for some time. Finding another job will be extremely difficult since the economy is growing slowly at best.

Now you see why the theme of this entry is “We gotta get out of this place if it’s the last thing we ever do.” This place is a dead end. We’ve got to find something new. The pressure to “get out of this place” seems like the spark for the Revenge Revolution.

The hardships associated with coronavirus seems to be awakening the middle class to realize how long they have been screwed by Republican policies of tax cuts for the wealthy and denying affordable medical care for all. Workers over 50 are realizing the need to return to employer-funded retirement programs and/or increased Social Security retirement benefits. Such programs are widespread in other developed countries so there is no excuse for not implementing.

When will the Revenge Revolution start? I think we’ve started. The coronavirus seems like an event that could trigger a revolution. The pace and magnitude of the job losses are unprecedented. The Revenge Revolution could spread as quickly as the coronavirus.

As more and more people realize “we gotta get out of this place” the more pressure on Washington to address the social and economic inequities. People are not going to be satisfied with Trump blaming China, the WHO or someone else for the coronavirus. People want concrete steps to fix the hole in the safety net, help train people for the coming technology tsunami, make healthcare affordable for everyone and make sure people have adequate resources for retirement. (Next few entries will offer some solutions.

#375 Leadership in a Crisis: Chaos or Confidence?

21 Saturday Mar 2020

Posted by in Causes of the Revolution, Economics, Federal Budget, Gov't Policy, Stupid Is as Stupid Does, Uncategorized

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Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, Entry #365.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude: there is an endless number of inconsistencies in information from the Trump administration about the spread of the coronavirus and/or actions to mitigate the spread. Rather than beat a dead horse, I’ve chosen a few that are representative but not necessarily the most egregious.

ENTRY #375 BEGINS: During the Great Depression FDR understood that instilling hope in people would help bring the country together and help reduce the likelihood of societal chaos. FDR started his first term by stating, “The only thing we have to fear is fear itself.”

FDR followed his inaugural address with a series of “fireside chats,” during which he outlined problems and proposed solutions. (If you’ve never heard any of the “fireside chats,” they’re available on the internet.) The fireside chats helped build confidence in the capabilities of the Roosevelt administration and a foundation of hope in a time of great uncertainty.

The umbrella for recovery from the Great Depression was called the “New Deal.” The New Deal included a series of programs to provide work and income (and self-respect) for all types of unemployed workers. The New Deal work programs – WPA, CCC, and many others – included significantly expanding infrastructure in the United States, which laid the groundwork for economic growth for many decades to come.

The lesson of FDR’s understanding of creating hope and maintaining self-respect seems to have been lost on the Trump Administration. Whereas the cause of society’s uncertainty today is different than during the 1930’s, the importance of instilling hope in society and avoiding instilling fear remains the same.

Unfortunately, since day #1 in office, Trump has promoted chaos and fear. Even cabinet members who were selected because of a relationship with Trump, have been cast aside for daring to disagree with Trump. As noted in several previous entries (#374 is an example), the result of Trump‘s management style has been a cabinet that is filled with incompetents.

Trump has also consistently displayed incompetence on substantive issues. The combination has reduced people’s confidence in the ability of government to manage crises. What about the public’s confidence in the competence of the White House in dealing with the coronavirus? Did Trump take the approach of FDR and layout problems and proposed solutions?

In a press conference March 20, 2020, a reporter asked Trump and Mike Pompeo, Secretary of State, when the administration first learned of the extent of the coronavirus problem in China. Pompeo asked the Homeland Security director to answer – the reply was “January 3.”

Did the Trump administration convey such information to the public? Did the administration take any action to ensure critical medical supplies would be on hand should the virus spread to the US? No, not even outside the public purview. As recently as March 3rd – two months after learning about the major problems in China – Trump declared publicly the coronavirus was a hoax.

When cases started appearing in the US, Trump claimed there were only 15 cases (there were at least 60). And of the 15 cases, Trump claimed only one or two were serious. A few days thereafter, Trump declared the virus would magically disappear, like some miracle. According to Trump, the US, unlike other countries, had the coronavirus under control.

On March 19 information became available that the Senate Committee on Intelligence had been briefed on the severity of the problem in February. The chairman of the committee, Richard Burr (R-NC), used the information to sell stock in industries that might be affected and to warn a small group of high-dollar donors about the growing problem. Did Burr inform the public? No. (Gee, I wonder what the outcry would be from Fox News, Lindsey Graham and other Trump lapdogs if Burr were a Democrat?)

Despite declarations from King Trump, the number of people infected in the US kept increasing exponentially. Then after several governors and mayors had implemented severe restrictions on travel and gatherings, King Trump declared, “I always knew this would lead to a pandemic.” Right Donald – liar, liar, pants on fire.”

Aside from the bonehead declarations by the president, the performance of the Trump administration this past week or so has been better, but remains mixed. Public confidence in the Center for Disease Control (CDC) seems to have improved as doctors have begun telling the truth about the intensity of the coronavirus and how citizens should behave. Comments from CDC personnel often have directly conflicted with claims made by Trump, even when Trump is standing next to the CDC spokesperson.

In addition, state and local officials have continued to provide guidance. Examples include governors of Michigan and Washington as well as governors/mayors in the New York tristate area. There are still some bumps in these declarations and differences of opinion but action is being taken.

As far as calming fear, Trump might have convinced the hardcore supporters he’s competent, but no one else seems convinced that he or key White House staff/cabinet officials knows what to do. Once the public began to understand more about they could be affected by the virus and then began to understand proposed government programs to respond, mild panic set in.

People rushed to buy food and staples. Stocks of toilet paper were depleted because people were concerned the material used to make facemasks would stop production of toilet paper. A simple explanation of manufacturing capacity for TP, and lead times from factory to food stores would have mitigated most concerns. A similar explanation for many food products would have helped. But as of this date, nary a word from the White House about supply chains.

The uncertainty also spooked investors, who hate uncertainty. The result has been a frenzy with huge daily swings in the market, mostly down. The major indexes, Trump’s personal barometer of job performance, have declined to a point where all the gains realized since inauguration have been wiped out. In less than two months the major indexes have fallen 25-30%.

The near freefall of the stock market has affected consumer confidence as has the projection of a double-digit drop in GDP in 2020:Q2, and double-digit unemployment. The trifecta hit on confidence will exaggerate the virus-related slowdown in purchases of durable goods as well as home sales and construction.

The run-up in the stock market proceeding the recent crash also left the public with another headache – an additional $1,000,000,000,000 Federal debt. The 2017 tax cut was essentially a wealth transfer program to the rich, making them even richer. Think of it as socialism for the rich. Little, if any of the tax cut actually filtered down to the middle and lower-income categories.

The end result was the rich got considerably richer and everyone else got stuck with the bill — $2,700+ for every man, woman and child in the US. For a family of four, they should think of the tax cut as their gift of more than $10,000 to the very wealthy. (For more about the fallacy of trickle-down economics, which was used to justify the wealth transfer, see blog entry xxx.)

While an economic stimulus will help some people pay bills in the short-term, the real issue is mitigating the effects of the virus. Because currently there is no vaccine (forget Trump’s claim) and no known cause, there is no way to stop infections. The government’s plan is to “flatten the curve” of the rate of infection so the number of people needing hospitalization stays within the capacity of the hospital system.

Actions to “flatten the curve of infection” include restricting the number of people who can gather together. In some areas, the restriction is 100 people, some areas it is 50 people and some areas 10 people. Surprisingly, as of 03/18, about 10 states had no restrictions, including Texas.

The flip side of restrictions on crowd control is the negative impact on commerce. Restaurants, bars, hotels, gyms, movie theaters, theme parks and even religious institutions have been ordered to close. Sporting events have been canceled or delayed. Airlines have cut back flights by 50% or more.

Even such mundane tasks as garbage pickup have been affected. In our neighborhood, the sanitation department also picks up twigs, leaves and other yard waste. This week the yard-waste truck was about an hour late because, according to a man on the truck, they could not take off because of the 50-person restriction and had to wait for the sanitation workers to leave the building. (Yard waste pickup has now been suspended.)

The effect of these restrictions will be a significant increase in unemployment and decline in GDP. Although some believe the jump in unemployment will be temporary, my belief is that any rebound in employment will leave many unemployed as organizations realize how to operate with fewer employees by implementing more technology. The depressing effect on employment could last for a number of years. (For more information about the effects of technology on potential unemployment, see ”Tech Tsunami Booklet with Supplement” )

While both economic and medical programs are needed, most proposed actions by the White House seem more focused on the economy and less on ensuring medical care is available for those affected. An example is the proposed payment of $1,000-$2,000 per family for some period. The intent seems worthwhile, helping to address income shortfalls for many service workers.

The effect of such programs on confidence is more problematic. The proposed program would link the amount of payment to family size and family income. Thus, the more income one earned (there’s a cap), the bigger the check from the government. Does anyone in the Trump administration or the Republican Senate understand basic economics? People with lower incomes who get laid off have no savings. At least give everyone the same amount.

Doubtless the irony of the proposed economic program has been lost on the White House and the Republican Senators. Isn’t giving away money directly to families socialism? Only a couple of weeks ago Republicans were characterizing as socialism any Democratic proposal for income support or student-loan forgiveness. Or, as often stated by Trumpsters, maybe such programs were really like communism. Well, aren’t socialism and communism the same?

Okay, the idea of supplementing income in the short-term makes economic sense. But there’s no need for a tax cut for corporations. In case Trump and Republicans don’t understand, taxes first require revenue and then a profit. If the public is not working there’s no demand and no revenue – and duh, no profit or tax due.

The proposed programs also have a flip side. #1, the proposed program would increase the federal debt in FY2020 at least another $1,000,000,000,000 and closer to $2,000,000,000,000. Thus, by the time Trump completes four years in office, the Federal debt will have increased more than $3,000,000,000,000…and likely more. The increase is remarkably high given that unlike Obama, Trump inherited a very strong economy that should have resulted in a smaller annual deficit and possibly annual surplus. Like I asked earlier, does anyone in the White House, Trump’s cabinet or the Republican Senate understand basic economics?

So where have all the Republican fiscal conservatives been while Trump ran up the federal debt? Apparently in hiding and waiting for a Democratic president so they can begin screaming about the level of federal debt. The scream will be the Federal debt needs to be reduced with cuts to payments for Social Security and Medicare.

Another area that can contribute to the thinking-public’s lack of confidence is the Trump administration’s effort to eliminate Obamacare. During the 2016 presidential campaign and then during three years in office, Trump has made every effort to kill Obamacare. Any Obamacare-like program was bad — oops until the coronavirus. Now many programs being proposed by the Trump administration are absolutely consistent with the purpose of Obamacare and suggest that the US would be better off with a national healthcare system. Such change in policy will only increase frustration among the populace as well as increase the lack of confidence in government.

Adding fuel to the “no-confidence” fire was Trump’s claim at a oppress conference Friday, 03/20/2020 that his administration inherited a broken healthcare system from the Obama administration but that he (Trump) had fixed it. Obviously, not everyone agreed. The lead doctor at CDC put his head in his hand as Trump spoke.

Where does all the inconsistency and uncertainty lead? Uncertainty, as discussed in a number of previous blog entries, is often a precursor to a revolution. The US might get lucky and avoid a 5th revolution by voting out Trump and most of the Senate in the November 2020 election.

As of today, even though the coronavirus crisis is still in the early stages, the public seems more than willing to accept Depression-era types of programs to help stimulate the economy and begin to help reduce the income inequities that currently exist. Such programs are more consistent with the Democratic Party and would seem to bode well for the election of Joe Biden.

However, if for whatever reason Trump is re-elected, then the level of chaos and uncertainty experienced during the first term is likely to intensify. While the hard-core Trumpsters might be satisfied, the majority of the population will not be. The extreme discord between the hard-core Trumpster and rational people will increase the probability of a 5th US revolution.

As described throughout the blog, the revolution will be some type of revenge against the elite that Trump continues to support. The revolution – the Revenge Revolution – also will include many of the hard-core who finally wake up to the reality of how much Trump has screwed them.