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 29^th 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.

 

COVID SIDE OF LIFE. Day 33: The New Normal?

 

(Image: Lucas Jackson/Reuters)

Pandemic Log: Friday, 17^th April 2020

I read today that one of the conditions for airlines to start flying people again will be that they cannot sell middle seats to passengers for the foreseeable future.

It got me thinking about what our new normal might resemble, once countries begin to re-open their economies for business and pleasure as they end the current lock downs.

The one thing abundantly clear to me it that there will be no semblance of 'pre-covid' normalcy in our daily lives and activities until we invent a vaccine, and have mandatory vaccinations for people; we are still twelve to eighteen months away from an available vaccine.

So, once we start to re-open the economy, in order to prevent a 'second wave', this what I believe the new normal will likely look like, at least until the end of 2021 because it will take that long vaccinate enough people to achieve herd immunity.

ONE: Temperature checks at our places of work, malls and maybe even movie theaters and restaurants. Employers will also require access medical records to track employee health; this will require temporary updates to current HIPPA guidelines.

TWO: We will be administered antibody tests in order to be cleared to resume work. Those who have not developed antibodies might need to be tested weekly. According to a Harvard professor this means that the US will need the capability to administer at least 500,000 tests per day. Currently, at the peak we are managing only at 145,000 tests per day.

 

THREE: Bluetooth-based contact tracing will be used to track, and inform people when they come into contact with someone with Covid. Those who came into contact will be required back into 14 day quarantine. Interestingly, privacy advocates, healthcare experts and elected officials agree that contact tracing is critical to preventing future outbreaks; they just need to agree to data privacy protections that need to accompany such a system.

FOUR: It will be mandatory to wear face masks in public spaces, on public transportation and probably anywhere there will be more than five people gathered.

FIVE: Social distancing rules will need to be observed at offices (hooray, to the end of open office concept), restaurants, grocery stores and movie theaters; likely anywhere that people congregate.

SIX: Those who are vulnerable, like older folks and the immune-compromised, will be required to continue to curtail their activities until they are vaccinated.

Basically, unless you are Larry David and believe this is what normal should always have been – we will all need to adjust the new abnormal.

 

The Cowardice of Narendra Modi

 

Image: @NarendraModi

"India’s tryst with destiny has been successful because of its democratic nature, not in spite of it."  

-Jawaharlal Nehru

Even though I never supported the BJP, I was not blindly anti-Modi and was willing to give him a chance when he was first elected Prime Minister in 2014. I also remember the depth of frustration and disgust the majority of Indians felt at the time with the Congress led UPA-II government’s unchecked and brazen corruption.

This frustration was further fueled by disillusionment with Prime Minister Manmohan Singh’s spineless leadership and an utter sense of hopelessness about the stranglehold that the Gandhi family maintained on the Congress Party; refusing to allow a new generation of competent leaders to emerge. So when a number friends and family confided in me that they were going to vote BJP for the first time in their life, I was not surprised.

As a deeply polarising figure even within his own party, Mr. Modi was aware of the trepidation most Indians had about his chequered past, a past that had earned him a ban from entering the USA. For this reason he was careful to avoid religious and communal themes during his campaign and championed the slogan, “Sabka Saath, Sabka Vikas” (Together for all. Development for all). 

He worked hard to position himself as an economic reformer, promising to function more like dynamic CEO and less like paper pushing bureaucrat. He vowed to cut red tape and deal with incessant graft to unleash the latent promise of the world’s seventh largest economy. Most of all he promised to work tirelessly to create jobs for what will be the world’s largest and youngest labour force by 2020. For these reasons, India Inc. was also willing to support Mr. Modi. 

It would be fair to say that I was cautiously optimistic about his first tenure, albeit always remaining clear-eyed about his deep RSS roots and the dangers of extreme Hindutva lurking beneath the surface of the BJP’s political façade. 

No rational person expected Modi to become a different person as Prime Minister, suddenly embracing Muslims and behaving like the grand statesmen that Mahatma Gandhi and Jawaharlal Nehru were. However, we did expect him to pour his energy into pushing through bold and much-needed reforms to modernise India’s socialist-style economy and privatise poorly functioning public sector organisations. To achieve his economic aims, we also knew Mr. Modi would have to walk a tightrope around furthering the RSS’s long held vision of turning India into a Hindu nation. The gamble was that if he succeeded economically, then the RSS’s vision would not have the fertile breeding ground that a weak economy and high unemployment can offer.

I was heartened when he invited Nawaz Sharif, the Pakistani prime minister, to his swearing in ceremony. It was a grand gesture, the first by any Indian Prime Minister and one that went against the wishes of many in his advisors. Similarly, I applauded his decision to allow the Pakistani Joint Investigation Team (JIT) to visit the crime scene of a Pakistani-sponsored terrorist attack on Indian soil, even though he was lambasted by the public and every opposition party for kowtowing to Pakistan. To me it was the right signal by a confident leader looking to find a diplomatic and peaceful resolution to long-running India-Pakistan animosity.

Similarly, I was glad when Mr. Modi was persuaded to change his mind, based on new facts and information, about the Aadhar program. While in the opposition, he had staunchly opposed and relentlessly targeted the program, dubbing it a fraud scheme. Further, I supported the implementation of the single national goods and service tax (GST). It replaced an archaic and cumbersome matrix of central, state and local tax regimes that included excise duty, service and customs duty, surcharges, state-level value-added tax and Octroi. No question the rollout was messy and painful, but it was necessary first step to make India more competitive and investment-friendly, and could be improved and finessed over time.

I was even willing to cut Mr. Modi some slack when he suddenly announced on live TV in 2016, that his government was getting rid of all 500 and 1000-rupee notes, to combat black money and help digitise the Indian economy, even though I did not understand his logic. We now know that Raghuram Rajan, Governor of the Reserve Bank at the time, strongly advised the Prime Minister against doing this. He explained to Mr. Modi that with India being one of the largest cash-driven economies in the world, the short-term economic costs would be catastrophic, even if there were minor long-term gains. 

The Prime Minister did not heed the advice of his top banker, a former Chief economist of the IMF and the man who predicted the 2008 global financial crisis. Mr. Modi’s demonetization decision was an unmitigated disaster with the Indian economy slumping to its lowest growth since 2014 with the move shaving 1.5% - 2% of GDP. We also know now, with more than 90% of the total cash in circulation returning to the banking system, that the primary goal of flushing out black money also failed.

For me the first turning point came when Mr. Rajan resigned in June 2016. His decision came after months of public criticism by senior BJP stalwarts and Hindu nationalists, and the government's silence made it clear that he did not have the support of the Finance Minister or the Prime Minister. Less than a year later another eminent economist, former Chief Economist of the Asian Development Bank, Arvind Panagariya, also quit. Mr. Panagariya, a professor at Columbia University, had been appointed by Mr. Modi to lead NITI Ayog, which was a revamp of the Nehru-created soviet-style government economic planning commission. 

It was starting to become clear to me that despite Mr. Modi’s 56 inch chest, he clearly lacked the courage to surround himself with depth and diversity of thinking to help him guide India’s governing and economic policies. Nor it seems was he willing to listen to the advice of some of the most accomplished economists. Perhaps Mr. Modi did not understand that, unlike his political cronies and sycophants like Amit Shah, men of integrity and intellect will never acquiesce to being a rubber stamp for the whims of a politician.

The other thing that became abundantly clear is that Mr. Modi had a great penchant for self-advertisement and a savvy for garnering PR to launch grand schemes like Make-in-India, Digital India and Smart Cities. However, after the initial fanfare there was little to no follow-through with policy support or investment needed to deliver on these promises. Undeterred by these failures and the lack of results, his government has spent “a whopping Rs. 4,343.26 crore of tax payer money on advertisements and publicity” touting Mr. Modi’s so-called achievements.

After five years in office even the economy, the reason many people reluctantly voted for him, has not shown signs of growing at the pace required to keep track with India’s development needs. It is true that under Mr. Modi the Indian economy has averaged a faster GDP growth rate than under Manmohan Singh’s government, 7.3 percent versus 6.7 percent, respectively. However, these figures were published after Mr. Modi’s government controversially changed the way that GDP was being calculated.

This led to a restating of growth under the prior government’s tenure and a downward revision to 8.5 percent of the 10 percent growth rate achieved under Manmohan Singh in 2006-07. The irony is that even with the new calculation and revised GDP numbers, growth under Mr. Modi has never reached 8.5 percent. The latest GDP forecast for 2019-20 has been revised further downward to a dismal 5.6 percent.

While the GDP calculations might be a source of debate, what is not being disputed is that for 2018-2019 Foreign Direct Investment (FDI) declined for the first time in six years. Additionally, India’s FPI outflow in July 2019 was the highest among emerging markets, this on the heels of the highest outflow in ten years in October the previous year. This sharp exodus of foreign funds signals a loss of confidence in India. The domestic economy has hit “a soft patch as private consumption, the key driver of GDP, turns weak, along with subdued new investment pipeline and a widening current account deficit,” according to the RBI's Systemic Risk report.

Under Mr. Modi’s tenure we have also witnessed unemployment reaching a forty-five year high to hit 6.1 percent in 2017-18. It seems his government tried to delay the release of the jobs report because it was close to the 2019 election. This led to the acting chairman and another member of the National Statistical Commission resigning in protest.

The man who promised in 2013, that if elected, he would create 10 million new jobs found himself in January 2019 struggling to explain why the Centre for Monitoring Indian Economy found that in 2018 the country lost as many as 11 million jobs under his stewardship.

I would be remiss to suggest that Modi has been a total failure. He has had successes with his Swachh Bharat program. This initiative has built over 92 million toilets and provided sanitation access to 500 million households. The Ujjwala Yojana scheme delivered cooking gas, with 60+ million free LPG connections, to the poorest households in India. The Ayushman Bharat health insurance scheme has provided free healthcare access to more than 10 lakh people, since its inception in late 2018. Additionally, infrastructure investments have led to a marked increase in road building, more than doubling the previous government's pace with 27km of road being built each day in 2017-18. His government has also invested in new airports and metro networks.

All of this is good and necessary but the bottom line is that Mr. Modi was elected for one sole purpose: to create jobs. He promised us that he alone could help India surpass China by delivering double digit GDP growth, modernising our economy and creating the most pro-business and investment-friendly environment in Asia. One that encourages entrepreneurship, small business and foreign investment to foster conditions that help create the 1 million jobs India needs, to match the number of young people joining the workforce, every month!

Nobody can argue that India is the most complex democracy in the world to lead. Our intricate mosaic of religious and cultural diversity has been built over 73,000 years. We speak 22 official languages and have over 100 dialects in use today. An Indian Prime Minister needs to contend with 8 national political parties, 53 state parties and 2485 unrecognised parties to get things done, not to mention satisfying the needs of 1.4 billion people. Leading India requires not only courage and tenacity to face often insurmountable challenges, but also compassion and humility to guide the birthplace of four of the world’s major religions.

Instead of rising up to this great challenge, Mr. Modi has decided to take the cowardly route. He has chosen to inflame communal tensions, undermine civil liberties and stir up religious fervor in a bid to divide and distract us from his failures. Any charlatan can inflame passions and stir up tensions, but a courageous leader acknowledges his or her mistakes and finds ways to course correct. Confident leaders encourage and revel in public debate on the most contentious issues and do not quash freedom of speech by shutting down the internet 134 times in 2018 alone, more than any other democratic nation in the world.

For me, the issue was not that Mr. Modi recently abrogated Article 370 and Article 35A, revoking Jammu and Kashmir’s special status, but the fact that he did it without sufficient public debate or any political dialogue. Mr. Modi’s government detained and arrested opposition leaders and shut down all communications in Jammu & Kashmir, acting in the way a Russia, China or Iran conducts internal affairs using cloak and dagger tactics, not in the light of day, the way the world’s largest democracy should.

There are people who will argue that Mr. Modi’s landslide re-election in 2019 should quiet all critics like me. To me it is clear that Mr. Modi’s current infallibility and election results stem entirely from the lack of opposition and a viable political opponent and not from any deference to him or blind loyalty to his party’s agenda. Mr. Modi would be wise to recall Bob Marley’s words; “you can fool some people sometimes but you can’t fool all the people, all the time.”

We have survived foreign invaders and the brutality of the British. We came together after a bloody partition. Rebuilt after terrorist attacks and communal riots. I believe our secular ideals are deeply enmeshed in the fabric of our country. In the short-term Mr. Modi’s government may succeed in sowing divisions, but in the long run they will fail to divide Indians.

For us, there will come a day when a charismatic new opposition leader will unseat Mr. Modi, or his tenure as Prime Minister will end, but Mr. Modi will forever have to live with his cowardice.