An Audit Study of Discrimination in the Boston Rental Market [feedly]

I love it when social science can begin to prove theses!

An Audit Study of Discrimination in the Boston Rental Market
https://conversableeconomist.blogspot.com/2020/07/an-audit-study-of-discrimination-in.html

 -- via my feedly newsfeed

Time for the West to Embrace Chinese Industrial Policy, Not Eliminate it [feedly]

Time for the West to Embrace Chinese Industrial Policy, Not Eliminate it
http://triplecrisis.com/time-for-the-west-to-embrace-chinese-industrial-policy-not-eliminate-it/

Western market fundamentalism is a dead-end road as far as long term economic prosperity goes.

By Marshall Auerback (guest post)

Robert Atkinson of the Information Technology and Innovation Foundation has just written a very compelling analysis of China's national industrial policy, especially in relation to the exponential growth of its telecommunications industry. Some of the key findings of the paper, "How China's Mercantilist Policies Have Undermined Global Innovation in the Telecom Equipment Industry" are as follows:

• "Without unfair, mercantilist Chinese government policies and programs for its telecom giants, China would lack a globally competitive telecom equipment industry. Neither Huawei, nor ZTE, would have more than minor market shares, even in China.

• Chinese market-share gains have come at the expense of innovative telecom equipment providers in other countries. By artificially taking market share from more innovative companies, the latter have had less revenue to invest in cutting-edge R&D.

• As a share of sales, leading non-Chinese equipment companies invest more in R&D, and patent and contribute more to international standards when compared to Huawei and ZTE.

• Beijing's policies dramatically limit foreign access to China's huge telecom markets, providing them with a guaranteed source of revenue to attack foreign competitors.

The analysis is characterized by an implicit bias against Chinese mercantilism, a bias that many champions of free trade naturally share. While reflecting those preferences to a degree, Atkinson's report does offer a recognition that China's state-driven capitalist model has played a significant role in driving industrial development and innovation (while also contending that such protectionism and heavy-state subsidies have had the negative byproduct of inhibiting innovation in western economies that have eschewed such practices).

And it is a model that is not unique to China. Economist and market practitioner Bill Janeway observed that state-driven innovation have been "put to repeated and successful use: by Japan beginning in the last decades of the nineteenth century, then by the emergent Asian Tigers in the second half of the twentieth century and now by China." In another analysis illustrating the key role the state plays in driving industrialization, authors Ben Landau-Taylor and Oberon Dixon-Luinenberg argue, "The great strength of capitalist societies is that industrialists like Henry Ford or Jeff Bezos can transform single industries within an existing economic framework, but the economic framework itself is too large to be remade with the resources of any individual or corporation. Only the state can coordinate many different industries to produce a transformation at the scale of industrialization."

This does not simply mean using the government to mindlessly pick winners and losers (the common complaint directed against national industrial policy).  To the contrary, the East Asian tigers used the market as a feedback mechanism to adduce likely areas for future growth, and then using that cumulative information to transfer state resources away from unproductive toward productive uses. In the case of South Korea, for example, this took the form of conglomerates such as Samsung starting in basic industries such as agriculture and textiles in the 1960s, rapidly progressing via government direction to more advanced industries, such cell phones, computers, and semiconductors, where it remains among the global leaders today.  So too has China emulated these policies to a degree and generated a corresponding quantum leap in living standards over the past 50 years.

By contrast, the crisis of 2008 (and the current pandemically-induced global depression) have highlighted even greater deficiencies in the western market fundamentalist model:  a policy matrix featuring free trade, deregulation, widespread privatization (and a corresponding diminution of the role of the state), and fiscal austerity, all of which contributed to a vast rise in inequality, asset bubbles, wage stagnation, and a vast industrial shell that has contributed to significant economic insecurity for vast swathes of the population.

These problems are nowhere close to being resolved today and, indeed, have been exacerbated by the COVID-19 pandemic.

It is becoming increasingly hard to make the case that a minimalist state which simply acts as an umpire for "the creation of efficient, rent-free markets coupled with efficient, corruption-free public sectors is even close to being a necessary or sufficient condition for a dynamic capitalist economy."  That was an observation made almost two decades ago by Professor Robert Wade in his seminal work, "Governing the Market" and it is no less pertinent today.

Instead of simply sending "a clear message to China that, going forward, systemic innovation mercantilism that hinders global technological innovation will no longer be tolerated", as Atkinson suggests, a better option might be to turn those very policies against China by restricting Beijing's access to western markets, while simultaneously deploying the state as an active player to help foster western innovation and higher quality growth (which will also create the benefit of correspondingly greater economic security).

To a degree, this is already happening:  the Trump Administration is now forcing the world's biggest chip maker – Taiwan's TSMC – to stop taking fresh orders from Chinese mobile leader Huawei. But this is not enough. Even if Trump sustains a tough line against Huawei, this will mean little, if not combined with a more constructive national developmentalist strategy in which the state plays an active role, not merely serving as a neutral bystander for the market.

Washington need not mindlessly copy Beijing's more coercive model but, rather, could well achieve similar outcomes via state-led purchases and subsidies. The Defense Department could play a key role here as it has in the past.  The key takeaway raised by Atkinson's excellent study, however, is that the status quo is untenable. America's market fundamentalist model is under enormous stress and failing to produce anything close to a socially sustainable economy. The U.S. has not turned into an industrial shell overnight; it is the product of decades of malign neglect. Hence, it will take many years before the current deficiencies are fixed. As the philosopher Lao Tzu argued: "The journey of a thousand miles begins with one step." Absent these initial steps, national redevelopment will remain a pipedream.

Marshall Auerback is a market analyst and commentator.

Dollars & Sense, which maintains Triple Crisis blog, is celebrating its 45th anniversary.  Please consider making a donation to support our work. 

Triple Crisis welcomes your comments. Please share your thoughts below.

Triple Crisis is published by

 -- via my feedly newsfeed

US unemployment fell in June, but the official rate continues to understate the problem [feedly]

US unemployment fell in June, but the official rate continues to understate the problem
https://www.piie.com/research/piie-charts/us-unemployment-fell-june-official-rate-continues-understate-problem

The official unemployment rate continued to fall from 13.3 percent in May to 11.1 percent in June. Even with unemployment at levels not seen since the Great Depression, the official rate understates the increase in unemployment since the beginning of the COVID-19 pandemic, compared to historical levels.

Since the pandemic began, an unusually high number of people have reported being employed but "not at work for other reasons." While these individuals are counted as employed in the official statistics, it is likely that the additional people "not at work for other reasons," numbering 2 million in June, are actually unemployed. Official calculations also do not count those without employment who are not actively looking for work as unemployed. In June, 4.6 million more people without work were not actively job hunting compared with February. This increase, relative to the increase in unemployment, has also been higher than in past recessions. Adjusting for these factors, the "realistic unemployment rate" was 13.0 percent in June, down from 17.1 percent in May, and 1.9 percentage points higher than the official unemployment rate.

In an optimistic scenario where all 9.8 million additional unemployed workers on temporary layoffs immediately returned to work, the "full recall unemployment rate" would remain elevated. These data suggest that the temporary labor market problems are deep, and the United States will still have a recessionary level of unemployment for some time to come.

This PIIE Chart was adapted from Jason Furman and Wilson Powell's blog post, "US unemployment rate falls again but little progress after accounting for recalls from temporary layoffs."

 -- via my feedly newsfeed

State Borrowing Can’t Substitute for More Direct Aid to Cope With Recession [feedly]

State Borrowing Can't Substitute for More Direct Aid to Cope With Recession
https://www.cbpp.org/blog/state-borrowing-cant-substitute-for-more-direct-aid-to-cope-with-recession

Contrary to suggestions by Treasury Secretary Steven Mnuchin and others, borrowing isn't a viable substitute for the substantial direct federal aid that states need to offset their sharp revenue declines and cost increases due to the deep, pandemic-driven, recession, our new report explains.

Without more federal aid, states will have to lay off even more workers and make even deeper cuts in services, which will likely mean thousands of teacher layoffs and cuts in health care and other services that would worsen the recession and disproportionately hurt people of color and low-income people, who recession is already hitting the hardest.

The argument that states don't need federal aid because they can borrow to cover their shortfalls have three key shortcomings:

• States' fundamental problem is that their tax revenues will likely fall far short of covering their necessary expenses for health care, education, and other critical services for several years — we estimate by $615 billion over just three fiscal years. If states borrowed enough to avoid the deep cuts that they'll have to make without substantially more direct aid, they wouldn't be in good enough financial shape to repay it when the debt came due in a year or two.

   

  States might decide to borrow very short term — say, 6-12 months — to manage cash flow or buy time in hopes that federal policymakers will provide more direct aid. But without substantially more aid, short-term borrowing likely would only delay damaging layoffs and spending cuts, not avert them, since the state budget crisis will last far longer than a year.

• Some analysts have proposed longer-term state borrowing as an alternative to more direct aid, but most state constitutions include balanced budget requirements and/or debt limits barring them from building borrowing into their enacted budgets and borrowing to cover unanticipated revenue shortfalls for more than a short period, often less than a year.

• Even a state without these constitutional constraints would find it risky to borrow for long periods to cover budget gaps, which could set the state up for even deeper financial problems down the road. No one knows how long the recovery from this recession might last before the next one starts or when a natural disaster might strike; states could find themselves in new fiscal straits before paying off the debt they incurred during this recession. Moreover, every dollar that a state uses used to pay off new debt would be a dollar that it doesn't have to deposit in a "rainy day fund" to prepare for the next recession.

   

  Even if states could take out big loans to mitigate the need for immediate service cuts, that would likely drive up interest rates on borrowing that states routinely — and appropriately — do to finance long-lived capital assets like highways and state university facilities, further squeezing their finances.

 -- via my feedly newsfeed

Evictions are likely to skyrocket this summer as jobs remain scarce. Black renters will be hard hit. [feedly]

Evictions are likely to skyrocket this summer as jobs remain scarce. Black renters will be hard hit.
https://www.washingtonpost.com/business/2020/07/06/eviction-moratoriums-starwood/?utm_source=feedly&utm_medium=referral&utm_campaign=wp_business

A backlog of eviction cases is beginning to move through the court system as millions of Americans who had counted on federal aid and eviction moratoriums to stay in their homes now fear being thrown out.

A crisis among renters is expected to deepen this month as the enhanced unemployment benefits that have kept many afloat run out at the end of July and the $1,200-per-adult stimulus payment that had supported households earlier in the crisis becomes a distant memory.

Meanwhile, enforcement of federal moratoriums on some types of evictions is uneven, with experts warning that judges' efforts to limit access to courtrooms or hold hearings online because of covid-19 could increasingly leave elderly or poor renters at a disadvantage.

Of the 110 million Americans living in rental households, 20 percent are at risk of eviction by Sept. 30, according to an analysis by the Covid-19 Eviction Defense Project, a Colorado-based community group. African American and Hispanic renters are expected to be hardest hit.

AD

ADVERTISING

Judge Yvonne Williams, glasses snuggled tight to the blue mask covering most of her face, peered into the camera in her Texas courtroom recently to press a renter about the more than $4,000 she owed her landlord.

"What do you have toward the rent?" Williams asked.

The renter appeared on another shaky screen from a dark room and explained that she had been furloughed as the spread of the novel coronavirus shut down much of the U.S. economy. But she had three kids and nowhere to go, the renter said, and was working to raise the money, which included more than $1,000 in late fees.

"I have heard almost 60 cases so far, and this is everybody's problem," Williams responded before approving the eviction.

FAQ: What you need to know about paying your June rent or mortgage

Like many other aspects of the pandemic and ensuing recession, the evictions are expected to hurt people of color most.

AD

"If you look at the covid pandemic and the health outcomes, the economic outcomes, that is hitting black and brown people very hard," said Peter Hepburn, a research fellow at Princeton University's Eviction Lab. "And that is likely to be seen in the housing market as well."

In response to a survey by the U.S. Census Bureau, about 44 percent and 41 percent of adult Latino and black renters, respectively, said they had no or slight confidence they could pay their rent next month or were likely to defer payment, according to an Urban Institute analysis of the data, which was collected between May 28 and June 9. About 21 percent of white renters felt the same.

In Milwaukee, where a state eviction moratorium was lifted in late May, the number of eviction filings through June 27 was up 13 percent compared with previous years, according to data collected by the Eviction Lab research group. Nearly 1,300 cases have been filed so far in June. About two-thirds of those cases were filed in majority-black neighborhoods.

AD

"Milwaukee is the future. A lot of these other cities are just beginning to ramp up their capacity to process cases again," Hepburn said.

Evictions are also beginning to pick up in areas where coronavirus infections have recently spiked, said Diane Yentel, president and chief executive of the National Low Income Housing Coalition.

In Texas, for example, Gov. Greg Abbott (R) recently ordered bars to close and restaurants to reduce occupancy after coronavirus cases surged in the state. But the courts remain open in Houston, the country's fourth-largest city, where more than 2,000 eviction complaints were filed in June, according to January Advisors, a data science consulting firm.

"That wave [of evictions] has already begun. We are trying to prevent it from becoming a tsunami," Yentel said.

Enforcement left to courts

Exacerbating the crisis, housing advocates say, is that an eviction moratorium covering federally backed mortgage companies Fannie Mae and Freddie Mac, which includes 30 to 40 percent of renters, is being unevenly enforced, leaving renters to wade through a complicated legal process and at risk of being illegally evicted.

AD

In Travis County, which includes Austin, eviction courts reopened June 2, and soon Williams was hearing the case of the renter who owed more than $4,000. During the hearing, the judge was asked whether the renter might be covered by the moratorium, which doesn't expire until late July. But Williams shrugged off the question. (The Washington Post viewed the hearing online.)

"I am not familiar with that, but if someone will show me the law on that, I will certainly entertain that," she responded. "Right now, I am going to give them the eviction … as unfortunate as it is."

According to a search on Fannie Mae's website, the building is covered by the moratorium.

Williams said in an interview with The Post that she "misspoke" and always advises renters they can appeal her ruling. She is "very sympathetic when it comes to evictions," Williams said, but landlords can also be hurt in the process.

AD

A few days after that hearing, Austin announced it would reinstate its local eviction moratorium after Texas coronavirus cases spiked. The evictions Williams had approved are now on hold.

"Part of the problem with these moratoriums is that there is no enforcement. It is up to the courts to know what is required," said Emily A. Benfer, director of the Health Justice Advocacy Clinic at Columbia Law School, which has been tracking evictions during the pandemic.

Only 15 states require landlords to verify that their buildings aren't covered by the federal moratorium, leaving it to renters to find out and enforce the law, she said.

Juanita Herrera DeLeon says she told her landlord in April that she wouldn't be able to pay the nearly $600 monthly rent on her San Antonio apartment after losing her job at a bakery. Herrera DeLeon says she hasn't received her $1,200 stimulus check and says she gets a busy signal when she calls to apply for unemployment benefits. "We were in lockdown; there was nothing I could do," she said.

AD

In late April, the landlord placed a "lockout box" on her apartment door while she was in the shower to prevent Herrera DeLeon from reentering her home. Eight hours later, after a flurry of calls to the police and city officials, the box was removed. "It's been very hard for me," DeLeon said though tears.

The housing market faces its next crisis as rent and mortgages come due

The landlord was alerted in writing that the building was covered by federal eviction moratorium, which was included in the Cares Act, but continued to pursue an eviction against Herrera DeLeon, said her attorney, Christina E. Trejo of Texas RioGrande Legal Aid. She eventually filed a restraining order. (The landlord didn't respond to calls seeking comment.)

"The things that the government has done to help with the pandemic have been great attempts," including the federal eviction moratorium, Trejo said. But "there is no enforcement mechanism for it, there are no penalties, and it takes a lawyer to file to get any relief. But the poorest of the poor can't get access to attorneys."

Local bans weaken

Starwood Capital Group, a large private equity firm, repeatedly pursued the eviction of residents in its apartment buildings after the eviction ban was put in place. On March 30, SCG Atlas Coconut Palm Club, owned by Starwood, filed an eviction complaint against one of its residents in Coconut Creek, Fla., for missing a rent payment, according to court records. Highmark Residential, also owned by Starwood, filed two eviction complaints against residents of Grande Court Apartments in Jacksonville, Fla., on March 30.

AD

In both instances, the buildings had loans backed by Fannie Mae or Freddie Mac, covered by the federal eviction moratorium.

"It's crazy that a massive landlord like Starwood Capital is evicting people now at a time when people are being asked to stay at home," said Jim Baker, director of the Private Equity Stakeholder Project.

Starwood, founded by Barry Sternlicht, a member of the panel advising President Trump on reopening the economy, said despite the court filings, none of its 100,000 tenants had been evicted during the moratorium.

"It is possible that a small number of eviction petitions, less than 10, that were already previously in process for nonpayment of rent, might have been filed in error shortly after the March 27, 2020 moratorium went into effect," the company said in a statement. "However, all of our residential tenants who were at risk of eviction for nonpayment of rent have been allowed to remain in their apartments."

AD

Federal help for renters has been limited.

A proposal from Democrats to establish a $100 billion rental assistance program passed in the House but hasn't garnered as much support in the Republican-controlled Senate. Three Democratic senators, including Elizabeth Warren of Massachusetts, introduced legislation this week to expand the federal eviction moratorium to include more renters and extend the protection until next March 2021. But landlords and property owners are likely to object and that legislation also hasn't gained wide Republican support.

Most renters fall outside the federal moratorium and are protected by a patchwork of state and local eviction bans that are starting to weaken.

And even for renters in properties backed by Fannie Mae and Freddie Mac, which includes about 40 percent of the mortgages for multifamily dwellings, federal authorities say they have limited power to enforce the eviction moratorium.

The Federal Housing Finance Agency (FHFA) said this week that property owners with mortgages backed by Fannie Mae and Freddie Mac would be eligible for more help — extra time to pay their mortgage. The landlords are barred from filing eviction complaints or charging late fees while receiving that help.

But FHFA lacks power to enforce the law, said Mark Calabria, the agency's director. "We have no information on renters. We have no way of contacting renters," said Calabria, noting that eviction law is traditionally a local issue.

As unemployment rates jumped, Fannie Mae and Freddie Mac scrambled to create online search engines so renters could look up whether their buildings were backed by either company and therefore covered by the federal moratorium. But the hastily built websites can be tripped up by someone abbreviating a word or putting an extra space in an address.

"We have had to build this thing from scratch," Calabria said. "There were certainly some kinks to it, [but] I would rather have this up working 80 percent than not having it at all."

Freddie Mac and Fannie Mae said that they follow up on renters' complaints and are working to improve their online search tools.

A growing rental problem

Without strict enforcement of the law, housing advocates say, millions of people could be illegally evicted. Fannie Mae and Freddie Mac "must proactively ensure compliance with this provision" of the Cares Act, Sen. Sherrod Brown (D-Ohio) said in separate letters to the companies. "Now is the time to prevent evictions."

As big corporations say 'black lives matter,' their track records raise skepticism

The moratoriums are a temporary remedy that could lead to a bigger problem for renters asked to quickly catch up on missed payments when the bans lift, said David Dworkin, president of the National Housing Conference, which has called for the creation of a large-scale rental assistance program. "This is a once-in-a-100-year pandemic. It is not unreasonable to expect the government to cover" lost rental income, he said.

Without a rental assistance program, some communities could find themselves in the uncomfortable position of having local police enforcing eviction orders in black neighborhoods after weeks of protests following the killing of George Floyd in Minneapolis, he said.

"Eviction is a very public experience that impacts the entire community. Your belongings are dumped on the street while your children and neighbors watch," Dworkin said. "Given the high degree of tension we are already experiencing, I don't think that's a dynamic we want to test."

Some housing advocates are also worried about the virtual hearings occurring in some cities where in-person court appearances are still hampered by the coronavirus.

Not all renters, especially the elderly or poor, will have access to the technology needed to participate in such hearings, said Abigail Staudt, managing attorney at the Legal Aid Society of Cleveland. "Can witnesses attend these hearings? How are subpoenas being handled? How is evidence being entered into the record?" she said. "Maybe the court is handling everything very well, and I trust that they probably are, but we don't know because we can't see what's happening."

When Columbus, Ohio, began preparing to open its court dockets again, Franklin County Administrative Judge Ted Barrows said it was clear the courtrooms were too small for all lawyers, plaintiffs and other court watchers to keep a proper social distance. He considered moving the hearings to nearby schools and recreation centers before settling on the local convention center. When the courts began hearing cases again last month, temperatures were taken as attendees entered the building, and seats were placed six feet apart, Barrows said.

In many of the cases heard so far, either the tenant has already vacated the apartment or the landlord is trying to work out a deal, Barrows said. But it's still early, he acknowledged.

"It's logical to think there is going to be an uptick" in evictions, he said. "I don't feel good about that, but I am between a rock and hard place. The courts are here to enforce contracts; a lease is a contract."

 -- via my feedly newsfeed

Beijing Just Reported No Cases. Here’s How They Turned It Around - Bloomberg

Beijing Just Reported No Cases. Here's How They Turned It Around

by Bloomberg News

Beijing reported zero new coronavirus cases for the first time in 26 days, a sign the resurgence that ignited fears of a second wave in China looks to have been brought under control for now.

https://www.bloomberg.com/news/articles/2020-07-07/beijing-just-reported-no-cases-here-s-how-they-turned-it-around?sref=woWS9Szx

Beijing reported zero new coronavirus cases for the first time in 26 days, a sign the resurgence that ignited fears of a second wave in China looks to have been brought under control for now.

The city of more than 20 million people appears to have quelled a flare-up that infected 335 people, with infections down from 36 a day at their peak in mid-June. Authorities took a different approach to the virus when it reappeared in China's political and economic hub after nearly two months of no locally transmitted cases than they did in Wuhan, the central city where the pathogen first emerged.

Instead of resorting to a sudden across-the-board lockdown that risked reversing the gains made since China started reopening, Beijing deployed more targeted measures. While some -- like confining whole neighborhoods to their homes -- may be more difficult to replicate in western democracies, they could hold lessons for other countries as they grapple with the inevitable return of the virus given an effective vaccine is months, potentially even years, away.

The Beijing resurgence, which took root in a wholesale food market in the city's southwestern district, injected fresh uncertainty into the global struggle against the virus, hitting as citizens were getting used to a semblance of normal life. It served as a warning to places that look to have nailed the pandemic: the virus is elusive and isn't easily beaten.

The Problem of Medical Supplies Was a Stockpile Problem, not a China Supply Chain Problem [feedly]

The Problem of Medical Supplies Was a Stockpile Problem, not a China Supply Chain Problem
http://feedproxy.google.com/~r/beat_the_press/~3/gD_zrRMjzWQ/

As Donald Trump tries to whip up anti-Chinese sentiment as part of his re-election campaign, many have joined in by complaining about our Chinese supply lines. The NYT joined this effort by highlighting the extent to which the U.S. and the rest of the world relies on China for medical supplies.

While it is arguable whether the reliance on China for medical supplies or anything else is a big problem, that was not the main issue when it came to shortfalls of protective gear and other medical supplies at the start of the pandemic. Those shortages stemmed from the government's failure to maintain adequate stockpiles of essential equipment.

Even if all this equipment was produced in the United States, our factories could not immediately ramp up production by a factor or five to meet the demand the country was facing in March and April. The only way this demand could have been met quickly was if the stockpiles were already in place. This was the major failure in the crisis and it obscures the issue to complain about supply chains going through China.

As a practical matter, it is striking how little production has been disrupted in response to a once in a century pandemic and totally incompetent leadership at the national level. That would seem to imply that our supply chains are not a big problem.

The post The Problem of Medical Supplies Was a Stockpile Problem, not a China Supply Chain Problem appeared first on Center for Economic and Policy Research.

 -- via my feedly newsfeed