Showing posts with label Unemployment. Show all posts
Showing posts with label Unemployment. Show all posts

Thursday, December 31, 2020

Looking Ahead at 2021 (not predictions)

 (Photo by Danil Aksenov on Unsplash)

“Optimism means better than reality; pessimism means worse than reality. I'm a realist.”
Margaret Atwood
 

I am an eternal optimist and feel confident that our future is bright. I envision that we will build a more equitable and just world over the next few decades, but the journey to get there will not be without hardship. However, the next few years are likely to get rockier, based on the current cultural, political and economic realities.  

There are five realities that exist and, based on how we navigate these or allow them to unfold, we will determine if the New Year turns out to deliver on the optimism we are feeling, with covid-19 vaccines rolling out and a new, more stable and predictable US President taking office, or if it ends up being no better, or even worse, than the previous year.

One: Vaccine Rollout and Anti-Vaxx Movement
Vaccinating 330 million Americans is going to be a Herculean task, not to mention vaccinating 7.8 billion people. Nothing on this logistical scale has been attempted 
since WWII. Adding to the complication is the fact that some vaccines will require two doses or need to be stored at temperatures that most storage and medical facilities are unable to accommodate, especially in poorer countries.  In America, we are already seeing major hiccups in the rollout with states not receiving the promised number of doses, healthcare workers turning on each other to cut in line and even one clinic accidentally giving patients antibodies instead of the vaccine. The Trump administration’s goal of vaccinating 20 million people by the end of December will fall woefully short with only 2.1 million doses being administered as of 29th December.

Even if the Biden administration ensures a smoother rollout and everything goes according to plan, which it never does, it will take until the third quarter before 90% Americans are vaccinated, to enable herd immunity. This does not account for the growing anti-vaccine movement around the globe and here in the US. The latest Gallup poll found that only 58% of Americans say they trust and are willing to take the Covid-19 vaccine.

Since wealthy countries have hoarded the initial available vaccines, their populations will be vaccinated by end 2021. Other high-income countries like China, India, Brazil and Russia will take until mid-2022 to vaccinate their populations. As a result, low-income countries will not be able to procure vaccines until mid to late 2022, and will take till end 2023 if not early 2024 before they can able deliver mass vaccinations. And we are still months away from developing a vaccine for young adults and children, who have not been a part of the initial clinical trials.

It is easy to forget that there can be no return to normalcy until the majority of the world has been vaccinated, given our interconnectedness through trade and travel. We saw record-breaking Christmas travel in the US, showing that people are starting to let their guard down when we can least afford to. At the same time we are witnessing the worst global spike in cases and deaths since the virus was detected, and have also discovered a new mutation that is 70 % more transmissible than the previous strain. It was first found in the UK but has already shown up in South Africa, India, United States and thirty other countries. Based on these realities, before things get better, I fear the worst of the virus is yet to come in early 2021.

Two: Stock and Big Tech Unreality vs. Small Business Apocalypse


(Source: New York Times)

This one chart says it all. The red line indicates stocks, while the blue and green show GDP and job growth, respectively. While all three took an unprecedented hit at the start of the pandemic, stocks have now climbed back to historic highs, while GDP and jobs lag substantially behind their pre-pandemic levels.

Since the 1920s average Americans and politicians viewed the stock market as a proxy for the US economy, with its peaks suggesting brighter days and troughs indicating tougher times ahead. However, this pandemic has made it clear that Wall Street is now completely detached from Main Street. With access to cheap capital through bond markets, deep cash reserves and global reach, these larger corporations can withstand economic shocks and remain profitable in ways that small businesses simply cannot.

Consider that the five largest listed companies Microsoft, Apple, Amazon, Alphabet and Facebook have all seen double digit profit increases this year, and each will exit the crisis in a more market dominant position than prior to it. Contrast this with small businesses that have suffered disproportionately, with over 43% reporting significant to severe impact.

Recent data shows that 60% have closed permanently, which is a 23% increase in the number of closures since mid-July. One of the worst hit sectors has been the restaurant and service industry, accounting for 82% of the jobs lost since February. In California alone, due to the severe lock downs, the National Restaurant Association predicts that 43% of restaurants will permanently close. Given that small businesses account for 48% of private sector employees in the US, the economic devastation of this crisis will linger for years to come. 

Three: Uneven Economic Hardship & Social Instability
Some ten million Americans are unemployed, and over one million filed new state and federal unemployment claims in the last week of December. More than four million people left the workforce, between February and November, meaning that they are no longer actively seeking employment. According to economists this skews unemployment numbers, showing a drop when it is actually a reduction in labour force participation.

Another worrying trend is the increasing number of people who have been out of work for more than six months. About one-third of the total unemployed are now long-term unemployed. That people are actively looking for work but still unable to find employment indicates a problem in the labour market’s ability to match skills with goods and service needs. Not a good sign.

This crisis has also disproportionately affected women and minorities. Women’s job losses account for 54% of overall net jobs lost. Of the 12.1 million women’s jobs lost, more than 2 in 5 have not yet returned, according to the National Women’s Law Center. Among Black men the unemployment rate is around 11.3 percent, which is 5 percent higher than the rate for white men. To put this in perspective, never during the Great Recession did overall unemployment rates surpass 10 percent.  

 In addition, the crisis has exacerbated the wealth gap that already existed between minorities and whites, with job losses concentrated among minorities and low wage earners, according to the Brookings Institute.  

This widespread economic hardship is represented in the fact that the number of Americans living in poverty has grown by more than 8 million since April this year. Nearly 1 in 4 households are now experiencing food insecurity. An analysis by Northwestern found that food insecurity has tripled in households with children; reaching an all-time high of 29.5%.

In addition, there is growing housing insecurity. Millions of homeowners are now struggling with mortgage payments. A Harvard study finds that more than 6 million homeowners entered mortgage forbearance this year due to loss of income, and nearly half (44%) of these households earn $25,000 or less per year.

Many of these issues represent deeper systemic problems that cannot be fixed by a vaccine or simple policy prescriptions. The reality is that we may be three to four years away from gaining back the jobs that have been lost during this pandemic. Economists are already warning us about a K–shaped recovery that worsens and exacerbates pre-existing economic and wealth disparities. 

Four: Growth of Trumpism & Our Deepening Divide
Far from being a decisive victory for Democrats, the 2020 election showed a resilience of Trumpism. Biden won the presidency with the same number of Electoral College votes as Trump did in 2016. Far from witnessing a Blue Wave, we instead saw Democrats lose ground in national, state and local legislatures.

Latino voters flocked to Trump in Florida, Texas and New Mexico. A Wall Street Journal analysis found that Trump improved his performance in every Texas County with a Latino population over 75 percent. Trump also measurably increased his support among Black voters, including over 18 percent of Black men, 34 percent of Asians and 28 percent of the gay, lesbian and transgender community. Even in New York, a solidly Blue state, Mr. Trump increased his vote share within immigrant rich districts in Queens and the Bronx.

If there is any doubt about the broad appeal of Trumpism among the working class and minority voters, we need look no further than Robeson County. It is the largest county in North Carolina and possibly the most diverse in the nation. Robeson is 42.3 percent Native American, 30.6 percent white, 23.6 percent black, and has a growing Hispanic population. It came as a shock when Trump won this formerly Democratic county in 2016, with 67 percent vote share, but in 2020 he increased it to a whopping 81 percent.

On a national level, rather than seeing a healing of divisions that came into sharper focus during the divisive 2016 election, the 2020 election map shows a more entrenched electorate with far fewer counties flipping from one party to the other. In the last election 237 counties changed allegiances from Obama to Trump, in this election only 77 counties flipped.

American’s divisions are not just political but also seep into bi-partisan institutions that require trust for our democracy to thrive. Only 10% of Republicans polled by Gallup say that they trust the media. This is a dramatic decline even from the 30% and 36% who did during eight years of the Obama and Bush administrations, respectively. According to Gallup we now have the largest gap recorded between the two parties since they started conducting this poll in the 1970’s.

As we head into 2021 we can expect these differences to become even more extreme at a time when the left does not believe that the New York Times is ‘woke’ enough, and the right is abandoning Fox News for not being far-right enough.

Five: Democratic Party Civil War
Any party that fields 27 candidates for their presidential primaries, which is the largest number in history, is both leaderless and visionless. Republicans only had 18 candidates during their disastrous 2016 primaries which ended with a hostile takeover of the party by Donald Trump. Imagine a company stating that they have 27 candidates vying for the CEO’s job during a leadership succession – would you invest in them?

Much like the Republican Party, the rifts we see in the Democratic Party have been growing for a number of years. Like the Tea Party who targeted and removed moderate Republicans, this rebel group, who call themselves Democratic Socialists, are intent on remaking the soul of the Democratic Party from the inside. Waleed Shahid, a Bernie Sanders campaign alumnus who now recruits progressive candidates for Congress, was asked if this far-left group was the equivalent of the House Freedom Caucus, his answer was unequivocal: “Yes, it is”.

Even before the new administration takes office, Alexandria Ocassio-Cortez, the most outspoken member of the Squad, has called for the ouster of current Democratic leadership. In the past she threatened her moderate colleagues, saying she would put them on a list to oust them in primaries if they made attempts to reach or work across the aisle.

After a poor showing by Democrats in the 2020 election, despite facing an unpopular and polarising incumbent, the knives have come out and the battle lines drawn between the moderate and progressive wings. The divisions were best summed up by Rep. Spanberger (D-Va.) when she said: “We need to not ever use the word ‘socialist’ or ‘socialism’ ever again. … We lost good members because of that”. President elect Biden too was heard on tape asking civil rights activists to stay quiet about overhauling police, echoing what many in the party believe; “That’s how they beat the living hell out of us across the country, saying that we’re talking about defunding the police”.

It is easy to forget that Progressive Democrats had written Biden off during the primaries, and were also not happy about his selection of Kamala Harris, who is viewed as being too establishment friendly. It is true that Progressives grudgingly coalesced around Biden in order to defeat Trump, but any group that is simply united by hatred for an enemy and not by a common vision is in danger of self-destructing when it comes time to govern. 

The bottom line is that at a time when the Democratic caucus is about as divided as it has ever been in its history, they also have a razor thin majority in Congress. They have 222 members with 218 being the bare minimum votes needed to pass legislation. With the smallest majority any party has had in two decades and given the deep internal divisions, it leaves them vulnerable to losing a handful of members. There is also a strong possibility that Republicans will regain control of the Senate after the runoff races in Georgia, They just need to win one of those races for the wily Mr. McConnell to remain as the Senate Majority Leader.

 

Friday, October 5, 2012

The Grand Old Ghost of George W. Bush

“I will not speak with disrespect of the Republican Party. I always speak with respect of the past.”
Woodrow Wilson




America is currently facing the highest pre-election jobless rate since World War II with an estimated 23 million Americans unemployed or underemployed. The number of Americans on food stamps has increased from 32 million to 46 million since Obama took office (source: USFDA). His signature healthcare legislation, as recently as June this year, had a mere 34 percent of the public in favour, while 48 percent disapproved of it (source: CBS News). The national debt increase is now officially larger under Obama’s watch than it was under all of Bush’s eight years in office; “The Debt rose $4.899 trillion during the two terms of the Bush presidency. It has now gone up $4.939 trillion since President Obama took office” (source: CBS News). The U.S. recession officially ended in June 2009, and the pace of recovery has been anemic at best and showing no signs of changing its current trajectory anytime soon.

History has also shown that no incumbent president has won re-election with a weak economy. George H.W. Bush got the boot in 1992 because of a weak economy (even though he had just won the Gulf war), Jimmy Carter in 1980, Gerald Ford in 1976, Herbert Hoover in 1932, William Howard Taft in 1912. Both Benjamin Harrison and Grover Cleveland were also unceremoniously dispatched by the American people because the economy was hurting. “In fact, this formulation holds for every case of a deposed incumbent going back to the 1850s, which is as far back as NBER’s data goes.” (source: The Daily Caller). There have been numerous analyses done by pundits, and even academics are scratching their heads and offering explanations that say the personalities of the candidates maybe playing a more important role today versus the pain people are feeling at the pump. Or that it boils down to Mr. Romney’s inability to connect with the people, the way Mr. Obama does. A few days ago a group of twenty leading conservatives accused ABC, CBS, NBC, and CNN of rigging coverage to help reelect President Obama.” (source: Washington Examiner). However, history and conventional wisdom would suggest that all other factors matter little when the economic picture is bleak, painful and unemployment very high. So, the only question that remains to be asked is why is Mitt Romney not running away with this election, and why is this race even a contest?

Rather than look to history, biased polling and conspiracy theories, the Republican Party would be better served to take a long hard look within their own tent. With some honest soul searching they will find that all the answers lead back to George W. Bush, and the party he left behind after eight years of internal turmoil. When Bush won re-election in 2004 it was clear that the cracks that emerged during his first term had started to widen within the party. It resulted in the GOP losing both the House and Senate in 2006, which served to further widen these internal cracks, ensuring that the ideological earthquake that had been swelling within the ranks was now a forgone conclusion. There has long been a small but vocal minority within the Republican ranks that believed this country has been on an unimpeded road to liberal hell and damnation; dominated by feckless Democrats and lily-livered RINO’s (Republicans in name only) who have enacted welfare policies and created a culture of handouts versus hard work, slowly destroying the once strong moral and God-fearing social fabric of America. The attacks on 9/11 presented the perfect opportunity, and George W. the perfect patsy, to implement their ultra-conservative agenda. It would start with a strike first (ask questions later) foreign policy and be followed by a audacious reversal and re-drawing of society and domestic policy to lead us towards a more conservative promised land. However, it did not quite pan out that way as they clearly bit off more than they could chew in an attempt to reverse sixty plus years in one Presidential term.

The ill-conceived and poorly executed Iraq war only served to sidetrack from the half started war in Afghanistan and more importantly the hunt for Bin Laden. It also forced America to live beyond its means, at a time when her economic might and global leadership status were already in decline. China, India, Brazil, Russia and South Africa were all emerging as strong economic powers, feeling more confident about their place on the world stage and thus less fearful of American dominance, than ever before in history.  Meanwhile, an administration embroiled in trying to save face in Iraq totally missed the numerous red flags and warning signs within the over-heating housing marketing. While Bush is not responsible for the greatest financial crisis since the Great Depression, he is accountable for ignoring and not paying enough attention to the cracks that had started to show up in the housing market and broader economy, well before his treasury secretary informed him of the stark choice between a $700B bailout and total financial meltdown. At the same time, reeling from botched and hugely unpopular Iraq war, Bush had started to distance himself from Cheney and the Neocon’s; softening his rhetoric, seeking diplomacy in both North Korea and Iran, and giving the foreign policy reigns to his softer Secretary of State. By the end of his tenure, the Bush presidency not only looked and felt like an unmitigated disaster for the country but he had also shattered the hard right dream of taking back the country by reversing liberalism. Under Bush there had been an unprecedented growth in the size of government, never before seen deficits (all financed by borrowing from China), he championed immigration reform that would allow current illegals to stay, provided government handouts, corporate bailouts and extended unemployment assistance, and there was no more tough talk or threats of war with Iran or any other axis of evil power. This betrayal of almost all the most dearly held conservative principles by Bush led to further disenchantment within the Republican ranks and gave birth to the Tea Party. The Tea Party calls itself a grassroots movement for all the people but acts more like it is anti-government, anti-spending/bailouts/stimulus, anti-immigration and anti-compromise politics.

The Tea Party would not be a bad thing if it had a reasonable view about reducing the size of government, bringing down deficit spending, simplifying the tax code, reducing personal and corporate tax rates and overhauling and cleaning up Obamacare but the fact that it has refused to compromise or even sit down and discuss any of these issues makes it feels like their only agenda is to hijack the GOP and yank the entire party to the extreme right. Unfortunately, politics is about compromise by its very nature. Ideology is not. By holding a gun to the head of the GOP the Tea partiers have only served to hurt their chances of success. They have made the GOP look like the party of NO, and provided Obama a free pass, even though he has done little to reach out and seek compromise himself. If you ask the average voter they will say that the Republicans have refused to compromise or reach across the aisle. This growing movement within the party has also forced every GOP presidential candidate to lean further right and appeal only to the extreme right wing base of the party. We saw how John McCain’s VP pick to placate his base turned out, and now a once moderate, slightly right of center, and once imminently electable Massachusetts Governor has been forced to expend considerable time and energy trying to prove that he is conservative enough to his own base. Frankly, this is pretty much all that Romney has been consumed with so far and it is also entirely responsible for his choice of running mate and all his recent gaffes. The man is trying so hard to be someone and something he is not; in the bargain he has not spent any time wooing the electorate, or formulating a strategy to fight his opponent. Meanwhile Obama has spent all his time and money making Romney look like a man who is constantly flip flopping, on virtually every principle and dearly held belief, and has successfully painted him as a weak and ineffective leader who will bend to the will of his party, every time.

Finally, it amazes me how Republicans today behave like the eight years of Bush never happened. That by choosing to ignore all the harsh realities and problems faced by America under his leadership they will somehow magically bear no responsibility. Or that the electorate will simply forget. In this context, laying blame for ALL of America’s problems at Obama’s feet is not only disingenuous but an incredibly naïve and dangerous strategy. Americans are well aware that the grave problems facing this country have been in the making for a few generations. Social security, Medicaid, Medicare, federal spending and ballooning deficits are all cans that have been kicked down the road by both Democratic and Republican presidents alike. What’s more, the electorate today is completely disillusioned with both the House and Senate; much more than they are with the person in the White House. So blaming a president for all our ills, when it is Congress that has the power to act and solve many of them, is like cutting their nose, particularly for Republicans. Consider that during six of Bush’s eight years the GOP controlled both the House and the Senate, and for the last six years of Clinton’s, before that. They also won back the House after Obama’s first two years in office, so have controlled it for half of his presidency. So, as long as the party is unable to fess up to the skeletons in their own closet and admit to the many failures during the junior Bush years, every Republican candidate who is electable will be burdened by the ghost of George W. Bush. He will continue to haunt them until the party is willing to exorcise his ghost. Or, with each subsequent electoral loss, the party can continue to react by pushing itself further to the right supporting candidates who have no chance of being elected. They will only end up looking more extreme, older, largely white male and further and further out of touch with women’s rights and modern America.

The majority of Americans are thirsting for new ideas and real-solutions not no compromise ideology and zero accountability. It would serve the Grand Old Party well to remember that the voter is not a moron, (she is your wife)