Saturday, July 6, 2024



Let America be America again.

Let it be the dream it used to be.


Let America be the dream the dreamers dreamed—

Where never kings connive nor tyrants scheme


O, let America be America again—

The land that never has been yet—

And yet must be


Let America Be America Again



Read the entire poem here:


Friday, November 19, 2021



What did we learn from the vote?


The Democrats want to help families find and pay for quality child care.  The Republicans are opposed.


The Democrats want federal funded paid family and medical leave so working Americans can care for themselves and their loved ones.  Republicans are opposed.


The Democrats want free preschool for all 3 and 4-year-olds.  Republicans are opposed.


The Democrats want expanded eligibility for free school meals so kids don’t go hungry.  Republicans are opposed.


The Democrats want to help rural America and assist family farmers.  The Republicans are opposed.


The Democrats want to protect our Atlantic, Pacific and Gulf coast beaches.  Republicans are opposed.


The Democrats want to make housing affordable for working Americans.  Republicans are opposed.


The Democrats want to make access to healthcare affordable.  Republicans are opposed.


The Democrats want to expand Medicare benefits.  Republicans are opposed.


The Democrats want to bring down the cost of prescription drugs.  Republicans are opposed.


The Democrats want to help small businesses.  Republicans are opposed.


The Democrats want to fix the supply change so products are one again available.  Republicans are opposed.


The Democrats want to expand higher education grants so more Americans can afford college.  Republicans are opposed.


The Democrats want corporations to pay their fair share in taxes.  Republicans are fine with billion dollar companies paying no taxes at all.


The Democrats want to increase federal deductions for state and local taxes.  Republicans are opposed.


The Democrats care about America.  Republicans don’t give a shit.


The Democrats have the interest of 99% of Americans at heart.  Republicans care only about the rich top 1%.


Democrats want a government that helps every American to prosper.  Republicans want a government that does nothing to help anyone but the rich.


Republicans say we can’t afford to Build Back Better.  Democrats say we can, we should and we must.


Republican are CAN’T DO.  Democrats are CAN DO!


What are you?

Monday, November 2, 2020


Final polls indicate that Biden has the best chance of winning with 279 to more than 350 electoral votes.  Here is how it stands now:

If you take all states where Biden is ahead by 6 points or more, Biden starts with 259 electoral votes.  Trump has 143 electoral votes.


There are six states in play-- the margin is 5 points or less.: TX, FL, PA, OH, GA and NC


Biden wins if he carries 1 of these six states.


Trump wins on ly if he carries ALL of these six states.


Trump’s best chances are in TX, OH, NC and GA where the difference is 1 point.


Trump behind by 2 points in NC, 3 points in FL and 5 Points in PA.


If you give him NC, then the race comes down to PA or FL.


Biden is ahead by 5 points in PA (50/45) and 3 points in FL (49/46)


Trump needs BOTH of these states to win.  Biden needs to win just ONE of these states even if he LOSES all of the other states in play.


Bottom Line:  We should know something about FL early on Tuesday night.  If Biden is winning, Trump chances DO NOT look good.  If  it looks like Trump will win FL, then the entire election could hinge on PA.  We could not get a final result for PA for up to a week.






Wednesday, October 21, 2020


 Here is a table showing the average of the polls in 2016 two weeks before the election vs the average now as reported by RealClearPolitics.  

The first thing you will likely note is that Trump's standing in the 2016 and 2020 polls two weeks before the election in 2016 were not that different from the polls now.  Nationally, he had 43% of the vote vs 42.4% now.  In Florida, he had 45% of the vote vs 46.8 % now.  It is the same with other battleground states.

So, what is different?  

First, Biden is performing a lot better nationally and in the battleground states.  His average is 51.3% now.  Hillary was at 48.4%.  Second, Biden is performing 2% to as much as 5% better than Clinton in the battleground states.  Third, the Undecided or other votes (UD/OTHER)  was much higher in 2016, double digits in 4 of the 6 battleground states.  Those undecided voters swung largely to Trump in the final two weeks.  

BOTTOM LINE: This time around, there just aren't that many undecided for Trump to pick up.

Read more about this comparison and the averages from FiveThirtyEight in 2016 vs now here;


Tuesday, July 21, 2020

Trump Ignores Constitution in Effort to Gain Total Power

Trump Ignores the Constitution


Once again, Trump has decided that he can overrule the Constitution of the United States.  

Section 2 or the 14th Amendment reads: “Representatives shall be apportioned among the several states according to their respective numbers, counting the whole number of persons in each state, excluding Indians not taxed.”  Until Trump, this provision has been interrupted to mean that all persons resident in a state should be counted excluding only those who are in the United States for a short period such as tourists.,state%2C%20excluding%20Indians%20not%20taxed.


Ignoring the Constitution, today Trump signed a presidential memorandum excluding all undocumented immigrants:

“it is the policy of the United States to exclude from the apportionment base aliens who are not in a lawful immigration status under the Immigration and Nationality Act, as amended (8 U.S.C. 1101 et seq.), to the maximum extent feasible and consistent with the discretion delegated to the executive branch


Interestingly, Trump does not specify how the immigration status of a person will be determined for the purpose of the census.  The Supreme Court has already ruled the Trump cannot include a citizenship question.  See:


We may have some indication of what Barr and Trump plan from the following passage in the memorandum:


In Executive Order 13880 of July 11, 2019 (Collecting Information About Citizenship Status in Connection With the Decennial Census), I instructed executive departments and agencies to share information with the Department of Commerce, to the extent permissible and consistent with law, to allow the Secretary to obtain accurate data on the number of citizens, non-citizens, and illegal aliens in the country. As the Attorney General and I explained at the time that order was signed, data on illegal aliens could be relevant for the purpose of conducting the apportionment, and we intended to examine that issue.


This section suggests that Trump intends to have the Department of Commerce adjust the final count in each state for apportionment based upon data collects on the number of non-citizens and illegal aliens in the country.  The implication is that Trump would have the census count in any state REDUCED for apportionment purposes by the number of non-citizens and illegal aliens the U.S. Government estimates are present in a state-based data collected by executive departments and agencies.  


Trump argues in his memorandum that he, and he alone, has the authority to determine who is an “inhabitant” for the purpose of apportionment and that he has the authority to exclude from the census count any person he determines does is not have " lawful immigration status.”


The discretion delegated to the executive branch to determine who qualifies as an "inhabitant" includes authority to exclude from the apportionment base aliens who are not in a lawful immigration status.


Basically, Trump is taking the power to adjust the census count as he sees fit to “exclude” as many illegal aliens as he alone determines are present in any state.  In short, Trump’s thumbprint will lay heavy upon the census count that will determine how many representatives each state gets to send to Congress.  You can be sure that states that are pro-Trump will be found to have very few, if any illegal aliens, while states that are anti-Trump will be found to have so many illegal residents that the census count for those states has be to be drastically reduced “in order to obtain an accurate Trump count.”


Today, Trump took one more step toward making himself the total and absolute LEADER WITH UNLIMITED POWER.

Monday, July 20, 2020

How Trump Could Be Re-Elected Without Winning The Popular OR Electoral Vote

Trump has said he may not accept the results of the election if he loses.  He may be setting up a scenario where he can remain President in spite of losing both the electoral and popular vote.  I discussed how this could happen in a recent post on my Facebook page.  Here is what I wrote then.


Could Trump lose the election and still get a second term?  Timothy Wirth and Tom Rogers just published an article in Newsweek explaining how that nightmare scenario could happen.


Here is the way Wirth and Rogers say it could play out


1. Biden wins the popular vote and carries enough key swing states to be presumed to have won 270+ electoral votes, enough to make him President.


2. Trump refuses to concede, claiming that the Chinese, Democrats, or someone has engaged in massive voter fraud by hacking voting machines and/or flooding the election with fraudulent mail-in ballots, just like he as already said would happen if Americans got to vote by mail.


3. Trump, with Attorney General Barr’s enthusiastic backing, declares that the massive voter fraud is a major national security issue requiring him to declare a national emergency and invoke his emergency powers.  He directs Barr to investigate voter fraud.


4. Barr drags out the “investigation” as long as possible.


5. Republican-controlled legislatures in swing states refuse to allow any electoral votes from their states to be certified until Barr completes his investigation.


6. Democrats take the issue to the Supreme Court but the court, unlike in 2000, refuses to intervene.


7. The Electoral College meets on December 14th but without the votes from the swing states Barr is “investigating” Biden does not have the required 270 electoral votes to be certified as the winner.


8. The election of President goes to the House of Representatives as called for by the 12th Amendment to the Constitution which says the House will select the President with each state having 1 vote.


9. Republicans have a majority House delegation in 26 states to 24 for Democrats.  Republican-controlled state delegations cast their votes for Trump.  Trump gets 26 House votes to 24 for Biden.


10. Trump is declared the winner of the election even though he once again failed to win the popular vote and, this time, lost the electoral vote.


All this takes is a close election.  The willingness of Barr to support Trump in his charge of election fraud.  And, the willingness of Republican state legislatures and Republican members of the House to support Trump.  


Trump would serve for four more years.  He would appoint one, if not two, Supreme Court justices thus ensuring a conservative majority on the court for decades regardless of which party gains control of the Senate and/or Presidency in 2024.  Trump could continue to use executive orders to cripple Obamacare, environmental regulations, civil rights, women’s rights, gain rights, worker rights, voting rights, public education, consumer protection, and most of the gains Progressives have made over the last 100 years or more.


Don’t think this could not happen.  It could and it just might.


Read the Wirth/Rogers article here


Friday, July 17, 2020

Trump has gone way too far.

Trump has assembled a private army to attack American citizens who are only exercising their Constitutional rights. People are being illegally arrested and injured for nonviolent protest guaranteed by our Constitution. Trump is doing this in Oregon right now. Speak out demand that this abuse of power stop and stop now. The people of Oregon need your support. Your state or city could be the next target of the Trump secret army. This must stop. 

Wednesday, July 8, 2020

Is Donald Trump a Destructive Narcissist psychologically driven to destroy people, organizations and societies?

I list 35 traits in this article exhibited by destructive narcissistic political leaders that predispose them to do great harm.  Trump exhibits almost all of these traits.  The list is at the end of the article if you are familiar with narcissism, you can scrooll down to view them.  Otherwise, here is a little background.

 Narcissism has to do with the child’s development of a sense of self-esteem during the formative stages of life  when children seek a secure base from which they can explore the world.  According to the theory, our psychological defense to being small, helpless, and dependent during infancy and early childhood is to view ourselves as the center of the universe and to view our parents, especially our mothers, as obedient servants there to satisfy all our needs. 

 We look to our parents’ reactions, and especially our mother’s reactions, for testimony that we are admired, valued, worthy of love, and the special object we think we are.  In effect, our first mirror of ourselves is in our mother’s eyes.  The natural reaction of most parents is to engage in constructive mirroring by reacting to us in ways that are positive, empathic, and accepting.  Simultaneously, we do a little mirroring of our own.  Our parents look to our reaction to their mirroring as proof of their good parenting.  Such mirroring enables the child to develop a grandiose sense of self that is necessary for ambition and self-esteem and that is a normal narcissistic stage of life.  As time goes by, of course, most of us encounter the reality that we are not the center of the universe and that our fantasies of omnipotence and strength are just that--fantasies.  Likewise, our parents cease to view us as their mirror and confirmation of their self-value.

Narcissistic deprivation occurs when the mirroring we so desperately need early in life does not occur or is inadequate.  In such cases, the person is stuck at an infantile stage of development.  His sense of self is undeveloped.  He is, in effect, “mirror hungry” with an insatiable desire for admiration, for exhibiting himself to the world, and for securing power.  The natural outlet is to become a leader, particularly a charismatic leader who can bask in the devotion of his followers.  

That’s not always a bad thing.  Narcissists can become effective leaders.  John Kennedy, Franklin D, Roosevelt, and Lyndon B, Johnson have all been described as having a narcissistic hunger for public approval. 

On the positive side, narcissism is an asset that enables the “mirror hungry” person to rise in organizations, society, and politics.  It is not hard to see why such people are generally so successful.  After all, they:

  • Exhibit high levels of self-confidence that most people equate with competence.
  • Have an infectious enthusiasm.
  • Have an unrelenting drive for power.
  • Are good at office politics.
  • Are frequently charming.
  • Build large numbers of quick, albeit superficial relationships.
  • Are able to make quick decisions with seeming ease.
  • Have Machiavellian “street smarts” when it comes to getting their way. 
  • Are ready, willing, and able to make whatever personal sacrifices are necessary to gain prominence and position.
  • It is only to be expected that many narcissistic people, with their need for power, prestige, and glamour, eventually end up in leadership positions.  Their sense of drama, their ability to manipulate others, their knack for establishing quick, superficial relationships serve them well in organizational life.


Taken to a certain degree, these narcissistic traits can be valuable. Yet, as Manfred Kets de Vries, author of Leaders, Fools and Imposters, has said, “Narcissism is a strange thing, a double-edged sword.  Having either too much or too little of it can throw a person off balance.  The same traits that can serve the narcissistic leader well can also become destructive.

  • Self-confidence can become grandstanding.
  • The pursuit of power can become a race to be run and won at all costs.
  • Relationship building can become the exploitation of others.
  • The easy charm can become crass manipulation.”

See Manfred F. R. Kets de Vries, Leaders, Fools, and Imposters: Essays on the Psychology of Leadership (San Francisco: Jossey-Bass, 1993), p. 33.

Destructive narcissists can do a lot of damage to people, organizations and societies.  

 In my book, Won’t Get Fooled Again, I list 35 traits that have been identified by various researchers that indicate a person is a destructive narcissist.  They are:


1.     Exaggerates his achievements and talents, is boastful and pretentious.

2.     Believes he is “special” and often misunderstood except by other people with special talents or high status.

3.     Devalues the contribution of others.

4.     Fantasizes about success, power, and her own brilliance; compares himself with famous and/or privileged people.

5.     Demands constant attention and adoration.

6.     Expects favorable treatment in any situation.

7.     Expects automatic compliance with his wishes.

8.     Speaks frequently of himself; constantly uses the word “I.”

9.     Takes advantage of others to achieve his ends.

10.  Is unwilling or unable to empathize with the feelings and needs of others.

11.  Is impatient with others who talk about their problems and needs rather than his.

12.  Is emotionally cold and lacks interest in other’s needs; is oblivious to how his behavior and remarks may inflict damage on others.

13.  Is often envious of others and/or believes others are envious of him.

14.  In public presents himself as patient, congenial, and confident.  In private is smug, arrogant, haughty, snobbish, disdainful, and patronizing to subordinates and servants.

15.  Exhibits highly exaggerated self-confidence can do no wrong.

16.  Has an unrelenting demand for perfection.

17.  Is emotionally volatile.

18.  Bullies and abuses those who work for him, intimidates others to get his way.  

19.  Exploits his power and position to achieve personal goals.

20.  Ignores or denies reality.

21.  Has difficulty adjusting to growing old or losing his former mental and physical superiority.

22.  Is obsessed with attaining power and influence.

23.  Is addicted to control.

24.  Distrusts others.

25.  Becomes paranoid when he senses danger or dissent.

26.  Has frequent mood swings that greatly impact the quality of his decisions.

27.  Takes too much or too little risk when making decisions.

28.  Attacks those who question or criticize his decisions.

29.  Prefers to surround himself with an unquestioning loyal and uncritical staff.

30.  Exploits others; forms relationships and romantic attachments only with those he feels will advance his goals and self-esteem.

31.  Has trouble working in a team.

32.  Refuses to share credit or take the blame.

33.  Is excessively confrontational when others deliberately or accidentally threaten his self-esteem.

34.  Overworks and underpraises staff.

35.  Has difficulty in retaining highly qualified staff.


Donald Trump exhibits just about ALL of these traits.  He is a destructive narcissist psychologically driven to do harm.  The longer he is in office, the more harm he will do.  


For more on narcissism and political leadership see: Joseph H. Boyett, Won’t Get Fooled Again: A Voter’s Guide to Seeing Through the Lies, Getting Past the Propaganda, and Choosing the Best Leaders, pp.41-42 ( AMACOM, 2008.) Available from AMAZON.

Sunday, June 28, 2020

Ten Things We Should Learn from COVID-19 and the Failed Trump Administration

1. COVID-19 is not the last virus we will see.  A new, even more, deadly virus could emerge any year.  We will probably not go five years without a pandemic.  We must be prepared to meet the economic and health challenges we will face from the next pandemic and the one after that.


2.  There is no place for racist or racism in this country.  


3. The debate is over.  The United States MUST have universal, free healthcare.


4. Traditional law-enforcement no longer works.  We must invest less in aggressively enforcing low-level, non-violent violations of the law and more in community-led support and public safety delivered by mental health providers, social workers, and victim's advocates.  Public safety should be about maintaining peace and reducing the social conditions that lead to crime.


5. Touchless and distance commerce is the norm.  Amazon is the future.  Shopping malls are the past.  Telemedicine is the future.  In-office doctor's appointments are the past.  Streaming movies is the future.  Movie theaters are the past.  Meals to go, takeout, and cook at home is the future.  Sit down restaurants are the past.


6.  The Gig Economy is here.  The days of a full-time, lifetime or near life-time employment are over.  The average person will have 100's, if not 1,000's of jobs during their career.


7. We should have a guaranteed minimum income for all Americans of working age pegged to the cost of living and above the poverty line.


8. Sixteen years of free public education.  A High School education is no longer sufficient to prepare students for good jobs in today’s economy much less tomorrow’s.  All current student debt should be forgiven.  


9. The Federal government should fully fund the expansion of 5G networks throughout the country.  Every American should have free and reliable internet access regardless of where they live.  Rural America cannot compete for jobs without reliable access to the internet.  


10. The American system of government no longer works.  We must write a new Constitution for the 21st Century that, among other things, provides for: 


a. Popular election of the executive for a single six-year term.  Candidates for the executive should be required to disclose their financial assets and place their assets in a blind trust during their term of office.  Candidates should be required to take general intelligence; physical and psychological tests and the results of the tests should be publicly disclosed at least six weeks before the first vote is cast in an election.  These tests must be repeated every two years with the results publicly disclosed.

b. Abolishment of the Senate.  

c. A single legislature elected for a four-year term from non-gerrymandered districts.  Districts should reflect contiguous geographical areas small enough that voters in the districts have a common community interest.  Terms should be staggered so that 25% of the legislature is elected each year.

d. 12-year single terms for Supreme Court and other federal judges appointed by a 2/3rd vote of the legislature.

e. Formal provisions for recall of the executive, members of Congress, and federal judges upon petition of 10% of registered voters.

f. Strict and effective legislative oversight of the military and Justice Department.

g. Federal funding of all national elections ban on corporate/group contributions to candidates, maximum limits on individual contributions to candidates, strict limits on campaign spending, and full disclosure by candidates on campaign contributions.

h. Online voting and/or vote-by-mail for all elections.

i. Automatic, simple, and easy voter registration to ensure that every American who is qualified to vote can vote.

j. Tax and other incentives for voting.


Please feel free to critique each of these and add new lessons.  We need a national dialogue concerning where we go from here.

Saturday, May 2, 2020

Why You Should Never, Ever Vote for a 3rd Party Candidate

You don’t like either Trump or Biden?  Thinking about voting for a 3rd Party?  Don’t.  If you vote for a 3rd Party candidate, you won’t just be throwing your vote away, you very likely will be helping elect the major party candidate you like the LEAST.  Here is why.

First, 3rd Party candidates can’t win.  The system is designed to prevent them from doing so.  NO 3rd Party candidate has ever been elected.  Former Republican Theodore Roosevelt running on the Progressive Party banner in 1912 had the best showing and he managed to get only 88 of the 531 electoral votes.  No other 3rd Party candidate has come close to matching Roosevelt.  Note: Roosevelt split the Republican Party handed a landslide victory to the Democratic Party candidate Woodrow Wilson.

The American system is designed to make it impossible for 3rd Party candidates to win.  

First, the system is rigged to keep 3rd Parties off the ballot.  Most states place a nearly impossible requirement that a 3rd Party candidate must get signatures from 1% of the voters in the state who voted in the last presidential election AND these signatures must be obtained and verified by August and in some states as early as June of the election year.  Candidates who obtain the necessary signatures can expect to be sued by one or both major parties challenging each and every signature.  

Second, running for President is expensive.  Hilary Clinton spent $768 million in 2016 and Trump spent $440 million.  In 2020, Trump and Biden will probably have to come up with $1 billion each.  Most 3rd Party candidates can’t come close to raising that amount of money and, without it, they can’t get their message out.

Third, like them or not the Presidential Debates still, matter.  To get invited to participate in the all-important debates, any 3rd Party candidate must be picked by 15% or more of voters in at least 5 national polls.  Most people vote for their party identification and there are very few true independents.  Pew Research says that while 38% of Americans say they are Independents, 17% of those Lean Democrat and 13% Lean Republican.  Only 7% of Americans truly don’t lean toward one of the major parties.  Getting 15% or better in one national poll given the fact that even self-proclaimed Independents have a Republican/Democratic Party preference  is next to impossible if you are not running as a Republican or Democrat.  Getting 15% or better in five polls is impossible if you are a third-party candidate.

Bottom Line:  3rd Parties Can’t Win….EVER


You are not just throwing your vote away on a guaranteed loser when you vote for a 3rd Party candidate.  You are actually helping the major party candidate you like the LEAST.  Why is that?

You are considering voting for a 3rd party candidate because you don’t like either of the two major-party candidates.  You don’t like Trump and you don’t like Biden.  Okay, but do you dislike them equally?  Let’s say, you had no 3rd party candidate to choose.  Let’s further say, just for the sake of this illustration, that write-in votes aren’t allowed.  You are stuck with picking Trump or Biden.  There is no other option if you vote.  You say you don’t like either candidate.  But, do you dislike Trump and Biden EQUALLY?  One is going to become President.  Will you be EQUALLY happy or unhappy with Trump or Biden? My guess is that you DO have a preference, even if it is a weak preference.  It is likely that you really, really don’t like one guy but only really dislike the other.  Unless you can honestly say that it makes absolutely NO difference to you whether Trump or Biden is President, then when you vote for a 3rd party candidate, you are voting FOR the candidate you would LEAST like to see as President.  Why?
Let’s say, you don’t like Trump or Biden.  However, if forced to pick between the two, you would pick Biden, not because you like him but because you DISLIKE Trump more.  You vote for a 3rd party candidate who cannot win.  Since you would have otherwise reluctantly voted for Biden, you are taking a vote away from him.  In a close election like 2020 is going to be, the loss of one vote could make a huge difference whether Biden beats Trump since in close elections EVERY vote counts.  If you are a “Biden is the lessor of two evils” voter and you vote for a 3rd party candidate, your best hope is that a “Trump is the lesser of two evils” voter votes for a 3rd party candidate, thereby canceling out your vote.  That’s the best you can hope to achieve, and that’s not a very good bet.  

What about not voting at all?  Here again, it depends upon whether you absolutely don’t have a  preference for one candidate over another.  Not voting when you have some degree of preference, even if it is very small, is the same as voting for a 3rd party candidate.  When you don’t vote, you take your vote AWAY FROM the candidate that you would have selected, although reluctantly.  That’s the same as voting for the guy you like least.

Bottom Line:  Hold your nose and cast a vote for the Democratic Party candidate or Republican Party candidate.  If nothing else, you avoid voting FOR the candidate you like LEAST.

Read more about this topic here:

Thursday, April 30, 2020

How should we address an economic downturn caused by social distancing during a pandemic?

Dennis Snower , a Senior Fellow at the Brookings Institution has produced an excellent paper on the unique economic policy challenges raised by a pandemic such as the COVID-19 crisis.
Snower begins with a summary of traditional Keynesian economics and government pump-priming during an economic crisis.  The basic model goes like this.  
Economies operate based upon Supply and Demand.  An increase in Demand for goods and/or services creates a need for more Supply to meet that Demand.  When companies cannot produce enough goods or services to meet the increased Demand, they have to hire more people or increase working hours that put more money in the hands of consumers who spend that money and create even more demand.  Demand leads to a need for increased Supply which leads to increased Employment/Wages which leads to increased Demand.
When a non-pandemic economic crisis occurs, such as in 2008, there is a drop in Demand which leads to less need for Supply which leads to Unemployment that leads to even less Demand.  The economy goes into a vicious downward spiral.  Governments can break that downward spiral in two ways.  First, governments can spend directly to create Demand by buying things like bridges, military equipment, and so on.  Second, governments can put more money in the hands of consumers through tax cuts or direct payments.  Consumers spend that money to create Demand.  It is called Keynesian Pump Priming.
Keynesian Pump Priming doesn’t work as well during a pandemic where people have to engage in Social Distancing.
Snower explains that the economy consists of two distinct kinds of production and consumption activities—Physically Interactive activities and Physically Distant Activities.  For example, waiters and customers in restaurants engage in Physically Interactive Activities—they have close physical contact.  Contrast that with Food Delivery such as Pizza Delivery.  Participants in Food Delivery are engaged in Physically Distant Activities.  Consumers and delivery people have limited physical contact.  Snower calls the Physically Interactive activities I-Chains and Physically Distant Activities D-Chains. 
In a normal economic downturn, I-Chains and D-Chains respond equally to a typical Keynesian response to getting the economy going again.  That’s not true when the economic downturn is caused by a pandemic such as the COVID-19 pandemic during which people have to engage in social distancing.  I-Chains collapse.  Keynesian pump-priming can’t bring them back to life as long a social distancing is in place.  
Snower says during a pandemic we can, and usually do, end up with a Great Economic Mismatch regardless of the pump-priming governments provide.  I-Chain jobs don’t come back while the demand for jobs in the D-Chain explode.  For example, restaurants can’t reopen and re-hire waiters, food preparers, and so on because people are voluntarily engaging in social distancing or being required to do so.  At the same time, demand for food delivery explodes and companies in that D-Chain struggle to meet demand since, for example, they don’t have sufficient production or delivery capability.  Some I-Chain companies can switch to D-Chain but, for many, it isn’t that easy.  For example, some restaurants can adapt easier to takeout, drive-through and delivery while others can’t simply because of the way their business is designed—they don’t have drive-through windows, delivery vehicles and drives, menu items that are well-suited for takeout or delivery and so on.  Food producers that are set up to serve the I-Chain restaurants having packaging and delivery systems that can’t easily be converted to meeting the needs of D-Chain grocery stores.  Food grown or packaged for the I-Chain may go unsold or may have to be discarded while D-chains grocery stores are unable to obtain sufficient supplies to meet a sudden increase in demand.  Grocery store shelves sit empty while warehouses are overflowing with food packages in large containers for delivery to restaurants.  Vegetables intended for the I-Chain rot in fields or are plowed under while grocery stores sell out of produce.  Employees who work in the I-Chain may find it hard to transition to working in the D-Chain because they lack the necessary skills or tools to match the skills they have with the vacancies that exist in the D-Chain due to the explosion in demand.  Additionally, D-Chain may be reluctant to invest in training out-of-work I-Chain workers for fear that they will lose these workers and their training investment as soon as Social Distancing ends and the I-Chain reopens.
If pandemics are rare and short-lived, the Great Economic Mismatch that Snower discusses may not matter that much.  As soon as the crisis ends, I-Chains open back up and over-stressed D-Chains go back to normal.  But, what if we experience more frequent and long-term pandemics in the future?  Some research suggests that is exactly what is happening.
Research suggests that we can expect more pandemics like COVID-19, not fewer due to three major changes.  First, the globalization of travel.  In 1970 the world had 310 million air transport journeys.  In 2018, the number of air transport trips had grown to 4.2 billion.  People are traveling longer distances, more often, and taking infectious diseases with them.  It is increasingly difficult to isolate an outbreak of infectious disease before it has a chance to spread not just to a neighboring country but to the other side of the world.  Second, people are living closer together.  It is estimated that nearly 70% of the world’s population will live in urban areas by 2050.  Day-to-day social distance is becoming less and less possible for more and more people.  The closer we are packed together, the easier it is for a virus to spread.  Finally, there is climate change.  Recent research shows that global warming is exposing larger numbers of people to infectious diseases.  For example, the warming of the planet has been linked to the spread of viruses from bats to humans which is one likely source of COVID-19.
Snower argues that to avoid or minimize the Great Economic I-Chain/D-Chain Mismatch we need a Readaptation policy that provides incentives for people and companies to rapidly switch from I-Chain to D-Chain activities during a pandemic.  Snower proposed Readaptation Policies for Labor Markets, Investments, and Financial Markets.
Labor Markets: One way to encourage rapid Readaptation in labor markets, says Snower, would be to provide D-Chain incentives during a pandemic to hire and train out of work I-Chain employees and incentives for online job search and matching services to provide I-Chain to D-Chain matching.  These programs would be funded by providing out-of-work I-Chain employees with hiring and training credits that D-Chain employers would receive from hiring and training I-Chain employees.  The number of credits an I-Chain worker had to offer a perspective D-Chain employer would rise with the duration of unemployment, fall with the duration of employment, and be totally phased out after two years.
Investment:  During a pandemic, I-Chain company capital equipment sits idle while D-Chain companies can’t ramp up services to meet increased demand because they lack the same type of capital equipment.  For example, I-Chain trucks and delivery vans sit idle while D-Chain companies experience a shortage of the same trucks and vans.  Here Readaptation Policies would focus on providing incentives to I-Chain companies to convert or make available their excess I-Chain capital equipment for D-Chain use.  Again, the policy would require online services that matched D-Chain needs to available I-Chain equipment and supplies.  
Financial Markets-Here Snower is concerned about “debt overhang” or the overall indebtedness of governments, businesses, and individuals.  He notes that many, if not most, corporations are highly leveraged.  U.S. corporate debt reached $10 trillion in 2019 or 47% of the U.S. economy, a record high.  Corporate indebtedness has been driven by cheap interest rates since 2008.  Now we have a pandemic and the monetary and fiscal stimulus from the U.S. governments has come primarily in the form of loans that further increase corporate debt.  Once the pandemic ends, many corporations may be carrying so much debt that they cannot borrow funds they need to get back up and running, even if the economy and consumer confidence are improving.  Snower proposes two new instruments to mitigate the effects of debt overhang.  The first is corporate bonds and loans where interest rates and repayment options are tied to corporate earnings.  When corporate earnings fall below a certain loan, interest rates on these loans decline, and the corporation is allowed to postpone payment of principal and interest for a specified period.  Second, corporate bonds and loans could be automatically convertible to non-voting equity when the ratio of corporate equity to risk-weight assets drops below a certain level.  Such financial instruments would avoid bailouts for corporations “too big to fail”.
Would Snower’s proposals work?  We don’t know.  However, Snower is raising an important issue.  Traditional Keynesian pump-priming to address an economic downturn does not work when the downturn is caused by the response to a pandemic.  We need a different strategy to address pandemic-induced downturns which are likely to become more frequent in the future.
Read Snower’s paper here:
NOTE: Dennis J. Snower is President of the Global Solutions Initiative; Professor at the Hertie School of Governance, Berlin; Senior Research Fellow at the Blavatnik School of Government, Oxford University; Nonresident Senior Fellow at the Brookings Institution; and President-Emeritus of the Kiel Institute for the World Economy. 

Thursday, March 5, 2020

Trump Economic Policies Leave Us Poorly Prepared to Fight an Economic Downturn

The U.S. economy goes through cycles of boom and bust.  For example, from April 1991 to February 2001 the U.S. had a booming economy driven largely by investments in the internet.  In March 2001 the economy went bust and we had the 2001 recession.  From 2002 to 2007 the economy boomed due to derivatives and the housing bubble then crashed leading to the 2008 bust and the great recession.  In 2009, the economy began responding to quantitative easing and the American Recovery and Reinvestment Act.  It has been in a boom cycle since then, the longest boom cycle ever.  We don’t know yet but the current correction in the stock market may be a sign that the economy is once again going from boom to bust.  No one should be surprised.  It is the nature of the economy to go boom, bust, boom, bust, etc.  If we don’t have a bust this year, one will come in the next few years.  That is certain.
When the economy goes bust, unemployment increases, the stock market tubes, and businesses stop expanding.  The U.S. government has three options to try to get the economy going again.  The Fed can cut interest rates to make it cheaper for companies and individuals to borrow and spend, thereby increasing demand.  The U.S. government can create demand directly by increasing spending on things like roads and bridges and other infrastructure improvements.  Congress can cut taxes in the hope that consumers will spend the retained dollars, thereby creating demand.  Tax cuts are most effective when they are targeted.  For example, when lower-income people receive tax cuts, they are more likely than rich people to increase their spending.
Two things affect the ability of the Fed to cut rates and Congress to increased spending and/or cut taxes.  The U.S. Government deficit and the Fed Funds Rate.  During a Bust, government revenues decline, and the deficit grows.  Tax cuts result in even less revenues.  The only way the government can increase spending is by borrowing money, thereby increasing the deficit. The Fed’s ability to cut the funds rate depends upon how high the funds' rate is when the bust begins.  Obviously, the Fed has more leverage if the funds' rate at the beginning of the bust cycle is 5% than if it is at 1% since the Fed cannot cut the rate to less than 0%.
During a Boom such as we have been experiencing since 2009, the smart thing to do is let the Fed Funds Rate slowly rise.  You lower it until the economy is gets going and then gradually raise the rate but not so fast that you slow the recovery.  Second, you avoid tax cuts and gradually raise taxes in order to pay down the deficit.  Again, you do this gradually to avoid slowing the recovery.  The objective is to get the Funds Rate back up, so the Fed has room to cut the rate during the next Bust and pay down the deficit so that there is room to engage in deficit spending or to adopt targeted tax cuts to create demand in a downturn.
Since 2016, the Trump Republicans have done just the opposite of what they should have been doing.
In 2008 at the beginning of the Great Recession, the Fed Funds rate was at 3.5%.  The Fed cut the rate all the way down to 0.25% before letting it gradually rise to 1.75%.  That’s much lower than you would want at the beginning of a Bust or deep recession since this time around the Fed will have less leverage in rate cuts.  We are fortunate that the current Fed Rate is not lower.  Trump and Republicans have been pressuring the Fed to cut the rate.  If they had their way, the Fed Rate would now probably be under 1%, a disastrously low level at the beginning of a Bust.
The Deficit as a % of GDP was at 3.1% in 2008, went up during the recession and was back down to 3.1% in 2016 and trending down.  Trump Republicans pushed through an unnecessary tax cut coupled with a massive increase in military spending.  As a result, the deficit as a % of GDP shot up to 5.1% in 2019, just what we would not want to happen.  The Debt to GDP Ratio, another measure of the deficit, was at 67.7 in 2008, a sustainable level.  The ratio increased to over 100 during the recession and recovery and was just beginning to decline when Trump took office.  Under Trump, the debt to GDP ratio has resumed its upper path and is now at 105.5 and climbing.  Most economists say a debt to GDP ratio around 60 is probably okay and but over 100 is not sustainable for more than a few years.  The World Bank says a debt to GDP ratio over 70 slows economic growth.  So, there is disagreement about when to worry.  There is no disagreement that a lower number is better than a higher one.  The highest in the U.S. was 120 at the end of World War II.
In summary, the U.S. Government needs the ability to step in to revive the U.S. economy when a downturn occurs, which always happens.  If the Fed Rate is relatively high and the U.S. Debt is low, then the Fed has a lot of room to cut the Fed interest rate to stimulate spending and increase demand.  Congress has a lot of room to increase government spending and to cut taxes to pump money into the economy without worrying about creating an unsustainable debt such as a debt to GDP ratio well over 100.
Instead of facing a possible economic downturn with a high Fed Rate and low debt, we currently have a relatively low Fed Rate and high and increasing debt to GDP ratio, just the opposite of what we would want.  
Trump Republicans are to blame for putting us in this difficult situation.  They cut taxes at the wrong time.  They failed to target the tax cuts, so they had little positive effect on the economy.  They dramatically increased military spending at a time when the stated goal of the Trump administration was to withdraw from conflicts and bring the troops home.  That policy should have called for less, not more, military spending.  Finally, Trump has consistently pressured the Fed to cut the Fed Rate at a time when the rate should have been gradually increased.  We don’t know if the Fed would have raised the Fed Rate faster without the pressure from Trump, but Trump’s pressure probably did have an impact.
It took the United States nearly 10 years to fully recover from the 2008 Recession, in spite of drastic cuts in the Fed Rate (down to almost 0%) and deficit spending that while massive was much less than required given the severity of the recession.  In fact, most economists would agree that the recovery could have been shortened with a larger stimulus.  
Thanks to Trump, the next time we have a downturn, the FED will have less room to cut interest rates than it did during the 2008 recession.  Congress will find it difficult, and perhaps impossible, to pass a stimulus the size of the stimulus it passed to combat the 2008 Recession because of the huge Trump deficit. 
It took 10 years for the U.S. economy to recover from the last major downturn.  Thanks to Trump’s economic policies we may face an even longer recovery the next time our economy goes bust.  The chance of the U.S. economy going bust someday, maybe someday soon, is 100%.  It is going to happen.