The libertarian era has come in the USA

Risk assessment is a key procedure for business. To provide safety, i.e. mitigation of major risks for a reasonable price, for all stakeholders of a given business one needs profit assessment and revealing/ understanding risks. Since the desired safety level depends on business profit and expenses related to risk mitigation one looks into the profit forecast and long term statistics of risks to decide on business perspectives. Both, the COVID-19 pandemic and socio-racial protests enhanced by robbery and looting, have dramatically changed both sides of the balance – for the majority of people and businesses the mid-term profit is much lower than that was estimated in 2019 and the risks for many businesses have been increasing since February 2020. For example, business-related to outdoor food and hospitality will likely be suppressed due to increased insurance payment and reduce profit forecast.

The major beneficiary in this situation is IT-companies, which benefit on both sides – their capitalization has been increasing since the deep local minima in February-March due to the lockdown and their risk assessment has been decreasing since these companies have moved to remote work. The latter means no risk for the IT-companies – everything is online. Easy money made their thoughts thin and they support protesters – longer and bloody protests will bring more and more money – this is a magic dollar printing machine.

Lucky IT-companies (and few others), but many other businesses will suffer more and more. Industrial companies will have problems with increasing risks of pandemic pressure and the personal safety of workers. Credits will be harder to get due to increasing risks and debts rising since February. Protests- looting-robbery -… will affect people who have to drive to work instead of sitting home with laptops on top of their laps and with caps of coffee. All in all, the next stage of economic growth will not be with industrial companies (good for IT who can prolong the protests and suppress industries, which likely support Trump). I have to say that the support of protesters creates a moral hazard situation. This is a declaration of war to suffering industries.

However, the real dark time comes to laypeople with lower incomes. Both, the COVID-19 pandemic-related lockdown and slower recovery due to protest disordering will make these people poorer and much poorer. The income loss alone puts their lives at risk and this is the existential risk for tens of millions. But this is a smaller risk to my mind. The actual risk is that law enforcement troops like police and sheriffs are in the process of replacement by private security service (e.g. Minneapolis City Council members). This is a fully libertarian idea that lower-quality human beings have to sell workforce to higher-quality human beings and no social/governmental services have to exist at all. This means state deconstruction. The USA will be the union of self-assistance.

Why American political institutions do not work?

S. Huntington defined institutions as  "stable, valued, recurring patterns of behavior".  Everybody in this universe believed that the American institutions are stable and the most valued patterns of behavior. Just a few months of COVID-19 broke the shell of polished lie. The American institutions is a fake news. This happened not because the depression of the longer home stay without pay had to be channeled into the rage of racial and social riot. This happens because the discussion of institutions was just words about the institution and there were no recurring patterns of valued behavior in many organizations and procedures. The labor income share fall in the 2000s reveals an important process - the US institutions tried to cover the globe (the  whole world is not enough) and a larger part  of the US society was eliminated from this institutionalization process as insignificant. The set of social organizations and procedures was reduced to suppression of potential protests by various means from rough vocal statements ("Basket of deplorables" ) to law enforcement ("Occupy Wall Street") instead of resolving crucial problems of the racial, social, and economic inequality.

The US institutions failed because there is no consensus in the society. The organizations and processes are still alive, however. And they fight now not for institutionalization of new and adequate "patterns of behavior" within the USA but for power and money. And this war will be costly to all organizations but most painful for the US society.     

The American dream is dead - work does not make your life

On December 30, 2019 I published a post "The labor income share plummets" where a simple graph was shown - the evolution of labor income share in the USA. I also started the December 30's post with a few banal words - One needs just one graph to understand the increasing stress in US society (data from the BEA -Table 1.10. Gross Domestic Income by Type of Income). Now it is clear that the observed trend in the labor income loss had dramatic progress into 2020 with the COVID-19 pandemic. Two negative processes resulted in the revolutionary racial and social movement. No data on income share is available but the unemployment rate and the fall in GDP suggests that the curve may well drop below the 1929 level. The rage related to the loss in labor income was enhanced by the stock market stability - the Fed has fed the richest investors with trillions. Rich people become richer when poor lost the last hope. The American dream is dead -  work does not make your life.

 

No Founding Fathers any more - justs parents 1,2,3 ...

Hurrah, tolerance reigns. The USA does not need the Founding Fathers who do not comply with the moral level of the current time. Now they have to be called parents 1,2,3 ...

David and Goliaths: COVID-19 fights

Experts have been discussing the second wave of COVID-19 since the start of the first wave. Today we observe a surge in the number of new cases in several countries who likely passed the first wave. The USA  is one of the biggest examples with the second large daily increase of 38386  (https://www.worldometers.info/coronavirus/#countries) new cases yesterday, June 24. When one digs into the state data, however, the pattern is different - this is the first wave that came to California, Texas, and Florida - the biggest and wealthiest states. The growth rate is above 5000 per day and does not show any sign of plateau any time soon.  New-York and New Jersey are burnt out but the crisis is far from the end and the biggest state economies of the USA are under increasing pressure. The Dow-Jones Industrial Average lost 2.7% but the COVID-19 news today is much worse than yesterday. The trend is close to exponential and new quarantine becomes mandatory.

Israel is an example of the second COVID-19 wave. During 30 days in May, the daily rate of new cases was between 7 and 70. Yesterday it was 532 new cases and the exponential growth trend. Israel does not declare new quarantine because of important military and political move on July 1. The annexation will\likely cost quite a few lives of Israeli citizens.

Obviously, COVID is not an anagram of David, but very close. This small virus hits the foreheads of the biggest powers. 

Is there any difference between the USA slavery and current US foreign policy?

I find no difference between historical slavery in the USA and the current US foreign policy. The idea of slavery is based on the absolute superiority of white men over other human species (even white women). This presumption led to the possibility to treat them like animals. The idea behind the superiority of the US over other countries is based on the same presumption - the long-term US experience shows that other people do not deserve any compassion.  Actually, this compassion exists in the reverse order of their other countries possibility to harm the USA.

In this sense I do not understand why people in the developed countries outside the US protest against slavery, not against the USA, which considers them as serfs. The only reason I can see behind such behavior is that all developed countries consider less developed countries as slaves. This is a long term tradition and to blame historical slavery is easier than the current suppression (nonequivalent exchange).

Instructively, the countries outside the well-known slavery-involved club (remarkably this the club of the most developed countries and their fortress-bank-countries) do not follow the protests against slavery. They have no guilt feeling and can blame only slavery beneficiaries, i.e. the USA, the UK, Japan, France, Belgium, Spain, Portugal, The Kingdom of Netherlands, etc. However, some US satellites have the slave-master relationships in a different incarnation: subsidies from the EU or trade agreement with the USA  still rule this world and blaming the slavery beneficiaries is risky for their subsidies. The satellite opinion means nothing - these countries are like slaves.

A few countries are free from the slavery guilt and subordinate bonds. These countries can blame the historical slavery beneficiaries and the current US foreign policy considering others like slaves. Why don't they do that?

What do we need to overcome the next pandemic?

The current COVID-19 pandemic harvested hundreds of thousands of lives and ruins economies. The authorities and societies are not prepared at all.  Some "smart" countries like Sweden, USA, UK, Brazil, Belorussia first decided not to react and consider the pandemic as a regular seasonal virus attack. This approach led to huge losses that will be scrutinized in the legal process later on. So, what did we miss when we have been not preparing for the pandemic? I have my own list and some simple remedies not to allow this situation again.

1.    When something unknown happens the reaction has to be the most conservative. Experiments on the whole population are prohibited before we understand how to mitigate the risks. Politicians have to make people’s lives the highest priority.  I would not vote for a politician who says that GDP is more important than lives, especially the lives of vulnerable people.

2.    The medical authority first. The reaction to the pandemic has to be similar to the reaction to war. Politicians may declare war but then strategy and tactics are controlled by militaries. However, medical strategy and tactics were not ready this time. The threat was underestimated and the reaction was inadequate on average. This is the bottleneck for developed countries that presented a full variety of stupid responses.

3.    State resources. To successfully fight against this and the next pandemic one needs resources for mid-term measures: medical army of doctors, nurses and other crucial personal – with extensive reserves, and medical facilities to treat sick people, medicine, teams, and tools to create vaccines,  etc.

4.    Comprehensive measures to protect people involved in essential jobs: police, firemen, post, food supply, water supply, army, delivery, etc. These people suffered the most after medical personal during this pandemic. These measures have to cover the whole cycle of their job and also cover the way to and from work to home. This is crucial since there is no way to make these jobs remote.

5.    A set of tools and measures of individual protection. This was the weakest point during the COVID-19 pandemic. People lost their jobs and the global economy returned to the earlier 2000s because people had not enough masks, gloves, protect costumes, measures, and places of decontamination. This is relatively cheap. At least it is cheaper than the GDP loss we suffer.

6. The social response was adequate and the overwhelming majority followed all protective measures. However, there are a not-negligible amount of people whose behavior endangered all others. I do not know legal ways to protect people from this psychopathic threat, but it seems to be one of the most dangerous channels of virus distribution.    

7.    Children. This is the problem that one cannot resolve. Children are likely the most effective and uncontrolled way of virus progress in society.

I am sure that people react to incentives and there is R&D activity around which is aimed at all challenges including those in my shortlist. The next pandemic has to be less painful if we are able to react in a rational way. However, the reaction of the Federal Reserve System and the stock market reveals a rather psychopathic reaction to save capital not lives.