Economic Update - Europe's New Internationalist Left [feedly]

Economic Update - Europe's New Internationalist Left
https://economicupdate.podbean.com

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 On this week's show, Prof. Wolff presents updates on "zombie" companies and their rapid growth in the US, The Federal Reserve "stress tests" expose risks, and weaknesses of major US banks. On the second half of the show, Prof. Wolff is joined by Greek economist, academic, philosopher and politician, Yanis Varoufakis on DiEM25, Europe's new internationalist left.

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BLS jobs report shows U.S. employment crash continues [feedly]

BLS jobs report shows U.S. employment crash continues
https://www.peoplesworld.org/article/bls-jobs-report-shows-u-s-employment-crash-continues/

WASHINGTON—Donald Trump's happy talk today notwithstanding, the nation's current depression, the employment crash caused by closures forced by the coronavirus pandemic, continues, the latest Bureau of Labor Statistics report shows.

That's because 1.445 million more people applied for regular state unemployment benefits, and another 839,563 sought special federal benefit checks in the week ending June 27.

The overall U.S. unemployment rate for June dropped to 11.1%, another BLS report says. It adds businesses claimed to create 4.8 million new jobs that month. Both reports were released July 3, but the regular June jobs report includes only data through June 12.

That makes it out of date. It's also understating joblessness, top economists said the day before, as workers who "are on temporary layoff but still paid"—due to federal aid—are not counted as jobless.

And the 4.8 million jobs businesses claimed to create in June as they started to reopen are those whose workers could be easily called back first, and who just as easily be laid off again as the coronavirus pandemic resurges. Such layoffs are already starting.

The more-up-to-date weekly report showed 19.2 million people received regular state unemployment benefits as of June 27. Numbers covering other benefits, from the federal government only–including 749,000 people who get just $600 weekly federal checks–went to 13.603 million other people in the week ending June 13. The federal numbers always lag a week or two behind state data.

"The total number of people claiming benefits in all programs for the week ending June 13 was 31,491,627, an increase of 916,722 from the previous week," that weekly benefits claims report says.

The economists warned the roof could fall in at the end of July unless Congress again extends jobless benefits, including weekly $600 checks to "independent contractors," musicians and other workers who don't qualify for state jobless aid. Extension is up in the air, Rep. James Clyburn, D-S.C., a member of the House leadership and chair of the select committee on the coronavirus, said the day before.

"There's another round of layoffs that are likely to occur as businesses that opened up are then likely to cut back" due to a resurgence of coronavirus pandemic, AFL-CIO chief economist Bill Spriggs said in that same telephone press briefing.

Those cuts are starting. Delta Airlines earlier asked 40% of its 90,000 workers to go on unpaid furloughs for up to a year, and Gov. Gavin Newsom, D-Calif., faced with rising coronavirus figures in the Golden State, ordered more business closures on July 2.

The bad numbers in the more up-to-date weekly claims report didn't stop the GOP Trump regime from crowing about the drop in the monthly unemployment report but made Trump's comeback claims a lie.

And even the better-looking monthly data showed weakness: Almost half (2.1 million) of those 4.8 million "new" jobs were in reopening bars, hotels and especially restaurants—all firms now forced to close again to combat the resurgent coronavirus. BLS reported on July 1 that all 389 U.S. metro areas lost jobs in May.

Those workers who returned came back to shorter workweeks and lower pay. "In June, average hourly earnings for all employees on private nonfarm payrolls fell by 35 cents to $29.37," BLS said in the monthly jobs report and the workweek declined by 0.2 hours, to 34.5 hours.

That earnings drop "reflects job gains among lower-paid workers; these changes put downward pressure on the average hourly earnings," BLS said. The big job gains in the private sector were among the lowest-paid workers: Restaurant workers, temps, and janitors.

That decline may understate the case. A University of Chicago business school study, commissioned by the Washington Post, found four million workers who have kept their jobs through the crash have had their pay cut, too.

"We're in two recessions," Spriggs said. One is a "normal cyclical recession" after joblessness hit a low of 3.5% in March, before the virus's impact hit home. The other and larger one is of people laid off due to the campaign to enforce social distancing and prevent the virus's spread, he explained. Those layoffs total 31.491 million from the March start of the pandemic through June 13, the BLS weekly jobless claims report said.

The reopenings have spread the coronavirus again. Analysis shows the number of new coronavirus cases in June was 50% higher than the number of new cases in May. June is when the reopenings began.

"We may see more losses in future months due to the coronavirus," Spriggs added, especially in state and local governments. BLS's monthly jobs report said those governments shed 1.9 million jobs in April and May and added only 33,000 in June. There were 70,000 more jobs in local schools and losses in other governments.

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PK: The pandemic depression is on track

By Paul Krugman

Opinion Columnist

The coronavirus led to a plunge in output and employment. This plunge, however, was a feature, not a bug. As I've been saying for a while, we deliberately put the economy into the equivalent of a medically induced coma, suppressing activity to give ourselves a chance to get the pandemic under control.

If we had stayed the course, this period of pain could have set the stage for a rapid recovery. But it was obvious early on that mishandling the situation — failing to stay the course on social distancing, failing to use the time to develop enough testing and contact tracing to gradually resume normal life while keeping a lid on new outbreaks — could extend the pain, turning a short, sharp recession into a prolonged depression, a long period of very high unemployment.

Here's how I described the nightmare scenario more than six weeks ago: "Over the next few weeks, many red states abandon social-distancing policies, while many individuals, taking their cues from Trump and Fox News, begin behaving irresponsibly. This leads, briefly, to some rise in employment.

"But fairly soon it becomes clear that Covid-19 is spiraling out of control. People retreat back into their homes, whatever Trump and Republican governors may say."

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Well, it's no longer a nightmare scenario; it's just reality. The New York area, after a terrible start, has done what most advanced countries have done, and crushed the curve. But Covid-19 is now exploding in the Sun Belt. Arizona is in full-blown crisis. So is Texas, especially big cities like Houston, where hospitalizations have soared. Florida, which has been suppressing data on hospitalizations, is probably similar.

All three states have Republican governors who enthusiastically lifted stay-at-home orders and, in Arizona and Texas, at first even prevented local governments from requiring that people wear masks. Even now, they're dithering, taking only baby steps toward restoring social distancing as the pandemic rages.

From an economic point of view, however, it may not matter what the governors do: Fear of the coronavirus is likely to stall recovery, and maybe even send these states back into recession, even if there isn't a new lockdown. Like many economists these days, I've been using restaurant reservations from OpenTable as an early warning signal for economic changes. Here's what smoothed data for the three hot spot states looks like since the beginning of May:

Recovery, stallingOpenTable

In case you're wondering (which you probably aren't), I'm using seven-day medians — seven-day to eliminate day-of-the-week effects, medians to avoid blips like Father's Day. What the data show is a substantial recovery in eating out during May in early June, stalling and perhaps going into reverse in the past couple of weeks.

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This tells you, among other things, how to react to Thursday's employment report, which is likely to show pretty big job gains. Namely, it will show a dead cat bounce, reflecting the effects of early reopening but not the effects of the surge in infections that followed.

For months, both epidemiologists and economists have been trying to tell policymakers and business types that there was no trade-off between fighting the pandemic and economic growth. That is, if we didn't get Covid-19 under control, any short-term gains would soon vanish, and we'd find ourselves getting the worst of both worlds — more deaths plus economic stagnation. But that message was ignored, and here we are.

Quick Hits

The level of fear is more important than official rules.

Larry Kudlow continues his impressive record of never being right.

Fox News has kept millions from practicing social distancing.

Trump's self-defeating resistance to mask wearing.

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John Case
Harpers Ferry, WV
Enlighten Radio
Socialist Economics
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Coronavirus Brings American Decline Out in the Open [feedly]

Noah Smith: (Blooomberg) Coronavirus Brings American Decline Out in the Open
https://www.bloomberg.com/opinion/articles/2020-06-29/coronavirus-brings-american-decline-out-in-the-open

The U.S.'s decline started with little things that people got used to. Americans drove past empty construction sites and didn't even think about why the workers weren't working, then wondered why roads and buildings took so long to finish. They got used to avoiding hospitals because of the unpredictable and enormous bills they'd receive. They paid 6% real-estate commissions, never realizing that Australians were paying 2%. They grumbled about high taxes and high health-insurance premiums and potholed roads, but rarely imagined what it would be like to live in a system that worked better.

When writers speak of American decline, they're usually talking about international power -- the rise of China and the waning of U.S. hegemony and moral authority. To most Americans, those are distant and abstract things that have little or no impact on their daily lives. But the decline in the general effectiveness of U.S. institutions will impose increasing costs and burdens on Americans. And if it eventually leads to a general loss of investor confidence in the country, the damage could be much greater.

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The most immediate cost of U.S. decline -- and the most vivid demonstration -- comes from the country's disastrous response to the coronavirus pandemic. Leadership failures were pervasive and catastrophic at every level -- the president, agencies such as the Centers for Disease Control and the Food and Drug Administration, and state and local leaders all fumbled the response to the greatest health threat in a century. As a result, the U.S. is suffering a horrific surge of infections in states such as Arizona, Texas and Florida while states that were battered early on are still struggling. Countries such as Italy that are legendary for government dysfunction and were hit hard by the virus have crushed the curve of infection, while the U.S. just set a daily record for case growth and shows no sign of slowing down.

This utter failure to suppress a disease that most other countries managed to contain will have real economic costs for Americans, as fear of the virus drives people back into their homes and businesses suffer.

Reopening Comes With a New Helping of Fear

Change in restaurant seatings from the same day a year earlier

Source: Open Table

In addition to worrying about their jobs and livelihoods, Americans must now be subjected to months of images of Italians casually walking around on the streets while they cower in  their houses. It's a painful and stark demonstration of national decline. Even more galling, the U.S.'s Covid failure means that its citizens can no longer travel freely around the world; even Europe plans to impose a travel ban on Americans.

But the consequences of U.S. decline will far outlast coronavirus. With its high housing costs, poor infrastructure and transit, endemic gun violence, police brutality and bitter political and racial divisions, the U.S. will be a less appealing place for high-skilled workers to live. That means companies will find other countries in Europe, Asia and elsewhere a more attractive destination for investment, robbing the U.S. of jobs, depressing wages and draining away the local spending that powers the service economy. That in turn will exacerbate some of the worst trends of U.S. decline -- less tax money means even more urban decay as infrastructure, education and social-welfare programs are forced to make big cuts. Anti-immigration policies will throw away the country's most important source of skilled labor and weaken a university system already under tremendous pressure from state budget cuts.

Almost every systematic economic advantage possessed by the U.S. is under threat. Unless there's a huge push to turn things around -- to bring back immigrants, sustain research universities, make housing cheaper, lower infrastructure costs, reform the police and restore competence to the civil service -- the result could be decades of stagnating or even declining living standards.

And a biggest danger might come later. The U.S. has long enjoyed a so-called exorbitant privilege as the financial center of the world, with the dollar as the lynchpin of the global financial system. That means the U.S. has been able to borrow money cheaply, and Americans have been able to sustain their lifestyles through cheap imports. But if enough investors -- foreign and domestic -- lose confidence in the U.S.'s general effectiveness as a country, that advantage will vanish.

If capital begins to abandon the U.S. and the dollar in large amounts, the currency will crash and Americans will find themselves paying much more for everything from cars to televisions to gasoline to imported food. Interest rates will be raised in an attempt to lure back investment capital, and the country might undergo a period of stagflation worse than the 1970s. Large-scale unrest would undoubtedly result and -- in the worst-case scenario -- the U.S. could collapse like Venezuela.

This is an outcome to be avoided at all costs. But it's an outcome that is no longer out of the realm of possibility, thanks to the complacency, arrogance and misplaced priorities of U.S. leaders and the deep and bitter divisions among U.S. voters. If the U.S. goes from rich, world-straddling colossus to floundering dysfunctional developing nation in just a few decades, it will be one of the most spectacular instances of civilizational decline in world history. Every mind in the country should be bent towards the task of reversing the decline and restoring national competence.

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U.S. workers need more power [feedly]

U.S. workers need more power
http://larrysummers.com/2020/06/29/u-s-workers-need-more-power/

By Lawrence H. Summers and Anna Stansbury

Covid-19 has brought into sharp relief the contrast between the experiences of the higher-income Americans who receive deliveries and the lower-income Americans who fulfill them, between those who can work safely from home and those who must expose themselves to risk, often with inadequate protection, between those who have the power to safeguard their health and their living standards and those who do not. More broadly, it has highlighted the long-standing trends in the U.S. economy toward a falling labor share of income, rising income inequality and slow wage growth for most workers — even as corporate stock market valuations and profitability rise.

Economic analysis often ascribes these trends to some combination of globalization, technological change and rising monopoly power. But our research suggests that a more compelling explanation is the broad-based decline in worker power. As workers have become less able to share in the profits generated by their firms, income has been redistributed from employees to the owners of capital. That has contributed to higher income inequality along class and race lines.

The evisceration of private-sector unions is the most obvious example of the decline in worker power. At the peak, one-third of the private-sector workforce belonged to a union; that number is now 6 percent. But other factors also affect the degree to which workers can share in firms' profits. Because of increased shareholder activism, rising levels of debt, increases in private equity and changing corporate norms, businesses are increasingly run for shareholders rather than their stakeholders. Ruthless management tactics involving precise measurement of workers' day-to-day activity have become widespread.

Meanwhile, workers at large firms or in highly paid industries (such as manufacturing, construction or transportation) used to earn large wage advantages, as they shared in the profits generated by their companies, but these benefits have declined by half since the early 1980s. An increasing number of workers are outsourced domestically, employed by staffing or temp agencies or misclassified as independent contractors, reducing their ability to share in the profits of the main firm they work for. And the real value of the minimum wage is lower than it was in the 1970s.

Why did this happen? Some portion of the decline in worker power may have been an inevitable outcome of globalization or technological change. But our research — which examines shifts in labor shares and corporate profits across different industries — indicates that changes in policy, norms and institutions are the most important explanatory factors. This view is supported by the fact that the legal and political environment has been tilted substantially in favor of shareholders and against workers since the 1980s, a trend exemplified by the expansion of state right-to-work laws undermining unions' ability to fund themselves and the increasing corporate use of union avoidance tactics, both legal and illegal. The fact that the decline in unionization, the rise in income inequality and the fall in labor's share of income have all happened to a greater extent in the United States than in much of the rest of the industrialized world also suggests an important role for U.S.-specific explanations.

What should be done? A traditional economic argument is that policy should let markets function competitively and then rely on progressive taxation and spending to redistribute income afterward. It is this kind of thinking that lies behind advocacy of negative income taxes or, more recently, for a universal basic income. But progressive institutionalists have long argued for pre-distribution alongside redistribution, strengthening worker power by changing the structure of labor market institutions.

We believe both ingredients are required. Strengthening worker power can be an important countervailing force against firms' dominance in product and labor markets, as argued famously by John Kenneth Galbraith. And it's not necessarily the case that it is more efficient to reduce inequality through after-the-fact transfers and taxes than by strengthening unions beforehand. After all, taxes create distortions and alter incentives — and moving to a system with more centralized bargaining may actually reduce the distortionary effects of taxation. When something is a big problem — as is inequality in America today — it is appropriate to tackle it from multiple angles.

Of course, there is a risk that by raising wages, such policies might lead to an increase in unemployment. Indeed, our research suggests that the decline in worker power may have contributed to the long-term decline in average U.S. unemployment (until the current crisis). The risk of increased unemployment should not be dismissed lightly, particularly as unemployment disproportionately affects lower-income people and people of color. But it is possible to bolster the power of labor without excessively restricting hiring. There is reason to believe, for example, that allowing bargaining at a broader level than just the individual firm — such as sectoral collective bargaining — would reduce the negative effects of unionization on unemployment. We must also consider the type of unemployment that policies might create; an increase in short-term unemployment as workers spend more time searching for good jobs is less problematic than the development of a two-tier labor market where unprotected "outsiders" spend long periods in unemployment or are unable to access good jobs at all.

Overall, we believe that increasing worker power must be a central and urgent priority for policymakers concerned with inequality, low pay and poor work conditions. If we do not shift the distribution of power toward workers, any other policy changes are likely to be short-term and insufficient.

 -- via my feedly newsfeed

CDC chief Redfield: 24 million may have coronavirus [feedly]

CDC chief Redfield: 24 million may have coronavirus
https://www.peoplesworld.org/article/cdc-chief-redfield-24-million-may-have-coronavirus/

WASHINGTON—The head of the federal Centers for Disease Control now estimates that 24 million people in the U.S., ten times the actual numbers recorded, may be ill from the coronavirus.

CDC Director Dr. Robert Redfield provided that estimate in a June 25 conference call with other reporters, the same day his agency expanded the list of pre-existing conditions that make people more vulnerable to the virus.

The CDC also removed age by itself today as a risk factor for infection because of the surge of positive cases among young people.

"Our best estimate right now is that for every case that's reported, there actually are ten other infections," Redfield told the health reporters.

As of 9:30 am on June 26, the most-authoritative data on the coronavirus pandemic, from Johns Hopkins University, showed 2,422,312 million people have been sickened since it was declared, and 124,415 have died.

And the U.S. overall, along with a group of Southern and Western states, set new daily case records on June 25. Utah's caseload rose so dramatically that the state health director, advocates a lockdown there. At its GOP governor's direction, Utah never closed down completely.

Redfield's warning flies directly in the face of the happy talk by GOP President Donald Trump and his political allies. Trump has talked about decreasing testing for the virus and his Health and Human Services Department closed more than a dozen federally funded testing sites in several states on June 25. And the GOP Trump regime has ignored CDC warnings while in effect muzzling Redfield.

Trump's also urged – indeed demanded – governors reopen their states for business, to try to end the depression resulting from continuing closures to ensure social distancing and stop the virus's community spread. Most state governors closed businesses when Trump refused to act and are now gradually reopening.

But Trump's reopening demand has boomeranged in almost two dozen states in the South and the West. Besides Utah, cases in Texas skyrocketed. GOP Gov. Greg Abbott, an early "re-opener" reversed course on June 25 and started closing bars and ordered Texans to wear protective masks in public. Houston public health officials told the Chronicle they expect 30,000 new cases in that city alone.

And the CDC issued a new warning on June 25 expanding who is vulnerable to the virus.

"Understanding who is most at risk for severe illness helps people make the best decisions for themselves, their families, and their communities," Redfield warned in that statement on CDC's website. "While we are all at risk for COVID-19, we need to be aware of who is susceptible to severe complications so that we take appropriate measures to protect their health and well-being."

"As more information becomes available, it is clear a substantial number of Americans are at increased risk of severe illness – highlighting the importance of continuing to follow preventive measures," the website adds.

Studies show higher risk from the coronavirus exists for people with chronic kidney disease, COPD (chronic obstructive pulmonary disease), obesity – a body mass index of 30 or higher, weakened immune systems after organ transplants, serious heart conditions, sickle cell anemia and type 2 diabetes, the agency said.

"An estimated 60% of adults have at least one chronic medical condition," including 40% who are obese, CDC said. "The more underlying medical conditions people have, the higher their risk."

And pregnant women "were more likely to be hospitalized, admitted to the intensive care unit, and receive mechanical ventilation" for the coronavirus "than nonpregnant women," CDC said. "However, pregnant women were not at greater risk for death from COVID-19."

 -- via my feedly newsfeed

PK: America Didn’t Give Up on Covid-19. Republicans Did. [feedly]

The fascists care not at all. Its Beyond "partisanship".

America Didn't Give Up on Covid-19. Republicans Did.

Paul Krugman
https://www.nytimes.com/2020/06/25/opinion/coronavirus-republicans.html

Earlier this year much of America went through hell as the nation struggled to deal with Covid-19. More than 120,000 Americans have now died; more than 20 million have lost their jobs.

But it's looking as if all those sacrifices were in vain. We never really got the coronavirus under control, and now infections, while they have fallen to a quite low level in the New York area, the pandemic's original epicenter, are surging in much of the rest of the country.

And the bad news isn't just a result of more testing. In new hot spots like Arizona — where testing capacity is being overwhelmed — and Houston the fraction of tests coming up positive is soaring, which shows that the disease is spreading rapidly.

It didn't have to be this way. The European Union, a hugely diverse area with a larger population than the U.S., has been far more successful at limiting the spread of Covid-19 than we have. What went wrong?

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The immediate answer is that many U.S. states ignored warnings from health experts and rushed to reopen their economies, and far too many people failed to follow basic precautions like wearing face masks and avoiding large groups. But why was there so much foolishness?

Refer your friends to The Times.

They'll enjoy our special rate of $1 a week.

Well, I keep seeing statements to the effect that Americans were too impatient to stay the course, too unwilling to act responsibly. But this is deeply misleading, because it avoids confronting the essence of the problem. Americans didn't fail the Covid-19 test; Republicans did.

After all, the Northeast, with its largely Democratic governors, has been appropriately cautious about reopening, and its numbers look like Europe's. California and Washington are blue states that are seeing a rise in cases, but it's from a relatively low base, and their Democratic governors are taking actions like requiring the use of face masks and seem ready to reverse their reopening.

So the really bad news is coming from Republican-controlled states, especially Arizona, Florida and Texas, which rushed to reopen and, while some are now pausing, haven't reversed course. If the Northeast looks like Europe, the South is starting to look like Brazil.

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Nor is it just Republican governors and state legislatures. According to the new New York Times/Siena poll, voters over all strongly favor giving control of the pandemic priority over reopening the economy — but Republican voters, presumably taking their cue from the White House and Fox News, take the opposite position.

And it's not just about policy decisions. Partisanship seems to be driving individual behavior, too, with self-identified Democrats significantly more likely to wear face masks and engage in social distancing than self-identified Republicans.

The question, then, isn't why "America" has failed to deal effectively with the pandemic. It's why the G.O.P. has in effect allied itself with the coronavirus.

Part of the answer is short-term politics. At the beginning of this year Donald Trump's re-election message was all about economic triumphalism: Unemployment was low, stocks were up, and he was counting on good numbers to carry him through November. He and his officials wasted crucial weeks refusing to acknowledge the viral threat because they didn't want to hear any bad news.

And they pushed for premature reopening because they wanted things to return to what they seemed to be back in February. Indeed, just a few days ago the same Trump officials who initially assured us that Covid-19 was no big deal were out there dismissing the risks of a second wave.

I'd suggest, however, that the G.O.P.'s coronavirus denial also has roots that go beyond Trump and his electoral prospects. The key point, I'd argue, is that Covid-19 is like climate change: It isn't the kind of menace the party wants to acknowledge.

It's not that the right is averse to fearmongering. But it doesn't want you to fear impersonal threats that require an effective policy response, not to mention inconveniences like wearing face masks; it wants you to be afraid of people you can hate — people of a different race or supercilious liberals.

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So instead of dealing with Covid-19, Republican leaders and right-wing media figures have tried to make the pandemic into the kind of threat they want to talk about. It's "kung flu," foisted on us by villainous Chinese. Or it's a hoax perpetrated by the "medical deep state," which is just looking for a way to hurt Trump.

The good news is that the politics of virus denial don't seem to be working. Partly that's because racism doesn't play the way it used to: The Black Lives Matter protesters have received broad public support, despite the usual suspects' efforts to portray them as rampaging hordes. Partly it's because the surge in infections is becoming too obvious to deny; even Republican governors are admitting that there's a problem, although they still don't seem willing to act.

The bad news is that partisanship has crippled our Covid-19 response. The virus is winning, and all indications are that the next few months will be a terrifying nightmare of rampant disease and economic disruption.

The Times is committed to publishing a diversity of letters to the editor. We'd like to hear what you think about this or any of our articles. Here are some tips. And here's our email: letters@nytimes.com.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman

A version of this article appears in print on June 26, 2020, Section A, Page 26 of the New York edition with the headline: America Didn't Give Up on Covid-19. Republicans Did.. Order Reprints | Today's Paper | Subscribe

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