Sunday, March 15, 2020

The Economic Crisis The Pandemic Will Cause Is NOT a "Recession," It Is Altogether Different

We need new terms to discuss the economic consequences of the current pandemic.  Terms like Recession (or even Depression), Economic Growth, Jobs Growth, Monetary Policy, and Fiscal Policy simply lose their usual meaning.

The usual goals for addressing a Recession are to create more jobs and more spending. However the economic problem caused by the pandemic is not too few jobs, but essentially too few workers, in the sense that the jobs are still there, but many workers are not able to perform those jobs - in some cases because that are actually sick, but in many more cases because a societal lockdown prevents them from leaving their homes to travel to a job. So the idea of creating more jobs to address the economic crisis of the pandemic is simply meaningless.

As to spending, it will generally decline greatly during the pandemic. Other than food and rent, most purchases will be put on hold for the duration. Why would anyone even think of buying a new home or car or fancy clothes when they are in lockdown at home? All restaurants and all retail stores other than food and medicine will likely be closed. Nothing, and certainly not lower interest rates, will (or should) cause people to spend beyond the basics of survival.

What the pandemic WILL REQUIRE is that the government provide sufficient immediate cash to everyone to make up for the lack of a regular paycheck. 

We need to simply forget about the usual metrics like "Recession," and just focus on surviving both medically and economically during the pandemic.

Sunday, March 1, 2020

The Federal Government Holds All The Cards For Addressing the Climate Crisis, Don't Scapegoat Private Enterprise

If you want to advocate for a Cuba-like system in which there is no stock market and all means of production and distribution are part of a massive government, go for it. (and note that China's miracle of lifting 98% of its people out of extreme poverty in 30 years came from moving toward private ownership - along with a stock market).

But as long as America continues to have it's great free market system, everyone need to understand how it works. Investors are driven by self interest - and it is essential to the operation of the system that they be driven by self interest. When Americans need more toilet paper, toilet paper manufacturers expand their factories out of self interest, and investors provide the money for that expansion out of self interest, and tree farms expand out of self interest, and investors provide the money for that expansion out of self interest.

BECAUSE investors operate out of self interest, they respond very quickly to the slightest government pressures, whether that pressure is beneficial or injurious. As long as our government continues to subsidize oil well drilling and provide public land for it, investors will like oil stocks. On the other side, the enthusiasm for Tesla shares is greatly boosted by the subsidies for electric cars.

Investors and companies will rapidly respond to whatever sticks and carrots our government chooses for the Climate Crisis. So far, our leaders have been worse than unhelpful, for example, BOTH Trump and Bernie Sanders are proposing to block the import of solar panels into the United States. Please assign the blame where it is deserved, on our government, and not on our efficient free enterprise system.

Sunday, February 23, 2020

What's So Bad About Global Warming?

The last time the average temperatures on our planet were 4 degrees warmer than they are now, palm trees grew in the Arctic.[1]  Would that be a bad thing? Let's look deeper...

Suppose that Earth were uninhabited, and a band of humans were just a arriving from somewhere else, AND that this uninhabited Earth was 4 degrees warmer than today's Earth and the average temperature was stable from year to year.

This bunch of newcomers would find Siberia and Greenland and Alaska and Northern Canada to be quite pleasant places, and would probably settle there happily. They would also find all of the Middle East and half of Africa, and half of eastern and southern Asia to be completely uninhabitable - crops could not grow there and humans could not survive long there outside of an air conditioned environment. That wouldn't be a problem for these newcomers in the same way that Antarctica's uninhabitability is not a problem today.

Our newcomers would also find dry land and oceans with shorelines as the demarcation between the two, so they would locate their settlements appropriately. They wouldn't care, or even be aware, that the shorelines were miles inland of 2020 shorelines.

They would also take advantage of the lakes and rivers, and the rainfall patterns they found. And they would take appropriate precautions against the prevailing pattern of hurricanes and other storms. Again, they wouldn't care, or even notice, that both the blessings and the hazards they found were vastly different from those in our 2020.

Could this newly found Earth support as large a population of humans as our current Earth does? Probably not, but that is NOT our BIG problem.

The Problem Is Rate Of Change

If Earth's average temperature were to climb by 4 degrees over the course of millenia, we humans could probably adapt fairly well. Coastal cities would very gradually decline and populations would move inland and further from the equator. Farms in warmer areas would very gradually decline while farms in Canada and Russia boomed. The entire population of the Middle East (and much of Africa and eastern/southern Asia) would very gradually migrate to more fertile and inhabitable parts of our planet. These migrations, undertaken over the course of millennia, would not be that different in kind from the population movements over the last several millennia.

But what if a 4 degree rise in average temperature takes place over the course of only a few decades? We will probably rescue the relatively few people living on low-lying island nations, but will we have the morality, or even the means, to rescue even the hundreds of millions of people of the Middle East, let alone the billions living in other hotter and drier parts of our world? Or will we condemn those people to near certain death by barricading them in lands with no means to grow food and incompatible with human life without mechanical air conditioning? Before they starve, those people would resort to ever more intense wars over what little fertile land and food remains.

And in our own country, what about the costs and logistics of relocating a third of our population away from the coasts? And what about our own farms becoming increasingly less productive? And the changes in rainfall and storm patterns? Consider the human costs and the economic costs.

[1] https://www.nbcnews.com/think/opinion/fighting-climate-action-uninhabitable-earth-author-david-wallace-wells-podcast-ncna979551


Sunday, February 9, 2020

WHY I say "ANY Democrat BUT Sanders" for 2020

First the "ANY Democrat" part...  Never let our disagreements over the best choice for the optimum Democratic candidate get in the way of our shared commitment to rid our country of the most criminal, immoral, and incompetent POTUS in American history. Whoever we Democrats nominate as our candidate, we MUST ALL pull together to VOTE Democratic in the General Election on Tuesday, November 3, 2020 AND to enthusiastically encourage ALL of our like-minded friends and family to do so also.  I commit to campaigning for and voting for our Democratic nominee, whoever our nominee is, and I urge all Sanders supporters to make the same commitment! (Sadly, a recent poll shows only 53% of Sanders supporters are willing to make that commitment. https://www.newsweek.com/bernie-sanders-poll-warren-biden-2020-nominee-emerson-college-1483831)

The reasons why I believe that Bernie Sanders is the worst choice among all our Democratic candidates...

1) Electability. Bernie fans certainly argue with some credibility that Americans are ready for the radical change that Sanders proposes and that he would bring out new voters. Certainly some of his most rabid enthusiasts will choose to boycott the General Election if the Democratic nominee is someone other than Sanders. However, I believe that the preponderance of evidence shows that we Democrats would fare far worse in the General Election if Sanders were our candidate...
   a) Independents would generally find even the hideous Trump less objectionable than a "Socialist," as all the Republican ads will certainly label Sanders.
  b) Mainstream Democrats would be much less enthusiastic about supporting Sanders, and turnout would be much lower.
  c) Hard-core Trumpites will vote for Trump no matter what, but having Sanders as our candidate would increase the GOP turnout among those Republicans who don't especially like Trump, but who would strongly vote for him to avoid a "Socialist."
Anyone who doubts the extent of the fear and loathing that the label "Socialist" conjures up in mainstream America is truly out of touch with the reality on the ground across our country. The sentiments of white intellectuals and of anyone who participates on Twitter are totally divorced from the rest of our country.

2) On most domestic issues, ANY President is more a cheerleader than a dictator. Congress, not the President, makes our laws. Whatever anyone thinks of Sanders proposed "policies," the reality is that...
  a) The majority of Congressional Democrats (let alone Republicans) do not support Sanders' proposals. That would make those proposals dead on arrival.
  b) Sanders' track record for working with his Senate colleagues is very poor. Senators do not appreciate Sanders' my-way-or-the-highway attitude. It is probably true that no Democratic President will get any support from any Congressional Republicans, but having a great relationship with Congressional Democrats is a prerequisite for success.

3) Sanders' proposed "policies" flout the principles of economics and the lessons of history. As one of the most egregious examples, I point to national "rent control," a policy which virtually all economists condemn because a few people can rent apartments at a bargain price, but then the supply runs out before everyone gets a place to live. And the situation rapidly gets far worse as landlords suffer from the price of rent being set below their cost of providing homes, stop building any more rental units, and (unless prevented from doing so by an even more disruptive law) convert existing rental units to other uses. We have a housing shortage, and need to provide incentives to build more housing units rather than fewer.
I also point to Sanders' very Trumpian isolationist opposition to international trade. International trade has a strongly positive net effect for Americans. Export-oriented jobs (including farming), hospitality and transportation jobs, lower consumer prices, etc. FAR outweigh any possible job gains from becoming isolationist. AND, encouraging international trade is a moral imperative to sharing our good fortune (on a win-win basis) with the developing world.