Crude Oil Business

Hello

Please permit me to introduce myself. My name is John Monk. I earn a living in the oil industry as an independent Feasibility/Project Management Consultant to oil refineries and other oil industries in Southern African, East Africa and some parts of Asia. We are based in Johannesburg RSA. Our mandate includes identifying specific licensed crude oil export/ marketing firms and recommending these firms to the oil refineries for supply of crude oil to the refineries.

On my desk is a mandate from one the refineries to arrange for crude oil purchase from Libya for up to 2,000,000 barrels on monthly bases for 12 calendar months.

The essence of my reaching out to you is the fact that am in the process of building a middle man structure to mediate between the 2 parties involved before the contract is signed. You may be wondering why I cannot do it by myself right? The honest fact is that as a consultant to these oil refineries, we are not allowed to act as suppliers of crude oil to them as well, hence the reason I need a trustworthy person outside my work circle in order to maintain a discreet profile.

I wish to extend this partnership to you my friend to build a middle man structure with you, while I work from the back to guide you. Our commission/brokerage as middle persons is between $2 - $3 per barrel as case may be. So if the target of 2M barrels is met monthly we stand to share $4M - $6M every month for a span of 12 months with possible extension.

Worry less about the speedy sales as I have contacts within oil producing country's top officials for license of crude oil export/lifting to any firm I so present for this business. Therefore if you can be able to handle this transaction with honesty and integrity, you should come back to me immediately for more details. Your urgent response is highly needed
Regards.

John Monk

America’s labor crisis [feedly]

America's labor crisis
https://economicfront.wordpress.com/2020/11/05/americas-labor-crisis/

We face a multifacited labor crisis. One of the most important aspects of this crisis is the U.S. economy's diminishing capacity to provide employment. This development is highlighted in the chart below, which shows the trend in civilian employment over the last thirty years.  Civilian employment includes all individuals who worked at least one hour for a wage or salary, or were self- employed, or were working at least 15 unpaid hours in a family business or on a family farm, during the week including the 12th of the month when surveys are taken.

As we can see, it took approximately 4 years to bring civilian employment back to its pre-crisis peak after the 2001 recession, and a much longer 6.5 years after the 2008 recession.  The number of years it will take to regain the pre-crisis peak employment level after the end of this recession (which remains ongoing) can be expected to be far greater, with some analysts predicting it could take a decade or more. And of course, new people will be entering the labor force over that decade, generating a serious unemployment problem.

The following chart, which shows the trend in the civilian labor force participation rate, offers additional evidence of the economy's declining job creating potential. The civilian labor force participation rate is calculated by dividing the sum of all workers who are employed or actively seeking employment by the total noninstitutionalized, civilian working-age population.

As we can see, this measure has been in sharp decline for many years, including over the years of expansion that followed the 2008 recession.  With growing numbers of working-age people, including prime-age workers, forced to drop out of the labor force even during so-called "good times," there is little reason to expect a significant improvement in employment opportunities in the years following the end of this recession.

These charts make clear that without a significant change in the workings of the economy, working people are facing a future of declining employment possibilities. And it certainly appears that there is no enthusiasm for major economic changes among the most powerful and wealthy in the United States.  According to a recent report, U.S. billionaires saw their fortunes soar by $434 billion during the nation's lockdown between mid-March and mid-May. And Market Watch reported that the S&P 500 and Nasdaq just booked the best postelection day gains in history.  The reason:

Wall Street warmed to the possibility of a divided U.S. government and further political gridlock in Washington following a contentious election, potentially keeping Trump administration's tax cuts in place no matter who sits in the White House.

In sum, if we want a meaningful economic recovery, one that serves majority needs, we will have to fight for it.  Among other things, this means finding new ways to strengthen labor-community coalitions and engage people in sustained conversation about the class-contradictory nature of our economic system.

 -- via my feedly newsfeed

PK: Is America Becoming a Failed State? [feedly]

Is America Becoming a Failed State? (text only)
https://www.nytimes.com/2020/11/05/opinion/joe-biden-senate-mitch-mcconnell.html


As I write this, it seems extremely likely that Joe Biden has won the presidency. And he clearly received millions more votes than his opponent. He can and should claim that he has been given a strong mandate to govern the nation.

But there are real questions about whether he will, in fact, be able to govern. At the moment, it seems likely that the Senate — which is wildly unrepresentative of the American people — will remain in the hands of an extremist party that will sabotage Biden in every way it can.

Before I get into the problems this confrontation is likely to cause, let's talk about just how unrepresentative the Senate is.

Every state, of course, has two senators — which means that Wyoming's 579,000 residents have as much weight as California's 39 million. The overweighted states tend to be much less urbanized than the nation as a whole. And given the growing political divide between metropolitan and rural areas, this gives the Senate a strong rightward tilt.

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An analysis by the website FiveThirtyEight.com found that the Senate in effect represents an electorate almost seven percentage points more Republican than the average voter. Cases like Susan Collins, who held on in a Democratic state, are exceptions; the underlying right-wing skew of the Senate is the main reason the G.O.P. will probably retain control despite a substantial Democratic victory in the presidential popular vote.

But, you may ask, why is divided control of government such a problem? After all, Republicans controlled one or both chambers of Congress for three-quarters of Barack Obama's presidency, and we survived, didn't we?

Yes, but.

In fact, G.O.P. obstruction did a lot of damage even during the Obama years. Republicans used hardball tactics, including threats to cause a default on the national debt, to force a premature withdrawal of fiscal support that slowed the pace of economic recovery. I've estimated that without this de facto sabotage, the unemployment rate in 2014 might have been about two percentage points lower than it actually was.

And the need for more spending is even more acute now than it was in 2011, when Republicans took control of the House.

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Most immediately, the coronavirus is running wild, with new cases exceeding 100,000 a day and rising rapidly. This is going to hit the economy hard, even if state and local governments don't impose new lockdowns.

We desperately need a new round of federal spending on health care, aid to the unemployed and businesses, and support for strapped state and local governments. Reasonable estimates suggest that we should spend $200 billion or more each month until a vaccine brings the pandemic to an end. I'd be shocked if a Senate still controlled by Mitch McConnell would agree to anything like this.

Even after the pandemic is over, we're likely to face both persistent economic weakness and a desperate need for more public investment. But McConnell effectively blocked infrastructure spending even with Donald Trump in the White House. Why would he become more amenable with Biden in office?

Now, spending isn't the only form of policy. Normally, there are many things a president can achieve for good (Obama) or evil (Trump) through executive action. In fact, during the summer a Democratic task force identified hundreds of things a President Biden could do without having to go through Congress.

But here's where I worry about the role of a heavily partisan Supreme Court — a court shaped by McConnell's norm-breaking behavior, including the rushed confirmation of Amy Coney Barrett just days before the election.

Six of nine justices were chosen by a party that has won the popular vote only once in the past eight elections. And I think there's a substantial chance that this court may behave like the Supreme Court in the 1930s, which kept blocking New Deal programs until F.D.R. threatened to add seats — something Biden wouldn't be able to do with a Republican-controlled Senate.

So we are in big trouble. Trump's defeat would mean that we have, for the moment, avoided a plunge into authoritarianism — and yes, the stakes are that high, not just because of who Trump is, but also because the modern G.O.P. is so extremist and anti-democratic. But our skewed electoral system means that Trump's party is still in a position to hobble, perhaps cripple, the next president's ability to deal with the huge epidemiological, economic and environmental problems we face.

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Put it this way: If we were looking at a foreign country with America's level of political dysfunction, we would probably consider it on the edge of becoming a failed state — that is, a state whose government is no longer able to exert effective control.

Runoff elections in Georgia may yet give Democrats Senate control; barring that, Biden might be able to find a few reasonable Republicans willing to pull us back from that brink. But despite his apparent victory, the Republic remains in great danger.


 -- via my feedly newsfeed

M.Roberts: US election: women, the young, the working class, the cities and ethnic minorities get rid of Trump [feedly]

US election: women, the young, the working class, the cities and ethnic minorities get rid of Trump
https://thenextrecession.wordpress.com/2020/11/08/us-election-women-the-young-the-working-class-the-cities-and-ethnic-minorities-get-rid-of-trump/

The Democratic party candidate, Joe Biden has beaten the Republican party incumbent Donal dTrump for the US presidency in 2020.  What can we learn from election result about the United States of America, the world's greatest imperialist power, in the third decade of the 21^st century?

First, the voter turnout.  With not all the votes even now yet counted, it seems that about 150m Americans of voting age will have cast their ballots. Given that there were 239m eligible to vote, that means there was about a 62% turnout (VEP).

That's better than in 2016 at 59% and the best turnout since 1960, but it's not as high as many media forecasts were claiming on the day of the election.  It means that 37% of Americans entitled to vote did not do so.  That compares with 31.4% who voted for Biden and 29.6% who voted for Trump.  So once again, the No Vote party polled the highest national vote in the US election.

Moreover, there were another 20m voting age Americans excluded from the poll for various nefarious reasons (they had committed a felony or the state administration had refused their registration).  So the voting age turnout was just 58%, implying that a sizeable section of America's working classes did not vote and/or were not allowed to vote.  Indeed, the 'greatest democracy in the world' has one of the lowest levels of voter participation of the major so-called 'liberal democracies'.

One large slice of the population that does not exercise its right to vote is young Americans. Less than half — just 43.4% — of eligible Americans under 30 voted in the 2016 presidential election. This was much less than the 71.4% of over-60s who voted. It was even lower in this election.

Trump is saying that the election was rigged and in a way he is right.  It is always rigged because the candidate with the majority of votes, let alone just the largest vote, seldom wins.  In this election, Trump polled over 71m votes, the highest vote ever for a Republican.  But Biden polled 75m votes, the highest vote ever for a president. But that's because just more people voted in this election than ever before.

In the last eight presidential elections, the winner has polled less votes his main opponent. This is because the winner is the one that receives most 'electoral college' votes.  And those votes are recorded from each state of the 50-state union. It is the United States of America, a federal union of sovereign states as formed in the American revolution of the 18^th century, with each state having its own laws and electoral procedures.  So building up huge votes in New York and California, the most populous states, for the Democrat candidate does not guarantee victory when narrow winning margins are achieved in lots of small states by the Republican candidate that add up to a majority in the electoral college.

So in 2016, Democrat Hillary Clinton polled 3m more votes than Trump overall, but Trump took 306 electoral college votes because he won very narrowly in a series of small to medium size states in the middle West. This time, Biden has polled even more of majority, probably about 4m, but the result appeared close because of the narrow margins in key 'swing states'.  But this time Biden took those states back from Trump and on 6 January when the electoral college meets, he will get 306 electoral votes to win, the same as Trump got in 2016.

Another reason the election result was close is that in the Republican-run states, there has been significant gerrymandering of the voting boundaries, deliberate blocking of voter registration and in this election a desperate attempt to foil massive postal balloting during the COVID pandemic.  US 'democracy' is a joke.  According to the Economist, it is at the bottom of the pile as a 'liberal democracy', with only Albania scoring lower!

The reason the turnout was higher this time is partly the intense polarisation in America during the COVID pandemic and the economic collapse; fuelled by Trump's demagogic tirades. But also the COVID pandemic lockdowns led to a massive increase in postal voting, an easier process for voters than going to the polling centres.  There were also significant grassroots campaigns in the big cities to get people registered and voting.

Can we learn anything from the demographics and economic composition of those who did vote?  The Votecast survey of voters gives us some clues.  According to the survey, male voters (47%) split 46-52 for Trump, but female voters (53%) split 55-45 for Biden. So women voters ensured a Biden victory.

The youth vote, as usual, was low, just 13% of the total vote, but those under 29 years voted 61-36 for Biden. And those aged 30-44 years (23% of the vote) also backed Biden 54-43.  Those aged 45-64 (a huge 36% of the vote) went narrowly for Trump 51-48. And those over 65 years (another sizeable chunk of 27%) again narrowly voted for Trump 51-48.  So 63% of those who voted were older than 44 years and backed Trump (narrowly); while those under 45 (just 37% of the vote) heavily backed Biden. That was enough to overcome the small majorities for Trump in the older age groups.

What about ethnic groups?  Well, the survey found that 74% of the voters were white and they backed Trump 55-43.  But all other ethnic groups overwhelmingly backed Biden.  Black Americans constituted only 11% of those voting, but they backed Biden 90-8.  Hispanic voters were only 10% of the total but they backed Biden 63-35.  Asian voters were only 2% of the vote but backed Biden 70-28. This 25% of the voters (and growing in size in each election) so overwhelmingly backed Biden that it was enough to overcome the smaller Trump majority among the white voters.

Much has been made of the supposed increased vote for Trump by black and Hispanic Americans this time compared to 2016.  But the evidence for this is dubious and even if true, the shift is tiny.  According to the Edison exit poll, there was a fall-off in support by white men for Trump compared to 2012 from 62% to 57% and small rise from white women from 52% to 54%. The supposed rise in support for Trump from black men was 13% to 17% and from black women was from 4% to 8%.  But considering that white voters were 75% of the vote and black voters were only 11%, the supposed shift to Trump from black voters is less than half the loss by Trump from white voters.  More Hispanic voters backed Trump this time, it is claimed, but still around two-thirds did not.

What about classes and incomes?  Well, by level of education, high school leavers (27% of voters) backed Trump 52-46; and those with some qualifications (34% of voters) again backed Trump but narrowly 50-48.  College graduates (a sizeable 24% of voters) heavily backed Biden 56-42 and postgraduate voters (some 14%) were even more strongly pro-Biden 56-42.  The more educated, the more Biden.

But that did not mean that working class Americans backed Trump more than Biden.  Those voters earning $50,000 a year (the median average income) or less backed Biden significantly 53-45, and they were 38% of voters.  Those in the middle-income group of $50-99k a year (36% of voters) narrowly backed Trump 50-48, while those earning over $100k a year (25% of voters) actually backed Biden 51-47.  The lowest paid Americans, the largest group of voters voted for Biden by a good margin, while the small-business people and middle income earners narrowly backed Trump. The better-off backed Biden (but I suspect that the higher up the income scale, the more votes for Trump, as other surveys show that millionaires heavily backed Trump).

Yes, there is a sizeable minority of working-class Americans that backed Trump, mainly in small towns and rural areas. But the majority of working-class Americans rejected Trumpism.  The urban areas (65% of votes) heavily backed Biden while the small towns and rural areas heavily backed Trump.  It was here that the polarisation in the vote was greatest.

Religion also played a role.  Protestant Christian believers and evangelicals (45% of voters) voted heavily for Trump while Catholics (22%) were split 50-50 and muslims, Jews and declared atheists (25% of voters) backed Biden hugely.

What were the main issues of the election?  Two stand out: the COVID-19 pandemic and the state of the economy.  The pandemic was considered the most important by 41% of voters and those that thought so backed Biden heavily. The economy and jobs were regarded as the most important issue by 28% of voters who heavily backed Trump. Here was another clear cause of polarisation in America: lockdowns to save lives; or no lockdowns and save jobs was how many Americans saw it in 2020.

To sum up, Americans turned out for this election in slightly larger numbers, but the turnout was still way down compared to other 'liberal democracies'. They voted even more strongly for the Democratic candidate than in 2016, but the constitutional peculiarities of the election system made the result quite close – although, more or less, in line with pollster forecasts.  Biden won because America's ethnic minorities overcame the white majority.  Biden won because younger Americans voted for Biden sufficiently to overcome Trump majorities among older voters. Biden won because working class Americans voted for him in sufficient numbers to overcome the votes of the small town business-people and rural areas.

The US election was a mess; mirroring the mess that US imperialism is now in, with the COVID pandemic running riot across America and the economy on its knees with millions unemployed, wages slashed and public services paralysed.

Biden had the backing of the majority of workers, ethnic minorities, young people and city dwellers.  They voted to get rid of Trump: but they may not expect much from Biden and they will be right.

 -- via my feedly newsfeed

GDP and Employment drag from State and Local Governments [feedly]

GDP and Employment drag from State and Local Governments
http://feedproxy.google.com/~r/CalculatedRisk/~3/FdEe-mpAmr0/gdp-and-employment-drag-from-state-and.html

A key policy issue for 2021 will be how much disaster relief the Federal government will provide to state and local governments. If we look back at the Great Recession, most of the damage was done to the States after the recession. This is because state and local governments are required to run a balanced budget (or something close), and the state governments started cutting after the recession.

Here is a graph showing the contribution to percent change in GDP for residential investment and state and local governments since 2005.

 Click on graph for larger image.

The red bars are the contribution to the percent change in real GDP from state and local governments.

Although state and local governments were a drag on GDP in Q2 and Q3 in 2020, the worst may happen in 2021 as state and local governments work to balance their budgets.

This next graph shows total state and government payroll employment since January 2005.   Note that graph doesn't start at zero to better show the change in employment.

Following the Great Recession, most of the state and local government layoffs were after the recession. This was a drag on overall employment for a few years.

In 2020, there was a sharp decline in state and local government employment due to the pandemic (mostly in education employment).

Without Federal disaster relief, I expect state and local governments will have further layoffs in 2021.  

 -- via my feedly newsfeed

Over a million people still filed initial unemployment claims last week with no COVID-19 relief in sight [feedly]

Over a million people still filed initial unemployment claims last week with no COVID-19 relief in sight
https://www.epi.org/blog/over-a-million-people-still-filed-initial-unemployment-claims-last-week-with-no-covid-19-relief-in-sight/

Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 751,000 people who applied for regular state UI and 363,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program that provides up to 39 weeks of benefits for workers who are not eligible for regular unemployment insurance, like the self-employed. Without congressional action, PUA will expire in less than two months (more on that below).

The 1.1 million who applied for UI last week was little changed (a decline of 3,000) from the prior week's revised figures. Last week was the 33rd straight week total initial claims were far greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn't have PUA in the Great Recession—initial claims last week were still 3.6 times where they were a year ago.)

Most states provide 26 weeks of regular benefits, but this crisis has gone on much longer than that. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 538,000, from 7.8 million to 7.3 million.

For now, after an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI. However, PEUC is set to expire in less than two months (more on that below).

In the latest data available for PEUC (the week ending October 17), PEUC rose by 278,000, from 3.7 million to 4.0 million, offsetting only 46% of the 602,000 decline in continuing claims for regular state benefits for the same week. The small increase in PEUC relative to the decline in continuing claims for regular state UI is likely due in large part to administrative delays workers are facing getting on to PEUC. Further, many of the roughly 2 million workers who were on UI before the recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are exhausting PEUC benefits. Nearly a million workers (972,000) had exhausted PEUC by the end of September, the latest exhaustion data available in most states (see column C43 in form ETA 5159 for PEUC here).

Department of Labor (DOL) data suggest that right now, 22.8 million workers are either on unemployment benefits or have applied recently and are waiting to get approved (see Figure A). However, that number is an overestimate. For one thing, initial claims for regular state UI and PUA should be nonoverlapping—that is how DOL has directed state agencies to report them—but some individuals are erroneously being counted as being in both programs. An even bigger issue is that states are including retroactive payments in their continuing PUA claims, which would also lead to double counting. All this means nobody knows exactly how many people are receiving UI benefits right now, which is another reminder that we need to invest heavily in our UI infrastructure and technology.

Figure A

Figure B shows continuing claims in all programs over time (the latest data are for October 17). Continuing claims are more than 20 million above where they were a year ago. However, the above caveat about continuing PUA claims applies here too, which means the trends over time since March may be distorted.

Figure B

Senate Republicans allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July, so last week was the 14th week of unemployment in this pandemic for which recipients did not get the extra $600. And worse, without congressional action, PUA and PEUC will expire in less than two months. Millions of workers are depending on these programs—DOL reports that a total of 13.3 million workers were on PUA (9.3 million) or PEUC (4.0 million) during the week ending October 17. When these programs expire, millions of these workers and their families will be financially devastated. But there is little hope for another stimulus bill before next year. The House passed a $2.2 trillion relief package, but Senate Majority Leader Mitch McConnell adjourned the Senate last week with no COVID relief, knowing full well that millions would see their benefits disappear during the winter holidays. The cruelty is mind-blowing.

And blocking more COVID relief is not just cruel, it's terrible economics. For example, the spending made possible by the extra $600 in UI was supporting millions of jobs. Letting the $600 expire means cutting those jobs. Not providing stimulus in the form of aid to state and local governments will also cost millions of jobs. We will get new data tomorrow when the October jobs report is released, but in the latest data available, the labor market is still more than 12 million jobs below where we would be if the recession hadn't happened, and job growth is slowing. Further, gross domestic product (GDP) numbers were released last Friday, showing GDP is now 3.5% below where it was at the end of 2019—the second-largest three-quarter drop on record. It is shameful that Senate Republicans are walking away from the American people like this. Blocking more stimulus also means no additional housing and nutrition assistance, no COVID-related health and safety measures for workers, no aid to the Postal Service during this critical time, and no additional support for virus testing, tracing, and isolation measures, or virus treatment and support for hospitals and other health providers. All of these things would have helped our economy and the people in it recover from the COVID-19 crisis.

Blocking stimulus is also exacerbating racial inequality. Due to the impact of historic and current systemic racism, Black and Latinx communities have seen more job loss in this recession, and have less wealth to fall back on. The lack of stimulus hits these workers the hardest. Further, workers in this pandemic aren't just losing their jobs—an estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19. Senate Republicans have failed struggling families.

 -- via my feedly newsfeed

Dean Baker: Donald Trump and Being Deplorable [feedly]

This would be a good article for a socialist economics discussion. I do not agree with every point in Baker's approach to Trumpism -- he leaves too much out to be the full story. (What point is there studying something about which we are already unanimous?).  But -- I agree completely with his essential thrust: there are economic policy wrongs at the source of divisions in the working class, including working class whites supporting Trump. Fixing those wrongs will mean huge progress in the fight for economic justice, and political equality. The details are important, however. There is a debate going on between Identity and Class analyses in progressive ideology. Sorting it out to achieve majority coalitions, especially a majority of working families, of all races, is our most important political challenge.

Donald Trump and Being Deplorable
http://feedproxy.google.com/~r/beat_the_press/~3/RUb7gz9cFzY/

As it increasingly looks like Joe Biden has won the election, I see many people around me appalled that so many of their fellow citizens can vote for someone as racist, sexist, and otherwise offensive as Donald Trump. Given what we know about the guy, and think everyone else should know about him as well, it is hard not to be appalled.

But we will not get anywhere politically by looking at half the country with disgust. Trying to win over some of Trump's voters doesn't mean giving in to Trump's racism and sexism, it is about recognizing that large segments of the country have not benefitted from the economy's growth over the last four decades as a result of deliberate policy.

This group does not at all coincide perfectly with the group of people who support Trump. Many Trump supporters have done quite well economically. There are also many among those who have been pushed behind who do not support Trump. This is especially the case for Blacks and other people of color who do not see a happy home for themselves in a party dominated by Trump's racism.  

Progressives have no reason to try to appease affluent Trump backers, but we should be looking to help the pushed behind among the Trump backers. Policies that benefit this group may not mean that they will turn to backing progressive candidates, but it is the right thing to do in any case.

The first part of this strategy is simply to state the facts. There is a conventional story that dominates economic and policy discussions, in which people without college degrees (still a majority of the workforce) have lost out because they don't have the right skills to prosper in today's high-tech global economy.

That is nonsense. The high-tech global economy was deliberately structured to redistribute income away from workers without college degrees to those at the top.

In terms of the impact of globalization, our trade deals were quite explicitly designed to make it as easy as possible for U.S. manufacturers to locate their operations anywhere in the world and to then import what they produce back to the United States. This put U.S. manufacturering workers in direct competition with low paid workers in the developing world. This had the predicted and actual effect of putting downward pressure on the wages of manufacturing workers and on non-college educated workers more generally.

There was nothing natural about taking globalization in this direction. We could have focused on making it easier for highly educated professionals in the developing world, like doctors and dentists, to train to our standards, and then practice in the United States. This would have put downward pressure on the pay of our most highly paid workers.

Putting highly paid professionals in the United States in direct competition with their counterparts in the developing world have led to the same sort of gains from trade that economists always tout in pushing trade deals. However, in this case the losers from globalization would be the most highly-educated workers. (I discuss this at more length in chapter 7 of Rigged [it's free].)

There is a similar story with the impact of technology. The huge sums going to the tech sector, and the stockholders and workers in it, are almost entirely due to the government-granted patent and copyright monopolies that allow them to charge prices far above the free market price.

Here too, economists do a great act of not-seeing. If you suggest that we get rid of patents and copyrights, they will all jump up and down and insist that people would then have no incentive to innovate and do creative work. But somehow, they avoid the unavoidable implication, the amount of incentive that we provide with these government-granted monopolies is entirely due to policy choices. We can make patents and copyrights shorter and weaker, or longer or stronger, as we have done. There are also alternative mechanisms for financing innovation and creative work. (I talk about this issue in chapter 5 of Rigged.) If we had gone the route of providing less incentive, then less money would have been redistributed upward from people without college degrees to the tech sector.   

With almost no exceptions, the people you see in policy debates ignore these basic facts about income distribution in the modern economy. While they may support measures to help non-college educated workers, they almost invariably treat their fate as an unfortunate outcome of natural developments, as opposed to deliberate design by those who held power.

If we want to reach out to non-college-educated workers, who may have supported Trump, a really good first step would be to acknowledge that their poor prospects in the economy were the result of design. It might still be good for them, as an individual matter, to get more skill and education, but as a group they are hurting because people in power wanted to redistribute income upward.

Reversing this upward redistribution is a long and complicated story that I write about all the time. A big part of the picture is reversing the policies that led to this upward redistribution. My favorite place to start is to move away from the patent monopoly financing of the development of prescription drugs.

If drugs were sold in a free market, it would save us more than $400 billion a year on drug spending. That comes to more than $3,000 a year for an average family. It would also eliminate the perverse incentives created by patent monopolies, like pushing opioids by falsely claiming they are not addictive.

Anyhow, we can start by having President Biden invoke Section 1498 of the Commercial Code, a provision commonly used in defense contracting, which allows the president to essentially over-ride a patent, while compensating the patent holder. Biden can do this for a number of expensive drugs, say some of the cancer drugs selling for more than $100k a year, so people can see what they would cost selling as free market generics.

In the same vein, he can arrange for some portion of the National Institutes of Health $40 billion budget to be designated for developing and testing drugs and bringing them through the FDA approval process. This is essentially what we did with Moderna in its development of a coronavirus vaccine, except we let them keep patent rights, even though we paid for the research upfront. With the policy I am proposing, the new drugs developed would be sold as generics from the day they are approved. Cancer drugs might be a good place to start, and set a model for other areas of research.

We can also look to cut into the waste and great fortunes made in the financial sector. Having the government prepare people's tax returns for them would be a great place to start. This has been the practice in several European countries for decades. It would save people hundreds of dollars each year that they now pay to tax preparation services, in addition to an enormous amount of anxiety. Requiring public pension funds to fully disclose the terms of their contracts with the funds they invest might also bite into the big fortunes made by private equity partners.

And, if we tried to improve corporate governance, we might put an end to CEOs ripping off the companies they work for with their $20 million a year salaries. My preferred route is to put some bite into the "Say on Pay" votes that shareholders vote on every three years. Suppose the boards of directors, who set CEO pay, lost their annual stipend, if a Say on Pay vote was defeated. My guess is that this will cause them to think much more carefully about whether they could get away with lowering CEO pay. And, the issue is not just the CEO. The outlandish compensation packages at the top contaminate the pay structure throughout the economy.

If we adopt a broader inequality fighting agenda will it make non-college educated whites more likely to vote for progressives? I don't have the answer to that question. We do know that college-educated whites are more likely to vote Democratic than non-college educated whites. If that pattern held, and we saw the same increases in college enrollment since 1980 as we did prior to 1980, the Democrats would have much more sold majorities in large sections of the country.  

Of course, this inequality fighting agenda will benefit many more people than non-college educated whites. It will benefit people of color without college degrees. It will also benefit non-affluent college graduates. A large share of college grads, especially recent college grads, have not been faring well in the last two decades.

Whatever the political implications, we should pursue an anti-inequality agenda because it is the right thing to do. It is also the honest thing to do. Telling the victims of a four-decade long policy of upward redistribution that it is their fault, is a lie of Trumpian proportions.

The post Donald Trump and Being Deplorable appeared first on Center for Economic and Policy Research.

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