OBSERVATIONS ON THE GREAT HUNKERING (15) [WITH COMMENT BY JOHN]
• We begin with the news this morning that another 3 million Americans have filed for unemployment this week, bringing the grand total up to 36 million. Every day that the lockdown continues, the economic damage begins to exact long term costs.
Bloomberg reports that “Layoffs Start Turning From Temporary to Permanent Across America“:
Plenty of layoffs that just a month ago were labeled “temporary” are now tagged “indefinite” or “permanent.” Alongside announcements of sweeping staff cuts by major employers such as Boeing Co. and U.S. Steel Corp. and the accelerating pace of downsizing in brick-and-mortar retailing, such notices are a sign that even as businesses continue to hope for a speedy recovery, they are starting to plan for a slow one.The new permanent layoffs are hitting a wide swath of the economy both geographically and sectorally. Uber Technologies Inc. on Wednesday became the latest major company to announced long-term layoffs, saying it would be eliminating 3,700 jobs, or 14% of its staff worldwide. A day earlier, Airbnb Inc. said it was cutting 25% of its workforce, or about 1,900 people worldwide.
There are, at the same time, some reasons for optimism about a relatively fast recovery. Aside from the data, consider one visual we are seeing on the nightly news. Everyone has seen photos from the history books of long lines of disheveled men in long bread lines, and right now we are seeing long lines of people at food banks . . . in their cars. This is not to say that many such people aren’t in difficult circumstances, with no cash or savings to fall back upon, but the point is the nation is rich in assets—human capital, physical plant and equipment, etc, which can enable a fast expansion—if and when the lockdown ends. Faster please.
• There is so much good (and also bad) analytical work appearing every day that calls into question the conventional wisdom about both COVID-19 and the hard lockdown remedy that just about every country has adopted. There’s so much that I can’t keep up, and can’t decide from day to day which items to pass along to Power Line readers. Fortunately for us, the British journalist Toby Young has put together a pretty good one-stop-shopping site called Lockdown Sceptics. Worth a look each day.
Other good recent reads on lockdown skepticism include Conor Friedersdorf in The Atlantic (“Take the Shutdown Skeptics Seriously“), and Matt Ridley writing about the train wreck of Neil Ferguson’s “crude mathematical guesswork.”
• How the virus crisis is going to play out in the election in November is wholly unclear at this point. Democrats are going to try to blame Trump for whatever economic woes linger by saying he failed to address the problem early enough or effectively enough. Hard to say whether this will work, or whether Trump’s instinct for the counterpunch will serve him well or ill.
But Democrats may have done us a great favor in proposing an additional $3 trillion spending bill this week, because two of their priorities may not play very well with voters in many of the key states. First, they want to bail out fiscally unsound blue states like California, Illinois, Connecticut, and New York, and they want to revive the SALT (state and local tax) deduction that the Trump tax reform eliminated. If Democrats sweep the election in November, you can expect this package to be high on their agenda for the next Congress.
The ironic thing is that the SALT deduction is overwhelming a tax benefit for high income people, and I think Trump would have a great time asking why Democrats want to have a tax cut for the rich. And bailing out blue states will make a campaign issue about lavish public employee pensions that are taking away money for public services and schools. I can easily see Trump attacking “filling the deep pockets of the deep state.” I’m starting to wonder whether Democrats are really this bad at politics.
JOHN adds: I think that Europe and America’s reaction to the coronavirus will go down in history as the great public policy fiasco of the post-WWII era. It seems unbelievable that we are suffering such self-inflicted wounds, but sadly, it is true.
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