The coronavirus pandemic is a major human tragedy which will kill many thousands around the world and cause huge economic disruption. Big mistakes were made in China, the U.S. and other countries which delayed the world-wide response.

Nevertheless, the U.S. has now adopted an effective social distancing strategy which is slowing down the spread of the virus in most parts of the country except for a number of unfortunate hot spots such as New York City.

A sensible plan of action for national recovery has been proposed by Scott Gottlieb and colleagues at the American Enterprise Institute.  They have a four part plan:

• Slow the Spread in Phase I. This is the social distancing phase we are already in.  Now the emphasis should be on increasing testing capacity to accommodate the ability to test everyone with symptoms and their close contacts.  Also issuing stay-at-home advisories in hot spots where transmission is particularly intense, as when case counts are doubling every three to five days.
• State-by-State Reopening in Phase II. This begins when there is a sustained reduction in new cases for at least 14 days, hospitals are able to treat all patients without resorting to crisis standards of care and the state is able to conduct active monitoring of confirmed cases and their contacts.  When these conditions are met, the vast majority of businesses and schools can reopen.
• Establish Immune Protection and Lift Social Distancing in Phase III. This means that infections can be prevented either with a vaccine or therapeutics which can mitigate the risk of spread or reduce serious outcomes in those with infections.  When these conditions are met, then all social distancing measures can be lifted.
• Prepare for the Next Pandemic in Phase IV. This can be achieved by expansion of public-health and health care infrastructure and workforce as well as government structures to execute strong preparedness plans.

Conclusion.  The coronavirus pandemic has caught the world off guard and done much damage.  But there are sensible means, as suggested above, for responding forcefully but in a measured way.  We want to be very sure that neither the U.S. nor any other country need go through such a traumatic pandemic again in the future.

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The incidence of new coronavirus infections in the U.S. appears to be slowing down to about 20,000 new cases per day (see chart).  This number should start to drop soon.

I have long considered myself fortunate to live in Omaha NE, and all the more so in the midst of the coronavirus crisis.  In Douglas County we have now had just 57 reported cases of infections and one death.  We are isolated from the country’s hot spots but still taking social distancing very seriously.

So I have the luxury to begin speculating about what will be coming down the pike when we get beyond the pandemic.  Here are some of the major changes which are likely to occur in the way we conduct our lives:

• The coronavirus will permanently change how we work.  Many companies and employees will decide that working remotely from the office has its advantages.  More and more people will discover that Zoom is a great way to convene groups electronically.

  

• Online education will expand dramatically, at least beyond high school. College faculties are now all learning how to teach online, many will like it, and it has the advantage of greatly increasing access to post-secondary education.
• Biotechnology will have a growth spurt.  Editing our genes could eventually make us immune to viruses.  Need more be said?

  

• China’s influence in the world will shrink.  Not only did China’s backward public health procedures let the coronavirus pandemic break out in Wuhan, all businesses can now see how dangerous it is to let supply chains become concentrated in one country.

Conclusion.  That’s it for now.  I (and my sources!) are certainly not clairvoyant.  But already these changes alone will have a major impact on American society.  As technology becomes more important, so does the technical knowledge which supports it, and the consequent demand for more knowledge workers.  Our entire educational system will have to be upgraded.  More on this later.

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The economy has been doing very well lately and I would prefer to be talking about this.  But, of course, we now have a more immediate problem to deal with.

The atmosphere in the U.S. about the coronavirus threat is almost panicky but consider:

• There are currently 3115 confirmed cases of the virus in the U.S. and 60 deaths.
• There have been 81,000 cases in China (with four times our population) so far and 3199 deaths.
• China now reports that there are fewer and fewer new cases reported every day.
• Since China, with a late start, has been able to get the virus under control in a ten week period, the U.S. with a sensible strategy, should be able to do the same.
• Just in the last few days a very sensible strategy has sprung up spontaneously around the country: social distancing. Isolate yourself from other people to minimize your infection risk.
• Also, the federal government has declared a national emergency and has set up a flu testing strategy with major businesses such as Walmart, CVS and Walgreens.

  

• Our economy is being hurt by the coronavirus outbreak, especially for transportation and entertainment. Cruise ships, airplanes and restaurants will all be badly affected.  In Omaha NE, where I live, both  the College World Series (each June) and the Berkshire Hathaway annual convention (each May) have been cancelled for 2020.  Omaha will thus take a big financial hit.
• Performance theaters and art galleries in Omaha are suspending operations but not yet movie theaters and restaurants. This will also hurt the economy.
• Economists are mixed on whether or not the U.S. is likely to go into recession  which requires two successive quarters of negative growth. We won’t know officially until October of this year, after the third quarter ends.
• In the meantime, watch the monthly unemployment rate which activates the Sahm Signal indicator of recession. I will be watching this carefully and reporting on it.

  

Summary.  The coronavirus is very serious.  The federal government is now responding forcefully even if it did delay initially.  Practice social distancing but without overreacting.  My wife and I (both retired) will continue most of our normal daily and weekly activities such as working out, meeting with others in small groups, going to movies and eating out at our favorite restaurants.

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The U.S. economy has been doing very well lately.  The unemployment rate, under 4% for the last two years, has just been reported to be a continued low of 3.5% for February 2020 and, moreover, 273,000 jobs were added last month.

There’s other good news to report about the economy as well (coming soon!) but, of course, we also have the coronavirus to contend with at the present time.  How should we evaluate the coronavirus threat?  Consider:

• During the 2019-2020 flu season so far there have already been about 14,000 deaths in the U.S. Typically there are from 12,000 – 61,000 flu deaths in the U.S. each year.
• So far there have been 17 coronavirus deaths in the U.S., including 14 in Washington State 1 in California and 2 in Florida.

The most likely course of a coronavirus recession is steep but very short:

• The DJIA has plunged 3500 points since February 19 or 12% of its value. This represents good buying opportunities for savvy investors like Warren Buffett.
• The price of oil has dropped 33% in the past two months, from $63 per barrel to $42. This is great for consumers even though it is not so good for producers.
• Ten year Treasury bonds are now yielding less than 1% annual interest, a very low rate. Investors are unlikely to continue to tie up money for 10 years at such a low rate.
• 30 year home mortgages are now available for 3.29%, again very low but good for home buyers.

Conclusion: Most reactions to the coronavirus threat have been quick and dramatic.  Very soon, within a few months or less, the long term threat is likely to fade and the U.S. economy will bounce back to its previous growth mode, by continuing to exhibit strong consumer spending.

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Income inequality is a hot topic these days, especially in the Democratic presidential primary race.  The New York Times writer, Nelson Schwartz, says it is so bad that he asks the question “Is America on the Way to a Caste System?”

But consider:

• The top four Democratic presidential candidates, Sanders (Vermont), Biden (Delaware), Bloomberg (New York) and Warren (Massachusetts) are all east coast residents.
• Los Angeles has by far the largest homeless population, 44,000, in the whole country.
• The average monthly rent for a one BR apartment in San Francisco is $3438, the highest in the country.
• In fact, the scholar, Richard Florida, has a book, “The New Urban Crisis” pointing out that it is our biggest cities, especially coastal, which are increasing inequality and failing the middle class.

In contrast with the message from the Democratic presidential candidates and the stark figures above, consider that, throughout the country as a whole, Life in America is continually getting better:

• The middle class is not shrinking. The number of middle income ($35,000 – $100,000) plus higher income (> $100,000) households together is expanding rapidly (see chart).  The number of low income households (< $35,000) is shrinking significantly and the middle class is actually thriving.
• Many developed countries have more billionaires per capita than the U.S.!  Warren Buffett, who lives in Omaha NE where I also live, is the third wealthiest American at $80 billion. His wealth and prestige are of enormous value to Omaha.
• So what if the wealthy have more and more special privileges?  As a retired math professor from the University of Nebraska Omaha, an average university, and with no extra financial resources, my wife and I are in the group of high income households (see above). We live somewhat frugally by choice but are not restricted in any way from doing what we want to do, from generously supporting our favorite charities to traveling anywhere we want to go.

Summary.  Income inequality is very real, especially in the blue states.  But poverty is a bigger problem than inequality.  There are practical ways to alleviate poverty and society is making much progress in doing this.

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In my last post “What Is Wrong with the Democrats?,” I discussed the fact that the Democratic party is moving so far to the left that it may nominate a presidential candidate who makes Trump look like the safer choice.

Here is an additional explanation of what is going on:

• In the short span of a generation, the face and focus of the Democratic Party nationally has shifted from a glorification of the working-class ethos to multi-culturist militancy pushed by the Far Left of the party.
• The narrow elite – people with national influence – coincides with the Big Four centers of cultural impact: New York, Los Angeles, San Francisco and Washington DC.
• Liberalism which seeks to spread cosmopolitan relativism to the masses, by force if necessary, instead of spreading economic equality, is destined to leave a decisive slice of the American electorate in search of a new home.
• If the people who make branding news, and political decisions, are immersed in environments hostile to a coalition that represents a governing majority of the nation, cultural schism is the most likely outcome.
• Trump’s often coarse language on the issues serves as an attractant for the kind of marginal voters who were previously unmotivated by more conventional presidential candidates such as Mitt Romney.
• For the typical voter, the speech of normal candidates has them saying “What’s going on? I just want a job.  Just get me a job.  I don’t need the rhetoric.  I want a job.”
• The question of whether Trump has remade, or can remake, the Republican Party on a less-ideological, but more strident, forge, is one that will persist past his presidency.
• A key to projecting the staying power of the Trump-made alliance between populists and conservatives is understanding not just the changing influences within this coalition but also the forces pushing Democrats further toward the multinational worldview that enabled the coalition to form.
• In the long run the Republicans have a demographic problem and the Democrats have a geographic (coastal) problem. What happened in 2016 is only the beginning. “Unchecked by the need to accommodate centrists in their own party, the Democrats are continually redefining the litmus test for acceptable liberalism.
• The 2020 election may determine whether the American electorate has altogether realigned, or merely had a hiccup.

Summary.  Did 2016 represent a great revolt or just a great surprise?  This is what the American voters will decide in 2020.  It will truly be a momentous election.

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In spite of President Trump’s post impeachment surge in popularity to 49% (Gallup Poll), he is still vulnerable for re-election.  “Millions of Americans like the results of Mr. Trump’s policies but not his divisive brand of politics and personal behavior.”

And yet the top Democratic candidate is a “socialist who wants the government to control energy production and health care, who wants nationwide rent control, and who calls America a racist society from top to bottom.”

Consider the intellectual currents Bernie Sanders is riding:

• The attack on capitalism and markets. The left blames the market for the 2008 panic and crash rather than failed government regulation, subsidies for bad housing risks and loose monetary policy.
• Inequality replacing growth as the top economic policy concern. Don’t Democrats realize that a 3.5% unemployment rate is far more beneficial to workers than demonization of billionaires and equating business success with corruption?
• The critique of America as irredeemably racist. After police shootings in 2014 and 2015, Black Lives Matter erupted and demanded that politicians bow to its concerns, neglecting 50 years of racial progress and the huge reduction in crime which has saved thousands of black lives.  For example, 200,000 African-Americans have been able to move out of Chicago in the last two decades alone to seek a better life.

  

• Climate change as religion, not science. Yes, global warming is real and serious, but the alarmists have greatly overstated the problem.  All over the country Americans are implementing practical ways of increasing the use of renewable energy and cutting back on carbon emissions.  The last thing we need is a Green New Deal to strangle the American economy.

Conclusion.  Americans “are looking for an alternative who doesn’t scare them.  The agony of the Democrats is that years of bowing to the left means they may nominate someone who makes Mr. Trump look like the safer choice.”

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Donald Trump will leave office in either January 2021 or January 2025.  I certainly don’t know which year it will be or who will be the next President.  Trump is a populist disrupter.  The real question is: do we return to “normal” after he is gone or rather set off in a new direction?

The New America scholar, Michael Lind, has a timely book: ”The New Class War: saving democracy from the managerial elite” which explores this very important question.

Says Mr. Lind:

• The hub-heartland divide that is reshaping politics is the geographic manifestation of a class divide. The interests of hub-city over-classes and heartland working-classes collide when it comes to environmental policies, trade, immigration and values.
• Between 1999 and 2009 U.S. multinational corporations cut 864,600 workers in the U.S. while adding 2.9 million workers abroad.
• The center of gravity of the over-class is center-right (pro-market) on economic issues and center-left on social issues. In comparison, the center of gravity of the much larger working-class is just the opposite.
• Populists have succeeded because they opportunistically champion legitimate positions that are shared by many voters but excluded from the narrow neoliberal over-class political spectrum. For example, a 2018 poll found that 64% of Americans, including 53% of Latinos, favor immediately deporting anyone who crosses the border illegally.
• Populism is a sign of a sick body politic, not a cure.
• Only a new democratic pluralism that compels managerial elites to share power with the multiracial, religiously pluralistic working class for the economy, politics and culture can end a cycle of oscillation between oppressive technology and destructive populism.
• The neoliberal establishment panaceas of higher education, retraining, geographic mobility, redistribution, and anti-monopolism may ameliorate the symptoms but will not cure the disease: the imbalance of power between the over-class and the working-class.
• The alternative to both technocratic neoliberalism and demagogic populism is democratic pluralism.
• The rootedness of most working-class Americans in their hometowns and regions is often lamented by the intellectuals of the managerial over-class.
• It has been argued that “democracy, national sovereignty and global economic integration are mutually incompatible.” The solution to this “impossibility theorem” is to give up on global integration.
• Every democratic nation-state should tailor both its immigration policy and its trade policy to promote the interests of the members of its working-class majority, native-born and foreign-born alike.
• Managerial elites are destined to dominate the economy and society of every modern nation.
• But the new class war will come to an end in one of only two ways: either there will be a new cross-class compromise embodied in a new democratic pluralist order or, the grim alternative: a future of gated communities and mobs led by demagogues at their gates.

Conclusion.  Mr. Lind’s message is clear: the neoliberal over-class must learn how to effectively work with the working-class on their common interests.  This is the answer to the question of the title:  Donald Trump is a demagogic disrupter.  What we need next is a bridge builder between the elite over-class and the working-class.

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This blog,It Does Not Add Up, addresses important fiscal and economic issues in the U.S.  It is remarkable that our unemployment rate, currently 3.5%, has been under 4% for going on two years.  This is the equivalent of a huge labor shortage which is very good news for our lowest-income workers who now have lots of new employment opportunities as well as big wage increases.

But here is another very interesting fact.  A new book, Fully Grown, by Dietrich Vollrath, makes a convincing argument that U.S. per capita GDP growth has actually slowed dramatically in the 21^st century and for very positive reasons:

• Per capita GDP growth averaged 2.25% annually from 1950 – 2000 and only 1% annually from 2000 – 2016. Most of the slowdown comes from the effects of smaller family sizes and aging as well as the shift from goods to services.
• This slowdown represents success since child-rearing has become a smaller burden on families, we are living longer and we are able to spend more on enhancing the quality of life rather than just physical necessities.

But this raises the obvious question:  how can we have both slower GDP growth and a labor shortage at the same time?  Here is at least a partial answer to this question:

• The U.S. unauthorized immigrant total has fallen from a high of 12.2 million in 2008 to 10.5 million in 2017 (see chart) and is probably still continuing to fall further. This means that unauthorized immigrants have declined as a share of the U.S. labor force (see second chart).
• Concurrently with our overall labor shortage, the number of H-2A (agriculture) and H-2B (non-agriculture) guest worker visas has increased from 103,000 in 2010 to 408,000 in 2019 (see chart).
• This means that there are now more legal immigrants to fill the physically demanding jobs which Americans don’t want.  It also means more jobs, and higher wages, overall for low-income Americans!

Conclusion.  Overall, we have an amazingly strong economy even though annual per-capita growth has slowed in the 21^st century.  The U.S. is doing something amazingly right!

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