What can the West learn from Vietnam’s Reopening? [feedly]

What can the West learn from Vietnam's Reopening?
https://www.globalpolicyjournal.com/blog/05/06/2020/what-can-west-learn-vietnams-reopening

Ba-Linh Tran and Robyn Klingler-Vidra highlight lessons from Vietnam's currently successful easing of lockdown restrictions. 

Vietnam eased social distancing on April 23rd, so I (Ba-Linh) went to get my haircut and scheduled phở with friends and students. On the way, I was surprised how fast Saigon had sprung – differently than before – back to life. In the six weeks since my haircut, the focus of Vietnam has shifted from fending off the pandemic, which made headlines with over 300 cases and no deaths so far, to the sustainable reopening of its economy and education. In this, the need to balance opening with staying vigilant has been central to every aspect of life.

The reopening has been deliberate and steady. The country has not seen an infection spike, all new cases have been repatriated Vietnamese; not residents, Vietnamese or foreigners. Life, however, is not back to normal but rather adapting to 'a new normal' that came with a myriad of questions. How to support businesses hit by the pandemic? What do we do if a student gets infected?

Four key themes underlie Vietnam's 'new normal' thus far, and we believe these themes offer lessons for all reopening countries in the weeks and months ahead.

1) Safety first: masks, thermometers and restricted entry

Reopening is accompanied by precautionary measures. The government continues to report new cases every day, all of which have been from repatriation flights rather than in-country. Many of the confirmed cases have been discharged, but the country is still fighting to save one critical patient, a 43 year-old British pilot; 26 Vietnamese have volunteered to donate their lungs for him. As of June 3rd, he was – finally – said to be on the path to recovery. At the grassroots level, people are encouraged to keep distancing, wearing masks and washing hands; quarantine and lockdown are neither off the table. Businesses are still providing hand sanitizers for customers (photos 1 & 2), and some take customers' body temperatures before entering; these measures are mandated for some forms of businesses. Vietnam is now open for repatriates, high-skilled foreign workers and diplomats, all of whom will be quarantined for 14 days upon entry.

Photos 1 & 2: From a big supermarket for household appliances, to a small, old Pho shop, Vietnamese businesses provide hand sanitisers for customers right at the entrance. Photos taken by author (Ba-Linh Tran)

2) The economy: revive, resist and accelerate

The 'new normal' also focuses on the economy. A set of policies and services (photo 3) have been established to support both businesses and citizens affected by the pandemic; these include, for example, business tax cut and deference, monthly allowance and employment protection for workers, and financial aid for poor households. The total support package amounts to $2.6 billion, and businesses and citizens can access governmental support via an online portal. In addition, there are concerning signs of hostile foreign (especially Chinese) takeovers of pandemic-hit businesses. By late April, foreign purchases of Vietnamese equities reached over $1b, a marked increase of 33% over the same quarter last year; Chinese investment alone increased by 38%. Given the rise, the Vietnam Chamber of Commerce and Industry has even suggested stopping any transaction of M&A nature. On the other hand, there have been talks about opportunities for Vietnam to become a FDI hub, considering advantages like the unique EU-Vietnam FTA and supply chains moving away from China. Indeed, excitement grew with the February announcement that Apple would be producing AirPods in Vietnam.

Photo 3: Local authorities in Saigon survey small, local businesses about the impact of Covid-19 on them. The survey covers operational details of a business during the pandemic and what it needs support with. Surveying is part of the Government's effort to support businesses' recovery. Photos taken by author (Ba-Linh Tran)

3) Education: free to teach, with caution

Education is a mainstay topic in Vietnam, with space being reserved for daily coverage in almost all news outlets. Vietnam was quick to close down all schools (and higher education institutions) in early February, and repeatedly postponed reopening until the 4th of May in the interest of safety. Such long closure now poses challenges for schools to achieve catch up with the national curriculum – substituting physical with online lessons during closedown proved largely ineffective. In response, compromises were made by the government in the amount of content taught and assessed, and schools were given agency to deliver the reduced content. Previously, school agency had been extremely limited. A bigger challenge is how to keep students safe in order to restart their learning. Notable compulsory measures for schools include checking students' temperature before entry, regular hand washing activities, and arranging different entry and exit times for different classes. In the event of a suspected infection, teachers must end classes immediately and the student in question will be immediately taken to a medical facility.

4) Politics: planning ahead

Vietnam is supposed to have new central and provincial leaders as of January 2021. Shelved during the pandemic, political activities have now quickly resumed, starting with a central meeting of the Vietnam Communist Party's decision-making body; we also observe a sense of urgency in many provinces to choose their own leaders. In the meeting, Covid-19 and its global fallout were taken into account, and it was stated that the context for forthcoming leaders is underpinned by international uncertainty, including potential complications stemming from Covid-19 itself.

What can we learn?

The themes underpinning Vietnam's initial reopening show that there is no silver bullet. Even in a country that was very effective in reducing community transmission rates, the reopening has been underscored by the need for planning, and for staging, when it comes to safety in reopening business and education. Politics also resumes. Before lifting lockdown, testing capacity was in place, the population was wearing masks, and businesses had put safety procedures in place (such as taking temperatures before customers enter). Now the issues turn to ensuring that the sense of continued awareness and diligence persists.  

 

 

Ba-Linh Tran is a Vietnamese researcher and consultant in higher education management. His clients include both Vietnamese universities and foreign universities in Vietnam, which he has consulted on a range of issues, including strategy making, research training and student recruitment. He also has experience working in lifelong learning and ESL/EFL. Ba-Linh holds a PhD in Education from the University of Bath in the UK; his thesis focuses on the role of non-strategists (e.g. deans, lecturers, students) in realising a university's strategies.

Robyn Klingler-Vidra is Senior Lecturer in Political Economy in the Department of International Development at King's College London, where she research focuses on innovation and venture capital policy in East Asia. She is the author of The Venture Capital State: The Silicon Valley Model in East Asia and co-authored a 2020 Nesta-UNDP study on Strategies for Supporting Inclusive Innovation: Insights from South-East Asia.

Photo by Louis PHDC from Pexels

 -- via my feedly newsfeed

Exploding US Unemployment Rates: A Peek Inside [feedly]

another deep dive from Tim Taylor -- into the unemployment numbers....some surprises and illuminations.

Exploding US Unemployment Rates: A Peek Inside
https://conversableeconomist.blogspot.com/2020/06/us-unemployment-rates-in-international.html

US unemployment rates have reached higher levels, and risen in a way that is more dramatic, than at any time since the start of regular employment statistics in the late 1940s. Here's the basic picture. The unemployment rate was 14.7%  in April and then dropped unexpectedly (to me, at least!) to 13.3% in May. Even so, looking back over the last 75 years, the monthly unemployment rate has never risen this fast or reached a level this high.  

The explosive rise in the unemployment rate has been accompanied by a sharper decline in jobs than the US economy has experienced in the last 75 years. The figure shows total US employees. As you see, the number rises gradually over the decades, keeping pace with the US population. The total number of jobs drops during or just after recessions, shown by the shaded gray bars. But whether it's the Great Recession of 2007-9 or the severe double-dip recession of the early 1980s, the US economy has not seen a drop in total jobs this fast and severe. Total number of jobs was 151 million in March and 130 million in April--a drop of about 14% in a single month--before the gain of about 2.5 million total jobs in May. 

The key question about unemployment is whether there could be a quick bounceback. Are many of these employers poised to resume hiring? Are many of these workers poised to go back to work? One interesting tidbit of evidence here is the share of the unemployed who lost their jobs because of layoffs--which has some implication that they could be readily rehired. Here's another striking figure. The share of "job losers on layoff" is about 8-15% of the total unemployed from the mid-1980s up to the is around 8-15% of 

One of the shifting labor market patterns in the last 30 years or so has been the disappearance of the "layoff." If you look back at recessions in the 1970s and 1980s, you see that the share of "job losers on layoff" rises during recessions, and then falls. It was a much more common pattern for factories and other employer to lay off and then to rehire those same workers. But when you look at the recessions of 1990-91, 2001, and 2007-9, you don't see much of a rise in layoffs. Instead, the chance that an unemployed workers was laid off with a plausible prospect of being rehired, rather than just let go, got lower and lower. For example, look how low the percentage falls in the years after the Great Recession. 

But the share of "job losers" on layoff just spiked to 78% in April and 73% in May, which implies that large numbers of the unemployed could conceivably be rehired quickly. But of course, a "layoff" could become an empty promise, where most of these workers are not rehired, and instead need to find new jobs in the new socially distancing economy. 

I've also been struck by the difference between US and European unemployment data. When US unemployment was spiking to 14.7% in April, unemployment in the 27 countries of the European Union barely nudged up to 6.6% in April; for the subset of 19 countries in the euro zone, unemployment was 7.3% in April. Why did US unemployment spike to double European levels? The likely answer involves interactions between public policy and what is counted as "unemployment." 

One key policy choice is whether assistance to workers has been sent to them directly--say, via unemployment insurance--or whether assistance to worker was funneled through employers, so that workers who were not necessarily going to work still kept receiving a (government-funded) paycheck from their employer. Jonathan Rothwell describes the difference in "The effects of COVID-19 on international labor markets: An update" (May 27, 2020, Brookings Institution). 

Here's a figure from Rothwell showing the change in workers getting unemployment benefits. Notice that it's way up in Canada, Israel, Ireland, and the US. But in France, Germany, Japan, and Netherlands, there's essentially no rise in unemployment benefits. 

The reason is that in many countries, a number of worker are getting government assistance via their employers. In the unemployment stats for those countries, they are still counted as employed. Here's the figure from Rothwell: 

Another policy choice in the US has been to increase unemployment assistance substantially, so that it is closer to the actual pay that workers receive. Manuel Alcalá Kovalski and Louise Sheiner provide a quick background primer on "How does unemployment insurance work? And how is it changing during the coronavirus pandemic?" (Brookings Institution, April 7, 2020). As they write: 

Most state UI [Unemployment Insurance] systems replace about half of prior weekly earnings, up to some maximum. Before the expansion of UI during the coronavirus crisis, average weekly UI payments were $387 nationwide, ranging from an average of $215 per week in Mississippi to $550 per week in Massachusetts. ... The CARES Act—a $2 trillion relief package aimed at alleviating the economic fallout from the COVID-19 pandemic—extends the duration of UI benefits by 13 weeks and increases payments by $600 per week through July 31st. This implies that maximum UI benefits will exceed 90 percent of average weekly wages in all states.

In other words, rather than trying to keep laid-off or furloughed workers receiving much the same income via their employer, the US approach has been to do so via the unemployment insurance system. This has caused problems. For lower-wage US workers, the higher unemployment insurance payments cover a substantial part of their typical working income--in some cases, more than 100% of their previous pay. They have a financial incentive not to return to work, even if their employer would like to re-open, until these benefits run out. Of course, other unemployed workers receiving these higher benefits may not have an option to return. In the meantime, other low-wage workers who have kept working in grocery stores, warehouses, delivery services, and from home, are not receiving such payments at all. 

Given that the US policy choice was to funnel assistance to workers through the unemployment system, it's not a big shock that the unemployment rate rose so high, so fast. A near-term policy question is whether to extend the higher unemployment payments, perhaps by another six months. The Congressional Budget Office (June 4, 2020) has just released some estimate of the effects of that choice. CBO writes: 

Roughly five of every six recipients would receive benefits that exceeded the weekly amounts they could expect to earn from work during those six months. The amount, on average, that recipients spent on food, housing, and other goods and services would be closer to what they spent when employed than it would be if the increase in unemployment benefits was not extended. ... In CBO's assessment, the extension of the additional $600 per week would probably reduce employment in the second half of 2020, and it would reduce employment in calendar year 2021. The effects from reduced incentives to work would be larger than the boost to employment from increased overall demand for goods and services.

My own sense is that a blanket extension of the additional unemployment benefits is probably the politically easy choice. But the pragmatic choice would be to start thinking more carefully about how structuring these payments in a way that would strike a better balance helping those who need it with incentives to return to work. 

There is a sense in which the very high US unemployment rates both understate and overstate the condition of US labor markets. Unemployment rates, by definition, leave out those who are "out of the labor force," perhaps because added family responsibilities have made it too difficult to work, or the bleak unemployment picture has made it difficult to seek a job. On the other side, some of the unemployed are are hovering in place, ready and able to return to their previous employer, but receiving enhanced unemployment insurance payments in the meantime. 

Estimating these kinds of factors of course involves a bunch of judgement calls. But for an example of such analysis,  Jason Furman and Wilson Powell III have written "The US unemployment rate is higher than it looks—and is still high if all furloughed workers returned" (Peterson Institute for International Economics, June 5, 2020). Furman and Powell look at the rise in the number of people "not at work for other reasons" and the rise in the number of people who are out of the labor force. They write: "Adjusting for these factors our "realistic unemployment rate" was 17.1 percent in May, down from the April value but still higher than any other unemployment rate in over 70 years."

They also look at what the unemployment rate would be if those who say they are on layoff all returne to their jobs: "In total, an additional 14.5 million of the unemployed reported being on temporary layoff. If all of these people were immediately recalled back to work and the labor force adjusted accordingly—a very optimistic scenario—the "full recall unemployment rate" would still be a very elevated 7.1 percent."

Either way, the US economy is clearly in the midst of a recession. The question is whether it turns out to be a deep-at-the-start-but-short recession, or deep-at-the-start-and-prolonged recession. The eventual outcome is only partly about economic policy: the coronavirus and public health policy will also play a big role. 

 -- via my feedly newsfeed

A 'misclassification error' made the May unemployment rate look better than it is. Here's what happened.

By Heather Long 

June 6, 2020 at 10:57 AM EDT

When the U.S. government's official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major "error" indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.

The special note said that if this "misclassification error" had not occurred, the "overall unemployment rate would have been about 3 percentage points higher than reported," meaning the unemployment rate would be about 16.3 percent for May. But that would still be an improvement from an unemployment rate of about 19.7 percent for April, applying the same standards.

The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.

"BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue," said a note at the bottom of the Bureau of Labor Statistics report.

The next big problem for the economy: Businesses can't pay their rent

Some took this as a sign that President Trump or one of his staffers may have tinkered with the data to make it look better, especially since most forecasters predicted the unemployment rate would be close to 20 percent in May, up from 14.7 percent in April. But economists and former BLS leaders from across the political spectrum strongly dismissed that idea.

"You can 100% discount the possibility that Trump got to the BLS. Not 98% discount, not 99.9% discount, but 100% discount," tweeted Jason Furman, the former top economist for former president Barack Obama. "BLS has 2,400 career staff of enormous integrity and one political appointee with no scope to change this number."

Economists say the BLS was trying to be as transparent as possible about how hard it is to collect real-time data during a pandemic. The BLS admitted that some people who should have been classified as "temporarily unemployed" during the shutdown were instead misclassified as employed but "absent" from work for "other reasons."

The black-white economic divide is as wide as it was in 1968

The "other reason" category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the "other reason" category was applied to some people staying at home and waiting to be called back.

(Reuters)

This problem started in March when there was a big jump in people claiming they were temporarily "absent" from work for "other reasons." The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.

Economists said the big takeaway is that it's hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.

Trump clings to jobs numbers as a campaign life raft — and as a race-relations plan

The unemployment rate comes from a survey where Census workers ask about 60,000 households questions about whether they are working or looking for a job the week of May 10 to 16.

One of the first questions that gets asked is did the person do any work "for pay or profit?" There are then 45 pages of follow up questions that come after that. One of those questions asks if someone was "temporarily absent" from the job and why that absence occurred. One of the responses is "other."

The BLS instructed surveyors to try to figure out if someone was absent because of the pandemic and, if so, to classify them as on "temporary layoff," meaning they would count in the unemployment data. But some people continued to insist they were just "absent" from work during the pandemic, and the BLS has a policy of not changing people's answers once they are recorded. It's how the BLS protects against bias or data manipulation.

Former staffers said it's unusual that the BLS was not able to correct this problem faster.

The U.S. economic slide is likely bottoming out, but a recovery could take years

"It's surprising the BLS couldn't come up with fixes to make this work in May," said Erica Groshen, the former BLS commissioner under Obama. But, she adds, "This is a very unusual situation. There are lots of field staff who had a tried and true way of asking questions and they were doing what they were used to doing."

The only political appointee at the BLS is the commissioner, who, Groshen said, does not have access to the data and only sees the finalized report.

"The commissioner never sees the job report before it is final. As commissioner, I did not have access to the underlying data," Groshen said. "This is a highly automated process."

Instead of focusing on possible Trump interference, many economists wish people would focus on the fact that 21 million Americans are currently unemployed and over 2 million have permanently lost their jobs.

The situation remains dire, they say, even after a few jobs returned in May as the economy reopened.

0 Comments

Heather Long

Heather Long is an economics correspondent. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Paatriot-News in Harrisburg, Pa. She also worked at an investment firm in London. Follow

--

John Case
Harpers Ferry, WV

Enlighten Radio

Socialist Economics

Facebook

Public education job losses in April are already greater than in all of the Great Recession [feedly]

Public education job losses in April are already greater than in all of the Great Recession
https://www.epi.org/blog/public-education-job-losses-in-april-are-already-greater-than-in-all-of-the-great-recession/

It has been well documented that fiscal austerity was a catastrophe for the recovery from the Great Recession. New estimates show that without sufficient aid to state and local governments, the COVID-19 shock could lead to a revenue shortfall of nearly $1 trillion by 2021 for state and local governments. In lieu of substantial federal investments, budget cuts are certain. But I, for one, did not expect to see the losses as soon as April. As of the latest jobs report from the Bureau of Labor Statistics (BLS), state and local government employment fell by 981,000, with the vast majority of losses found in local government. And the majority of those local government losses are in the education sector, with a loss of 468,800 jobs in local public school employment alone.

State and local government austerity in the aftermath of the great recession contributed to a significant shortfall in employment in public K–12 school systems, a shortfall that continued through 2019. The figure below shows that, as of early 2020, public employment in elementary and secondary schools had yet to recover the level it had reached prior to the losses of the Great Recession. Furthermore, employment levels in the public education system have failed to keep up with growth in public school enrollment since 2008. As of September 2019, the start of the most recent pre-pandemic school year, local public education jobs were still 60,000 short of their September 2008 level, and they were over 300,000 lower than they would have needed to be to keep up with public school enrollment.

Then, the pandemic hit and local education jobs dropped sharply. More K–12 public education jobs were lost in April than in all of the Great Recession. And that's before any austerity measures from lost state and local revenue have been put in place. A look at the Current Population Survey reveals that losses in public education were concentrated in certain occupations. While some teachers were spared, namely elementary and middle school teachers, others were not. Half of the job losses in K–12 public education between March and April were among special education teachers, tutors, and teaching assistants. Not only are these job losses devastating to those no longer getting a paycheck, but they negatively impact the education students receive. Other significant job losses occurred among counselors, nurses, janitors, and other building maintenance workers. Without sufficient staffing, we cannot safely reopen schools and get parents back to work—which will in turn hamper economic recovery.

April's job losses are huge in and of themselves, but it's an even bigger problem that additional public education job losses have probably already occurred—we will find out more details when the May jobs data comes out this Friday.

What we know from the last recession is that states that preserved or grew their public-sector workforce fared better, with fewer job losses overall, fewer private-sector job cuts, less growth in unemployment, and faster job growth. In lieu of sufficient federal investment, it will be impossible for state and local governments to withstand the expected shortfall in revenues from the current economic disaster and return to their pre-pandemic employment levels, levels still significantly below where they should have been to keep up with student enrollment.

The Teacher Gap

 -- via my feedly newsfeed

Black deaths at the hands of law enforcement are linked to historical lynchings: U.S. counties where lynchings were more prevalent from 1877 to 1950 have more officer-involved killings [feedly]

Black deaths at the hands of law enforcement are linked to historical lynchings: U.S. counties where lynchings were more prevalent from 1877 to 1950 have more officer-involved killings
https://www.epi.org/blog/black-deaths-at-the-hands-of-law-enforcement-are-linked-to-historical-lynchings-u-s-counties-where-lynchings-were-more-prevalent-from-1877-to-1950-have-more-officer-involved-killings/

"A lynching is much more than just a murder. A murder may occur in private. A lynching is a public spectacle; it demands an audience… A lynching is a majority's way of telling a minority population that the law cannot protect it." — Aatish Taseer, British journalist

George Floyd's death was more than just a murder, it was a modern-day lynching.

The agonizing similarity in the death of Floyd, Ahmaud Arbery, and Breonna Taylor, is that current and former police officers participated in their lynching. From 1877 to 1950, nearly 4,000 individuals were the victims of lynchings. Some have speculated that as many as 75% of historical lynchings "were perpetrated with the direct or indirect assistance of law enforcement personnel." Despite drawing attention from large crowds, many perpetrators of historical lynchings were never charged with a crime —a fact seen in many modern-day officer involved shootings.

While historical lynchings peaked more than a century ago, these racist acts can be linked to officer-involved shootings today.

Using county-level data on historical lynchings and present-day officer involved shootings, Figure A shows that historical lynchings are positively associated with officer-involved shootings for Blacks. That is, counties that experienced a higher number of historical lynchings have larger shares of officer-involved shootings of Blacks in the last five years.

Figure A

Yet, Figure B shows the opposite relationship exists for whites: as the number of historical lynchings increases, the share of modern officer-involved shootings of whites decreases.

Figure B

To examine whether these relationships are statistically different, our analysis uses a statistical method that accounts for black population during the historical period.

Figure C shows that a statistically significant relationship exists between historical lynchings and the difference in the share of officer-involved shooting of blacks compared to whites. In fact, blacks who live in areas that had fewer historical lynchings (fewer than 12) makeup a lower share of officer-involved shootings compared to whites. Yet, blacks who live in areas that had high levels of historical lynchings (more than 12) makeup a larger share of officer-involved shootings compared to whites.

Figure C

Taken together, these three figures suggest that lynchings continue to plague our communities, including our police departments.

As we see protesters across the country demanding justice for Floyd, Arbery, Taylor and countless others, let's remember that no amount of justice will bring their lives back. While justice is necessary, there needs to be a fundamental change to how, and on whom, laws are enforced. By demanding change, in addition to justice, protesters can stop being forced to demand justice, with varying levels of success, every time police officers lynch Black people.

There are steps being taken to stop these heinous crimes, including an anti-lynching bill that, as of Thursday, was being held up in the Senate by Senator Rand Paul (R-Ky.)who added an amendment to the bill, strongly opposed by several Democratic senators, including Senator Kamala Harris (D-Calif.).

Lynchings, she stressed in a speech on the Senate floor on Thursday opposing the amendment, are "the great stain of America's history."

"Senator Paul is now trying to weaken a bill that was already passed—there's no reason for this, there's no reason for this. There is no reason other than cruel and deliberate obstruction on a day of mourning," she said, about Floyd's memorial service in Minnesota.

To learn from our past, we must break the cycle of state sanctioned violence.

 -- via my feedly newsfeed

The Fed’s crisis response: Helping corporations, yes, but mostly at the expense of financial predators [feedly]

The left ultimately pays a steep  price for hot rhetoric about capitalism, etc., and the rich that disconnects from real paths and choices in the present. As the founders of modern socialism opined: "...all science would be superfluous if the outward appearance and the essence of things directly coincided". Nonetheless, we all tend to exclaim our intuitions when doing  "fast thinking".  Before committing precious troops and treasure to battle, good advice to slow down.

The Fed's crisis response: Helping corporations, yes, but mostly at the expense of financial predators
https://www.epi.org/blog/the-feds-crisis-response-helping-corporations-yes-but-mostly-at-the-expense-of-financial-predators/

A number of recent articles imply that Americans should be mad at the Federal Reserve for bailing out the rich in the coronavirus crisis. This seems wrong to me. We should be mad at nearly every other policymaker—mostly Congress and the president—for failing to do enough to bail out typical working families.

The Fed, conversely, has maximized the weak tools it has available right now for helping these families. Maybe we should give the Fed more and better tools for future recessions—but it's not useful to get mad at the Fed for failing to do things it can't do right now.

This is not to say the Fed is a force for good always and everywhere. There really are times when the Fed intervenes on the side of corporate interests in what is essentially a distributive conflict between labor and capital. (By "capital" I'm including the corporate managers who serve as corporate agents and whose rewards trade-off pretty sharply against typical workers' pay.) Usually the Fed's intervention on behalf of capital occurs when it cuts economic expansions short by raising interest rates in the name of controlling inflation, robbing typical workers of the leverage to secure faster wage growth that really tight labor markets could give them. As we have often written, these actions by the Fed have been hugely consequential, contributing significantly to the disastrously slow wage growth for the bottom 80% of the U.S. workforce for most of the last 40 years.

However, lots of recent evidence suggests that the Fed—now recognizing how distributionally important these past episodes have been—is genuinely concerned about avoiding the kind of prematurely contractionary policies that curtail employment possibilities for traditionally disadvantaged groups and hamstring typical workers' wage growth. This has been a huge progressive win.

Today's Fed intervention is not part of a capital–labor conflict

By lending to and buying the debt of private businesses in response to the coronavirus crisis, the Fed is not wading into a capital–labor conflict on the wrong side. Instead, it is wading into a conflict between nonfinancial capital and financial predators. Take the case of a notably unsympathetic nonfinancial corporation: Carnival Corp., operator of Carnival Cruise Lines. In a recent article generally critical of the Fed's actions, The American Prospect's David Dayen tells a story about how Carnival needed bridge financing to survive the shutdown in the cruise industry caused by the coronavirus:

Carnival was flirting with a consortium of hedge funds on a high-interest loan above 15 percent. These vulture funds, including Apollo Global Management and Elliott Management, specialize in distressed debt, squeezing governments and businesses with no alternatives. If Carnival couldn't repay the loan, the hedge funds would be primed to take ownership.

But the March 23 announcement, signaling a Fed backstop to all comers, suddenly gave Carnival new options. Within days, it had secured $5.75 billion in loans, including a $4 billion bond issuance at 11.5 percent interest, and a $1.75 billion bond at an even smaller 5.75 percent rate that could be converted into Carnival stock.

To boil this down: Hedge funder predators were looking to exploit a nonfinancial corporation that needed loans as it faced distress caused by a global pandemic and economic crisis, and the Fed intervened and offered the nonfinancial corporation a better deal. From my perspective, there are no presumptive good guys in distributive conflicts between nonfinancial capital and financial predators. But it's not obvious to me why we should shove more firms like Carnival closer to bankruptcy—and threaten to extinguish even more jobs than have already been destroyed—just to allow hedge fund vultures to reap the benefits of having their predatory loans be Carnival's only option.

The Fed was actually founded in 1913 precisely to serve as a public lender of last resort that could give nonfinancial businesses an option for obtaining loans for survival without throwing themselves on the mercy of Wall Street. In very real terms, the Fed was created so that J.P. Morgan (the person, not the bank) wouldn't get to decide who did and did not survive financial panics, and wouldn't get to decide the price of this survival. The Fed experiment as a public service to break the power of private financial capital has not gone without a hitch in the century-plus since its founding, but, during the crisis it seems to me that it's mostly going how one would want.

Rising stock prices are not proof that the Fed's actions are malign or misguided

It is often pointed out that share prices of nonfinancial corporations rose after the Fed announced its lending programs. Given that most stock is owned by the already-wealthy, this seems like prima facie evidence that the Fed's actions have helped the rich, no? Yes, but, while wealthy households own most of any companies' stock right now, they also will be the buyers of that stock eventually, and so policy actions that raise stock prices reduce the future rate of return. In short, the real distributive conflict between a lower and higher share price for Carnival isn't really between rich and poor (who will never own this stock), it's between today's rich and tomorrow's rich. Further, as a spillover potential benefit, the more-generous loan terms offered by the Fed (relative to other sources of capital) will likely keep many companies in business and avert layoffs of typical workers.

The Fed can do more at the margins—but its existing tools are too weak to provide the help typical families need—it's up to Congress and the president now

I've already noted that Carnival is hardly a sympathetic company. It has a terrible record on labor and environmental standards and bungled its obligation to provide safe accommodations for its passengers during the coronavirus pandemic. It may well be the case that all of this means Carnival shouldn't exist as a company. But policing these things is a job for labor, environmental, and health authorities, not the Fed. The proper tool for doing this policing is transparent and consistently enforced regulation, not decisions—made on the fly during a meltdown of the economy— that the company should not get access to financial support being widely offered to other firms.

This theme that the Fed can't be held responsible for all aspects of economic policy is an important moral of this story. It is absolutely true that we as a country have not yet done near enough to ensure that human misery and economic suffering are minimized in the wake of this recession and after. But this is on Congress and the president. They have the tools—fiscal policy measures such as stimulus spending—that can provide relief and recovery at scale and targeted toward typical families. In moments like this, the Fed's official tools really can only keep financial predators from exploiting the vulnerability of nonfinancial corporations and provide a verymodest across-the-board stimulus to economic activity once it starts again.

Has the Fed utterly maximized the modest help it can provide? Not quite yet. It should lower interest rates on loans offered to state and local governments, extend these loans' maturities, and make them more broadly available to cities and countries. Unofficially, Fed leaders can jawbone Congress to be better—and they've largely been doing this.

The Fed has shown more concern and intelligence than other branches of the economy policymaking apparatus for more than a decade now. Because of this, and because the Fed is not hobbled by the filibuster or other things that hamstring fiscal policy, it is not surprising that many want the Fed to be in charge of crisis response generally. And when the Fed doesn't do things that many think (rightly) should be part of this general crisis response, people get mad. But this is not the Fed's fault. The Fed lacks the legal and logistical capability of delivering aid more directly to households. Would it be nice if the Fed one day had this capability? Sure. But Fed leaders don't have it today. And in the meantime, it's better than they use the frustratingly weak and indirect tools they have available to them rather than do nothing.

 -- via my feedly newsfeed