Tag: Economy

Privilege needs to recognize itself and compensate

America marked the one-year anniversary of the COVID-19 epidemic last week. It was part memorial to the more than 500,000 who have died due to the negligence, ignorance, and egotism of President Trump. It was also part celebration of the rapid ramping up of vaccinations and the prospect of a return to normality by sometime in the late summer or early fall. President Biden has already demonstrated an ability to get good things done with a minimum of fuss, including a $1.9 trillion package intended not only to confront the virus but also to revive the economy.

It may be too much, but better that than too little. It will take some time to move some of that quantity of money through our various bureaucracies and into productive hands. But the initial $1400 payments to taxpayers went out already this weekend and the $300/week plus up of unemployment insurance should move fast too, but a lot of the rest cannot and should not be done quickly. It will require applications from businesses and states. Transparency and accountability will be important to ensuring that it reaches the correct destinations. Nothing could hurt the image of the Democrats-only stimulus more than a few boondoggles at taxpayer expense.

While we wait for the recovery, reflection on the past year is in order. The US failed miserably to stop COVID-19 early, which would have required a serious commitment to testing and contact tracing that the President was incapable of. Trump deserves credit for moving quickly to fund multiple vaccine projects, three of which have already come to arms. He was completely inept however at encouraging mitigation measures (masks, social distancing) and developing a serious plan for administering vaccine. That happened only after Biden took over. His administration has demonstrated impressive capability to increase production and distribution, down to the last mile and even inch.

That said, distribution of the vaccine is following the inverse of distribution of the disease, which has affected black and brown people disproportionately. They have contracted COVID-19 and died from it more than whites, but they are still not getting their proportionate share of vaccinations. There could be no clearer indication of how deeply ingrained in our institutions prejudice is. Georgia is managing to get vaccine to rural white communities while Atlanta black neighborhoods are short on supply. Sounds a bit like the distribution of polling places. Tell me there is no systemic discrimination.

A lot of people like me have enjoyed relatively few deprivations from the epidemic. I’ve been able to continue my usual reading, writing, and teaching from home. It’s not the same as enjoying the stimulation of students and colleagues downtown, but it isn’t all that far off. My wife and I have been walking 6-7 miles per day and have lost a few pounds. Groceries all get delivered. I’ve been in a store no more than half a dozen times in the past year, but I lack for nothing. Brown and black people who need the work bring me everything my bank account can afford.

It is an enormous privilege to quarantine as we have, without giving up professional life or income. All of us who have done it owe those who made it possible a big debt. I’d have thought a minimum wage of $15/hour wouldn’t be too much to pay, but our well-heeled Congress thought differently. I have no doubt but that the support to families with children contained in the latest stimulus package is likewise justified. The Republicans in Congress objected to that too, concerned it might enable some single mothers with four kids to stay home to do the vital work of raising kids rather than work.

Right now our biggest problem is climbing out of the recession and ensuring the benefits aren’t reserved for the relatively rich white people, of which I happen to be one. Privilege needs to recognize itself and compensate. That goes for America as a whole too. As we exit this tunnel, we need to help the rest of the world get out of it too.

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Stevenson’s army, March 9

– NYT tells more about the CIA base in Niger.
– Afghan broadcaster says government angry about proposed peace deal, has text here.
– Dan Drezner grades Biden’s NSS, is critical of foreign economic policy statements.
– New Yorker reports views of CJCS General Milley.
– TNSR reports poll of military, finds support for exceptionalism.
– Bit of history: Atlantic tells how House did away with its filibuster.

My SAIS colleague Charlie Stevenson distributes this almost daily news digest of foreign/defense/national security policy to “Stevenson’s army” via Googlegroups. I plan to republish here. To get Stevenson’s army by email, send a blank email (no subject or text in the body) to stevensons-army+subscribe@googlegroups.com. You’ll get an email confirming your join request. Click “Join This Group” and follow the instructions to join. Once you have joined, you can adjust your email delivery preferences (if you want every email or a digest of the emails).

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Stevenson’s army, March 3

– The Hill  says FBI Director Wray hinted at forthcoming sanctions for the Solar Winds hack, saying they would be joint, public-private, and sequenced.
-The administration and EU announced sanctions on Russia in the Navalny case.
-David Ignatius is unhappy with the Khashoggi sanctions. The administration’s fallback position is planned sanctions against people who punish journalists or dissidents.
– David Von Drehle says Biden should accept defeat in Afghanistan and pull out.
– Dan Drezner says economic statecraft is changing.

My SAIS colleague Charlie Stevenson distributes this almost daily news digest of foreign/defense/national security policy to “Stevenson’s army” via Googlegroups. I plan to republish here. To get Stevenson’s army by email, send a blank email (no subject or text in the body) to stevensons-army+subscribe@googlegroups.com. You’ll get an email confirming your join request. Click “Join This Group” and follow the instructions to join. Once you have joined, you can adjust your email delivery preferences (if you want every email or a digest of the emails).

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One more problem in Lebanon, but now may not be the time to solve it

Samin Mirfakhrai, a first-year Conflict Management student at SAIS, writes:

The Carnegie Middle East Center February 19 held a discussion of inequality in Lebanon. Panelists were:

  • Lydia Assouad, El-Erian Fellow, Carnegie Middle East Center; PhD Candidate, Paris School of Economics
  • Haneen Sayed, Human Development Specialist, World Bank Group
  • Toufic Gaspard, Former Senior Economic Advisor to the Lebanese Minister of Finance; Advisor, IMF
  • Gregg Carlstrom as moderator, Middle East Correspondent, The Economist

Key Points

 Income and wealth inequality have been a cornerstone of the Lebanese economy for decades; the existing disparity has grown more extreme since 2005. The political elite have long upheld a system rooted in clientelist institutions and policies. The political culture has exacerbated economic inequalities to benefit the ruling elite and forego creating opportunities in upward mobility for the middle and lower classes.

 The state of the political economy is dire. Without the proper reforms, financial collapse is imminent. Within the scope of fiscal policy, implementing a general and progressive income tax, increasing top marginal tax rates, and instituting an annual wealth tax are recommended to increase the national revenue.

 Economic reform must be coupled with political form. Long-term programs that increase human development, continue economic subsidies, and offer cash assistance can lower inequality rates, yet the financing needed for such measures is unavailable. Panelists agree that real change cannot be achieved without political reform.

Figures

 The richest 10 percent of the population hold approximately 70 percent of total wealth in the country.

 Extreme poverty in Lebanon has nearly doubled since 2012.

 The lower poverty line, classified as anyone who cannot provide their daily caloric needs, is at 22 percent.

 The Human Capital Index in 2018 was 0.52, meaning a child born in Lebanon can expect to be 52 percent as productive as he/she could be upon reaching the age of 18.

Summary

This event was organized around Lydia Assouad’s research on economic equality in Lebanon. Her recent paper for the Carnegie Middle East Center entitled “Lebanon’s Political Economy: From Predatory to Self-Devouring” focuses on assessing income and wealth inequality at the apex of several converging crises. Income inequality has been a ubiquitous aspect of Lebanon’s socioeconomic sphere since the state was formally established in 1943. While it isrecognized that inequality has persisted since the decades before Lebanon’s civil war erupted in 1975, data is lacking.

Inequality has grown more severe as the country faces various crises that have combined to beget a serious humanitarian crisis. In 2019, a massive protest movement responded to decades of policies that have sustained and exacerbated levels of economic inequality that are considered some of the highest in the world. Since then, a number of events, including a protracted banking crisis, coronavirus, and the Beirut port explosion, have compounded on a dire situation.

Assouad’s research first tackled the dearth of data on economic inequality in Lebanon. There is little data available on the phenomena prior to 2005, the year Syrian forces left Lebanon after nearly three decades of occupation. The data since then is incomplete. Her novel methods of collecting micro-fiscal data allowed Assouad to delve into the nature of inequality in the country and deliver a sober message that economic amelioration must be coupled with political reform. The political elite are often the country’s wealthiest individuals, who continue to take part in kleptocratic and corrupt practices lacking in political accountability and integrity.

Assouad’s recommendations emphasize the need for tax reform in order to generate government revenue. Specifically, she advocates a progressive income tax that would combine all sources of income as one, instead of considering them separately. Additionally, an exceptional wealth tax of 10% on billionaires would collect approximately 2-3% of the national income.

Panelist Gaspard criticized Assouad’s focus on tax reform, suggesting that a progressive tax would not be feasible for a developing economy like Lebanon’s because fiscal management and administrative systems are underdeveloped. He further expanded that while fiscal policy has caused the collapse of the exchange rate, it is monetary policy that brought the collapse of the banking system. Attendees also questioned the ability to tax a wider base when public trust in institutions is so low.

All panelists agreed that economic reform would need to be coupled with massive political change in order to reverse Lebanon’s collapse, but major reforms are difficult during stability, let alone during the country’s current crisis. Such changes require strong leadership, political consensus, public engagement, and tough measures—a combination not to be found in Lebanon today.

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Stevenson’s army, February 16

– CNN has a typical day.
– WSJ’s Seib says he’s blending economic and foreign policy.
– WSJ says DOD is going big on  robotics.
-CNAS writer has good to-do list for SecDef Austin.
– Erdogan blasts US for support to Kurds.

My SAIS colleague Charlie Stevenson distributes this almost daily news digest of foreign/defense/national security policy to “Stevenson’s army” via Googlegroups. I plan to republish here. To get Stevenson’s army by email, send a blank email (no subject or text in the body) to stevensons-army+subscribe@googlegroups.com. You’ll get an email confirming your join request. Click “Join This Group” and follow the instructions to join. Once you have joined, you can adjust your email delivery preferences (if you want every email or a digest of the emails).

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Stevenson’s army, February 12 and 13

I didn’t get to it yesterday, so here is two days worth:

February 13

– Major shakeup in Senate Appropriations — Sen. Leahy becomes chairman, but loses his chairmanship of State/Foreign Ops after many decades. Full roster here.
– State de-lists Houthis as terrorists.
– Biden keeps tariffs on European wine & cheese [Darn]

February 12

This is the year of the ox.
Technology issues are a major part of the Biden administration’s China policy. Note these:
Export restrictions expected.
Supply chain issues important.
Press reports say Jennifer Harris, co-author of War by other means [assigned for week 6] will be NSC director for foreign economic policy.
Fred Kaplan says Pence’s “nuclear football” was evacuated with him.

My SAIS colleague Charlie Stevenson distributes this almost daily news digest of foreign/defense/national security policy to “Stevenson’s army” via Googlegroups. I plan to republish here. To get Stevenson’s army by email, send a blank email (no subject or text in the body) to stevensons-army+subscribe@googlegroups.com. You’ll get an email confirming your join request. Click “Join This Group” and follow the instructions to join. Once you have joined, you can adjust your email delivery preferences (if you want every email or a digest of the emails).

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