Showing posts with label Green New Deal. Show all posts
Showing posts with label Green New Deal. Show all posts

Thursday, April 2, 2020

Can We Expect More Than One Pandemic?

Popular Economics Weekly


Yes, says behavioral economist Robert Shiller, who won his Nobel prize for the study of human behavior in financial markets. Why? Financial market investors are panicking because of the COVID-19 pandemic, for starters, which could affect the general public’s financial behavior as well, and so wreak even more damage to crashing financial markets.
“We are feeling the anxiety effects of not one pandemic but two,” said Dr. Shiller in a recent Project-Syndicate article. “First, there is the COVID-19 pandemic, which makes us anxious because we, or people we love, anywhere in the world, might soon become gravely ill and even die. And, second, there is a pandemic of anxiety about the economic consequences of the first.”
The first indication of a looming loss of confidence in the economy and jobs is showing up in consumer sentiment surveys, per Wrightson’s above graph. The University of Michigan’s consumer sentiment index fell by 12 percent in March. 
The Conference Board’s confidence survey fell as well.
“Consumer confidence declined sharply in March due to a deterioration in the short-term outlook,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index remained relatively strong, reflective of an economy that was on solid footing, and prior to the recent surge in unemployment claims. However, the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs. March’s decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow.
Dr. Shiller knows a lot about human behavior, and the irrational behavior of financial market investors. He wrote about irrational exuberance in his best-seller of that name in 2000, just as the Dot-com bubble burst from overinvestment building the digital infrastructure (remember all those fiber-optic cable networks being laid?).

And the Great Recession was caused by the busted housing bubble—due to home buyers bidding up housing prices to stratospheric heights because of the popular thought that housing prices could never decline—another example of irrational exuberance.

Now what about its opposite—irrational pessimism, or a contagion of fear that stock prices have no visible bottom; or a cure or vaccine will not be found in time to save many companies from bankruptcies, due to a prolongation of social isolation and business shutdowns?
“The effects financial anxiety has on the stock market may be mediated by a phenomenon that psychologist Paul Slovic of the University of Oregon and his colleagues call the “affect heuristic,” said Shiller. “When people are emotionally upset because of a tragic event, they react with fear even in circumstances where there is no reason to fear.”
Dr. Shiller’s research has found that people tend to react to rumor, word-of-mouth, or popular media stories rather than actual facts.

In a joint paper with William Goetzmann and Dasol Kim, for example, Shiller found that people living within 30 miles of the epicenter of a substantial earthquake significantly raise their expectation that there could be a 1929- or 1987-size stock market crash.

Similar fears may have caused the plunge in market asset values today, where interest rates and Treasury bond yields have plunged to historic lows as investors flee to save haven investments in order to preserve their cash.

While many Americans might have faith in upcoming cures for COVID-19, they might not have such faith in a restoration of the economy and jobs. It took years for markets to recover from the Great Recession, even with the Fed holding their rates to almost zero.

I maintain that we will need some form of a New Deal, or even Green New Deal—prolonged market interventions by government in a word—to reassure Americans and the rest of the world that the second, anxiety pandemic can be controlled as well.

Harlan Green © 2020


Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, March 26, 2020

The Coronavirus, A New World War

Popular Economics Weekly


Nobel laureate Paul Krugman has said it might take an alien invasion to bring Americans together again to counter the threat of another economic downturn possibly as great as the Great Depression.

Well, the new threat has arrived—COVID-19, the ‘new’ coronavirus. The only way it will be defeated is if Americans can come together as we once did with the creation of the New Deal under President Roosevelt.

Today, unfortunately, we have a president who would like us to gather together in churches on April 12, Easter Sunday, to celebrate our deliverance from a pandemic that will not end for months, if not years.

He has named himself a “wartime” president yet wants to declare an armistice before the enemy has been vanquished. Why? He said, “We cannot let the cure be worse than the problem.”

But the cure will be worse because the social isolation and business shutdown required to keep the coronavirus pandemic even in check can take months; enough time to bring on a recession or depression.  And in fact it will take another New Deal, or Green New Deal to defeat the economic damage caused by new coronavirus.

Economists such as Nouriel Rubini predict we could be entering a “greater” Great Depression, even with the just-passed $2 trillion aid package that gives extended benefits to all business sectors and the unemployed.
“With the COVID-19 pandemic still spiraling out of control, the best economic outcome that anyone can hope for is a recession deeper than that following the 2008 financial crisis. But given the flailing policy response so far, the chances of a far worse outcome are increasing by the day,” he said in Project-Syndicate.
The Conference Board has predicted in three scenarios just what could be the effects of this worldwide pandemic on the U.S. economy.
  1. May reboot (quick recovery): Assuming a peak in new COVID-19 cases for the US as a whole by mid-April (with some possible variation by region), economic activity may gradually resume beginning in May.
  2. Summertime V-shape (deeper contraction, bigger recovery): The peak in new COVID-19 cases will be higher and delayed until May, creating a larger economic contraction in Q2 but a stronger recovery in Q3 than in the scenario above.
  3. Fall recovery (extended contraction): Managed control of the outbreak helps to flatten the curve of new COVID-19 cases and stretches the economic impact across Q2 and Q3, with growth resuming by September.
The April scenario is President Trump’s wish, but he would have had to act as fast and methodically as China’s Premier Xi Jinping. That can’t happen when Trump has labeled himself as a “wartime” president but has been reluctant to use the War Powers Act that would order private industry to produce what health care workers lack now to protect themselves while treating the mushrooming population of COVID-19 victims.

The other two scenarios are called ‘V’ and ‘U’-shaped recoveries by economists, meaning the recoveries would take longer. The V-shape means a quicker recovery with a more severe downturn, as can be seen in the Conference Board graph. The ‘U’ shape means the downturn and return to growth is more gradual and over a longer term.

All of the Conference Board’s predictions posit a return to GDP growth in the fourth quarter of 2020.
But not so fast, says Dr. Rubini: “While most self-serving commentators have been anticipating a V-shaped downturn – with output falling sharply for one quarter and then rapidly recovering the next – it should now be clear that the COVID-19 crisis is something else entirely. The contraction that is now underway looks to be neither V- nor U- nor L-shaped (a sharp downturn followed by stagnation). Rather, it looks like an I: a vertical line representing financial markets and the real economy plummeting.”
Which scenario will it be? It’s obvious that the just-passed $2 trillion recovery package will keep this economy alive for a few months only. Additional aid will be required, when the initial jobless claims for just this week reported 3.28 million new unemployment claims.

The Great Depression lasted 10 years, and the layoffs have just begun for this downturn. Our best hope is that a new vaccine and treatment regimen is discovered sooner rather than later. But also that Americans are able to band together to create a ‘new’ econo,ic New Deal that protects all Americans.

Harlan Green © 2020

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Sunday, June 23, 2019

Answering the Kennedys’ Call to Promote Greater World Peace & Freedom

Introduction


I was one of 88,000 wide-eyed, mostly white, middle class students that came to hear President John Kennedy speak on March 23, 1962 in Berkeley, California to commemorate the 94th anniversary of the University of California’s founding. We wanted to see and hear what our future might look like. We were ready to believe in Kennedy’s vision that the cold war with Russia could end and lead to more peaceful collaborations.
“…The processes of history are fitful and uncertain and aggravating,” said Kennedy that day. “There will be frustrations and setbacks. There will be times of anxiety and gloom. The specter of thermonuclear war will continue to hang over mankind; and we must heed the advice of Oliver Wendell Holmes of "freedom leaning on her spear" until all nations are wise enough to disarm safely and effectively.”
We need such leaders as JFK with his unifying vision of cooperation over confrontation even more today. That is the most important question for me, a person who lived through the social upheavals and activism of those days. For if we do not find ways to grow that idealism to make the world a better place for all—both social and economic change that will preserve a livable planet and prevent future wars—then I cannot see a hopeful future.

Recognizing the many ways such a spirit of service is restoring communities and hope for a better future is the reason for this essay. In fact, the sense of community and common purpose that prevailed in the sixties via new technologies and shared values in community-building and peace-making is the path that can restore our faith in western democracies imperiled by the rise of authoritarian governments and immensely wealthy oligarchs.

Leaders have emerged in the upcoming presidential election—Senator Elizabeth Warren’s fight to curb Wall Street excesses, Senator Sanders call to right record income inequality—but they are leaders of factions fighting injustices without a unifying vision to bring younger Americans in particular together to make the changes that might save their future, as well.
One 30 year-old in 2013, 50 years after President Kennedy’s death, said “Though his goals were typically big, what he sought from individuals was often rather small. Not everyone was expected to join the Peace Corps or become an astronaut or participate in the Freedom Rides. But citizens were asked to do their part — to think about how they could improve their community or make another person’s life easier — to look past their differences and focus on our common humanity. We badly need this message again. I believe it is one that resonates very deeply with young Americans who are yearning for a time when we can search for new frontiers and once again be part of the same team.” https://www.huffingtonpost.com/scott-d-reich/jfk-millennials_b_4263057.html
Many of us followed paths of alternative service, of selfless service that I learned was the shortest path to inner peace, as well as peace among communities and nations. President Kennedy’s most famous words memorialized worldwide were in his inaugural speech—“Ask not what your country can do for you, ask what you can do for your country.”

JFK gave us the picture of a new future on that beautiful March day in Berkeley, Kennedy promised a peaceful settlement to the cold war with Russia, of scientific research and alternatives for peaceful service that could benefit all nations; while joking that Jackie was having all the fun riding on an elephant in India with Ambassador John Kenneth Galbraith.
“Yet we can have a new confidence today in the direction in which history is moving,” Kennedy continued. “Nothing is more stirring than the recognition of great public purpose. Every great age is marked by innovation and daring--by the ability to meet unprecedented problems with intelligent solutions. In a time of turbulence and change, it is more true than ever that knowledge is power; for only by true understanding and steadfast judgment are we able to master the challenge of history.”
We did not know that the Cuban missile crisis would happen in just seven months—October 16-28, 1962—that could have turned into a nuclear war, if Kennedy and Russian Prime Minister Nikita Khrushchev had not negotiated a peaceful resolution.

JFK’s words may sound like the voice from a distant past to those who have lost their faith in service of any cause, when there is no general prosperity, or hope of a more peaceful post-9/11 world. Treaties are being ripped apart, and allies shunned that would maintain peace because there is no longer a national vision of one for all and all for one.

His vision of a new frontier of possibilities began an era of higher technological growth that has brought the world’s citizens closer together, of global warming threatening cities and countries causing mass migrations, of greater economic cooperation accompanied by greater income inequality in a revolution that hasn’t yet benefited the majority of its citizens.

Keeping that spirit alive is a daunting challenge, needless to say. Today we have a young population that is generating new, diverse communities having survived generational wars between red and blue states, between young and old ages, rich and poor regions that will find their own leaders.

John F Kennedy, Bobby Kennedy, Martin Luther King, Jr., and Cesar Chavez were leaders that gave our generations hope for greater equality and liberty in a new frontier of possibilities. It was a time when communities of the political and economic classes had a consensus that progress was possible, movements formed that swept one up in causes much larger than the individual—the environmental movement, anti-war, or non-violent civil rights’ protests, and a farmworker movement that advanced minority and immigrant rights.

The boundless optimism that Americans such as myself believed could accomplish anything, solve any problem is needed as much today because of the terrible cost of continuing wars, the drug culture, and those regions of America that no longer believe they live in the United States of America.

We of the so-called silent and baby boomer generations dealt with similar obstacles by looking at what we had in common; that we are all created equal, regardless of race, gender or ethnicity, and desired the best for ourselves, our families and communities.

This is important because younger generations; like the 30-year old millennial on the 50th anniversary of JFK’s death; say they want to continue to work. Studies show they wish to make the world they have inherited a better place to live. Their preferences will be influential for no other reason than they are the largest generation ever, born from 1980 to 1996, outnumbering even their baby boomer parents. They are also a much more diverse and tolerant population, which is why they are picking up where we left off in their preference for making worthwhile life choices..
“Almost two-thirds (64 percent) of millennials said they would rather make $40,000 a year at a job they love than $100,000 a year at a job they think is boring,” the Brookings Institution recently noted in a report by Morley Winograd and Michael Hais titled “How Millennials Could Upend Wall Street and Corporate America.”
It cites a 2013 survey of over 1,200 U.S. adults that found Millennials to be the generation most focused on corporate social responsibility when making purchasing decisions.

Almost all Millennials responded with increased trust (91 percent) and loyalty (89 percent), as well as a stronger likelihood to buy from those companies that supported solutions to specific social issues (89 percent). A majority of Millennials reported buying a product that had a social benefit and 84 percent of a generation that accounts for more than $1 trillion in U.S. consumer spending considered a company’s involvement in social causes in deciding what to buy or where to shop. In 2013, 89 percent of all American consumers said they would consider switching brands to one associated with a good cause if price and quality were equal. https://www.brookings.edu/wp-content/uploads/2016/06/Brookings_Winogradfinal.pdf

“The sixties was a period of monumental social and political change, altering virtually every aspect of American life for future generations,” touts a popular CNN documentary film, The Sixties. “No other decade of the Twentieth Century has acquired the mythological status of the 1960s,” said British Historian M J Heale in his book, The Sixties in America, (2001, Edinburgh University Press Ltd, Edinburgh, UK).

The United States had already been through World War II, the Korean War, and was under the threat of nuclear annihilation in a Cold War with the Soviet Union. Yet it was also a period of unprecedented economic and social growth, when many believed in a better future—not only for U.S. citizens, but those in the developing world.

America’s annual economic growth rates in the sixties equaled that of China and the fastest-growing, developing countries today. Annual U.S. Gross Domestic Growth rates—our best measure of national business activity—were as high as 8.9 percent in 1950, and consistently higher than 6 percent through most of the 1960s. Median family incomes grew 214 percent from 1945 to 1975, and haven’t grown faster than inflation since 1975.

It was also a time of protest against all forms of authority—against loyalty oaths that foreswore radical beliefs, against segregation in the schools and workplaces, and a government continually at war. The anti-war protests created Rock-n-Roll music and Bob Dylan; who was a poet as well as a musician that portrayed the times many Americans were living through. He warned of the hardships ahead, as had his mentor, Woody Guthrie, the dust-bowl folksinger who sang for those dispossessed by the Great Depression.

Dylan songs such as Blowin in the Wind portrayed a land without peace: “how many deaths will it take 'till he knows that too many people have died?” and a rebellion against the old order in The Times They Are a-changing when: “your sons and your daughters are beyond your command.

Then the euphoria was gone almost as quickly as it came; times had changed; but not for the better for many in America. Good paying jobs began to disappear; energy shortages and soaring inflation caused deep recessions.

Younger Americans now must deal with a world that seems to have limited possibilities, with the greatest income inequality in the developed world—which means today’s children may not be able to earn more than their parents. Studies show that only half the children born in the 1980s grew up to earn more than their parents. That’s a drop from 92 percent of children born in 1940. They also face a faster, more competitive world with challenging opportunities.

The larger economic picture is that successive recessions since the 1970s have led to catastrophic drug use and high suicide rates in regions of blue-collar America that lost entire industries due to modern economies charging ahead at warp speed. Blue-collar, high school educated Americans once earned enough to enter a middle class standard of living that meant homeownership and upward mobility.

The economic death of these regions has resulted in an un-civil war between its inhabitants that has torn apart communities and created a dysfunctional national government unable to meet the urgent needs that modern times require. The overall health and well-being of Americans has declined; Americans are no longer the tallest people, live the longest, are the best educated in the developed world.

Workers have had to travel farther and move more frequently in search of a decent paying job, and better education. Social scientists such as Harvard sociologist Robert Putnam have studied the breakup of communities in his best-selling book, Bowling Alone, The Collapse and Revival of American Community. “Once we bowled in leagues, usually after work—but no longer,” he said in his portrayal of our fractured society. 

Yet it is possible to rebuild broken communities in such difficult circumstances. The loss of national consensus—which at heart is the belief that Americans share common interests and goals—is at the bottom of most of our problems. It is the antithesis of a well-functioning democracy.

President Kennedy’s speeches moved us because nuclear annihilation was always in the back of our minds. I had read Nevil Shute’s 1957 novel On the Beach. It was a terrifying tale of Australians awaiting the arrival of a deadly radiation cloud spawned by a nuclear war. World War III had just devastated most of the populated world, polluting the atmosphere with nuclear fallout and killing all human and animal life in the Northern Hemisphere. 

The icon of that age was the Peace Symbol designed by Gerald Holcomb, a British conscientious objector in despair over the possibility of nuclear annihilation. He is said to have combined naval signal semaphore codes of N with D that stood for Nuclear Disarmament into the symbol we know today. And perhaps because of the threat of nuclear annihilation hanging over us, we preferred to make love rather than war.

What could be more disheartening than the disappearance of all life? We also lived through the anti-communist witch hunts of the McCarthy era that resulted in the House of Un-American Activities Commission hearings to weed out communists and other subversives, even though membership in the American Communist Party was legal.

But those problems could be solved, because so many believed the cold war and wartime institutions were based on outmoded beliefs and ideologies, as do the young today. Wars were fought because governments saw a world of scarcity, and conflict the only solution. The U.S. with just five percent of the world’s population maintained a large military in order to have access to 25 percent of the world’s resources; such as oil.

That is why many of my generation believed in President Kennedy’s vision of a new frontier of possibilities for peaceful coexistence. All things are possible with the spirit and mind-set that enabled us to serve causes that bettered the lives of others, as opposed to the ‘me first’ narcissism so prevalent in much of American culture today. This dedication to service in peaceful ways was first realized in

President Kennedy’s call to form the Peace Corps, where I and more than 200,000 have served.
Brother-in-law Sargent Shriver, the first Director of the Peace Corps and many Great Society programs, added to that vision with his call to service above self, the Peace Corps credo, if one wanted to work to create a more peaceful and just world.

In his acceptance speech at the 1960 Democratic National convention, Kennedy said, “We stand today on the edge of a New Frontier — the frontier of the 1960s, the frontier of unknown opportunities and perils, the frontier of unfilled hopes and unfilled threats. ... Beyond that frontier are uncharted areas of science and space, unsolved problems of peace and war, unconquered problems of ignorance and prejudice, unanswered questions of poverty and surplus”

President Kennedy also benefited the poor and seniors by signing social legislation raising the minimum wage and increasing Social Security benefits. He heard Martin Luther King Jr.’s call for greater justice for African Americans by ordering his Brother and Attorney General Bobby Kennedy to protect the freedom riders in the South supporting James Meredith's attempt to enroll at the University of Mississippi.

This work in service is even more important today for the underserved. A better future for young and old is possible because of the lessons we learned; such as the non-violent tactics of Gandhi and Martin Luther King advocating peaceful coexistence. Cesar Chavez’s farm workers adopted those tactics as well, which promoted greater inclusivity and fairness among all races and ethnicities.

Working in service to higher ideals can be a spiritual quest. I learned the basic elements needed to build and strengthen communities because of the opportunities to work as a Peace Corps volunteer, with the US Environmental Protection Agency and Cesar Chavez’s United Farmworkers Union. Implementing the community development principles first realized in those earlier efforts leads to a better understanding of how to organize our own communities and provide aid in other parts of the world that gives them the tools to develop their own communities.

Domestically, we have made progress in confronting some of the inequities of race and color, yet American society is still recovering from a Great Recession; the worst economic downturn since the Great Depression that has yet to benefit the majority of Americans. There is much more that needs to be done to aid the financial recovery of Main Street households, rather than Wall Street financiers. How much time do we have? The Great Depression of the 1930s lasted ten years and didn’t fully recover until World War II.

There are solutions to what may seem like unsolvable problems that came out of that era. The sixties brought out the best and worst of America, because it was a time of transformation; of new-felt social freedoms from old customs and cultures, greater civil rights, the environmental and peace movements. There were also the darker days of Vietnam, the assassinations of JFK, Bobby Kennedy, and Martin Luther King; which caused many Americans to lose faith that change could be beneficial, or even possible.

The differences between those who see a world of limited wealth and unlimited possibilities is understandable when looking at the growing disparities that have disenfranchised large parts of the Midwest and south—whose citizens tend to blame government for their problems, when in fact these states are most dependent on government aid due to their high levels of poverty.

The debate over who benefits from western countries’ capitalist model hasn’t been resolved between the followers of Adam Smith, who saw self-interested behavior as the path to a general prosperity, and Lord John Maynard Keynes’ model of shared wealth via government programs and regulation that was the basis of the New Deal.

Yet there is no country that hasn’t adopted some elements of the capitalist model with all its deficiencies because it is able to generate almost unlimited wealth—for the few, in many cases.

In fact, we no longer live in a world of scarcity with limited resources that was a basis for the eye-for-an-eye belief system Mahatma Gandhi opposed with his tactics of non-violent protest. Survival of the fittest in a world of brutal competition was the life earlier hunter-gatherer and tribal societies faced, as described by evolutionary psychologist Steven Pinker in his best-seller, The Better Angels of Our Nature.

This is no longer the case, even in the developing world. Our modern, technological economies of almost endless innovation and invention have created the possibility of a world of super-abundance, but not how to share it equitably. In fact, many of the most developed countries, including the U.S., are suffering from the effects of overabundance—obesity, high rates of infectious diseases, cancer, higher suicide rates and the overuse of drugs.

A world of super-abundance is more suited to win-win outcomes, a term used in conflict-resolution and business negotiations. It is the opposite of a winner-take-all, win-lose mentality, because the possibility of a non-confrontational solution enables both sides to benefit in some way. That’s easy to see in limited purchase transactions between a buyer and seller, but not in more complex conflicts involving national entities.

All can profit from such abundance, as we find better ways of sharing this wealth. The sixties world believed in a sharing society, even though we had nothing like the super-abundance modern technology has provided. Only a more sharing and caring society can bring about greater peace and less conflict.

Many new developments are helping to solve the inequities generated by the enormous changes—including a new understanding of financial behavior that can mitigate the frequent recessions and growing inequities of the past four decades. It relates to implementing systems that encourage economic cooperation over competition; systems like the Green New Deal that younger leaders are beginning to propose during this presidential election season.

The U.S. became the technology leader in the sixties, a goal that President Kennedy first set at the beginning of his Presidency. We are the first (and only) nation to land on the moon, explore Mars, and send satellites beyond our solar system. But we are just beginning to develop the environmental and health sciences to create a safer, more predictable world, such as new alternative energy sources that help to mitigate the effects of global warming from the overuse of fossil fuels.

And we still fight among ourselves and in foreign wars. This is while earth’s temperature continues to rise; and why it is so necessary to participate in the efforts to restore communities, as well as strengthen organizations that seek a peaceful resolution to the environmental crises and decreased opportunities for the less fortunate.

Such efforts are succeeding because the legacies of those leaders we lost continue to resonate with the best of America. The Kennedys and King instilled the belief that service above self is more important than self-interested behavior underpinning today’s consumer-driven society of unmet wants and needs. They called for participating in the building of a more universal community that transcends loyalty to ethnic origins and political parties.

Writers from M Scott Peck to President Barack Obama since then have touted the importance of community development in bringing people together to accomplish what cannot be done individually.

A well-functioning community is able to live within the normal boundaries of peaceful coexistence. There are the usual disputes, but ways are found to compromise among the factions because a common sense of mission gives them the will to coexist, rather than become polarized into immovable opposites.

The agents of change usually include individuals that believe diversity is an essential component uniting a community or organization. This is what motivates volunteer organizations such as the Peace Corps, and Rotary International that focus on service above self in the poorest communities and countries.

The recent proliferation of non-governmental organizations (NGOs) also helps to address poverty and wealth-sharing issues in the U.S. and underdeveloped world. Rotary International’s 35,000 clubs have 1.2 million members in some 150 countries that include national leaders. More than 23,000 domestic community and non-profit organizations nurture local initiatives to further community goals and aspirations in the U.S.

The National Collaboration for Youth, an interagency council of the nation’s 50 major youth-serving organizations, notes that its member agencies serve more than 40 million young people each year, making this system second only to the public schools in the number of youths served annually. Indeed, nearly 50 percent of eighth graders in the nationally representative sample surveyed by the U.S. Department of Education reported participation in programs sponsored by one of these groups.

There are also more than 36,900 such youth organizations, according to Guidestar.org’s web database, including such long-standing programs as 4-H, Boy Scouts, Girl Scouts, Boys and Girls Clubs, YMCA, YWCA, Girls Incorporated, Camp Fire, Big Brothers/Big Sisters, and Junior Achievement. These organizations are creating the leaders of tomorrow who will bring order to the seeming chaos brought about by the sixties’ tsunami of youthful energy that swept all before it.

How much time is left for Americans to come together in a more peaceful and caring way, a way that allows greater peace of mind and freedom of expression of our better angels? How much time do we have before 50 percent of Miami is under water; hurricanes and cyclones devastate whole regions and even countries, and North Korea or an as yet unknown terror group unleashes a nuclear weapon?

In reality, there are many methods of sharing that would mitigate the effects of growing populations and a changing climate—such as better trade agreements between the developed and developing countries, and the new Paris Accord to reduce global warming that the U.S. and Syria continue to oppose.

ow do we build a world community that lives in shared values and recognizes common aspirations? It will take patience and a determined effort to find commonalities between the various races and religions, yet we all belong to Homo sapiens—the one species in charge of Planet Earth. Recognizing those commonalities will provide the vision of that new frontier of possibilities we glimpsed in the sixties; and which inspired many of us to find a path that leads to a better place for America and the world.

We know how much President Kennedy’s vision influenced other countries as well as our own from the countless memorials that honor him. They help to remind us what needs to be done, as much as what has been done. It will happen as the newer generations find their call to serve, just as we found ours.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Saturday, June 15, 2019

Saving Capitalism--Part II

Popular Economics Weekly

Nobel laureate Joseph Stiglitz’s plea to save capitalism is important for a number of reasons; foremost is the survival of liberal democracy itself. Modern liberal democracies that we have known since WWII cannot survive if we cannot ‘fix’ modern capitalism to serve the majority rather than minority of its citizens.
“There are many reasons for our plight, including corporate power and greed centered on immediate profits and little regard for the impacts business decisions have on low-income Americans and the environment,” said Stiglitz. “Corporations have translated their economic power into political power, lobbying for policies that give them free rein to despoil the environment; and the swamp President Donald Trump promised to drain has been overflowing.”
It cannot survive without greater government programs to improve lives, and better control of financial markets, advantages that countries like China, the world’s second largest economy, have in competing in world markets for resources, and winning trade competitions.

One answer is what is called Modern Monetary Theory, or MMT, that both progressives and conservatives are talking about. It’s really a reincarnation of the New Deal that enabled America to pay for the Great Depression and WWII with a large amount of government debt, without raising taxes at the time that would have impeded economic growth.

Conservatives have railed against versions of MMT since Roosevelt and his Labor Secretary Francis Perkins created the New Deal—giving millions of jobs to jobless Americans, creating the social safety net and much of the early infrastructure (dams bridges, energy grids) that need updating today.
But it’s now become obvious from their 2017 tax cuts that Republicans love debt as much as anybody when it suits their purpose.


Conservative publication Barron’s Magazine portrays in this graph from 1985 to 2016 the actual U.S. net savings as a percentage of GDP. It highlights the wide fluctuations in the line graph—when there were 4 years of federal budget surpluses 1996-2000 (midgraph), to the low point in net savings during the Great Recession with the massive federal deficit. Foreign net savings are in red, domestic household and business net saving in blue and gray.

MMT is being touted as a possible way to pay for AOC’s Green New Deal, universal health care and other Democratic initiatives that will create jobs for all.

But debt has to be paid back in one form or another. In post-WWII economies, 1) it does get paid back if used in advancing growth that increases revenues, and 2) debt is extremely cheap today with the world awash in excess savings that investors are begging to place where it will give a decent return. Financing U.S. budgets with ‘other people’s money’ is not so risky when there’s no safer place to put it than in U.S. dollar investments.

WWII’s 120 percent of GDP debt was paid down to less than 40 percent in the post-war years with massive growth and productivity-enhancing investments like public highways, the Internet, modern healthcare improvements and government basic research.

We are in a much better position today with a fully-employed economy. But it does subject investors to the vagaries and vacillations of the Treasury bond market, which is the safest haven for investors afraid of an economic downturn that could crater stock prices.

Democracies are also in danger with authoritarian governments springing up in Eastern Europe using Russia and China’s authoritarian examples that control the courts and public media to maintain their power.

However modern capitalism with its checks and balances has enabled the growth of prosperous middle classes at the heart of liberal democracies. No other economic system is able to produce the quantity of goods and services required for a healthy liberal democracy.

Radosław Sikorski, Polish Minister of Foreign Affairs, speaking of recent anti-democratic trends in Eastern Europe at the Wrocław Global Forum, an annual summit organized by the Atlantic Council, the city of Wrocław, Poland, and other partners, noted a startling fact--there is a common assumption that dictatorships may be better at some economic tasks because they do not have to pay attention to public opinion. Yet communist governments in Central and Eastern Europe failed to live up to that supposed economic advantage.
Sikorski explained, “My thesis is this: contrary to received wisdom, dictatorships also have public opinion and dictatorships are usually more cowardly than democrats. That is why fundamental economic reform under dictatorships – in Chile for example – is the exception, not the rule. It is usually the democrats who have to tidy up the mess, including economic mess, left by dictatorships.”
The club of rich democracies is not easy to join, per a recent piece in the Economist, but those who get in tend to stay there. Since the dawn of industrialisation, no advanced capitalist democracy has fallen out of the ranks of high-income countries or regressed permanently into authoritarianism.

This is not a coincidence, say Torben Iversen of Harvard University and David Soskice of the London School of Economics, in their recent book, “Democracy and Prosperity”. Rather, they write, in advanced economies democracy and capitalism tend to reinforce each other, as I’ve been saying. It is a reassuring message, but one that will face severe tests in years to come.

What are those tests? The largest may be how to grow an economy that benefits more of the middle and lower-income classes with greater government-funded programs, such as happened with the New Deal. That obviously hasn’t been the case since 2009 and the recovery from the Great Recession. It is already being tried successfully in many Northern European countries that reward its citizens with a larger social safety net, shorter working hours, and more leisure time.

Professor Stiglitz, Torben Iversen, David Soskice and a growing number of economists show just how liberal democracies have survived multiple wars and global recessions; by modernizing capitalism to fit modern needs. Perhaps “capitalism is the worst economic system, except for all the others,” to paraphrase Winston Churchill’s famous aphorism.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, April 11, 2019

What's Wrong With Capitalism?

Financial FAQs

Winston Churchill once said, “No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.”

What about capitalism? Has it survived because it is the most imperfect economic system, except for all the others?

Hedge fund billionaire Ray Dalio has been sounding the alarm of late that the western, free market, American model of capitalism is no longer working for most Americans.
In a recent Linked In commentary he said, “I think that most capitalists don’t know how to divide the economic pie well and most socialists don’t know how to grow it well, yet we are now at a juncture in which either a) people of different ideological inclinations will work together to skillfully re-engineer the system so that the pie is both divided and grown well or b) we will have great conflict and some form of revolution that will hurt most everyone and will shrink the pie.”
Dalio was talking about the 1930s collapse of markets and Great Depression—when Roosevelt’s New Deal came to the rescue, employed millions of the unemployed and helped US win WWII. It was the last time income inequality had increased to the level it is today as shown in this well-known graph, and the last time “people of different ideological inclinations” worked together.

In the words of Marriner Eccles, Roosevelt’s Federal Reserve Chairman during the Great Depression, “As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth ... to provide men with buying power. ... Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. ... The other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
We have the same situation today; partly as a result of the just-ended Great Recession, which was comparable to the Great Depression because of the $trillions in American households’ lost wealth yet to be recovered.

The Great Recession was a market failure caused by the housing bubble, but also by government policies that kept employees’ wages from rising with the increases in productivity—hence the return to record income inequality. For instance, collective bargaining labor laws were weakened in the 1980s. Today there are 26 so called ‘right-to-work’ states that restrict workers rights and union collective bargaining in some way.

This was accompanied by deregulation of whole industries in the name of globalization that loosened oversight and regulations controlling corporate behavior, unleashing the worst form of capitalism—cutthroat capitalism where the profit motive overrode all social obligations to take care of those less fortunate, which made it more difficult for ordinary Americans to climb the success ladder.


Dalio’s graph portrays who benefited from the 2001 and 2007 Great Recession. It wasn’t the employees, as employees’ share of US corporate sales plummeted from almost 76 percent of corporate revenues to 68 percent in 2017. Employees lost the most, in other words, and have yet to climb back above the 70 percent that prevailed from the 1970s to 2000.
And hence comes Ray Dalio’s dire threat: “The previously described income/wealth/opportunity gap and its manifestations pose existential threats to the US because these conditions weaken the US economically, threaten to bring about painful and counterproductive domestic conflict, and undermine the United States’ strength relative to that of its global competitors.”
So we need to find ways to escape repeating the history of the 1930’s and World War II that followed. Put another way, how do we rebalance the power structure that skewed incomes and wealth upward, and put the US at the bottom rankings of developed countries in services provided to its citizens—like educational opportunities, health outcomes, and chance for upward mobility?

Dalio’s answer is to identify leaders who believe greater equality of opportunity is the way to save capitalism, and who will in turn form public-private partnerships that include businesses, philanthropists (such as Dalio) and government to coordinate the planning of such partnerships via recommendations of a “bipartisan commission to bring together skilled people from different communities to come up with a plan to reengineer the system to simultaneously divide and increase the economic pie better.”

But who are those leaders? Philanthropists such as Bill Gates, Warren Buffett, and Dalio are already participating. And there are enlightened corporate leaders that don’t belong to ALEC, the right wing American Legislative Exchange Council lobby responsible for crafting the right-to-work laws that currently suppress both voter rights and worker salaries in many of the red states.

Harvard Socialist, Rober Putnam, author of Bowling Alone, the Collapse and Revival of American Community, doubts that American communities fragmented in the 1970s as a result of another ‘revolution’, the ICT revolution (in information and communications technologies), can be easily reconstituted. He says good luck in bringing together those ‘different communities’ that Dalio talks about: “I think that community is a casualty of an elite minority’s capture of both markets and the state…The genie of meritocracy cannot be put back in the bottle.”

And Nobel economist Paul Krugman once joked it may take another extremely dire event, maybe an alien invasion, before Americans will unite again in a common cause as they did with the New Deal and WWII.

Where will we find the political leaders? He doesn’t mention large ideas like the Green New Deal, which some of our younger leaders—and even Presidential candidates—are proposing. The bottom line is it will take very big ideas to tackle such  “existential threats”.  Let’s not forget global warming that the US Pentagon had said is already endangering our national security.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, February 18, 2019

Modern Infrastructure A Must for Climate Change

Answering the Kennedys Call



There is something we can do as a country to mitigate the catastrophic changes that global warming is already wreaking on whole populations. Accelerate development of a modern for-the-22nd Century infrastructure. It will create badly needed jobs, energy efficiencies that mitigate greenhouse gases, and better manage the international conflicts already arising from massive droughts and rising oceans.

That infrastructure must include new digital pathways, such as 5G networks, modern energy grids, modern transportation systems, and better planning for uncertain outcomes to changing climates. This is turn will assist in resolving conflicts that are sure to pop up when populations are pressured to move, as they have in just the last decade.

There is actually no alternative. We are already seeing the rise of populist, anti-democratic governments in Europe, Africa, and the United States. Scared native populations are building walls and fences to protect themselves from the influx of darker-skinned strangers ousted by unlivable climates from the poorest regions.
The World Economic Forum has said, “A global focus on sustainable infrastructure can boost growth, reduce poverty, improve air quality and create jobs, while building low-carbon, climate-resilient economies. This transition could entail economic gains worth $26 trillion over the next 12 years compared to business-as-usual, according to a report by the New Climate Economy.”
The New Climate Economy was commissioned in 2013 by the governments of seven countries: Colombia, Ethiopia, Indonesia, Norway, South Korea, Sweden and the United Kingdom. “The Commission has operated as an independent body and has been given full freedom to reach its own conclusions. Lead by its global commission, it has disseminated its messages by engaging with heads of governments, finance ministers, business leaders and other key economic decision-makers in over 30 countries around the world,” said its website.

And what has been proposed by other countries is now reaching our shores. The Green New Deal resolution by Massachusetts Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) is already being denounced by so-called ‘moderate’ politicians and pundits as too draconian. Columnist David Brooks has characterized it as a massive government takeover of the private sector; socialism in its most extreme form that has been a failure in competition with modern capitalist-based economies.

Yet, why must it be an either/or proposition? The various reports on climate change mitigation maintain it will take centralized planning to create a necessary private/public partnership—yes, central planning in some form—to coordinate the incredible complexities that must be navigated in modeling multi-factor planning that takes into account many different outcomes. It’s playing three-dimensional chess with the survival of our planet at stake.

Then what kind of Central Planning? It has to resemble Roosevelt’s New Deal that brought us out of the Great Depression and enabled the U.S. to turn the tide in WWII. Global warming as a result of climate change is just such an emergency. And the longer governments wait to mitigate its affects, the more expensive it becomes—both in financial and geopolitical terms. The U.S. Pentagon has said it now poses a danger to our national security.

The critics of better coordination between the private and public sectors obviously miss the point. It is what is lacking from any suggested solutions to the climate crisis, because it entails massive improvement in the social structures as well, as is envisioned in the Green New Deal—such as some form of more universal health care, better labor laws, and a much improved social safety net that would mitigate much of the red-vs-blue states’ conflicts that have stymied bringing infrastructure improvements into this century, much less planning for the next.
“Even with these caveats in mind, a global climate action scenario prepared for this (New Climate) Report using the E3ME model that combines a range of opportunities including the wide scale use of appropriate carbon prices and phasing-out fossil fuel subsidies, seizing energy and industrial energy and resource efficiency gains, halting deforestation and restoring degraded lands, accelerating the penetration of electric vehicles, and integrating intermittent renewables into the power system—was found to deliver significant benefits. Transitioning to this low-carbon, sustainable growth path could deliver a direct economic gain of US$26 trillion through to 2030 compared to business-as-usual, according to analysis for this Report,” says the Guardian.
There is no reason that such complexities might overwhelm the planning process, in other words. Even AI will contribute in some form. If IBM’s Big Blue and newer iterations can win chess matches and defeat a top S. Korean champion in the ancient game of go, then we know Artificial Intelligence will be needed to help overcome those complexities.

Shouldn’t saving our planet take precedence over going to Mars, a barren planet and prime example of what could happen on earth? North America and all countries will suffer greatly from the looming climate crises, if we aren’t able to perfect our union in some way.

Harlan Green © 2019


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