Tag Archives: economics

“State Governments are Broke”

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That’s New York Governor Andrew Cuomo’s (D) claim as he pitched President Donald Trump for a Federal bailout of his State.

“You know the state governments are broke, to use a very blunt term. You know the state governments are now responsible for the reopening and the governors are going to do the reopening, and they have no funds to do it,” New York Governor Andrew Cuomo said….

No, no one “knows” that State governments are broke. They most assuredly are not. Not as long as they have taxing power, which they do.

Not as long as they have absolute control over their own spending, which they do.

Cuomo knows this full well. He’s just ducking away from having to make those hard decisions and ducking away from the fight with New York’s legislature as those politicians duck just as thoroughly from the same decisions.

All the politicians populating those governments need do is have the political will and the integrity to act on those authorities.

Sunset Clauses

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Here’s another example of their utility. To help out the furloughed and fired during the current Wuhan Virus situation, the Federal government enhanced existing unemployment insurance payouts with an extra $600 per week. The plus-up doesn’t expire until the end of July, more than three months hence.

Many businesses, especially the small and mom-and-pops that are at the heart of our employment environment, are starting to re-open as they figure out ways to operate at least partially or as State-level restrictions start to ease.

However.

Employees say they’ll take the unemployment check for as long as they can make more money by not working. One internal Trump Administration analysis estimates that this work disincentive applies to millions of Americans.

That’s not laziness, as the Wall Street Journal‘s editorial correctly emphasizes. That’s workers making economically sound, rational decisions. Especially at the lower end of the economic scale, taking a functional pay cut to go back to work is…suboptimal.

Such a plussing up of unemployment payouts could have been made marginally acceptable—this particular jobless spike came about due to Government fiat rather than business decisions or economic cycles—had the addenda been accompanied with a hard milestone rather than an arbitrary date. A milestone like, oh say, an employer being ready to hire back and offering to do so, or a more blanket State-level easing of restrictions that would allow ranges of businesses to start re-expanding their operations or re-opening altogether—and so hiring or re-hiring.

It’s possible this oversight can be fixed in the next round of Wuhan Virus situation responses, but I’m not holding my breath.

GIGO

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Garbage in, garbage out. That doesn’t only apply to modeling or to the utility of software functions.

Deutsche Welle had an article earlier discussing the potential of the present Wuhan Virus situation and the emphasis on working from home to drive increasing digitization of the work being done.

[M]any firms and a considerable proportion of workflows in administration and the education system are still paper-based, using postal letters and fax machines. However, the coronavirus crisis has been a wake-up call for many of them.
Smaller firms are now hoping to jump on the bandwagon, [Bitkom Head of Digital Business Processes Nils] Britze notes. “By using cloud technology, every company can quickly find a digital solution to processing documents or setting up video conferences.” Direct investment in IT infrastructure complete with servers would have been too costly for many, but cloud-based services have proven a real game changer.

However, and this is key, Britze also pointed out that

just using digital tools to improve workflows isn’t enough. Work processes have to be enhanced across the board to use the full potential of digitization. “If you just digitize an inefficient analog process, you end up with an inefficient digital process[.]”

Even work processes optimized for digitization and a work-from-home environment, though, are insufficient. That home environment must be optimized for the work, too: there is a large reduction in direct oversight, and there are myriad distractions in the home environment that need to be handled, also. Folks aren’t fundamentally lazy, but routinely working from home presents a business work culture change that wants handling that’s as carefully done as the digitization itself.

Digitization, after all, is like most things in the human endeavor: it’s is a tool, not an end, and the utility of any tool is in the efficiency of the use of it, not in its mere existence.

Then Don’t Go Out

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According to a Wall Street Journal/NBC News poll, many Americans are worried about States relaxing stay-at-home/lockdown orders too soon in this Wuhan Virus situation. Sixty per cent of us, apparently.

A look inside, though, shows an importance difference.

  • 77% of Progressive-Democrats worry about opening too quickly
  • 39% of Republicans worry about opening too quickly

On the other hand,

  • 48% of Republicans are worried we’ll take too long to open up
  • 19% of Progressive-Democrats are worried we’ll take too long to open up

All of us, Progressive-Democrats and Republicans alike, though, should keep in mind one paramount fact: easing stay-at-home/lockdown restrictions isn’t the same as a requirement to go out. Those persons worried about too soon easing are free to stay indoors.

The rest of us should act like the adult human beings we are and make our own, separate, decisions about whether to take advantage of the relaxations; we don’t need to wait to be told what to do.

Overseeing PRC Telecomm

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The Senate has started looking into tightening oversight of People’s Republic of China telecomms that are operating in the US.

In a forthcoming report, the Senate Permanent Subcommittee on Investigations will level sharp criticism at a group of telecom regulators for failing to scrutinize the Chinese companies and the way they handle data going back nearly two decades. Senate investigators who briefed The Wall Street Journal on their findings said that without proper oversight the Chinese companies “present an unacceptable amount of risk.”

It’s a start.

But even with suitably proper oversight, a larger question remains unaddressed, much less unanswered: why are these companies allowed to operate in the US at all? They are, after all, arms of the PRC government, not free enterprise entities competing on their own recognizance and beholden to the laws of the political jurisdiction within which they operate.

And this:

Representatives for American carriers warned the Senate investigators that the US moves could cause Beijing to retaliate by cutting off their business with Chinese carriers to provide services. That, the carriers have said, would potentially hurt their customers in China, such as US companies, and hinder the carriers’ ability to cooperate with US intelligence-gathering requests.

Couple things about this. Cutting off American carriers’ business inside the PRC would be relatively minor for operations in a nation that demands domestic partners and technology sharing as a condition of doing business within that nation and that demands government-accessible backdoors into foreign companies’ critical software suites as a condition of doing business within that nation.

The bit about hindering US carriers’ ability to cooperate with US intelligence-gathering requests emphasizes a critical difference between us and the PRC. US carriers’ cooperation with our government’s intel requests is entirely voluntary, for all the political pressure a carrier might face for noncompliance. PRC telecomm companies operating in the US have no such option: PRC government requests for intel-related information are required to be satisfied. The only request aspect relates to the type of information the PRC government requires to be collected.